Rent day may become rink’s judgment day
The South Tahoe Ice Center’s landlord will likely bring up key questions about the facility’s future when rent comes due next week, said City Attorney Dennis Crabb.
Under terms of its lease with the city of South Lake Tahoe, STIC’s first rent payment – 5 percent of public skating revenues – is due May 1.
At that time, city officials have authority to inspect the facility’s financial records, Crabb said last week. He also said it is likely that the City Council will inquire about the rink’s future from STIC President John Wareham.
“Until that first quarterly rent payment is due, there’s nothing to talk about,” the city attorney added.
The rink has been closed since mid-March, due to warm temperatures melting the ice surface. The city can revoke STIC’s lease on 1.25-acre site at the Recreation Complex if it remains shut down for more than 210 days, or until roughly Oct. 15.
Wareham has met with investors interested in buying out his lease and providing the cash infusion needed to complete the project. However, no deal has yet been signed.
Both Crabb and Mayor Tom Davis said it is unlikely the city will change its position about maintaining the ice rink as a privately funded venture, terms outlined in the lease signed last year.
“The best situation is going to be some private enterprise doing it (operating the rink), which is why we were so excited about it in the first place,” Davis said on Sunday.
If STIC does not meet its obligations and the lease is revoked, Crabb said the city would likely seek a new operator.
One possible candidate is Ray Van Winkle, Sr. Van Winkle’s company, V&C Construction, is owed more than $200,000 for work that helped get the facility open, albeit briefly, in late January.
Van Winkle already holds a roughly $200,000 lien on improvements at the site and his attorney has discussed taking over the rink with city officials.
The contractor last week said he is awaiting results from Wareham’s discussions with the city before he plans his own course of action.
“It’s a waiting game,” said Van Winkle. “We’re not happy about it, but that’s what we have to deal with. I think John had every intent in the world to make it work. By not having the money behind him, he got himself between a rock and a hard spot, which has put me between a rock and a hard spot, because I’ve got the most money invested in it.”
Wareham is hoping to ink a deal with one of the two potential investors he has met with in recent weeks.
Sources close to the project estimate about $1 million is needed to build the roof needed to make the rink a year-round facility and pay off existing debt.
Besides V&C Construction, Sierra Valley Electric has a $4,800 lien on the improvements. Crabb said the city – as property owner – would not be obligated to pay off the liens if STIC is unable to repay the debts.
If a private investor never surfaces, Wareham said another option may be forming a non-profit corporation and issuing tax-exempt bonds through the city to raise construction capital.
Such bonds could be repaid through ice rink revenues. However, depending on the type of bonds issued, there could be a scenario requiring the city to supplement bond payments if rink revenues fell short of projections.
For a city in the middle of massive budget reductions – including nearly $400,000 in cuts from the Parks and Recreation Department – political support for municipal bond sales seems difficult at best.
“I would be very leery of the city underwriting a bond,” said Davis.
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