JPA gives go ahead on refinancing plan
SOUTH LAKE TAHOE, Calif. – The South Lake Tahoe Recreation Facilities Joint Powers Authority signed off Friday on a refinancing plan that will allow for private investment in the South Lake Tahoe Ice Arena, according to city officials.
By refinancing the tax-exempt bonds for the ice arena sold under 2000’s Measure S as taxable, the JPA will save about $15,000 a year, according to estimates from Mark Northcross, a financial advisor to the JPA.
If the JPA refinanced, but kept the bonds tax-exempt, the body could save about $50,000 a year.
Keeping the bonds tax-exempt requires contracts involving a private operator at the ice arena to have a 50-day termination clause under Internal Revenue Service rules. Such a short termination clause will prevent a private contractor from investing in the property as hoped, said City Manager Tony O’Rourke.
The South Lake Tahoe City Council approved a 10-year contract with Tahoe Sports and Entertainment for operation of the ice arena in July, but was forced to modify the agreement in August after it was determined the contract did not meet IRS restrictions on the private management of facilities paid for by tax-exempt bonds. Tahoe Sports and Entertainment is now operating the ice arena under an interim contract.
O’Rourke has estimated private operation of the ice arena will save the city about $150,000 per year.
“The net gain, you might say, to the community is $115,000 per year,” Northcross said.
In order to refinance, the JPA is required to show a savings on its debt service payments. While the JPA initially expected a $400,000 cash contribution would be required in order to show a savings, changes in the financial market have made any cash contribution unnecessary Northcross said.
Former City Councilman Bill Crawford was critical of how the refinancing was undertaken Friday.
“This actually is a rescue operation because the original contract had some problems with it and now we’re trying to rescue the contract,” Crawford said.
He said he is not opposed to the private operation of the ice arena, but said the projected long-term savings are a “crapshoot.”
The refinancing will save the JPA money while also providing an incentive for investment in the ice arena, said Hal Cole, city councilman and JPA board member.
“I really don’t see the downside,” Cole said.
The plan still needs approval from two of the JPA’s three members.
The City Council approved the plan Tuesday. The refinancing plan is scheduled to be before the El Dorado County Board of Supervisors and Tahoe Paradise Resort Improvement District Board of Directors next week.
Also on Friday, the JPA appointed members to two advisory committees that will recommend how money from the recently passed Measure R should be spent.
The Bicycle Advisory Committee members are Russ Dahler, Peter Fink, Lauren Lindley, Shay Navaro, Charles Nelson, Eric Thelin and Mary Lou Whitcomb.
The Fields Advisory Committee members are Marilyn Breisacher, John Dalton, Brian Hogan, Charles Leonard, Steve Noll, Ken Riegal and Steve Weiss.
The committees will hold their first meetings starting at 9 a.m. on Feb. 3 in City Council chambers at Lake Tahoe Airport.
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