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November 23, 2010 - 10:43am

Majority at council meeting want more details on possible sale of Falleti Ice Arena

posted by Timothy Walton in batavia, Falleti Ice Arena.

Even though there are roadblocks in the way of selling the Falleti Ice Arena, a majority of Batavia City Council members said last night they to find out how much revenue could be generated by selling it. They also want more details about the original purchase.

On a 4-3 vote, after much discussion, and more information from City Manager Jason Molino on the difficulties of a sale, the council instructed Molino to gather facts about the purchase and, if the rink was sold, the options of handling the money.

With councilmembers Kathy Briggs and Tim Buckley absent, Councilman Frank Ferrando called for a vote at the next meeting on whether the city should continue to look at a possible sale of the arena.

Councilmembers Bill Cox, Bob Bialkowsk, Sam Barone and Rose Mary Christian all voted in favor of getting a professional appraisal.

As for the difficulties involved in selling the arena, Molino explained that the city had recieved $1.2 million for energy capital improvements. It was a 15-year loan.

Approximately $630,000 of that was spent on improvements at the ice rink.

The upgrades included; new lighting; an energy-management system; refrigeration improvements; foil ceiling to keep heat out; new exterior doors; a ventilation system to vent out carbon-dioxide from the Zamboni; and a new boiler that is used for heating both the ice rink and the fire department, which are connected.

These resulted in lower utility costs. The city's lease contract with Firland Management called for Firland to pay the city the difference due to the improvements. That's about $25,000 per year for the city -- roughly 30-percent of the annual $84,000 payment the city has to make for the 11 years remaining on the loan.

According to Molino, the rink was built in 1978 with a Community Development Block Grant, which required the city to build some type of multi-use community center and the vote went to putting up the arena.

Since it was built with CDBG funds, if the rink was sold, the revenue would have to be used to benefit low- to moderate-income families. The project would also need to be approved by the federal Department of Housing and Urban Development.

So the money would probably have to be used to build another community center or to put improvements into an existing one, yet it is not certain if the latter would be allowed.

Councilman Bill Cox asked Molino to submit a formal request to HUD to see what the money could be used for and find facts as to what could be done with revenue if the rink was sold.

Revenue from its sale could not go toward the city's loan. Batavia would have to pay the  balance with other money.

The city would also lose the $25,000 Firland pays toward the loan debt each year.

If the city maintains ownership and renews the agreement with Firland -- which the company wants to do -- the city could expect a total of $400,000 from Firland over the next 11 years. That's enough to cover debt service, including the $75,000 still owed on the Zamboni.

In a previous report, Molino guessed that the sale price might only be four or five times current revenue, or between $300,000 and $400,000. City Attorney George Van Nest has cautioned council members that finding a buyer could be difficult.

The city also receives $5,000 per year for five years from Falleti Motors, which won the bid for the naming rights in December 2006.

After expenses, the city still profits $10,000- $15,000 per year. The money goes into a rink reserve account, which is used for any repairs or building upgrades that may be needed. Any money the city puts into the rink, is money received from the rink.

After listening to Dave Meyer speak at last night's meeting, Councilman Frank Ferrando changed his position and now strongly opposes selling the arena.

He said the council was spending too much time on the issue -- treating it like it is critical to sell the arena.

"We are receiving money and there hasn't been a problem," Ferrando said. "We aren't in business. We aren't doing payroll."

He said Meyers had a good point by referring to the arena as "a park in the wintertime" and offers a lot for kids, families and even adults.

"I am kinda proud that we as a community provide the facility and we provide it in a way that isn't a burden to us," Ferrando said, "and we have income coming from it. We are making a complicated issue out of a simple issue."

Ferrando stated that selling the arena is "as ludicrous as dividing up Kibbe Park and selling it as property. ... I'm not interested in selling that ice rink."

Councilwoman Rose Mary Christian, who's in favor of the sale, argued that "I am not getting any service from the rink" as compared to the fire department and other services.

Councilwoman Patti Pacino responded by reminding Christian, that unlike the fire and police departments that are free to everyone, this is a different type of service because the people that play hockey, pay to use the arena. So the taxpayers aren't paying for sports there that not everyone plays.

Peter O'Brien
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Seems to me that it would be pointless to sell it since its a money maker. Not to mention they don't need to find a new managing company or anything. What other park pays for itself?
Jeremiah Pedro
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What do they plan on doing with the money they get from the sale? Seems like with the conditions attached to a sale of the building it would be pointless to sale the property. But then most city councils are not known for making logical decisions.
John Roach
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Jeremiah, I agree that they do not always make logical decisions. In my own opinion, they should have never put another $600,000 into the rink. They should have used that money to move the Police Department into it and sold off the old building to reduce taxpayer cost. But then I also never thought they should have built a bigger than ever needed new City Hall either. And nobody really knows yet what, if any, conditions might have been placed on the original loan. Everyone "thinks" they know, but they don't seem to be able to find the paperwork from 1978.
Peter O'Brien
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If they sell it, I'm sure some lawyer will find it in a hurry.
John Roach
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Peter, Why?
C. M. Barons
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You are looking at a council desperate for new revenue that has no direct connection to a taxpayer's wallet or paycheck. Reminds me of old Laurel and Hardy movies when they are out of jobs and sell-off every stick of furniture. The thing to keep in mind: selling the ice arena is a one-shot advantage for the city; then it's gone. Any potential revenue from that facility goes to the new owner. Converting the arena to a police facility will likely cost more than building new and generate negative revenue.
John Roach
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CM, Desperate is right. Sales tax payments are coming in lower than last year, property values are flat, and expenses are going up. On top of that, nobody wants their pet projects cut. That leaves only tax increases. And if many have their way, County taxes will go up because nobody wants to make cut there either. That makes for bleak future for keeping people here.
Howard B. Owens
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I can't recall one member of the council saying "we need to sell the ice arena to generate revenue." Nor have I heard, "we need to sell the ice arena because it's costing too much money." The two primary reasons some members of the council are backing sale is because, A) it might some day cost more money; b) the city shouldn't be in business. There was talk of selling to pay off the debt related to the arena, but now we know sale proceeds couldn't be used for that; and also, the arena is generating enough revenue to service the debt just fine.
Ricky G. Hale
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I agree with Howard. The City has no business being in business. The City shouldn't be in the ice arena business; nor should it be in the baseball business, nor the mall concourse business, nor the housing authority business, or any other business. The City should'nt be dabbling in entrepreneuring that belongs in the private sector. The only business the City should be invloved in is their own government. I'd like to know how many millions of dollars of tax payer's money went into these pet projects, that so few of the City residents actually benefit from or actually use.
Howard B. Owens
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Rick wrote, "I agree with Howard. The City has no business being in business." I didn't say that. And I disagree that owning the arena constitutes the city being in business, same with Dwyer.
Kyle Couchman
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Well it seems an obvious obvious decision I just cant understand why it hasnt been tabled and the City move on to other business. Rumor I have heard though is that Rose is a real bulldog and once she decides sh e wants to do something she kinds bullies everyone into it. Not saying its the case here it's just gossip I heard that sems to be relevent here. Just seems that there are too many what if's in the sale as well as conditions. Whereas if the contract with the management company is just renewed it's money in the bank, and bills paid for.
Peter O'Brien
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So someone can sue the city and make their fortune...
John Roach
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Peter, How do you come up with that?
Ricky G. Hale
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Howard, I didn't mean to miss quote you. I was just saying that I agreed with you, and then I went on to express my own opinion. You said "the city shouldn't be in business" and I further commented that "The City has no business being in business". I apologize for my error.
Howard B. Owens
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Ricky, just to be clear, I didn't say, "the city shouldn't be in business." I said that some on the council are saying it.
Peter O'Brien
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John, Say that its sold without finding that paper work and because of it the managing company loses that business. They would have standing to sue if the city sold it and violated the terms of the grant. To know if they had standing they would need to hire a lawyer who would do the research and find it and probably do it quicker than the city since there is financial motive.
Paul Dibble
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So they got $1.2 million grant or loan for upgrades to the rink,and spent $630,000 so far,plus $5,000 a year from the name sponsor,plus $20,000 from the manegement company,is there a list of stuff that needs to be done yet? Anyone that uses the facility knows that there is alot of stuff that needs to be fixed or upgraded yet,or at least make it more "green",better insulation,tankless water heaters for the bathrooms and showers,upgrade plumbing fixtures. And if down the road they do sell it,are the utilities (water,gas,electric) seperate from the fire station yet?(they should be anyway). I think you'll find that any city/town that has an ice rink other than a college has some kind of financial interest in it. I like having the ice rink in Batavia,It's busy 7 days a week (when the ice is down),It makes money and the families that come to Batavia to watch their kids play hockey frequent the Hotels,resturants,and other businesses,so at least there's a draw for it. Like anything it has to be run right,money set aside for capitol projects,and emergency repairs,not put in the city's general reserve to be used for other things,so if the need arises the money is there,no suprises.
Howard B. Owens
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The $1.2 million, as I understand it, went to energy saving project at more city facilities than just the ice rink.
John Roach
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Howard is right. It was a no bid contract and one of the buildings that had money spent on it was Fire Station #2. Right after the money was spent, they sold it.

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