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Feasibility Study for the Addition to Ice Arena Inventory in the South Surrey Region Prepared for: Semiahmoo Minor Hockey Association, January 2013
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Contents 1.0 Summary of Analysis and Recommendations Page 4 2.0 Regional Market Demographics and Demand Analysis Page 7 3.0 Regional Arena Supply Analysis Page 9 4.0 Ice Arena Space Program and Facility Considerations Page 11 5.0 Ice Arena Capital Cost and Operating Cost Considerations Page 12 Option A -‐ SMHA Conversion of a Decommissioned Curling Club into a Mini-‐Arena Page 14 Option B – Surrey Region Hockey Associations form a Not-‐for-‐Profit Society to Assume
an Existing Single Ice Sheet Facility Page 16 Option C – Surrey Region Hockey Associations Capital Campaign to Add a Sixth Ice Sheet
at Surrey Sport and Leisure Centre Page 18 Option D – New Ice Sheet in Region Delivered by Developer Mixed-‐Use Project or
Post-‐Secondary Partner Page 20 Option E -‐ Surrey Region Hockey Associations Capital Campaign to Build a Rigid-‐Framed
Fabric Structure on Land Leased from City of Surrey Page 22 Disclaimer This document is confidential and for the internal planning purposes only of the Semiahmoo Minor Hockey Association. This is a strategy report for the purpose of identifying opportunities and risks associated with potential development directions. The consultant, David Hewko Planning and Program Management believes the information herein to be accurate but by its nature is subject to change, and therefore the consultant is absolved of any responsibility for the use of this information.
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1.0 Summary of Analysis and Recommendations The purpose of this report is to identify and investigate the practicality and cost viability of potential means of creating additional ice time inventory in the Surrey -‐ White Rock region, through the development or redevelopment of arena facilities. Overview of Findings Demographics and Demand Decline in the 5 to 17 age group population factored with a changing ethnic profile suggests soft growth projections for the future. Municipalities evaluate demographics to determine the most appropriate and balanced responses to community needs. Given the low overall participation rate in hockey, the only new arenas will likely only be replacements for aging or single-‐pad buildings. As a region, Surrey and White Rock combined population has doubled since the last new arena was constructed in 1999. Demographics for the 5 to 17-‐age cohort remained constant at 9.6% from the mid-‐1990s to 2012 -‐ increasing in real numbers from about 28,000 in the late 1990’s to the current 46,000 in 2012. However since 1972 the 5 to 17 age group has declined from 24.9% of the total population to a forecasted 7.3% for 2022. There are over 1,000 young hockey players registered with the Semiahmoo Minor Hockey Association based in White Rock, B.C. Of that number, about 100 are actual residents of White Rock with the remainder mostly from South Surrey. In total, there are four minor hockey associations in the region with a combined total of about 2,700 minor hockey registrants. In the 5 to 17 age group in the region, there are about 46,000, meaning current registrations translates into a 5.8% participation rate in hockey, lower than the national average. While a few kids are turned away each year, about 370 additional players constitutes sufficient demand for 100% of prime time, the tipping point for adding another arena. Regional Supply Registration data from the 1970’s is incomplete but it would appear the present is considerably better served than the past. In 1972 there were 3 ice sheets in the region serving 35,000 kids, or 1 sheet per 12,000 kids. In 2012 there are 11 sheets serving 46,000 or 1 sheet per 4,200. Many factors have changed though, including more hours per player per week, other users competing for ice time and probably most significantly the growth in demand in female hockey and adult hockey. In White Rock specifically, there are 1,900 in the 5 to 17 age cohort and only 100 registered in hockey which translates into a 5% participation rate and 1 ice sheet per 1,900 kids. The four associations utilize subsidized ice time at eight ice sheets at five City of Surrey arenas, plus one sheet at Centennial Arena in White Rock and purchase additional time at a private facility, Excellent Ice in Surrey. Roughly 50-‐60% of prime ice time in most of the arenas is set aside for minor hockey. Adding an additional arena would increase available desirable prime time hours, but would also add about 10-‐12% to the overall inventory thereby reducing the revenues to all existing ice sheets by the same amount. In other words, it is better from the municipality’s perspective to manage unmet demand rather than excess supply. While there are scheduling and access to ice time problems in the region, there isn’t sufficient pent-‐up or unmet demand in the region to trigger the construction of very costly additional ice sheets beyond those
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proposed and funded by Surrey for construction in 2015-‐2016. What is less certain is the fate of the two oldest single-‐sheet facilities, Newton and Cloverdale in terms of how they fit into the long-‐term service delivery strategy. The best outcome with no cost to minor hockey would be the private development of a market-‐rate adult hockey facility in the region which would redirect the adult demand and reduce the added competition for the finite supply of prime and Off-‐Prime ice times in all existing municipal arenas. Capital and Operating Cost Arenas are added in increments of over 30,000 square feet and considerable cost starting at $8-‐10 million. For the City of White Rock the cost for a single pad addition would be additional $100 per year per household in property taxes. Surrey, with over twenty-‐times the population base the cost is much less. The main impetus for building new arenas aside from responding to increased demand, is mostly based on the efficiency of operating cost recovery, including staffing (about 50% of the total cost), energy use (about 25%) and maintenance, repair and overhead costs (25%). Multi-‐sheet facilities are more economical to operate than older single-‐pad arenas that are gradually being phased out. An arena facility will cost in the range of $9-‐10 per square foot per year to operate, for a twin ice facility this would amount to about $450,000 to $550,000 annually. Revenues need to correspond to this for sustainable break-‐even operation. Evaluation of Options Given that from the standpoint of the owners and builders of recreation facilities, the municipalities do not believe adding net additional ice arenas in the region is a priority or in White Rock even financially possible, alternatives should be considered. Five of the best possible options have been investigated and evaluated.
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Recommendations Given the fiscal climate and the soft demand projections for the future, it is highly unlikely the City of Surrey would commit to building any more arenas than those identified in their capital plan. In the City of White Rock, with a tax base of only about 6,000 households, the cost of adding an arena is prohibitively expensive to serve the needs of only about 100 families. There are however, several courses of action open to the Semiahmoo Minor Hockey Association in its desire to add more ice time for hockey in the region. In descending order in terms of cost, risk and probability of attainability:
1) In direct competition with adult hockey, pay market rates for additional ice times, passing the added cost to particpants. Municipalities are unlikely to add more subsidized time due to lower cost recovery potential.
2) Should the curling club ever close due to financial hardship, the SMHA would have to appeal to the City of White Rock to covert the facility into a mini-‐arena and would likely need to fund the cost of conversion. The City would have to measure the proposal against other possible uses.
3) Should the City of Surrey decide to decommission the two aging single ice sheet arenas after the
new sheets are added to Surrey Sport and Leisure Centre, the four minor hockey associations should form a not-‐for-‐profit society to privately operate and extend the life of the aging arenas for as many years as possible. The City could sell the arenas (and lease the land) to the society for $1 plus the costs of essential upgrades.
4) Work with the other minor hockey associations to fundraise the cost of an additional new arena, sixth sheet at Surrey Sport and Leisure Centre or a second sheet at South Surrey. The City would own and operate the new sheet.
5) The four minor hockey associations identify and partner with a developer or post-‐secondary institution to create another arena in the region. Minor hockey would be the secondary users to the partners and capital funders of the project’s own needs.
6) Least desirable but possible would be a not-‐for-‐profit society independently building and
operating a rigid-‐frame fabric structure arena, similar to the soccer associations that build and operate indoor soccer centres across Western Canada. This is a less durable structure presenting greater risk and a shorter payback window.
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2.0 Regional Market Demographics and Demand Analysis Demographics As a region, Surrey and White Rock combined demographics for the 5 to 17 age cohort remained stable from 9.6% in mid-‐1990s to 2012, adding less than 20,000 more kids while the cities grew by 200,000. However since 1972 the cohort 5 to 17 declines from 24.9% of the total population to a projected 7.3% in 2022. Another variable is the changing multi-‐cultural aspect of new residents – almost all of the growth in what Statscan defines as ‘visible minorities’, from cultures not familiar or attracted to hockey.
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In terms of population to the number of ice sheets, the four associations utilize subsidized ice time at eight ice sheets at five City of Surrey arenas, one sheet at Centennial Arena in White Rock and purchase additional time at Excellent Ice in Surrey. Also competing for prime ice time (usually defined as 5:00 to 9:30 PM weekdays and all day weekends), are the Surrey Eagles BCJHL junior team, public staking, skating lessons, figure skating, ringette and adult hockey. Adult hockey consumes most of the off-‐prime inventory (late nights, daytime) and at market rates. Minor hockey also purchases a modest amount of additional ice time at market rates. There are no available hockey registration numbers from the 1970’s but it would appear the present is considerably better served than the past. Currently there are 2,000 kids in hockey out of a possible 46,000 or 4.4% participation rate of the 5 to 17 cohort. In 1972 there were 3 ice sheets in the region serving 35,000 kids, or 1 sheet per 12,000 kids. In 2012 there are 9 sheets serving 46,000 or 1 sheet per 5,000. If Excellent Ice, a private facility is included the count the number becomes 12 sheets or 1 per 4,000. Many factors have changed though, more hours per player per week, other users competing for ice time and probably most significantly the growth in demand in female hockey and adult hockey. Adult hockey in particular reflects an increasing retention of hockey players beyond their youth, coupled with an ability to pay market rates is inadvertently exerting pressure on the inventory of ice time available to minor hockey. Participation There are about 1,000 young hockey players registered with the Semiahmoo Minor Hockey Association based in White Rock, B.C. Of that number, about 100 are actual residents of White Rock and the remainder mostly from South Surrey. The overall registrations number has remained stable for the past five years adjusting for the subtraction of female participants who left to form their own association. There are four minor hockey associations in the region, Semiahmoo MHA, Surrey MHA, Cloverdale MHA and the Surrey Falcons Female Hockey Association with a combined total of about 2,700 minor hockey registrants. In White Rock specifically, there are 1,900 in the 5 to 17 age cohort and only 100 registered in hockey which translates into a 5% participation rate and 1 ice sheet per 1,900 kids if treated in isolation. There are 46,000 in the 5 to 17 age group, therefore 2,700 registrants translates into a 5.8% participation rate in hockey. This rate appears to have remained constant for over the past decade as the growth in female hockey in the region (and nationally), has offset the small but steady decline in male participation rate. Since the Surrey / White Rock region continues to experience rapid population growth real numbers have continued to increase over that time. Conclusion Fewer kids as a proportion of the total population factored with a changing ethnic profile suggests soft growth projections for the future. Municipalities pay very close attention to demographics and the appropriate and balanced responses to community needs. Given the low overall participation rate in hockey (as a percentage of total population), the only new arenas will likely only be replacements for aging or single-‐pad buildings. About 370 additional minor hockey players constitutes sufficient demand for 100% of prime time, the tipping point for adding another arena. Until the private sector provides more market-‐rate adult-‐focused arenas, access to more ice time for minor hockey will be a challenge.
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3.0 Regional Arena Supply Analysis Calculation of Time Inventory On the supply side, the nine ice sheets in the Surrey and White Rock region generates approximately 12,000 annual hours of prime time ice, usually defined as 5:00 to 9:30 PM weekdays and all day weekends. This is based on about 45 hours per week multiplied by about 30 weeks of ice time (early September to late April) and does not include any time purchased at the private Excellent Ice facility. Of this amount, about 60% or 7,000 hours is allocated to minor hockey and the balance apportioned to other activities and uses including public staking, skating lessons, figure skating, ringette and to a limited extent, adult hockey. Off-‐prime time is usually defined as the saleable late evenings or early morning timeslots. On the demand side, the 2,000 participants in the four minor hockey associations divided by 17 players per team means there are about 120 teams in the Surrey / White Rock region. If House league players (2/3rds of the total) are allocated about 2.5 hours per week and Rep league players (1/3rd of total) at least 4.0 hours per week, the blended average is about 3.0 hour per player per week. In concept this translates into about 7,000 hours annual hours. This suggests that all available prime ice time allocated to minor hockey is used, if not more without any margin or flexibility. Current Supply of ice Arenas The four associations utilize subsidized ice time at eight ice sheets at five City of Surrey arenas, one sheet at Centennial Arena in White Rock and purchase additional time at a private facility, Excellent Ice in Surrey. The ages of each facility is identified as well as the total inventory at each point in time.
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As mentioned previously, there is little information about hockey registration numbers from the 1970’s but it would appear the present is considerably better served than the past. In 1972 there were 3 ice sheets in the region serving 35,000 in the 5 to 17 age group, or 1 sheet per 12,000. In 2012 there are 9 sheets serving 46,000 or 1 sheet per 5,000. In 1972 there was an estimated 2,000 registered in minor hockey, comparable to the present time. What has happened is the total population has more than tripled during the intervening years, while the number of children as a percentage of the total population has decreased to almost one-‐third of its level in the 1970’s. Many other factors have changed as well, including more hours per player per week, other users competing for ice time including junior hockey at South Surrey and probably most significantly the growth in demand in female hockey and adult hockey. In White Rock specifically, there are 1,900 in the 5 to 17 age cohort and only 100 registered in hockey which translates into a 5% participation rate and 1 ice sheet per 1,900 kids. Economics Factors Influencing the Addition of Arenas Across Canada, single-‐sheet ice facilities are being de-‐commissioned and replaced at other locations by twinning, or even adding four, six or eight sheets. The reason for doing so is almost entirely to do with operating costs and specifically, staffing levels. Simply, a single-‐sheet facility requires about four full-‐time staff and a twin facility requires only five FTE’s -‐ a reduction or efficiency gained of almost 40%. Additional ice sheets also add minimal staff with diminishing returns. South Surrey Arena is the exception as a spectator venue seating about 1,240 and home to the junior Surrey Eagles. It could remain a stand-‐alone single-‐sheet facility though the site appears to be large enough to accommodate twinning. New arenas cost between $8 and $10 million with limited spectator capacity. Arenas with 600, 1,200 or more seats are considerably larger buildings and more costly. The cost of borrowing for long-‐term financing of new arenas is about $70,000 per year per million dollars borrowed (at an averaged 5% over 25 years). For the City of White Rock that would translate into an additional $100 per year per household in property taxes. For the City of Surrey, with over twenty-‐times the population base, the cost would be a fraction at about $5 per year per household. Conclusion While there are scheduling and access to ice time problems in the region, there isn’t sufficient pent-‐up or unmet demand in the region to trigger the construction of very costly additional ice sheets beyond those proposed and funded by Surrey for construction in 2015-‐2016. What is less certain is the fate of the two oldest single-‐sheet facilities, Newton and Cloverdale in terms of how they fit into the long-‐term service delivery strategy.
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4.0 Ice Arena Program and Facility Considerations Functional Program For the purposes of advancing proposals for a new arena twin or a new stand-‐alone arena, a functional space program describes precise area requirements as itemized below. All the spaces in the building would typically be on one level. A twin sheet added to an existing arena would be 30,503 gross square feet or 2,850 square metres and an entirely new twin facility would be 65,220 sf or 6,060 sm.
The spacelist above includes all commonly included amenities except for a lounge /restaurant / banquet facility. If one is desired, allow approximately 45 sf or 4.0 sm per seat. This would include seating area, kitchen, washrooms, circulation and building systems. Site and Parking Requirements The building footprint for a twin addition will require about 30,500 square feet. Allowing for fire lane access on three sides, minimum site area should be a minimum of 38,000 sf or 0.9 acres. Assuming an adult accompanying each of the players on two teams on the ice plus two dressing / undressing, officials and staff, up to 80 adults could be in building. Allowing 0.5 parking spaces per person would generate 40 stalls, requiring an additional 14,000 sf of site area for a combined total of 52,000 sf or 1.2 acres. A new stand-‐alone twin facility would require about 75,000 sf for building and surrounding, plus 28,000 for parking for a combined total of 103,000 sf or 2.4 acres (0.9 hectares).
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5.0 Ice Arena Capital Cost and Operating Cost Considerations Operating Costs While capital cost is the stumbling block for making arena replacement decisions, operating costs are the growing problem that eventually forces action and a decision. As mentioned previously, all across the country single-‐sheet ice facilities are being de-‐commissioned and replaced at other locations by twinning, or by creating new four-‐plex, six-‐plex or even eight-‐plex complexes. In a very few situations where population is declining as well as a falling 5 to 17 age cohort, the single-‐sheet facilities are being closed without replacement. The main reasons for decommissioning the single-‐pad facilities is almost entirely based on operating costs, including high maintenance and repair costs, higher energy-‐usage costs and perhaps most significantly, staffing levels. Most single-‐sheet facilities in Canada are about forty years old, typically the near the end of a building life expectancy. At forty years the building envelope, mechanical systems, plumbing, lighting and electrical systems will fail and functional obsolescence such as small dressing rooms and narrow corridors become problematic. Repair and maintenance costs begin to increase exponentially. Older buildings are also less well insulated and the mechanical systems are not as efficient as contemporary systems. The result is higher energy costs, in some cases as much as twice the cost of a new buildings of the same size and volume. The biggest factor is staffing, which typically makes up 50% or more of annual operating budgets for an arena facility. By way of example, a single-‐sheet facility requires four full-‐time staff but a twin facility requires will only require five FTE’s -‐ a reduction or efficiency gained of almost 40%. Fewer underutilized ticketed tradespersons are required, as well as management, bookings staff, concessions, custodial and security now shared between two side-‐by-‐side pads. For planning purpose a newer and efficient arena facility will generate operating costs in the range of $9-‐10 per square foot per year. For a twin ice facility this would amount to about $450,000 to $550,000 annually. This amount then becomes the revenue target and any shortfall necessitates subsidization from the City. Assuming about $90 per hour from minor hockey multiplied by 2,600 annual prime time hours with a twin-‐sheet facility, would generate about $235,000. Add to this about 1,200 annual off-‐prime time sold to adult hockey at about $220 per hour, generating an additional $265,000 for a combined $500,000 per year. Added to this are marginal profits from concession sales, skate shop, rinkboard and signage advertising. An on-‐line survey of subsidized rates charged to minor hockey and market rates charged to adult hockey and other users were found to be in line with what other municipalities were charging or were more favourable. Assuming 100% of Prime time is sold at the subsidized rate and 100% of Off-‐Prime time is sold at the higher market rates, a twin arena complex can break even. The importance of the Off-‐Prime time revenues cannot be overstated. Over-‐supply of ice time in a region means the adult market will shift to arenas with better time slots and unsold capacity will exist without generating revenue.
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Capital Costs New arenas will cost between $8 and $10 million with limited spectator capacity. The range depends on quality of construction with pre-‐engineered steel structures at the low end (30-‐year expected life) and more durable institutional-‐quality buildings (40-‐50 years) at the higher end. Arenas with 600, 1,200 or more seats are considerably larger buildings and more costly. Some marginally lower cost options exist (see Option E) but are less proven and less common and have a shorter expected service life. In terms of square foot costs estimates, arenas can be expected to cost about $200 to $275 construction, depending on construction type. Multiplied by the gross building area arrives at the base construction cost. To this amount can be added site servicing costs, site development and parking costs, landscaping, FF&E (furniture, fitting and equipment), hazardous materials removal, geotechnical remediation and other hard costs that can add 10-‐20% to a project cost. An additional 25-‐30% is added in the form of soft costs including design and engineering fees, permits, licensing, project management, construction financing and contingency allowances determines the total project cost. There are also different types of construction delivery processes that can impact pricing. The cost of borrowing for long-‐term financing of new buildings is about $70,000 per year per million dollars borrowed. This is based on an averaged 5% interest rate and an amortization period of 25 years. For the City of White Rock that would translate into an additional $100 per year per household in property taxes for a single ice sheet. For the City of Surrey, with over twenty-‐times the population base, the cost would be a fraction at about $5 per year per household and doubled for a twin facility. Conclusion Arenas can only be added in very large increments and expense of $8-‐10 million. For the City of White Rock the cost for a single pad addition would be additional $100 per year per household in property taxes. Surrey, with over twenty-‐times the population base the cost is much less. The main impetus for building new arenas aside from responding to increased demand, is almost entirely based on the efficiency of operating cost recovery, including staffing (about 50% of the total), energy use (about 25%) and maintenance, repair and overhead costs (25%). Multi-‐sheet facilities are more economical to operate than older single-‐pad arenas that are gradually being phased out. An arena facility will cost in the range of $9-‐10 per square foot per year to operate, for a twin ice facility this would amount to about $450,000 to $550,000 annually. Revenues need to correspond to this for sustainable break-‐even operation.
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Option A Overview Should one of the region’s curling clubs suspends operations due to declining membership and financial hardship, the opportunity exists to convert the facility into a mini-‐ice arena. One hypothetical example would be Peace Arch Curling Club, a four-‐rink facility at Centennial Park in White Rock. The only other curling club in the region for possible conversion is the Cloverdale Curling Club (same dimensions). The potential for this option only becomes possible due to the closure of the club. Practical Considerations Simple conversion from one ice use to another, with dasherboards and glass added along perimeter walls. Two modest ‘saddlebag’ additions would be required and existing rooms converted into four small team rooms, plus referees room. The saddlebags would allow ice to be maximum size by placing on one side team benches, spectator seating and a zamboni area outside of the perimeter structural columns, and on the opposite side a small addition for officials and penalty boxes. Additions shown toned in grey below.
Aerial view of Centennial Park with building roofs removed View from southwest showing Peace Arch addition in grey
Advantages • Another 1,500 annual hours of rentable prime time ice created in the region • Creation of a mini-‐ice allows younger age groups to shift over freeing up more and more desirable timeslots of older age groups in the adjacent Centennial Arena
• The ‘twinning’ of Centennial Arena would be a more operationally economical solution than two single-‐sheet ice facilities in separate locations
• Conversion of curling rink would be less contentious than the removal of heritage trees and infringement on other park users and uses by creating a new ice pad
• Ice off-‐prime time would also be saleable to adults for three-‐on-‐three hockey • Of alternative uses for a decommissioned curling club, ice rentals would likely provide the best revenues • Cost effective adaptive re-‐use solution
Interior view of addition with benches and seating
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‘Saddlebag’ additions to Peace Arch Curling Club
Disadvantages • Non-‐regulation ice inside dimensions would be 168’ x 58’ or a 1:2.83 ratio versus a conventional 1:2.35 of an NHL-‐sized rink and would not be acceptable for competition, rep hockey or tournament use
• Concept contingent on cessation of the Peace Arch Curling Club, current status unknown • Concept contingent on the City of White Rock converting a decommissioned curling rink into an additional ice facility over alternatives serving other sport groups such as gymnastics, gymnasium sports (basketball, volleyball, badminton) or indoor turf sports (indoor soccer, rugby, field hockey, lacrosse)
Capital Cost Order-‐of-‐magnitude capital cost for +/-‐ 2,000 sf ‘saddlebag’ additions would be in the range of $300,000, plus dasherboards and scoreboards for an additional $150,000. Soft costs and costs for modestly converting existing rooms into team rooms, any lifecycle maintenance to the building and an ice re-‐surfacing machine not included. Amortization cost of $450,000 over 25 years would be about $31,000. Amortized over 10 years the same amount would cost $57,000 per year. Operating Cost Recovery Order-‐of-‐magnitude operating cost would be in the range of $145,000 per year largely benefitting from the sharing of facilities staff with the adjacent existing arena. For cost recovery, this would translate into a prime time rental rate approaching $100 per hour, reduced by off-‐prime and dry-‐floor revenues. Timing Entirely dependent upon cessation of operation of the Peace Arch curling club due to declining membership and/or financial hardship. Addition of the saddlebags and dasherboards could occur over one summer, with exterior construction beginning at any time.
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Option B Overview Surrey Region Hockey Associations collaborate to form a not-‐for-‐profit society to assume management and operations of one of the existing single ice sheet facilities: Newton Arena or Cloverdale Arena. The City of Surrey has identified capital for the addition of two new ice sheets for the Surrey Sport and Leisure Centre (Fleetwood) ostensibly as replacements for the aging single pad facilities. This would result in a negligible increase in ice inventory in the region unless an alternative strategy to extend the life and use of the old arenas is proposed. This option is a 10-‐year strategy assuming the building life of one or both buildings can be extended without significant capital outlays. Over the next ten years demand will either continue to decline to correspond with supply or a new strategy will be required. Practical Considerations A newly created not-‐for-‐profit entity would create a board of directors with representation from each of the minor hockey associations. The society cooperative would need to raise sufficient funds to post a bond and/or create a sinking fund to deal with operating shortfalls and, maintenance and repairs. The City of Surrey would turn over the arenas to the society, but the City would retain the land in perpetuity. Labour succession rights would have to be lapsed for these facilities allowing for lower cost, non-‐union staff. A precedent for this model can be found in most curling facilities across Western Canada. It is possible but unlikely the City would extend a partial operating subsidy to the old arenas as the current recreation budgets would like be shifted to the operations of the new ice sheets at Surrey Sport and Leisure Centre. A full business plan and sustainable model for operations would have to be developed and presented to the City. The bond issue would be in essence the sale of transferable shares that minor hockey families would be obligated to acquire. Assuming about 1,600 households between the four hockey league (Surrey, Cloverdale, Semiahmoo and the women’s association) and assuming annual operating cost of one arena is about $250,000, a cost of $150 per participant would yield a trust equal to one year’s operations.
Newton Arena (b. 1976) Cloverdale Arena (b. 1986)
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Advantages • A net increase of almost 1,500 prime time hours per arena is possible, plus off-‐prime inventory • The society will have automous control over bookings and scheduling • The new Not-‐for-‐Profit Society and its board would assume management and operations of the facilities at virtually no start-‐up cost or at least no capital cost
• The Not-‐for-‐Profit Society will have to hire or contract management and operations staff that can be augmented by volunteer staff (office functions, custodial, control and security) potentially reducing the labour component of operating costs by as much as 50% and overall operating costs by 25% compared to City-‐operated facilities with labour succession
Disadvantages • Two net additional ice sheets will impact the higher revenue yielding off-‐prime time rentals that are vital to sustainable operation of all arenas. While more ice is desirable for users, too much prime time ice means softer demand and necessitates higher rates to recover costs or creates a price-‐war
• The Not-‐for-‐Profit Society will have to raise sufficient funds to satisfy the City that it will not be seeking annual subsidies
• The Not-‐for-‐Profit Society will have to hire or contract facility management and operations staff and be responsible for those costs and benefits
• The society will be responsible for acquiring insurance and assuming other operating overheads as the cost of business
• The society will be the ‘owners’ of the oldest and least desirable ice sheets in the region, making the sale of unused ice time more difficult
• Cloverdale Arena is located at the Cloverdale Fairgrounds that has been discussed as a possible site for a multiplex and mixed use / enteratinment district redevelopment that does not include an ice arena(s)
• Requires buy-‐in from all groups and the new entity assumes full risk and liability • The City of Surrey may have rules and bylaws precluding the transfer or disposal of assets, or may have other plans in place
Capital Cost A technical evaluation of the buildings would be required to determine the condition and remaining building life Operating Cost Recovery Order-‐of-‐magnitude annual operating cost for the society would be in the range of $250,000 per ice sheet, lower than the cost of operation of a single-‐sheet facility with City staff. Savings would be most significantly around the cost of labour, but the society may also be able gather donations and in-‐kind contributions. The greatest risk Timing Post-‐2016 when the new ice sheets have been added to Surrey Sport and Leisure Centre. This creates a window of 3-‐years to establish and organize the entity, raise the bond or trust, make a proposal to the City and for the City to conduct it’s approvals process.
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Option C Overview The Surrey region Minor Hockey Associations would have to collaborate and form an entity to create a capital campaign to raise $7-‐9 million to add a sixth ice sheet at Surrey Sport and Leisure Centre (Fleetwood). Currently, the City of Surrey five-‐year Capital Plan has identified $16 million for the design and construction of a fourth and fifth ice sheets at SSLC that strategically should be replacing two aging and inefficient single ice-‐sheet facilities. Adding a sixth sheet concurrent to the other additions would yield a modest savings in construction and operating cost due to economies of scale. A possible alternative location might be adding a community rink next to the spectator arena at South Surrey. Practical Considerations Raising a substantial amount capital by the four hockey associations will be difficult, especially in the current economic climate. Most recreation facilities in Canada require annual subsidization as sustainable operation cannot be covered by revenues alone -‐ let alone debt repayment. The 25-‐year amortized cost of $8 million would be $560,000 per year at an averaged rate of 5%. Higher levels of government than the City typically will only make capital contributions for games events such as Canada Winter Games, pre-‐international Winter Olympics qualifying event venues, or other types of legacy facilities. Private or corporate sponsorship is a possibility but a challenge in the current economic climate. School District 36 has a hockey academy currently operating at Centennial Arena in White Rock, but school districts cannot be expected to be capital partners.
Aerial view of the Surrey Sport and Leisure Centre site
Advantages • Net addition of 1,500 annual hours of prime time, plus off-‐prime time in a new arena • Highest efficiency and economy of operations with a large modern facility • Convenience of consentration of six ice sheets in one location simplifying travel for families Disadvantages • Major capital fund-‐raising commitment by four separate hockey associations • Facility would be owned, operated and controlled (including books and rates) by the City • Risk of creating an over-‐supply of ice time in the region creating a significant cost burden to the municipality that would be passed on to users
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• SSLC site while large, may not be able to support the additional building footprint and parking requirements generated
Capital Cost The 25-‐year amortized cost of $8 million would be $560,000 per year at an averaged rate of 5%. This works out to $350 for every hockey player in the four associations. Operating Cost Recovery Order-‐of-‐magnitude operating cost would be in the range of $250,000 per year that for break-‐even operation will require commitment by minor hockey to purchase 100% of prime time at current rates and adult hockey or minor hockey to commit to about 750 hours at the premium rates. Timing Should be realized by 2015-‐2016 to potentially occur as part of the planned and budgeted expansion.
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Option D Overview New ice arena in region delivered by a private developer as part of a mixed-‐use or entertainment precinct project, either as an attraction or through absorbing a portion of the cost as a development cost charge (DCC). Alternately, an arena could be included as part of a recreation centre serving a post-‐secondary institution. In both cases, arenas delivered this way are an indirect, not direct solution to ice supply issues. Practical Considerations In a number of locations throughout the United States and in Canada, developments including hotels, restaurants, shopping centres, theatres and casinos can will include an arena as a means of creating a large venue for hosting concerts and other performance events as well as trade shows and conferences. Major events will be the prime tenant in an arena component and typically will consume blocks of time, days or a week or more, negatively impacted scheduled rentals like hockey. Much of the trade and convention industry is scheduled in the winter, competing with not complimenting hockey use.
Examples: a dated concept for Fraser Downs, and for a South Surrey Entertainment Complex currently under review
Lower Mainland post-‐secondary institutions such as Simon Fraser University, a university without an arena on any of their campuses as with Kwantlen Polytechnic University, could be potential partners. Recreation centres are non-‐instructional facilities and are typically funded by endowments and/or directly by students with a levy on fees, but not funded by the province. Much of the influence in the decision to build a student recreation centre will lie with the student union and the athletics and recreation departments. Post-‐secondary institutions will want to preserve blocks of prime time for varsity and recreation use as well as potentially daytime for instructional purposes and dry-‐floor weeks for exam writing end of terms.
Kwantlen Polytechnic University and Simon Fraser University are two post-‐seconday institutions with campuses in Surrey
In both cases, a new arena is not the focal point of the development but is an attractive amenity. Also in both cases, the community hockey user will be the secondary user taking whatever residual time is offered for sale.
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Advantages • As an indirect solution to the regional ice supply problem, it comes at the lowest capital cost and risk if any to minor hockey or to the municipality
• The new developer arena and inventory of ice time would likely be sold at adult permium market rates and not affordable to minor hockey – but adult renters in other arenas would be attracted to the new facility thereby freeing additional prime and off-‐prime time in existing arenas.
• Post-‐secondary institutions experience comparatively low usage of ice arenas and often consider extending access to the community as their gesture of inclusion and openess. Some subsidized time may be made available to minor hockey, but likely cost recovery will be a consideration for the institution so the same argument as above may apply.
Disadvantages • Sporadic and abrupt changes to scheduled rentals and higher rental rates of between $350 to $450 per hour for the developer arena. Same with the post-‐secondary arena but rates may be potentially lower or competitive with City adult prime time rates of $175 to $225
• New facilities will be located to suit the criteria, resources and needs of the owners • The new arena would be focused on multi-‐use and not primarily hockey Capital Cost As a beneficiary of surplus time sold to the market place there would be no capital cost but also no voice at the table per se. As a significant and influential partner, a contribution of at least $1.0 million capital. This amount could be spread over time in the form of a commitment to a contribution of 1/10 each year over ten years (in addition to paying rent) for example. Operating Cost Recovery A revenue commitment at market rates by minor hockey for operating cost recovery to the pro-‐rated share of available ice time. Timing Develop projects will take five years or longer as the process is complicated. Post-‐secondary decisions may involve student referendums and approvals process within the institutions, also requiring 3-‐5 years.
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Option E Overview The Surrey region Minor Hockey Associations would have to collaborate in a capital campaign to fund-‐raise about $5-‐6 million to build a rigid-‐framed fabric structure arena on land ‘leased’ from City of Surrey. This amount is considerably less than conventional construction alternatives. Ideally if this facility could be twinned (with an adult hockey partner) or paired with a second sport partner facility such as gymnastics or indoor soccer better operational performance could be expected through economies of scale. This option is a shorter-‐term strategy (generally 20 years) than a permanent building (40 years) or even a pre-‐engineered metal building (30 years). History of the building type tells us, the outer skin will have to be replaced every 10 years at a significant cost. Practical Considerations The structure should be of the double-‐skinned insulated rigid-‐framed type and not an air-‐supported structure (‘bubble’) that relies on mechanical pressurization and consequently has poor insulation characteristics to minimize weight. There are numerous manufacturers in Canada but the most prolific builder of these structures is Sprung Structures of Calgary. Some products can be constructed with flat gable ends, but the Sprung structures rely on rounded ends for lateral stability. All of these structures are column-‐free with high peaks at mid-‐point. Sprung has also developed a rigid-‐panel material used to an eight-‐foot height in arenas to deal with the heavy wear and tear. Locker rooms and support spaces are constructed as buildings-‐within-‐a-‐building. Slab and ice mechanical would be the same as in a permanent building. Rigid-‐frame structures have made great strides in increasing insulation values reducing energy loss/waste and consequently operating costs. This is less of an issue in the Lower Mainland climate zone.
Interior view of a rigid-‐framed fabric ice arena structure Typical exterior view of a RFFS arena with rounded ends
Advantages • Additional ice surface in the region would add 1,500 hours of prime time • Facility would be owned, operated and the schedule controlled by the society and its staff • Construction schedule about half of conventional construction • Construction cost 25-‐33% lower than conventional construction or pre-‐engineered
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• Structure could be relocated, except for foundation and slab
Typical plan view (from the Sprung Structures website) of a RFFS single pad arena (a twin would be adjacent or by added length)
Disadvantages • The City of Surrey would still have to provide the land, possibly at a cost • The City typically wouldn’t make capital decisions that aren’t long-‐term (i.e. quality of construction) and may view the RFFS as a riskier investment, consequently choosing not to endorse or in anyway support the project
• A potential over-‐supply of ice in the Surrey region would adversely impact usage of City arenas and subsequently budgets
• A sinking fund of about 3% of the value of construction would have to be set aside annual for the replacement of the outer fabric shell every 10-‐15 years
Capital Cost $4.5 to $6 million, not including site, site servicing and parking lot costs or indexing for escalation. Amortization cost would be $315,000 per year for 25 years at an averaged interest rate of 5%. Operating Cost Recovery Operated by a not-‐for-‐profit society with non-‐union and volunteer labour, order-‐of-‐magnitude operating cost would be in the range of $325,000 per year for break-‐even operation requiring minor hockey to purchase 100% of prime time at about 15-‐20% above City of Surrey rates and adult hockey or minor hockey to commit to about 750 hours at rates comparable to private facilities such as Canlan or Planet Ice. Timing Manufacturers claim ability to complete the project from design to opening in under six months, excluding land acquisition process and building approvals -‐ about 1/2 the time of conventional construction and 2/3 the time of erecting pre-‐engineered structures.
