memorandum

to:                  Roger L. Stancil, Town Manager

from:            Ray “Butch” Kisiah, Parks and Recreation Director

                        Bill Webster, Assistant Parks and Recreation Director

subject:       Proposed Extension of a Concession Agreement for Operation of the Town’s Skate Park and Batting Cage Facilities

date:            April 15, 2009

PURPOSE

The attached resolution would authorize the Manager to execute a two-year lease extension agreement with Aloha II Inc. (d.b.a. Vertical Urge) that would allow the existing concessionaire to continue to operate the Town-owned skate park and batting cage facilities at Homestead Park for another year, with options to extend the agreement for two additional years.

BACKGROUND

The Homestead Park skate park opened in November 1999. The batting cage facility opened in September 2000.

A private concessionaire operated the facilities from November 1999 until April 2005. In April 2005 we learned that the concessionaire had violated the terms of its agreement and allowed its liability insurance to expire. In response the Town terminated the agreement. The Town operated the facilities from May 2005 through May 2006.

On April 24, 2006, the Council authorized the execution of a contract with Vertical Urge to operate the skate park and batting cage.

DISCUSSION

The skate park and batting cage facilities are located at Homestead Park and contain:

- Concession/restroom building
- 10,000 square foot concrete skate park
- 16 ramps
- Lights for night operations
- 7 station batting cage facility

We believe that the concession agreement executed in May of 2006 has worked well. The concessionaire has operated the facilities in a professional manner. Park patrons have generally reported satisfaction with the operation. There have been very few complaints from the surrounding neighborhood and those have been effectively addressed by the concessionaire.

Budget and Financial Issues: The current and proposed agreements contain a sliding scale that requires the concessionaire to make payments to the Town if his gross revenues exceed $80,000. The amount payable to the Town increases as gross revenues increase. The Town is liable to  make payments to the concessionaire if his gross revenues are less than $80,000. The maximum Town liability is $12,000, which is the amount currently budgeted for this purpose.

Aloha II Inc. made payments to the Town of about $6,000 in both 2007 and 2008. The concessionaire reports that attendance is down this year and expects to invoice the Town in 2009. The amount is not certain, but preliminary estimates indicate that the amount may be approximately $5,000 -$6,000. We have budgeted for this possibility so no new funds are required for the current fiscal year. Funds for a possible payment of up to $12,000 in 2010 have been included in the draft operating budget for the Parks and Recreation Department.

The concessionaire attributes the decline in attendance to three primary factors; the general decline in the economy, the declining condition of the existing skate park, and the lack of a concrete bowl. The concessionaire has agreed to run the facility for at least one additional year, but asks that the Town make a commitment to renovate and upgrade the facility as soon as economic conditions allow.

We agree that for the skate park and batting cage to be successful we must take steps to ensure that the facilities meet the needs of patrons. We think that it is important to renovate the older skate ramps, replace the pitching machines, and expand the skate park. We will make some basic repairs to the facility this year from existing funds.

We also think that when the Town is financially able, an effort should be made to begin the process of planning for a new concrete drop-in bowl, which was envisioned when the park was built in 1999. An area was set aside for this purpose. Concrete bowls are generally considered an essential part of most modern skate parks.

We will present a proposal in the Capital Improvement Program for the Manager’s consideration during the budget process that could allow us to begin work on upgrading the facility.

Terms of the Concession Agreement: The proposed extension of the lease agreement would be essentially the same as the current agreement and would contain the following main points:

  1. Term: Vertical Urge shall have exclusive concession rights to the facilities for a period of one year. They shall have the option to extend the terms of this Agreement for two (2) additional consecutive one (1) year periods. The Town may decline to extend the Agreement.
  2. Schedule: Vertical Urge will operate the Facilities seven days per week, weather permitting.
  3. Admission Fees: Vertical Urge may charge up to the following amounts:

Skate Park:

 

Residents

Non-Residents

PLATINUM membership

$200

$250

Platinum membership is an unlimited skate access pass good for 1 year from the date purchase.

GOLD membership

$25

$30

Orange county residents, 1 year membership with $ 4.00 session fee, 1st session is free.   Renewal membership is $15.

Non – Orange county residents, 1 year membership with $ 5.00 session fee, 1st session is free.  Renewal membership is $ 20.

Regular session fee

$7

$8

Batting Cage:   $2 Per 25 Pitches
  1. Changes to Admission Fees and Charges: Any change in fees (excluding food and merchandise) must be approved in writing by the Town.
  2. Payment Schedule: The following schedule is based on total revenues from operations.
    1. If total revenue collected by Vertical Urge from 12 months of operations for the term of the agreement is $60,000 or less the Town of Chapel Hill shall make a $12,000 supplemental payment to Vertical Urge.
    2. Once Vertical Urge has collected a minimum of $60,000 within each 12 month term of the agreement the supplemental payment will be reduced by $600 for every additional $1,000 in revenue collected by Vertical Urge until such supplemental payment to Vertical Urge is $0.
    3. Once total revenues collected by Vertical Urge reach $80,000 during the term of the agreement, Vertical Urge shall pay the Town of Chapel Hill $600 for each $1,000 in revenue collected by Vertical Urge until total revenues reach $89,000.
    4. Once total revenues collected by Vertical Urge during the term of the agreement reaches $89,000, Vertical Urge shall pay the Town of Chapel Hill at a rate of 6% per $1,000 revenue collected by Vertical Urge.
  3. Maintenance by Vertical Urge: Vertical Urge shall be responsible for the following maintenance functions:
    • routine maintenance and repair
    • repair of minor vandalism
    • cleaning of concession/restroom building
    • cleaning and litter pickup of both facilities and all the grounds surrounding the facilities
  4. Maintenance by the Town: The Town shall be responsible for any extraordinary maintenance, including:
    • replacement and renovation of pitching machines and skate ramps
    • replacement or major renovation of concession/restroom building heating and air conditioning system
    • painting of concession/restroom building
    • changing of lights on poles
    • repair or renovation that exceeds a reasonable definition of “routine”
    • mowing of grass in and around the facility
  5. Utilities: Vertical Urge shall pay for all utilities.
  6. Public Restrooms: Vertical Urge agrees that the restrooms in the concession building are open to the public during the times that the building is open for skate park and batting cage operations.
  7. Additional Ramp Construction: Vertical Urge and/or the Town may build additional ramps if such a step is deemed beneficial by the Town.

RECOMMENDATION

That the Council adopt the attached resolution authorizing the Manager to execute an extension of the current concession agreement with Aloha II Inc. (d.b.a. Vertical Urge) that would allow the existing concessionaire to continue to operate the Town-owned skate park and batting cage facilities at Homestead Park for another year, with options to extend the agreement for two additional years.