ICE RINK?

A Commissioner tells

HOW

By John S. Wineman

(Editors note: Mr. John S. Wineman, Jr., is former Commissioner and former President of the Board of Commissioners of the Park District of Highland Park.

All municipalities are faced with a common problem in the area of recreation. New recreation programs and facilities are needed more than ever before. Yet, the dollars available for developing these facilities and programs are harder than ever to obtain by routine methods.

General maintenance and operating costs continue to rise and it is not possible to divert significant funds from existing activities to create new ones unless one is prepared to let existing activities suffer. Corporate funds do not normally provide sufficient resources to undertake large scale projects.

Real estate taxes are high and tax payers are, more often than not, reluctant to pass General Obligation bond issues for "non-essential" facilities. Revenue bonds are useful if bond purchasers are available. Often facilities don't have either the proven feasibility or projected ability to repay revenue bonds.

The dilemma exists: how can a community provide major new facilities if the routine financing alternative suggested above are not workable? The Park District of Highland Park encountered and solved this type of problem in a rather innovative way. An explanation of what the Park District of Highland Park did may be helpful to other communities who face this problem.

In 1968, a referendum was held to gain approval to sell general obligation bonds to construct an artificial ice rink. The Park District had sufficient land and needed only the funds to construct the facility. The demand for artificial ice was already apparent and the Park District was urged to hold the referendum.

However, the referendum was defeated by a margin of four to one. During our post-referendum discussions, we concluded that the referendum was not defeated because of the proposed facility, but because of a fear of increased taxes. There was agreement about the desirability of the facility but an unwillingness to pay for it with tax dollars.

The Park Board's desire to build an ice rink did not diminish. A decision was made to pursue this in a rather unconventional way. We would raise the money by the sale of revenue bonds to individuals. We studied a neighboring Park District's successful attempt to do this on a smaller scale and concluded that we could successfully sell the bonds.

After talking to architects, we obtained a rough cost estimate of $550-600,000. From the beginning, we impressed upon the architect, the need to build a first class ice surface and a complete facility for a minimum cost.

Before going further, we decided to ask a sampling of residents: "If a feasibility study produced positive results, would you consider purchasing a 6%, 20-year revenue bond, in the amount of $1,000 or more?"

We also asked for a non-binding committment to purchase bonds, with considerable success. Within a few weeks, in excess of 100 people had tentatively committed to the purchase of $200,000 in bonds.

A feasibility study proved positive and preliminary plans were developed with a cost estimate of approximately $600,000. A formal prospectus was prepared and mailed to every resident in the Park District. Included, was a subscription form and reply envelope.

Simultaneously, a Citizens Committee began urging support of this project and members of the committee, as well as Park Board Commissioners, became municipal bond salesmen. Contact was made with various groups and service clubs and within a few days after the prospectus had been mailed, the results began to develop.

Within a short time, we had obtained subscriptions for $250,000. Then, as quickly as it began, the activity subsided. Few voluntary subscriptions came in and most of the individuals who had originally given a tentative commitment had been heard from.

It was determined that the only successful method to complete the bond sale was to personally contact prospective purchasers. During the next six to eight weeks, the members of the Citizens Committee and Park Board contacted hundreds of people. By mid-summer, momentum had picked up and subscriptions for bonds totalling $725,000 were now in hand.

In the initial stages of bond sales, we asked each of the four local financial institutions to commit to an amount of bonds on an "if needed" basis. The agreement was to only use their commitment, or a portion of it, to make up an amount lacking between individual subscriptions and the total amount needed. The combined commitment was $75,000 and we only used $16,000.

The subscription forms required

Illinois Parks and Recreation 12 November/December, 1973

a non-refundable 10% deposit with the balance due just prior to delivery of the bonds. The deposit was necessary to insure that the subscription represented more than just casual interest. Deposit dollars were put in a savings account and bond purchasers would earn interest on the deposit until the bonds were delivered.

Upon total subscription of the bonds, final plans and specifications were prepared, bids taken, and contracts approved subject to availability of revenue bond funds. Not until this point, was final legal opinion given on the bonds.

This represented a difficult situation since bonds would not be issued without legal opinion, and counsel would not issue an opinion until contracts were approved within the limit of bond funds. This matter was resolved; bonds were printed and bond purchasers were notified of the balance due, less interest earned on their deposit. Two local banks, who were named as paying agents, acted as delivery points for bonds to be picked up.

Construction was begun in October of 1972 and the facility was opened May 13, 1973, almost exactly on schedule.

A preview opening was held for bond holders and their response was very enthusiastic. Since that time, several requests for bond purchases have been received but can only be honored if a seller can be found.

The bonds are 20 year revenue bonds with semi-annual coupons. All bonds carry a twenty year maturity date but a sinking fund, for scheduled annual repayment, is included beginning in the third year. Bonds to be retired each year will be drawn by lot and the Park District reserves the right to retire additional bonds if revenue permits.

When this program was undertaken, no one knew exactly what to expect. Highland Park is a community of 30,000 plus residents with a high median income. We were optimistic, but guardedly so. Bonds were offered in denominations of $500.00 and $1,000.00.

This was a big undertaking—but

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ICE RINK? . . .

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a worthwhile one. Highland Park has a major new facility without cost to the taxpayer. Bond holders have a good, tax-free investment and everyone will benefit. Some of the bond holders purchased bonds purely as an investment. Others looked upon their participation almost as if it were a donation. It was a good investment in their community, in the future of their children and in the interest of improved recreation.

Illinois Parks and Recreation 21 November/December, 1973