The long-awaited draft Term Sheet to bring Sharks Ice to the Gilroy Sports Park is ready to be presented to the Gilroy City Council at our meeting on Monday, June 20. To participate, you may either attend the meeting which will include public comment on this agenda item (the council meeting begins at 6pm in Council Chambers at City Hall, 7351 Rosanna St.) or submit your comments via email in advance to the City Clerk, ci*******@ci**********.org, and reference agenda item 11.3. The full agenda may be found here: gilroyca.iqm2.com/Citizens/default.aspx.
The effort to expand the Gilroy Sports Park to include two ice rinks operated by Sharks Sports & Entertainment (SSE) has been ongoing since 2019. Many factors, including the pandemic, have weighed on the time it took to get to this point. The draft Term Sheet is a nonbinding document that sets the parameters and expectations for the proposed project. It represents negotiations thus far between Gilroy City staff and SSE and now awaits City Council approval. There will be an opportunity for public comment prior to the council’s deliberation and vote on this item.
Written comments submitted in advance of the meeting will also be considered. Please participate and help shape the possibilities for this portion of our Sports Park. I am very excited to be part of bringing this potential opportunity to fruition, and City Council approval of the draft Term Sheet is the next step!
The Proposed Project
The City of Gilroy would construct a two-ice rink facility in the Phase III area of the Gilroy Sports Park located at 5925 Monterey Frontage Road. The necessary financing for the project would come from revenue bonds together with a long-term lease with the Sharks to operate the facility and obligating them to make the payments on the bond (think of it like taking out a mortgage to build a rental property for which the rental income will cover the mortgage payments).
The bond amount is proposed to be at $30 million and will cover construction of the facility and financing costs. The proposed lease term for operations of the facility is 30-35 years. To work within the proposed $30 million budget that makes negligible any risk that proceeds from the Sharks’ operating agreement might not fully cover the bond payments, the overall square footage and/or height of the facility may be reduced while still including two NHL-sized ice rinks and ancillary uses such as spectator seating, training rooms and conditioning area, multi-purpose rooms, offices, and support areas, as well as a restaurant/snack bar and pro shop. In addition, a parking area of approximately 387 spaces will be part of the project.
The City of Gilroy will retain ownership of the land and the facility. Costs of development that will be borne by the City include our own staff time for planning applications and approvals, including necessary CEQA (environmental) clearance, habitat conservation plan fees, traffic mitigation fees, in-lieu fees and other development fees, preparation and bidding of construction documents, building permit applications and inspections, and any necessary traffic and utility improvements. Much of these costs will be covered by the City’s Public Facilities Impact Fund and will not reduce the $30 million available for the facility itself, nor will they reduce the City’s general fund.
The Sharks will pay the City, pursuant to a fixed payment schedule, the aggregate of all of the City’s debt service obligations on the revenue bonds, and will pay in installments that are sufficient to timely fund the City’s scheduled debt service payments. On top of these annual base payments, the Sharks will pay an additional .5% over the interest rate on the principal balance of each installment of revenue bonds for the City to use for costs and expenses associated with the ongoing administration of the revenue bonds, including rating agency fees, trustee fees, consulting fees, and other City administrative expenses associated with the project.
Community use of the facility is proposed to include public skating at prime times convenient to the public, and to encourage use by all members of the public who are interested in recreational programs on ice. SSE will offer school-based programs for the benefit of Gilroy youth, and free general admission, skate rental and group instruction for up to 5,000 at-risk youth per year.
SSE will offer programs to play ice hockey, figure skating, and speed skating as well as other ice oriented recreational activities. SSE will establish youth ice hockey camps during the summer.
Although this project, in its current form, does not include a recreation/swimming facility at the Gilroy Sports Park, the City expects to continue discussions about the appropriate location and financial viability of a future facility.
As always, your input matters. I and the rest of the City Council hope to hear from you on Monday!
Marie Blankley, CPA is the mayor of Gilroy.
