INTERGOVERNMENTAL COOPERATION
Darien's Public/Private Venture Editor's note: In this issue of Illinois Parks & Recreation, our regular department on intergovernmental cooperation highlights a unique partnership between a park district and a private organization. "This facility really is being built without an impact on taxes." In today's economic climate, many recreation agencies struggle with the idea of providing greater opportunities for recreational services without the extra burden of increased taxes. One unique approach to this dilemma is to actively seek partnerships with representatives from the private sector to assist in providing a greater level of service. Over the past several years, many park and recreation agencies have entered into some type of joint public/private venture. In most cases a private group signs a lease agreement with a governmental entity for the use of land or to provide a service (i.e., leasing a concession stand to a private company at a public water park). What makes the Darien Park District's partnership unique is the melding of both public and private resources to provide services to the community with substantial benefits for both groups. "We're both working under the same roof, side-by-side," explains Kerry Hays, executive director of the Darien Park District. "[The private entity] brings a large portion of the money, we give up management, but we get the building on our land and we've negotiated recognizable benefits for our residents. This facility really is being built without an impact on taxes. The only impact on taxes is the purchase of the property."
In Search of a Partner
Shortly after the committee's presentation, the park district was a approached by a group of citizens interested in working towards the development of an ice arena located near Darien in the southwest suburban area of Chicago. Residents from several communities were part of this group, and the park district officially recognized their efforts through the creation of an ad hoc committee which became known as the Citizen's Arena Council. Created in 1990, the Citizen's Arena Council spent a lot of time and effort in developing a professional presentation. Contacts were made with several existing ice facilities and a request for proposals yielded bids from many architectural firms. A list of major corporations in the area were targeted and a team from the committee was given the opportunity to make its presentation to one company. Subsequent presentations met with interest but no commitment for project funding. In the summer of 1993, district officials were approached by a private group of investors interested in working with the park district towards the creation of a joint public/private ven- 8 • Illinois Parks & Recreation • July/August 1996 ture. The investors offered to fully fund the project if the district would allow the group to manage its operations. Negotiations continued through the fall of that year and broke down when the park district requested that the plan include additional indoor sports areas. In March of 1994, the park district was approached by another group of investors that wished to explore the option of providing a multi-use joint sports venture. This began the evolutionary process of developing a partnership structure allowing for the creation of a sound legal agreement that would in turn provide many benefits for the residents of the Darien Park District.
The SportsPlex Team Delivers
Initially the investment group came to the park district with the proposal of financing the full cost of project construction. Bringing significant contributions from investors, attempts were made to seek a conventional loan to cover the remainder of the project's costs. Their efforts met with frustration primarily due to the perceived high level of risk associated with the project and the legal inability of the group to subordinate the facility as security for the loan. After meeting with several banks, the investment group requested that the park district consider issuing bonds to meet the costs of the project not covered by the $3 million in investment equity. After careful consideration, a two-tiered structure of financing was established for the issuance of bonds by the district, and $3.3 million in bonds were issued secured by the full faith and credit of the park district. An additional $4.2 million was issued, secured by the results of an independent economic feasibility study funded by the developer. The accounting firm of Trkla, Pettegrew, Allen and Paine was engaged for the purpose of measuring the economic feasibility of the project in Darien. Competing facilities were identified as well as their effect on potential participation levels in a variety of different sports activities. The firm determined estimates for operational costs and the amount of net operating revenue. This established a level of comfort for the park district, because it showed the capability of meeting debt requirements for the facility by a nearly 2:1 ratio. The park district's law firm prepared several documents detailing a legal structure for the creation of the joint public/private venture that exists today. A key component of these documents is the "Facilities Operation Agreement," which outlines the operation of the facility and the benefits provided for district residents. These benefits include: • Up to 4,140 hours of free use by the park district of areas within the facility. This translates into programming control (without cost) of both fields and one ice rink during non-prime-time hours (defined as Monday through Friday, 9:00 a.m. to 3:00 p.m.). • Up to ten civic and senior groups can rent any portion of the facility two times per year at a 50 percent discount of the rate charged to the public. These rentals are subject to availability. • Teams comprised primarily of Darien Park District residents will receive a 10 percent discount on the fee charged to the public. • A discount of 33 percent will be given to park district residents who participate in individual activities such as open skating. • After the fifth full year of operation, the park district will be entitled to a portion of revenues determined to be surplus. The actual amount will be based on a sliding scale tied to the surplus amount. Park district ownership of the facility occurs during construction. Once completed, a management agreement will go into effect that authorizes the management of the facility by SportsPlex LLC. This agreement continues for twenty years with the park district having buyout options beginning in the year 2001. The final configuration of the facility includes two Olympic-size ice arenas, two indoor multi-use fields, a rehabilitation center with services provided by Loyola Medical Center, meeting space and other ancillary areas. Primarily setup for soccer, the multi-use fields can also be used for volleyball, in-line hockey and basketball.
Construction Begins
It would be virtually impossible to provide this type of facility within Darien using conventional means of financing. Public opinion for a facility solely funded by district taxes would be difficult to generate at best. With the synergy of public and private efforts, the community has demonstrated solid support for the facility and the Darien Park District looks forward to providing this valued service to its residents. Sandy Estes is a commissioner, Kerry Hays, CLP, is the executive director and Scott Nerger, CLA, is the assistant director of the Darien Park District. Illinois Parks & Recreation • July/August 1996 • 9 |
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