Quarry Park Adventures Operating Agreement with Bonsai Design, LLC

Key Terms and Start-Up Expense Reimbursement

Adopt a Resolution of the City Council of the City of Rocklin:

1. Approving the Key Terms to be included in an Operating Agreement with Bonsai Design, LLC;  and

2. Authorizing the City Manager to Reimburse Bonsai Design, LLC, for Start-up Expenses in Advance of Contract Execution; and

3. Approving an additional appropriation of General Funds for Start-up expenses.

It is recommended that the City Council conceptually approve the key terms of an operating agreement with Bonsai Design, LLC, (See Exhibit A to Resolution).  In addition, it is requested that the City Council authorize the City Manager to reimburse up to $300,000 in start-up expenses to Bonsai Design, Inc., as set forth in the Start-Up Budget attached to the Key Terms, prior to contract execution. 

Upon approval of the Key Terms, the City will proceed with preparing a formal operating agreement to be presented to the City Council for consideration on March 12, 2019.

Earlier this year, the City terminated the agreement with the prior operator of the Quarry Park Adventures (the “Park”), and temporarily closed the Park for the winter season. 

Subsequently, the City entered into discussions and negotiations with Bonsai Design, LLC, which is the entity that constructed the Park, for the operation of the Park when it re-opens in the Spring.  Bonsai’s anticipated operational responsibilities will include the adventure elements, kid’s zone, maze and paddle boats. Bonsai’s operation will not include food services (other than minimal pre-packaged snacks and water) or hosting/participating in ancillary events (e.g., concerts, carnivals, festivals, etc.). 

The primary proposed terms are summarized below:    

KEY TERMS:

1. Start-Up Budget – not to exceed $300,000.

2. Operating Agreement Term – contract execution through December 31, 2022.

3. Bonsai Design Management Fees:

   1. Pre-Opening – No Management fee.

   2. Opening Date through December 31, 2019 - $15,300/month.

   3. January 1, 2020 – December 31, 2022 - $11,760/month.

4. City Shortfall Fund:

   1. $200,000 funded and controlled by City;

   2. Bonsai may request funds to cover documented operational shortfalls;

   3. Upon achieving gross revenue in excess of operating expenses, Bonsai to reimburse City using its share of net revenue.

5. Revenue Sharing:

   1. 50/50 split of revenue once the park achieves gross revenue in excess of operating expenses (not including management fee). 

6. Operating days and hours:

   1. 7 days/week, excluding Christmas Day, New Year’s Day and Thanksgiving Day

   2. November – February:  8 a.m. to 4 p.m.

   3. March – May: 8 a.m. to 5 p.m.

   4. June – October: 8 a.m. to 6 p.m.

7. Tickets and Prices:

   1. Start-up ticket prices will be set forth in an Exhibit to the agreement, and pricing may be changed by Bonsai after review and consultation with the City Manager.

   2. Bonsai will honor season passes, tickets, gift cards issued by the prior operator, however, if volume of such ticket redemptions exceeds the reasonable expectation of the operator, the parties shall meet and confer to work out an acceptable solution.

   3. Bonsai will provide the City with 50 tickets annually to fulfill the City’s obligations to Placer Valley Tourism.

       

       

FISCAL IMPACT

Adopting this Resolution will require an additional appropriation of General Funds for FY 2018/19 to cover the park re-opening Start-Up Budget in the amount of up to $300,000.  Additionally, if the City Council approves the formal agreement with Bonsai on March 12, 2019, a General Fund amendment for FY 2018/19 to cover the City shortfall account in the amount of $200,000, and to cover management fees in the amount of $45,900 will be required.

On July 10, 2018, pursuant to Resolution No. 2018-192, the City Council authorized funding for a King Swing in amount of $471,500 (including contingency), contingent upon availability of funds following completion of all remaining elements, and installation of food service components for up to $486,898, from budgeted project funds.  It is not recommended that the City proceed with the construction of a King Swing in this Fiscal Year.  Additionally, installation of the food service components will not occur this Fiscal Year.  Funding is required for some minor final construction, including lights and fans in the Guest Services Building, and fencing and security enhancements in the amount of $250,000.  Funding for these items may require a budget amendment, which, if necessary, will be presented to Council for consideration at the March 12, 2019 meeting.