City backs loan to AMHA to buy Feildian Gardens
The City of St. John’s is providing a loan guarantee of $2.5 million, a direct loan of $400,000, and a $100,000 capital grant to the Avalon Minor Hockey Association (AMHA) to purchase Feildian Gardens.
In a note from city staff to council in Monday’s council agenda, it says the AMHA’S current home arena is privately owned whereas other Northeast Avalon minor hockey associations play at rinks owned by municipalities or non-profits.
The AMHA runs the Avalon Celtics minor hockey program in St. John’s which has over 400 participants between ages five and 18.
According to the city council agenda, AMHA will purchase from Northpoint Sports and operate Feildian Gardens as a non-profit, proposing a similar model as the Avalon Arena Association’s running of Twin Rinks. To that end, the AMHA requested the aforementioned loans and grant from the city.
The $100,000 grant was previously approved under the city’s capital grant program, but the loans were approved in a unanimous vote by city councillors on Monday.
Mayor Danny Breen asked council if they had any comments before the vote, but no councillors spoke. Breen himself said it’s to the city’s advantage to make this decision.
He said it’s a better situation for the city when a community group operates an arena, and the city provides assistance through occasional capital grants. For example, he said this is what happens with the Goulds Arena.
He said the city had a similar situation a couple of years ago with Twin Rinks. According to the council agenda, in that situation, the city agreed to issue a mortgage for up to $500,000 because the group running the facility wanted another ice surface.
Breen said when Twin Rinks was built decades ago, the land was provided by the city to make it happen, and he said this is a similar situation today.
Council’s agenda says another similar agreement occured when the city advanced $1.8 million for repairs and upgrades to King George V soccer field, a loan which is being paid back over time.
“Clearly there is precedent for the current request,” reads the decision note which was prepared by Derek Coffey, deputy city manager for finance and administration.
Approval in principle was granted for the agreement in a private meeting of council on Feb. 3.
The $400,000 loan from the city is interest and payment free for the first five years, conditions which were required by AMHA’S lender to see it as an equity investment by the city, according to council’s agenda. After five years, annual payments of $25,000 will be required. There will be no interest charged.
According to the agenda, there are no budgetary requirements on the city for the $2.5 million loan guarantee unless AMHA defaults on the loan guarantee. AMHA’S annual payments to its lender will be roughly $175,000 per year.
STRENGTHS AND RISKS
Nine strengths of the proposal were identified in the decision note to council, including statements that the AMHA is a well established group with a proven track record, AMHA will retain key rink operations staff thus retaining knowledge of the facility, and due diligence was completed to assess the long-term integrity of the arena structure and ice plant with no issues identified.
Another strength of the proposal identified in the agenda is that the purchase reduces the need for the city’s involvement in the construction of another ice surface by increasing the hours available for minor sporting groups.
“Surrounding municipalities have had to invest in constructing rink facilities at substantial cost. The proposal here allows the city to greatly support minor hockey at a minimal comparable cost,” reads the decision note.
Three risks associated with the proposal were identified in the decision note to council: AMHA defaulting on its loan payments, resulting in the city being required to make annual payments of $175,000; if a default occurs and another operator can’t be found, the city may end up operating the facility which could prove to be expensive; and the possibility that loan of $400,000 might only getting partially recovered.
City staff suggest in the decision note three mitigations that should be built into any agreement with AMHA.
First, that the facility’s major use be the provision of ice time availability for minor sport organizations unless a change in direction is approved by the city.
Second, that no sale or assignment of the rink or agreement can take place without the prior approval of the city.
And third, if there is a default on any loan payments, the city retains control over the future direction of the facility.