#4 Discussion and action on ice rinks in Janesville as discussed in ice rink evaluation report
CITY MANAGER DEPARTMENT MEMORANDUM
July 12, 2010
Updated September 8, 2010
TO: City Council
FROM: Eric J. Levitt, City Manager
SUBJECT: Discussion/possible action on report from Rink Management
Services Corporation on the ice rink evaluation.
Summary / Background
In 2008, the City performed some preliminary evaluations of issues and possible
deficiencies at the ice rink. During the spring of 2009, the City experienced
several small failures and one large failure of the ice cooling system. In addition,
there have been some continual structural concerns with the facility including the
roof. Temporary repairs have been completed over the last year while a review
of the current ice rink status has been on-going.
A group of Janesville residents, now affiliated with the Janesville Youth Hockey
Association, began developing a proposal to form a partnership with the City of
Janesville to build a new rink rather than renovate the current rink. The proposed
rink is located adjacent to the Youth Sports Complex and built on 11 acres of City
owned land. The proposed partnership evolved over the summer into the
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attached proposal. The proposal on October 26 had the following elements:
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The building and one sheet of ice would cost approximately $4 million (not
including land).
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The expansion to a second sheet of ice would cost approximately an
additional $1 million.
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The City is requested to commit an initial $2 million and an additional
$500,000 when funds are raised for a second sheet of ice.
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The proposal projected the City to close its current $85,000 actual subsidy
to a $0 operational subsidy when 2 sheets of ice are operational.
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The proposal discusses the expansion of users at the current rink over the
last year
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The City Manager indicated to the group that due to concerns with
competitive bidding, it would be his recommendation that if the City had
ownership and responsibility for the operations of the facility that he
believes that it would be best to competitively bid the project management
and construction.
The City Council in October approved $2 million in public funds for a one-sheet
ice rink and up to $2.5 million in public funds for a two-sheet ice rink if private
funds were raised to complete the facility. It was also approved to place the rink
on the South side after discussion on location. The City currently has $2 million
available for the rehabilitation of the current rink, the construction of a new rink or
other eligible uses.
The City contracted with an outside firm, Rink Management Services
Corporation, this Spring for approximately $10,000 to do an overview evaluation
of the current rink and the plans to construct a new rink. Typically to perform an
intensive study of the current rink and evaluate the feasibility of a new facility
would cost between $30,000 and $60,000. However, the City Manager believed
that an abbreviated study for under $10,000 would provide enough valid
information to provide an informed decision.
Possible Motion
I move to approve moving forward with contributing up to $2 million for a
one-sheet rink at the location selected previously and that is expandable to
two-sheets in the future if sufficient funds are raised by the private group
by ________________.
City Manager Recommendation
As the City Council is aware this project has been an evolving concept or project
since the Spring of 2009. Due to that there have been a variety of issues that
have arisen during this dialogue.
Issues of focus included:
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Location of a new rink (currently the Council has designated a south side
site as the preferred site.)
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Whether to renovate the current rink or build a new facility.
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Whether to financially support constructing one sheet or two sheets.
Rink Management Services Corporation prepared a report that provided an
overview of the following issues:
1. An overview of the current rink and the ability for it to continue to operate.
2. Evaluation of the current design of the proposed rink from an operational
standpoint and capital.
3. An overview of a Revenue/Expenditure evaluation for both current rink
and a 2 sheet ice rink.
After reviewing the attached report and having discussions with the firm, the City
Manager has the following recommendations.
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It appears that the current expenses would be close to $1 million for the
basic renovation of the rink. This does not include any major
enhancements.
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If the City could limit its contribution to $2 million and the contribution of
City owned land for a new rink, I believe that would be the best course of
action if it also meant that the new Central Fire Station would be included
at the current rink location.
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If land needed to be purchased for the Central Fire Station, I recommend
that renovation of the current rink be evaluated as the best option.
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I believe based on the report that the City should limit the contribution to a
single sheet rink at this time with expansion capability. If other parties
prefer a two sheet rink, the additional costs should be paid for from non-
city funds. The reason for this recommendation is that I am not convinced
that the property tax subsidy will be eliminated and am concerned that
two-sheets may even place more burden on the subsidy if certain
assumptions don’t play out.
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If the private group wants the City to revisit the site location of the south
side, I would recommend that this occur at a future meeting.
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The City should maintain ownership of the current or a new rink in the
near term.
Update to Recommendation as of August 16th
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The Ice Rink Advisory Committee met on August 11 to discuss the report from
outside consultant. The Advisory Committee is looking to evaluate the amount of
ice time purchased currently and the capacity in some of the user groups to
increase their use to determine whether there is capacity to build two-sheets.
As the City Manager has continued to evaluate the issue, I maintain my
recommendation to construct a one-sheet ice rink that is expandable. I believe
that a two-sheet ice rink should not be constructed until the City would be able to
project an operating budget that would not have a subsidy. In evaluating the
report, I believe that the expenditures would increase and that revenues could
not increase to the level that would create a break-even budget.
In evaluating past operations I have found that while the City’s expenses have
increased from $230,000 in 2002 to $275,000 in 2008; revenues decreased from
$237,000 to $188,000 despite a doubling of open skate revenues. In 2009 we
are able to increase revenues to approximately $220,000 and shrink the subsidy.
But these overall trends concern me when evaluating a two-sheet rink option.
Based on current expenditure levels, I would anticipate expenses climbing to at
least $325,000 depending on how the second sheet was operated which would
minimum of $105,000
require revenue to increase a to break even in operating
expenses.
Finally, I recommend that a financial commitment needs to occur from the private
group by the end of this year, in order to move forward with renovating the
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current rink if we do not construct a new rink. If we went forward with renovating
the rink, I am estimating approximately $1.2 million in costs for basic design and
improvements.
Update to Recommendation for September 13, 2010
Attached is the Ice Center Advisory Committee’s recommendation and their
projected revenue gains from a second sheet. If those projections were able to
be fulfilled and be sustainable for a minimum of 5 to 10 years, I would agree that
building a two sheet arena is a positive move. However, in evaluating the data, I
believe that the assumptions need to be closely analyzed.
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The revenue projections show an increase of 80% in revenues over the
current usage. From the calendar of activity, I believe there is
approximately 4 months that the ice is close to 100% capacity currently
and 2 months that have up to 70 to 80% capacity during prime time
(defined as 3 p.m. to 10:00 p.m. and weekends).
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I believe an aggressive but more realistic expectation would be an
increase of approximately $100,000 to $120,000. This is based on
increasing usage by 5 hours per day every day during the 4 highest usage
months and having some increase in usage during the two shoulder
months.
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The $105,000 in increased expenses is based on an assumption that
efficiencies are gained by having a facility that does not duplicate staffing
or energy costs. If two large events occur concurrently the facility may
need to be designed differently.
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The assumption on public skating is based on lost public skating session
because of other activities. However, the projection exceeds our highest
year which was 2009 by $18,000. The public skate showed increases in
revenue in recent years concurrent with the loss of another activity.
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Youth Hockey increasing revenues to $149,000 is doable if the two key
assumptions occur. They are looking at increasing practice time for
current teams and adding a non-high school affiliated midget (15 to 18
year old) team. However, youth hockey is a cyclical business in certain
respects and records show that revenues dropped from $99,000 to
$63,000 over a 5 year period in the mid-2000s. They are on an upswing,
but it is difficult to tell what the sustainability will be.
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Figure skating’s projections appear to be based on increasing coaching
and skaters. This would result in a $68,000 increase. This does not have
any guarantees tied to it for the City.
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The Bluebirds is tied to revenues we currently don’t receive because of
our contract with the School. If the contract changes, these revenues
would also be there for a one-sheet scenario also.
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Concessions are under projected for a new facility.
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My recommendation is based on the understanding that the City Council is willing
to contribute to additional costs of a second sheet if the City was able to forgo
future subsidies for the sustainable future. I still believe that the City Council
would need to consider whether you are willing to subsidize a two sheet facility if
the assumptions don’t occur in the five year period.
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The Ice Center Advisory Committee (Committee) was charged with the
evaluation of the Rink Management Services Corporation report
(Consultant). The conclusions drawn by the Committee are:
1. The report was objective and the fee charged was appropriate. The
comprehensive census information and spending patterns of the
community provided a foundation for the Committee to expand its
review of the facts presented and the assumptions for the reports
conclusions.
2. It is the opinion of the Committee that while the Consultant’s
report was very detailed in the area of population of the
community they did not focus adequate time with the various user
groups. The Committee, using volunteer time, was able to
determine that there is sufficient demand for a 2 sheet ice arena to
operate under Management of the City of Janesville.
a. Youth Hockey could expand their usage by as much as 394
hours per year which could produce $65,000 in revenue.
b. Polar Express could expand their usage to produce an
additional $4,000 in revenue.
c. The Figure Skating Club could expand their usage by 490
hours for another additional $80,850.
d. Public skating sessions could increase and provide as much
as an additional $31,000 in revenue.
3. Mr. Levitt’s current projection for the 2 sheet facility expenses are
$350,000 per year. The subsidy for this year is projected to be
$73,000 and would increase to $105,000 for the 2 sheet facility
with no increase in revenues. The Committee has shown that the
various user groups have the desire to expand their programs. This
expansion could result in as much as $180,850 in revenues without
raising the hourly rate from the present $165 per hour.
It is the opinion of the Committee that a 2 sheet facility should be built and
with support of the current user groups it can be operated without a deficit.
Potential Revenue Gain
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Projected Revenues
2010 Increase for 2 sheets Projected Totals
Public Totals $34,000 $31,000 $65,000
Program Totals $33,000 $ 4,000 $37,000
Youth Hockey $84,000 $65,000 $149,000
Janesville Jets $27,000 $8,000 $35,000
Ice Rentals $58,000 ---0--- $58,000
Figure Skating $12,000 $68,000 $80,000
Concession $5,000 $2,000 $7,000
Bluebirds/Fury H.S. ---0--- $25,000 $25,000
Pro Shop $1,000 $500 $1,500
$254,000 $457,500
Potential Revenue Loss
132 additional practice
Youth Hockey hours $21,780
26 games played at other
arenas $4,290
Dry land training rental $400
Invitational Tournaments
(2) $5280
Skill development sessions
(12) $1980
Goalie training (4) $660
WAHA Tournament (1) $2,640
Addition of Midget age
hockey team (1) $9,900
Intra-mural league
(22 hours) $3,630
Sub total $50,560
Open skate sessions (26)
Leisure Services (Cancelled for Jets games) $31,000
Team Wisconsin game (1) $380
Sub total $31,380
Janesville Jets Junior Jets Tournament (1) $3,000
Play-off games $1,760
Robertson Cup
Championship $3,080
Sub total $7,840
Janesville Blue Birds and
Fury Fury practice time (60) $9,900
WIAA Tournaments (2) $4,000
Sub total $13,900
Figure Skating Club Shows, clinics testing $4,125
Total $107,805