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Within 90 days after the final date of operation each year, SJAM will provide the City Manager with an annual Profit and Loss Report summarizing the ice rink's operations. After payment of all the operating expenses of the ice rink, 10% of any net operating proceeds will be forwarded to the City for distribution to community-based organizations. Any operating losses will be absorbed by SJAM. Term of Agreement The term of the license agreement is for three years, to include the 2009-2010, 2010- 2011, and 2011-2012 holiday seasons. By a mutual decision of SJAM and the City, SJAM has the option to extend the license agreement for an additional two years, through the 2012-2013 and 2013-2014 holiday seasons. Should the City desire to continue the holiday ice rink after the five years, SJAM will offer the City the option to purchase any or all of the equipment (as a depreciated value) and operate the rink without any affiliation with SJAM or the San Jose Sharks. Costs to City There is no cost to secure the selected location. The initial cost to provide infrastructure to the location is estimated to be up to $15,000 for the extension of electrical power, water and voice/data lines to the site. Potential additional expenses to ensure visitors' safety and enjoyment while visiting the ice rink may include the lease and lighting of the 3-acre vacant parcel for parking, temporary signage and other related measures; those will be defined as staff develops a formal logistics plan. The expenses associated with the daily operation of the holiday ice rink are to be covered by revenues from ticket sales and sponsorships. Per the license agreement, the City will pay up-front costs for electricity and security, to be reimbursed from net operating profits. Corporate sponsorships are a key funding source, and account for approximately 50% of the budgeted revenues. In the event that expected sponsorship revenue targets are not reached, the City will commit either financial or in-kind sponsorship support of up to $40,000. Comparatively, other cities that operate holiday ice rinks make similar, and even greater, financial contributions. For example, both Walnut Creek and San Jose fund their respective ice rinks without the benefit of an operating partner-as the City has with SJAM-and so bear the full costs and risks of operations. Thus by partnering with SJAM, the City's risk is minimized. In addition to SJAM's substantial financial investment, equally important is the expertise SJAM brings to provide a high quality ice rink experience for our community. Staff recommends City Council approval of the attached license agreement with San Jose Arena Management to operate an outdoor holiday ice rink and authorization for the City Manager to execute the agreement. Page 4 of 8