Adventure Operations (AO) has been operating Quarry Park Adventures under the terms of an Operating Agreement with the City of Rocklin entered into on March 12, 2019. That agreement will expire on December 31, 2022. AO has approached the City with a proposal to replace the operating agreement with a lease agreement. Transitioning from an operating agreement to a lease agreement will provide more autonomy to AO, while continuing to afford the City general oversight of the property. An operating agreement will also modify the revenue sharing arrangement in a manner that will be more beneficial to the City.
Under the current operating agreement (attached as Exhibit C), the City is responsible for non-routine maintenance and repairs exceeding normal wear and tear, inspection fees, and utilities (sewer, water, electricity and gas). The City also pays annual management fees of $141,120 to AO, and splits revenue in excess of expenses 50/50 (not including management fees).
Under the proposed terms, the lease agreement will allow for an initial term of 6 years with up to two additional 2-year extensions at the City Manager’s discretion, for a total of 10 years. Prior to commencement of the lease, AO will repay all remaining short-fall account funds owed to the City, and upon commencement of the lease, the City will immediately terminate payment of management fees. AO will agree to pay the City lease revenue of 8% of gross receipts during the initial term, which would increase during the extension options. AO will be granted exclusive use of the parking lot adjacent to the adventure park during business hours, the City will retain use during all other hours including concerts.
AO will retain responsibility for maintenance and certification of the park adventure elements, the City will retain all capital maintenance responsibilities. A number of sections included within the existing operating agreement will carry forward in the lease including section regarding marketing, insurance, indemnification, and liability.
The full term sheet is attached as Exhibit A to the Resolution. A location map showing the areas covered by the lease is attached as Exhibit B.
If the City Council approves the lease term sheet, staff will continue negotiations with AO, and bring the lease agreement to Council for approval, with an anticipated lease start date of January 1, 2022.