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

City Manager’s Office Background 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 2

City Manager’s Office Creation of the RBOC 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

City Manager’s Office Creation of the RBOC 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 ) 4

City Manager’s Office RBOC Operations 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 5

City Manager’s Office RBOC Oversight Appointment of RBOC Board. Pursuant to Pasadena Municipal Code Chapter The RBOC’s thirteen- member 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. 6

City Manager’s Office RBOC Oversight The qualifications for board members is set forth in Section 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. Section Appointment of Tenant Representatives – was intended to resolve any appearance of conflict of interest 7

City Manager’s Office RBOC Oversight RBOC Board  Well qualified and diverse backgrounds  Standing sub-committees  Finance  Operations  Able to focus in-depth on Stadium and Golf Course issues 8

City Manager’s Office RBOC Financial Results 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 9

City Manager’s Office Findings & Recommendations 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

City Manager’s Office Findings & Recommendations 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

City Manager’s Office Recommendations to City Council 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

City Manager’s Office Recommendations to City Council 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 13

City Manager’s Office Additional thoughts 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 14