Let's Talk Budget and Ice Arenas

Blog Update: 

1. Attaching a one page summary of the information used to build this blog 
2. Link to the Finance Committee discussion
3. PowerPoint presentation used at the meetings

Thank you for providing feedback and sending additional questions.

Hola!

At tomorrow's finance committee we will be discussing the ice arenas. Thank you for your questions. Below is my interpretation of the resolution after multiple discussions with staff.

For this week's news, meeting and events click here.

CHAPTER UNO: Madison Ice, Inc.

As of 2004, the ice arena's operating budget cost the city $250,000 in subsidies.

• For the past twenty years, the city has saved $5 million in operating costs if we had to subsidize the operations at a yearly rate of $250,000 times twenty years.
• Current operating costs are $1.4 Million.

In 2004, the city sold the land and buildings to Madison Ice, Inc., a non-profit organization.

• The contract didn't include a Deed restricting the land use
• Madison Ice, Inc. has paid $446,518 toward the land contract.
• Madison Ice, Inc. has also invested over $5 Million in building maintenance and repairs.
• Madison Ice, Inc. has invested at least $5,446,518 of capital and operating as part of their ownership.
• Hartmeyer needs an additional $3 million capital investment.

In 2011 & 2017, the city refinanced the debt.

• The balance of those transactions is $1,613,365.
• The Revenue and Expenses for Madison Ice, Inc. can be found in their IRS statements (2011 to date)

Who does the Madison Ice, Inc serves?

• About 400,000 to 450,000 people visit the ice arenas every year.  Following is a breakdown of participants:
  • Youth Hockey Players: 750
  • High School Hockey Players: 120
  • Figure Skating/Synchro Participants: 200
  • Learn-to-Skate Program Participants: 2,000 community members
  • Adaptive/Disabled Skating Participants: 100
  • Broomball League Participants: 100
  • Adult League Skaters: 250
  • Group Outings (schools, birthday parties, community groups): 4,000
  • Public Skate Attendees: 4,500 community members
  • Open Hockey Participants: 350
  • Tournament Participants: 3,500
  • Competition Participants: 850
• This includes local users and out-of-town users. People coming from out of town eat in our restaurants, purchase in our stores, and may spend the night; all or any of these activities support our local economy.

CHAPTER DOS: East Madison Ice Collective (EMIC)

• A new non-profit organization is willing to be part of the solution of continuing to provide ice-arena services.
• Committed to raising $3 Million for the capital investment needed for Hartmeyer.

Ice Arena's Ownership:

• Currently, both arenas belong to Madison Ice, Inc.
• The City of Madison is not selling land or buildings; the sale of land and buildings was completed in 2004.
  • In 2004, I worked at Third Wave Medical. The kid was 8, and I was too busy volunteering at Thoreau Elementary (helicopter mama, guilty as charged) to pay attention to this transaction.
• East Madison Ice Collective (EMIC) is asking for a title transfer from Madison Ice, Inc., not from the City of Madison. The $1 is a common practice used to record a transfer in the general ledger.

CHAPTER TRES: The options

1. Madison Ice, Inc. is in default on its loan; the city can take over the properties and
   1. We shut down the business and repurposed the land.
   2. We could take back the business, pay the $3 million in repairs, and add the $1.4 million operating cost to our city budget for years to come.
      1. Pay salaries, benefits, and yearly increases.
      2. Keep up with the decayed buildings, covered maintenance, and capital cost repairs year after year.
   3. take the business back, find another operator, and negotiate a deal to cover capital and operating costs.
2. Legistar 86169: East Madison Ice Collective (EMIC) is required to raise $3 Million in 3 years, and no payments are required during the fundraising period. Then, the following will take place:
   1. Transfer of the title of Hartmeyer to EMIC for $1 (Madison Ice, Inc. will not benefit financially from this transaction).
   2. Transfer the Hartmeyer portion of $1,284,612 to EMIC as a 15-year forgivable loan.
      1. In years 0-5, if EMIC stops operating the facilities, the full amount will be owed back to the city. If operations stop after 5 years, EMIC must repay portions of the loan.
      2. Year 6-15, the city's forgivable loan is reduced by 10% yearly.
   3. For the west facility, transfer the title to Madison Inc. 
      1. The loan portion for Madison Ice, Inc. is $328,753, and it will follow the forgivable structure used for EMIC.

Additional Restrictions:

1. Both organizations must keep a 25% reserve of their annual expenses to cover unforeseen capital repairs and operations.
2. A Deed will restrict the land use to "sports and recreation".
3. If needed, the deed restriction can be negotiated in the future, and the city can claim compensation for its release.

CHAPTER CUATRO: My position and my vote

The ice arenas showed up on agendas at least twice during my service. I already had done some research on the service the arenas provide, but this resolution took my research deep into their history. I have to thank those who patiently answered my many questions, especially Matt Mikolajewski, Eric Knepp, and Mike Verveer. But I also want to thank the people sending emails asking clarifying questions that helped me navigate the understanding of Legistar 86169.

As you may know by now, the city budget is complex, and the 2025 budget was intense and educational. After passing a referendum to allow city services to continue at current levels, I am not considering bringing the ice arena business back into our operating budget when we have many other priorities. Nor will I support additional measures that involve investing additional funds that can be invested in other priority areas.

For the past couple of months I have taken the time to understand the issue and the solutions proposed by staff. The staff's multi-layer approach with multiple safeguards is thoughtful and responsible. I have also considered stopping the service, closing the facilities, and turning the land to other uses, like housing. However, the proposed solution keeps that option open if the city must intervene in the future.

We will discuss this further at finance tomorrow night. Please join us if you have time. If you have additional questions, please send them to me before the Finance and Council meeting.

The following are graphical representations of the options presented:

CLOSE ICE ARENAS

KEEP ICE ARENAS OPERATIONAL