Review of the Rose Bowl Operating Company

City Manager’s Office

Review of the Rose Bowl Operating Company (RBOC) City Council February 3, 2014 (Finance Committee, Oct 28 & Nov 18, 2013)

Background City Manager’s Office

• The City of Pasadena has three operating companies > Rose Bowl Operating Company (RBOC) > Pasadena Center Operating Company (PCOC) > Pasadena Community Access Corporation (PCAC)

• Established by Title 2 of the Pasadena Municipal Code • Operate independently within parameters established by City Council > Municipal Code > Operating Agreements  PCAC’s is currently in development

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Creation of the RBOC City Manager’s Office

• May, 1991 Organizational Study of Arroyo/Seco Rose Bowl Department > > > >

Lack of management hierarchy Lack of essential business functions Lack of accountability and authority Options: 1) Status quo, 2) Not-for-Profit, 3) Contract-out

• September, 1991 Analysis of Operating Alternatives • November, 1991 Financial Operations Review 3

Creation of the RBOC City Manager’s Office

• September, 1992 Council approves in concept • September, 1993 Council approves ordinance • May, 1995 Operating Agreement between City and RBOC executed • Purpose and Function of the RBOC: > “…to return economic and civic value to the City of Pasadena by managing a world-class stadium and a professional quality golf course complex in a residential open-space environment.” (P.M.C. 2.175.110)

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RBOC Operations City Manager’s Office

• FY14 operating budget $32.4m, 24 FTEs > Number of FTEs compares well to other stadiums > Employees are “at-will” but participate in CalPERS > Salaries compare favorably to comparable City positions > Lower overhead than City departments; no cost allocation except for charges from City Attorney’s Office

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RBOC Oversight City Manager’s Office

• Appointment of RBOC Board. Pursuant to Pasadena Municipal Code Chapter 2.175.030 The RBOC’s thirteenmember board is appointed as follows: > 1.Each Councilmember and the mayor shall nominate 1 member of a total of 8 members. > 2.The Mayor shall nominate 1 member from persons recommended by the 7 Councilmembers and 1 member who is a voting member of the City Council. > 3.The Tournament of Roses Association shall nominate 1 member. > 4.The City Manager, or his/her authorized representative at the election of the City Manager by written notice to the City Clerk, shall be appointed. > 5.The Chancellor of the University of California, Los Angeles shall nominate 1 member. > 6.All nominations, except the City Manager, or his or her authorized representative, are subject to ratification by the City Council.

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RBOC Oversight City Manager’s Office

• The qualifications for board members is set forth in Section 2.175.040 subsections A and B, as follows: > A. All seven members nominated by City Councilmembers shall be residents of the city, and the members nominated by Councilmembers from Districts 1 and 6 shall be residents of those districts, respectively.

> B. Each member shall have recognized competence and wide experience as evidenced by but not limited to any of the following fields: banking; financial services; venture capital; real estate development or financing; real estate leasing and/or property management; senior management of a business; project management; accounting; business law; economic development; community service. Considered as a whole, the board should reflect experience in all these areas. Appointed members must be willing to serve actively for the full term.

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Section 2.175.045 Appointment of Tenant Representatives – was intended to resolve any appearance of conflict of interest 7

RBOC Oversight City Manager’s Office

• RBOC Board > Well qualified and diverse backgrounds > Standing sub-committees  Finance  Operations

> Able to focus in-depth on Stadium and Golf Course issues

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RBOC Financial Results City Manager’s Office

• Between FY95 – FY04 combined net earnings of stadium & golf course were positive in all but one year > Ten year average of $1 million per year

• From FY05 to beginning of renovation project combined net earnings have been stronger > No less than $1 million annually > High point of $3.6 million in FY06

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Findings & Recommendations City Manager’s Office

• RBOC structure has been successful > Stadium is being operated better today than prior to establishment of the RBOC > Operations are cost-efficient > Functions in a business-like fashion > Decision making is streamlined > Well-qualified Board of Directors provides oversight

• Financial results may have been less than originally hoped > Function of the marketplace, limits on events and not management 10

Findings & Recommendations City Manager’s Office

• RBOC operating agreement > Executed in 1995 > Many terms are outdated – dealing with transition from Department to Operating Company > Review of entire agreement may be appropriate

• Recommendations for consideration by Council > Aimed mainly at enhancing oversight of all operating companies > Several would necessitate amendments to existing operating agreements 11

Recommendations to City Council City Manager’s Office

• Present information, during annual budget review regarding anticipated adjustments in salary and benefit line-items (revised from that presented to Finance Committee)

• Quarterly reporting to the City Council through General Managers and/or Board Chairs

• Submit monthly financial information to the City’s Finance Director for inclusion in Quarterly Financial Monitoring Report to Finance Committee 12

Recommendations to City Council City Manager’s Office

• Direct the City Manager to work with the GMs to develop a policy for capital project construction management and return to City Council for consideration

• Direct City staff and RBOC to jointly undertake an analysis of event coordination in the Arroyo • Direct the City Manager to work with RBOC to develop other proposed amendments to update the operating agreement between the two entities

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Additional thoughts City Manager’s Office

• Staff considered merger of RBOC and PCOC into a sports and tourism agency > Perceived benefits: marketing, economies of scale > Perceived challenges: disruption, merging totally different personnel systems, disaffecting key stakeholders

• General Managers are jointly exploring ways to enhance coordination

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