SHARKS ICE EXPANSION DATE: June 30, 2020 PROJECT UPDATE

Home , San Jose Sharks, Solar4America Ice

TO: HONORABLE MAYOR FROM: Julia H. Cooper AND CITY COUNCIL Kim Walesh Matt Cano

SUBJECT: SHARKS ICE EXPANSION DATE: June 30, 2020 PROJECT UPDATE

Approved Date 6/30/2020

INFORMATION

BACKGROUND

On December 10, 20191, the City Council accepted the Finance Feasibility Report (“Study”) on the feasibility of financing the proposed expansion of the Solar4America Ice Centre. As part of the Study, the lease payments from Sharks Ice, LLC were set to be sufficient to cover the debt service payments on the lease revenue bonds proposed to be issued by the City of San Jose Financing Authority (“Authority”) to finance the expansion and to refund the outstanding Authority’s 2008E Bonds. Additionally, the City Council directed staff to:

• Develop a bond financing structure and prepare the necessary documents for consideration by the Authority Board and City Council; and • Negotiate an Amended and Restated Lease and Management Agreement with Sharks Inc, LLC for the Council’s consideration.

On January 28, 20202 the City Council approved the necessary development and planning actions for the expansion project to proceed. These actions included:

• Adoption of a resolution adopting the Solar4Amercia Ice Facility Expansion Project (“Project”) Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program in accordance with CEQA;

1 December 10, 2019 City Council Meeting, “Financial Feasibility Study Ice Centre Expansion Project” https://sanjose.legistar.com/LegislationDetail.aspx?ID=4263943&GUID=3E5A3385-AB63-4A9B-A7D2- DC45ADEFB470&Options=&Search= 2 January 28, 2020 Council Meeting, “Conforming Rezoning and a Conditional Use Permit for the Property Located at 1500 South 10th Street” (Solar4America Ice Centre) https://sanjose.legistar.com/LegislationDetail.aspx?ID=4304033&GUID=7C831583-9008-4091-AEE2- 2E58CE6FCE4A&Options=&Search=

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• Approving an ordinance rezoning an approximately 21.23-gross acre site situated at the southeast corner of South 10th Street and East Alma Avenue (1500 South 10th Street) from the R-2 Residential Zoning District to the PQP Public/Quasi-Public Zoning District; and • Adopt a resolution approving, subject to conditions, a Conditional Use Permit to allow the demolition of the San José Municipal Firing Range, the removal of 33 ordinance-size trees and 65 non-ordinance-size trees and to allow the 204,193-square foot expansion of an existing ice rink facility with late night use and an off-site alternative parking arrangement on an approximately 21.23-gross acre site at 1500 South 10th Street.

In December 2019, staff presented a financing schedule which contemplated Council approval of the bond financing in March; this date was delayed to early April given the work effort that was underway to prepare the necessary bond documents including the official statement for Council review and approval. At the onset of the shelter-in-place order related to COVID-19 pandemic, staff was anticipating Council approval of the bond financing in April with bond closing in May.

This information memorandum provides an update on the status of the expansion of the Project and the proposed bond financing that has been delayed given the shelter-in-place order and the significant shift in the City’s financial situation.

ANALYSIS

The analysis section of this information memo is divided into three sections to provide the following updates to the City Council:

• Current Operations at Solar4America Ice Centre and Impact of COVID-19 • Status of Public Works Project • Status of Bond Financing

Current Operations at Solar4America Ice Centre and Impact of COVID-19

The Solar4America Ice Centre (“Ice Centre”) was closed for three months (March 13 to June 14) and Stage 2 reopening occurred on June 15 with youth camps approved by Santa Clara County. The Sharks have reported the following on current operations:

• All the youth camps, with all required protocols in place are full; • All the summer youth hockey camps were fully registered and sold out prior to COVID- 19 shelter-in-place; during the shelter-in-place only 6% of registrants requested a refund; and • 4-week youth figure skating camp offered to its customer base sold out in 30 minutes.

Attached is a white paper prepared by the Sharks titled, “Sharks Ice Expansion Project – Beyond the Pandemic”. The white paper provides the Sharks’ responses to questions regarding the impact to operations and revenue related to the shelter-in-place order, reopening plan, working HONORABLE MAYOR AND CITY COUNCIL June 30, 2020 Subject: Sharks Ice Expansion Project Update Page 3

premise for future of the business, assumptions of return to another shelter-in-place, COVID-19 effect on expected operations for 2020-21 hockey season, why the project now – why not delay, events planned in existing and expanded facility, financial protections and assurances offered to the City and economic advantages to the City for proceeding with the project. The information presented in the white paper has not been independently verified by the City. It is important to note that during the shelter-in-place order and the closure of the Ice Centre for three months, all payment obligations were made to the City.

Status of Public Works Project

The construction documents for Solar4America Ice Rink Expansion project are currently under Public Works review. Once reviews are complete, all the permits for construction are likely to be issued in August 2020.

To expedite the process, the Department of Public Works will separate permits for the earlier project work. It is expected that permits will be issued to start the demolition, underground utilities, and grading work in the next month, with construction to start late July or early August at the Sharks risk that bonds are not issued.

Full construction will last approximately two years from the start date.

Status of Bond Financing

The financing schedule has been delayed due to the significant shift in the City’s financial situation given the impacts of COVID-19 which has impacted the ability to complete the preparation of the Official Statement for the sale of the bonds. Although it is anticipated the Sharks will make lease payments to the City for the use of the Ice Centre that will be sufficient to pay debt service on the bonds, the obligation to repay the bonds rests with the City. Official statements disclose material information on the bond issue, such as the project to be financed, the repayment source which in this case is the City’s General Fund, a discussion of the City’s financial condition, and credit ratings. Investors use this information to evaluate the credit quality of the issue of the bonds. Staff does not believe we will be able to prepare an accurate and complete description of the City’s financial condition until after adoption of the budget and sales tax data for the final quarter of FY 2019-2020 is received in August. This information is necessary to represent that the Official Statement is accurate and complete in all material respects.

As discussed earlier, in December 2019, staff presented the Financial Feasibility Report (“Study”) prepared by an independent feasibility consultant. The Study evaluated the sustainability of the Ice Centre operation after expansion and the Feasibility Consultant presented three operating projection scenarios: (1) conservative; (2); expected and (3) aggressive. Projections in the Study reflected smooth growth over time but considered that event demand and sports participation cycles are not always smooth. These scenarios recognized that business can be affected by unpredictable local and national economic factors; and, demand is often cyclical and based on market conditions. The Study did not contemplate a pandemic which HONORABLE MAYOR AND CITY COUNCIL June 30, 2020 Subject: Sharks Ice Expansion Project Update Page 4

forced a prolonged closure of the facility and a reopening under strict operating guidelines for social distancing and regular/frequent cleaning.

In addition to providing three operating scenarios described above and in detail in the December 2019 memorandum to the Council, the Study also provided an economic sensitivity analysis for the Expected Scenario for the first year of stabilized operations in FY 2026 that presented a range of possible outcomes for Ice Centre operations under typical, cyclical market conditions and the impact of a significant economic downturn or recession. The top portion (Summary Sensitivity Analysis – Expected Scenario) of the table below from the December 2019 memorandum depicts sensitivity to a 10%, 20%, and 30% reduction of operating and non- operating revenues in the Expected Scenario.

Summary Sensitivity Analysis - Expected Scenario (dollars in thousands)

10% 20% 30% Revenue Revenue Revenue FY2026 Decline Decline Decline

Operating Revenue $26,888 $24,199 $21,510 $18,822 Operating Expenses (15,353) (14,098) (12,843) (11,588) Operating Income/(Loss) $11,535 $10,101 $8,668 $7,234

Non-Operating Revenue $3,535 $3,535 $3,535 $3,535 Indirect Expense (868) (868) (868) (868) Net Income/(Loss) $14,202 $12,768 $11,335 $9,901

Current Market Coverage Analysis (dollars in thousands) Bond Scenario – 2 Years of Capitalized Interest - Lease Payments1 $8,876 $8,876 $8,876 $8,876 - Coverage by Net Income 1.60x 1.44x 1.28x 1.12x

- Bond Debt Service2 $8,122 $8,122 $8,122 $8,122 - Coverage by Net Income 1.75x 1.57x 1.40x 1.22x

Bond Scenario – 3 Years of Capitalized Interest - Lease Payments1 $9,434 $9,434 $9,434 $9,434 - Coverage by Net Income 1.51x 1.35x 1.20x 1.05x

- Bond Debt Service2 $8,631 $8,631 $8,631 $8,631 - Coverage by Net Income 1.65x 1.48x 1.31x 1.15x

1 Assumes lease payments based on estimated debt service using current market rates as of June 22, 2020 plus 50 basis points (0.50%); bonds fund $120 million of project costs, refinancing of 2008E Lease Revenue Bonds, capitalized interest, debt service reserves, and issuance costs. 2 Estimated debt service assuming rates as of June 22, 2020, with no interest rate cushion, funding the same costs as indicated in footnote 1.

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The bottom section of the above table (Current Market Coverage Analysis) summarizes the results of a current market analysis of the proposed bonds to fund the Ice Centre expansion project. The table presents the results of the FY 2026 lease payment from the Sharks and debt service payments paid by the City under two scenarios – one in which interest on the bonds is capitalized through the project’s expected two-year construction period, and one in which interest is capitalized for an additional year, a more conservative assumption that would provide additional cushion against potential construction delays and longer period to reach project stabilization.

The three-year scenario results in increased debt service in FY 2026 and beyond (versus the two- year scenario) due to (i) the increased amount of bonds that are required to be sold to fund the additional year of capitalized interest, and (ii) the one-year shorter period over which the bond principal is being repaid. Each of these scenarios also include a current market rate scenario (i.e., the estimated actual debt service on the bonds) and a current market rate plus 50 basis points (“bps”) or 0.50% scenario, which would be the basis for the lease payments to be made by Sharks Ice. Lastly, the table presents the estimated coverage by projected net income in FY 2026 based on each of the revenue projection scenarios, ranging from the expected case to the 30% decline (-30%) in revenue recession case.

As the table indicates, under current market conditions, projected Net Income under all the recession scenarios analyzed covers the estimated Sharks lease payment by more than 1.0x, with minimum coverage of 1.05x in the three-year/-30% scenario; coverage of bond debt service in that scenario would be 1.15x. City staff is discussing the three-year capitalized interest scenario with the Sharks and final debt sizing will be based ultimate bond structuring.

As described below, Sharks lease payments are also secured by a Letter of Credit covering two years of debt service, the corporate guarantee by Sharks Ice’s parent company, and the requirement that the Sharks make lease payments regardless of force majeure events (except those which result in abatement of City payments due under the bond documents due to physical damage to the property), all of which provide additional security to avoid the need to pay debt service from the General Fund. Lastly, the bonds will also have a debt service reserve fund, funded at maximum annual debt service on the bonds, that will protect bondholders as a last resort if other sources of liquidity are unavailable.

Amended and Restated Lease and Management Agreement (“Lease Agreement”)

The December 2019 Council report included the proposed business terms for the Agreement. Several key business terms will provide a level of security for the City if base rent payments from the Sharks are insufficient to cover the City’s debt service payments on the 2020B bonds. These key terms include:

• Letter of Credit –Sharks Ice will continue to maintain a Letter of Credit (or cash security deposit) equal to approximately two years of debt service with specified triggers which allow for a reduction, elimination and restoration as described in the December 2019 memo; HONORABLE MAYOR AND CITY COUNCIL June 30, 2020 Subject: Sharks Ice Expansion Project Update Page 6

• Force Majeure Events – Sharks Ice will make rental payments regardless of epidemics, civil rights protests or other “force majeure” events except those in which the City experiences an abatement of payments as permitted under the bond documents due to physical damage to the Project; term of the Lease would be extended to match the period of abatement; and • Corporate Guarantee – Sharks Sports & Entertainment (SSE), the parent company of Sharks Ice (and parent of San Jose Sharks and San Jose Arena Management) will provide a continuing, unconditional guaranty of all the Sharks Ice payment obligations under the Ice Centre Lease. The City can make a demand on SSE directly, without a legal process, for payment of any rents, costs, charges or other amounts due under the Lease Agreement.

Current Schedule

Council Approval of Bond Documents and Issuance of 2020B Bonds …………………. August 25, 2020 Bond Sale ……………………………………… Week of September 21 Bond Closing ………………………………….. Early October Project Construction Completed ………………. August 2022

CONCLUSION

The Administration believes the Project is still economically viable and the proposed business terms to the Lease Agreement outlined in the December 2019 are still valid and key business terms as described above will provide a level of security for the City if base rent payments from the Sharks are insufficient to cover the City’s debt service payments on the 2020B bonds. As noted in the white paper, proceeding with the bond financing and the construction project during a recessionary period will result in construction jobs and additional employment opportunities at the Ice Centre once the project is completed.

/s/ /s/ /s/ JULIA H. COOPER KIM WALESH MATT CANO Director of Finance Deputy City Manager/ Director of Public Works Director of Office of Economic Development

For questions, please contact Julia H. Cooper, Director of Finance at (408) 535-7011, Nanci Klein, Assistant Director of Economic Development at (408) 535-8184 or Matt Cano, Director of Public Works at (408) 535-8477.

Attachment

SHARKS ICE EXPANSION PROJECT BEYOND THE PANDEMIC

June 18, 2020

Introduction:

There is no question that the COVID-19 crisis has had a challenging impact on our world in unprecedented ways. During the 3 months beginning March 13, we closed our facilities and focused on protecting the health and well-being of the community as the highest priority, and like the City we had to re-direct staff time and other resources to help “flatten the curve” and provide services and assistance to those affected.

Now, with the start of phased re-opening, we are looking beyond the pandemic to actions that will ensure a safe return to full operation of the Ice Centre (to the extent allowed by City and County directives) and that will ensure completion of the bond financing in time to meet critical deadlines for the expansion project. On June 15 we were able to reopen Solar4America Ice (S4A) for youth camps (hockey and skating) at almost our standard levels – very exciting. We are also extremely pleased (and relieved) that after a 3-month delay the City Council will be considering the bond financing in mid-August.

Because of the hard work of the Sharks/City team, the project is essentially shovel-ready! All project entitlements have been obtained, all previously-vetted financing and deal terms have been incorporated into draft documents, building permits are almost ready, and all major contractors are on board. We were even able to get PGE to commit to schedule relocation of our major utilities for the expansion on August 6. This is critical, because immediately following bond approval we can begin demolition work and will then be able to meet our commitment to open the expanded facility in time for the 2022-23 season.

City Council Approvals and Feasibility Study:

During this past 14 months, the Council reviewed this project on three separate occasions. On 4/16/19, the Council unanimously approved moving forward with a Feasibility Study. Eight months later, on 12/10/19, the Council unanimously approved the results of the Feasibility Study, and the term sheet for the amended Lease and Finance Plan. Five months ago, on 1/29/20, the Council unanimously approved a Conditional Use Permit. The only Council approval remaining is for the final documentation and issuance of the bonds. Interest rates are at record lows now, which provides further incentive to move now.

Of course, COVID-19 has introduced new issues into the discussion.

When the City required the Feasibility Study to test recession scenarios with up to 30% lower operating revenues than expected, none of us thought we would actually be looking at that situation in real life. Fortunately, even with the worst recession scenario, the project

Page 1 of 6 was determined to be feasible. In a letter to the City’s Director of Finance, Julia Cooper dated March 30, 2020, the feasibility consultant confirmed that “the recession scenarios are still valid” and can be used to evaluate the Ice Centre’s operations during the recession we find ourselves in today. Therefore, we believe the Feasibility Study does not need to be updated or supplemented.

Our experience with the current COVID-19 situation bears this out. Although we were required to close the building for 3 entire months with no programing, our forecasted operating revenues for the year will drop by only about 20%.

However, we completely understand that the Council may have questions about the project, based on the uncertainties caused by COVID-19 and the resulting economic instability. We hope the information presented on the next pages helps to answer some of these questions.

Questions and Answers:

1. What is our Reopening Plan?  As stated above, the Ice Centre was closed for 3 months (March 13 - June 14).  “Stage 2” reopening occurred on June 15, with youth camps at S4A as approved by Santa Clara County (with all required protocols in place).  Based on our agreement with the County, we are able to offer youth camps with 24 participants or two (2) pods of 12. This is very similar to our regular programming, so we are offering all youth camps 7 days a week with a slightly reduced number of participants.  Prior to COVID-19, we had already registered and sold out our youth hockey camps for the summer, and in the COVID-19 period, only 6% of the registrants requested a refund.  Furthermore, with the approval of reopening, we released our 4-week youth figure skating camp to our customer base (no outside marketing); all four weeks sold out in 30 minutes and these camps run from 7am-7pm daily.  When “Stage 3” reopening is approved by the County, we will be ready to open all other programing that cannot be offered now. Our assumption, based on our experience so far, is that we will be completely full with whatever programs we offer.  Many clubs, programs and events are already asking for ice time following the lifting of the current social distancing health orders.  Cancelled events have already asked to reschedule, including Norcal youth hockey championship and CAHA adult hockey championships, among others.  Our experience is consistent with what we’ve been hearing from other ice facilities in other parts of the country that have opened ahead of California.  We have retained experts to help ensure that all applicable public health protocols will be strictly followed.  SSE now has an Infectious Disease Mitigation Coordinator who will oversee our end-to-end policies and compliance including social distancing, sanitization and disinfecting and temperature screening at all of our facilities.  The facility is set up for physical distancing, with separate designated ingress and egress points.  Each rink is its own building, with its own HVAC/air filtering system.

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2. What is our Working Premise for the Future of our Business?  There is a large pent-up demand for ice time in our area, and based on long-term growth trends for ice sports in general, we continue to be bullish on the outlook of our business.  If we provide just one extra practice per team for youth hockey (90 teams) we would use 100% of new available ice time in Rinks 5 & 6 (this doesn’t even include adult programs).  The Little Sharks program sells out within a week of each offering; with 90 kids per facility per quarter and 75+% retention we have no program space for them going forward.  We have one prime time freestyle weekly that sells out within seconds, leaving many shut out from this opportunity.  The curling club wants another full night of curling.  When construction for the expansion is completed in 2 years, it is likely that sports and recreation activities will be back to pre-pandemic levels, and the economy will have recovered. However, even if the recession lingers, the Feasibility Study demonstrated that our business will be feasible.

3. Do our Assumptions Change if we go back to a Shelter in Place Situation?  If we must go back to another shelter in place cycle, it will not change any of our assumptions. We would need to “wait it out” like we did for the past 3 months, and as soon as we could open again we would be sold out. We could build 4-6 more sheets of ice in the Bay Area and we would fill them.  Our customers and our community are passionate about ice sports, which appeals to a very wide demographic – a demographic that is young, diverse, family oriented, health conscious and educated. Our customers are split 50/50 male and female, and more than 50% are under the age of 18.  Ice sports are unique, in that they are not weather-dependent, and anyone can participate (2 yrs. old or 70 yrs. old.)  Of all the 4 major sports, it has been proven and documented that ice hockey has by far the most loyal fan base of all. There is no reason to believe it would change now.  The Sharks owner has proven to be one of the most loyal and dedicated owners of any professional sports team in this country.  He has already proven that he is steadfastly dedicated to keeping the Sharks in San Jose.  Now he has also proven his loyalty to his employees, by paying all full time and part time employees during this downtime; we did NOT furlough or layoff any employees.  Like others, we also believe that the combination health protocols, testing, contact tracing, medical treatments, education, and vaccines will help reduce the risk of repeated Shelter in Place cycles.

4. How does COVID-19 affect our Expected Operations for the 2020-21 Hockey Season?  As indicated above, when the County moves into Stage #3 (which could be in the next 30 days), we expect that our recreational ice business will be able to operate at full capacity, including all of our recreational leagues.

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 Regarding the Sharks/Barracuda practices at the Ice Centre, in the summer, we don’t sell/allocate any regular ice to the teams as it is their normal break, so there is no economic impact.  It should be noted that the NHL and AHL have seasonal reserved practice ice which makes up a very small percentage (2%) of total revenue for S4A annually.  For the professionals, there are 2 major considerations moving forward for the NHL/AHL.  #1 Finishing the 2019/20 season – The restart of the NHL season is scheduled to begin in early July for the 24 teams that have qualified for the post season (Sharks are not a part of this group). The goal for the NHL is to finish their playoffs and award a champion in late summer or early fall of 2020.  #2 Start a full 2020/21 season – We are anticipating the leagues (NHL/AHL) will start up again in late November (after Thanksgiving) with the intent to start their full 2020/21 regular seasons in December (which could be with limited or no fans). This does not affect S4A as the Sharks and Barracuda use very little ice as outlined above.

5. Why Now? Why Not Delay the Project?  In partnership with the City, we have worked at this project for over 4 years. The project is fully baked and ready for ground-breaking. In order to realize a return on all the time, effort and money that has been invested by the City and Sharks, the project needs to proceed now.  The project design team has completed most of the drawings and specifications for the project; plan check is nearing completion; and demolition permits are almost ready. These plans and permits would be stale if we delay the project.  We have a solid partner in Devcon Construction – they have worked incredibly hard to obtain fixed bids for a Guaranteed Maximum Price (GMP) that is financially sound in all scenarios of the Feasibility Study. Devcon cannot hold the GMP if we do not start pre-construction and demolition activities by August.  We have entered into numerous contracts for the project, with the expectation based on Council hearings that the bond financing would occur within a few months after approval of entitlements, and we would be able to start construction by this summer.  The multiple prime contracts that the Sharks and Devcon have secured represent pricing for over 50% of the construction costs for the project, including for mechanical, electrical, plumbing, sprinklers, pre-engineered metal buildings and ice making equipment. This equates to $50M+ of the GMP. Further delays will jeopardize product availability and project cost.  The Sharks and Devcon have also secured steel for the project to ensure product availability and pricing. Delaying the project will result in increased costs or significant restocking fees.  We also need to retrofit Rink 3 now, which is already 21 years old, and by doing that work while adding Rinks 5-6 there are economies of scale which provides significant cost savings.  To date, not including legal and management expenses, the Sharks have advanced over $6M for the project, and need to obtain financing in order to cover those expenditures.  Interest rates are at record lows. If we cannot start the project this summer, we may not ever be able to take advantage of this financing opportunity.

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 The project will provide a needed economic boost to the City and its residents. The expansion will provide hundreds of construction jobs over 2 years, which is greatly needed to counter-act job losses coming out of COVID-19.  Finally, it is crucial for us to maintain a construction start this summer in order to achieve completion in time to host scheduled events for the 2022/23 season as described below.  We have already anticipated the possibility that there may be future construction restrictions related to COVID-19, and have built contingencies into the project schedule to ensure that we will be able to complete the project on time.

6. What Events are Planned in the Existing and Expanded Facility?  We will continue to offer events no different than in years past. In January we are hosting the US Figure Skating National Championships at SAP Center and S4A. In March we are hosting USA Hockey’s National Tournament at S4A. Both events will add significant hotel room pick up and provide much needed economic impact for our City.  For the expanded facility, we currently have been awarded the NHL Rookie tournament (6-8 NHL teams) in September of 2022. This will result in 1000+ hotel room nights per night over a 5 day period. However, if the start of construction slips past August, we may be unable to host the event unless we can guarantee timely completion (which may require additional costs).  There are a number of other events we plan on bidding for, both during and post construction – U.S. Curling Championships, U.S. and National Figure Skating events, and AHL All Star Game, just to name a few.  The above events are in addition to the AHL home games, but to be able to schedule AHL home games in the new rink for the 2022/23 season, we need to guarantee completion by August 2022. A construction start (demolition) by August will enable us to meet that deadline without increased costs that would be required to pay overtime and extra work if we are forced into a shorter schedule.

7. What Financial Protections and Assurances are Being Offered to the City?  As indicated above, the Sharks have made significant financial investments in this project that highlight our commitment to extend our partnership with the City for decades to come.  More importantly, we have agreed to unparalleled financial protections and guarantees that insulate the City from risk on a number of levels. The Council approved financing term sheet contains numerous significant protections to ensure that the City’s general fund will not be at risk for repayment of the bonds, even if operating revenues are reduced due to a recession or any other reason.  Under the new Ice Centre Lease (which incorporates the Expansion Agreement), Sharks Ice will make rental payments regardless of any epidemics, civil rights protests or other “Force Majeure” events.  The only exception is that if the City is entitled to abatement of payments under the bond documents because the building is damaged, then Sharks Ice would also be entitled to an equivalent abatement of rent.  The Ice Centre Lease would be extended as necessary to make up the abated rental amounts, as calculated by the Director of Finance.  Sharks Ice will also maintain a Letter of Credit in the amount of 2 years’ worth of Base Rent, until such time as other financial assurances or milestones are achieved (as specified in the Ice Centre Lease).

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 Finally, Sharks Sports & Entertainment (SSE), as the parent company of Sharks Ice (and the parent of San Jose Sharks and San Jose Arena Management) will provide a continuing, unconditional guaranty of all of the Sharks Ice payment obligations under the Ice Centre Lease, without exception. Under this, the City can make demand on SSE directly, without legal process, for payment of any rents, costs, charges or other sums that are due under the Ice Centre Lease.

8. What are the Economic Advantages to the City for Proceeding with this Project?  This project will result in many other significant positive economic impacts to our community by securing new events for the City, providing jobs, and contributing direct income to the City  We have been actively pursuing new large events for the expansion as there is a long runway to secure these National Governing Body events. For example, we have an RFP for the 2023 U.S. Curling trials. All these events will bring significant TOT dollars to the City.  The project will use 20+ different contractors and will have an average of 150 workers on site daily during the 2-year construction of the project.  This project will produce a significant amount of jobs for our community once in operation.  New full-time jobs created – 12 FT jobs created  New part time jobs created – 231 PT jobs created

Final Thoughts:

We have done everything asked of us to ensure substantial protections and benefits for the City, the local trades and the community, with no downside risk to the City. For example, in addition to being the first project to be subject to the new Feasibility Study requirement for bond financing, we were the first project to sign up for the City-wide Project Labor Agreement. As another example, we agreed to pay the City a finance charge estimated to exceed $19M over the 30-year bond term (a present value of over $10M) – which funds will be deposited into a Capital Reserve owned by the City.

Approval of the financing for this project by August will further the successful relationship between the Sharks and the City for another 30 years with unparalleled financial protections. It’s good for the Sharks, good for the City, and good for the community.

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