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HomeMy WebLinkAbout _ 9.6(a)--Consider Long-Term Options for Redding Sports Park OperationsC IT Y OF REMDINO�" AN CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: February 4, 2025 FROM: Travis Menne, Director of ITEM NO. 9.6(a) Community Services ***APPROVED BY*** Tray=is air" rec. r ' tppin, "iia' i,' /202 tmenne ,cityofredding.org btippin@cityofredding.org SUBJECT: 9.6(a)--Consider long-term options for Redding Sports Park operations. Recommendation Authorize and approve the following: (1) Direct staff to develop a City of Redding -staffed model for operations and maintenance of the Redding Sports Park; and (2) Direct staff to draft a request for proposals for a third -party concessionaire for future consideration by the City Council. Fiscal Impact The fiscal impact of the various long-term options for the Redding Sports Park (Park) are currently unknown. Directing staff to examine a specific option allows staff to return to City Council (City Council) with details and budget requests if necessary. Alternative Action The Council could choose not to select a long-term option at this time or provide an alternate direction to staff. Not providing direction to staff will result in staffing and supervision issues as temporarily reassigned staff returns to other normal duties and may effectively close the Park. Background/Analysis At their meeting on July 29, 2024, the Council unanimously voted to terminate the Sports Park Lease Agreement (C-0458) after receiving a notice of surrender from Big League Dreams, effectively closing the Sports Park. During that meeting, the Council directed staff to return with options for short-term operations of the Park. Later, at their August 20, 2024 meeting, Council authorized staff to initiate a short-term in-house operations model. At that time, staff indicated they could operate the Park for approximately six months while developing long-term options for Council to consider at a future meeting. In the short-term model, the Department's Recreation Division operated the facility, focusing on leagues run by outside organizations, existing Report to Redding City Council January 29, 2025 Re: 9.6(a) - -Consider Long -Term Options for Redding Sports Park Operations Page 2 tournaments, and practices. Furthermore, the Department's Parks and Building Maintenance Divisions undertook several small improvement projects and performed basic maintenance and repairs. The current model has been in place since October 1, 2024, and is generally well -received by existing user groups. Staff and community partners have found success with tournaments on both the field and in the field house, generating near normal levels of activity and satisfying most user groups. With this model, staff has achieved financial and operational sustainability in the short term. In addition, staff has secured a $200,000 sponsorship for rebuilding the sand volleyball courts from the Redding Tourism and Marketing Group and is working with a larger sponsor looking to secure naming rights for the Park. However, with mostly part-time staff drawn from the Redding Aquatic Center, no dedicated management personnel, and no dedicated maintenance staff, the model is not sustainable in the long term. Staff is seeking direction from the Council on the future of the Park as the operations cannot continue borrowing from existing resources and placing additional workload on existing staff. In a long-term scenario, the City would have to appropriately staff the facility by hiring adequate management personnel and front-line workers to effectively operate the facility. With most of the part-time staff slated to resume working at the Aquatic Center, additional workers will need to be hired, and an uncertain operational future is not an effective recruiting tool should staff choose to backfill the positions. Furthermore, the Recreation Coordinator responsible for staff management is assigned to the Aquatic Center and must be on site as the pool season begins. Therefore, staff is seeking guidance on the next steps for the operation of the Park to begin developing an operational plan and budget to move forward. Staff envisions three general paths which Council could direct staff to follow: 1. Develop and issue a Request for Proposals (RFP) for third -party operations of the Park; 2. Develop a model for a City -run facility; or 3. Explore shuttering or selling the facility. Due to the substantial amount of staff time required to create a staffing plan or RFP, staff is seeking guidance on which direction to move. Each model comes with its own specific positive and negative attributes, as well as budget implications. Any future budget implications must be established through a planning process for the chosen model, and staff will return to Council with the details for the chosen model in March or April. Regardless of the chosen model, the major outstanding issue is the degraded condition of the facility and sourcing the funds required for improvements. In either model, where the park continues to operate, it is unlikely that an outside source or third -party operator will wholly fund the repairs, and the City will have to fill any gaps creatively through alternate sources. Funding sources may include, but are not limited to, additional sponsorships, donations, grants, or the use of the City's funds. At their January 8, 2025, meeting, the Community Services Advisory Commission unanimously recommended that the City Council direct staff to develop a model for a City -run facility and issue a Request for Proposals for food and beverage services only. Environmental Review This is not a project defined under the California Environmental Quality Act, and no further action is required. Report to Redding City Council January 29, 2025 Re: 9.6(a) - -Consider Long -Term Options for Redding Sports Park Operations Page 3 Council Priority/City Manager Goals • Government of the 21st Century — `Be relevant and proactive to the opportunities and challenges of today's residents and workforce. Anticipate the future to make better decisions today." Attachments PreviousStaff Report - August 20, 2024, item 9.6(a) - Short Term Operations Previous Staff Report - July 29, 2024, item 3.1 - Termination (C-0458) C IT Y OF REMDINO�" AN CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: August 20, 2024 FROM: Travis Menne, Director of ITEM NO. 9.6(a) Community Services ***APPROVED BY*** Tr =is a r art c r t i �T.ii .Sovices 8, ,12024 r ' tpp i tn,, "iia ' 8/15/2024 tmenne ,cityofredding.org btippin@cityofredding.org SUBJECT: 9.6(a)--Consideration of Short -Term Operations Plan Options for the Redding Sports Park Recommendation Authorize the following actions relative to the City of Redding (City) Sports Park: (1) Accept the report regarding short-term operations; (2) Direct staff to pursue a City -run, short-term operations plan; and (3) Authorize the City Manager to administratively approve an expenditure of up to $200,000 for Park operations and minor maintenance repair. Fiscal Impact Facilitating short-term operations will require an appropriation of $200,000 from the General Fund. This initial budget would allow the City of Redding (City) to cashflow operational costs while revenue is generated. Operational costs include: payroll, utilities, maintenance and contracts as expenses occur. Facility revenue can backfill the operating budget with the goal of operational sustainability. Revenue and expense assumptions are based on user -provided data pertaining to historical schedules, costs, and operations. However, these assumptions have yet to be proven, and a broad budget is necessary to fund the estimated park operations. Based on known expenses and staffing projections, the budget should cashflow operations for at least two months. Projected revenues will backfill and allow the startup budget to fund operations for six months, at which time staff anticipates the City Council (Council) will authorize a long-term direction and an updated budget. Alternative Action The Council could choose not to select a short-term option or provide an alternate direction to staff. Report to Redding City Council August 15, 2024 Re: 9.6(a) - -Short- Term Operations for the Redding Sports Park Page 2 BackgroundlAnalysis At their meeting on. July 29, 2024, the Council unanimously voted to terminate the Sports Park Lease Agreement (C-0458) after receiving a notice of surrender from Big League Dreams, effectively closing the Sports Park. During that meeting, the Council directed staff to return with. options for short-term operations of the Redding Sports Park (Park). Since then, City staff has met with nine organizations representing teams, leagues, and tournament directors about their groups' present and future needs at the Park. These groups provided key insights into operations and the unmet needs of the Park users as staff collected needed data points to plan for near - normal levels of service at the Park. Staff included the representatives from Shasta Regional Soccer Association (SRSA) in multiple meetings with user groups to gather information and provide consultation. Additionally, staff met with SRSA several times and toured the facility to gather operational data. After this process, the City and SRSA concluded that the City is best suited for operating the Park in the immediate term. Staff has conceptualized a model in which the Community Services Department (Department) operates the facility for approximately six months while developing long-term options for Council to consider at a future meeting. In this model, the Department's Recreation Division would operate the facility with existing and additional staff. Services could include operations of the Field House and ballfields, focusing on leagues ran by outside organizations, existing tournaments, and practices. Staff would identify a programming matrix and work with outside groups as partners to help facilitate activities as staffing allows. In the short-term, organizing and running in-house leagues would be problematic as it requires too much staff time. The community, however, would be encouraged to form user -led groups that can facilitate league play as staff gains experience running the facility and capacity improves. Furthermore, the Department's Parks and Building Maintenance Divisions would perform basic maintenance and repairs. In the interim, staffing would be limited to basic services, and concessions would not be feasible. Additionally, the City would only perform large capital improvements once a long-term plan and appropriate funding is in place. The City may also need to rely on partnerships and volunteers for some operational components, a strategy which is generally supported by existing user groups. This short-term model allows for most of the existing programming and minimal ongoing disruption to user groups. With direction from Council staff will create the appropriate long-term plans necessary to ensure the Park can serve the community and work toward restoring it as a quality community asset. Environmental Review This is not a project defined under the California Environmental Quality Act, and no further action is required. Council Priority/City Manager Goals • Government of the 21st Century — `Be relevant and proactive to the opportunities and challenges of today's residents and workforce. Anticipate the future to make better decisions today." Report to Redding City Council August 15, 2024 Re: 9.6(a) - -Short- Term Operations for the Redding Sports Park Page 3 Attachments Previous Staff Report - July 29, 2024 C IT Y OF REMDINO�" AN CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: July 29, 2024 FROM: Travis Menne, Director of ITEM NO. 3.1 Community Services ***APPROVED BY*** Tray=is cnr" rec r t it 'unit `aei ices 7,' 1?t1 8 r ' tppin, Ci n e 7,' 6/202 tmenne ,cityofredding.org btippin@cityofredding.org SUBJECT: 3. 1 --Consider termination of Contract with Big League Dreams Redding, LLC. Recommendation Authorize the following actions relative to the Sports Park (Park) Lease Agreement (C-0458) with Big League Dreams Redding, LLC: (1) Authorize the termination of the Park Lease Agreement (C-0458) with Big League Dreams Redding, LLC in accordance with Section 17 of the Lease Agreement effective immediately; and (2) Direct staff to explore options for the future operations and maintenance of the Park, to include but not be limited to, operating the Park in-house and issuing a Request for Proposals for a third -party operator. Fiscal Impact In March 2023, Big League Dreams USA (BLD) signed a Letter of Agreement (LOA) agreeing to repay past due lease payments totaling $182,818. Since then, BLD made three monthly payments of $18,000 each per the LOA terms, after which they have not made any other payments toward their LOA debt. BLD also failed to pay lease payments for the second, third and fourth quarters of 2023, as well as the first two quarters of 2024. BLD made one payment of $10,000 on May 7, 2024. Since BLD failed to submit the first and second quarter reports to the City of Redding (City), the current total owed in quarterly payments cannot be accurately calculated. Based on recent years' average first and second quarter payments, and the past due lease payments, BLD owes the City approximately $215,182.74. The fiscal impact of terminating the lease is unknown at this time. Alternative Action City Council (Council) could choose not to terminate the contract. This alternative would allow BLD to continue to operate the Big League Dreams Sports Park (Park). This option may not be available as BLD has ceased operations and has not obtained insurance to continue operations. Report to Redding City Council July 26, 2024 Re: 3.1--Terminate Contract with Big League Dreams Redding, LLC Page 2 BackgroundlAnalysis In 2001, the City and BLD Redding executed a Lease agreement (Agreement) for the operation and maintenance of the Park. In 2004, the Park was opened and the start of the 35-year lease term began. The agreement conditions require BLD to pay monthly lease payments equivalent to six percent of gross receipts after the first three years. BLD paid over $950,000 in lease payments through May 2019..At that point, BLD fell behind in its payments compounded by COVID restrictions which closed the Park for almost a year. In August 2022, TC Sports acquired all nine BLD facilities and took over operations. On. February 21, 2023, Council approved the LOA (C-0458) with. BLD USA for the payment of past due lease obligations of BLD Redding and a capital improvement plan to address Park repairs, replacements and improvements. On July 20, 2023, the LOA was amended to extend the timeline for many of the projects. The current status of the improvements is noted below: Project I Status I Notes BLD was required to complete the capital improvements below by August 15, 2023: Batting Cage Repairs Complete New POS System Partially complete Paint Buildings Partially complete In progress Paint Outfield Replica Walls " Partially painted Decalsmissing Parking Lot Lighting Complete Stadium Club Paint Exterior complete Fix All Broken Stadium Seats Incomplete Pawtucket Grading Repairs in Outfield Incomplete Restroom Upgrade Incomplete Stadium Club Flooring Incomplete BLD was required to complete the capital improvements below by October 1, 2023: Repair Shade Structures - Replica Fields 3 of 5 complete Not installed BLD was required to complete the capital improvements below by March 31, 2024: Turf Installation at Home Base Incomplete Not started Turf Replacement Infield Incomplete Not started Sand in Volleyball Courts Incomplete Not started Staff issued a letter to BLD on April 18, 2024, which stipulated that if payment was not made by a certain date, the City would issue official notice to cure pursuant to Section 17 of the Agreement. On June 28, 2024, after receiving only partial payment, the City issued a formal notice to cure under the contract. The notice demanded payment for all past due rents and penalties, plus the performance of the maintenance items and capital improvements listed above. The notice was issued pursuant to Sections 17.a.i (failure to pay rent), 17.a.iv (default under Report to Redding City Council July 26, 2024 Re: 3.1--Terminate Contract with Big League Dreams Redding, LLC Page 3 related agreements) and 17.a.v (other default). The Agreement gives BLD 10 days to cure the failure to pay rent and 30 days to cure most other failures. BLD has since failed to make payment within the 10-day period. With the delinquent payments, substandard maintenance, and failure to perform capital improvements identified in the LOA, BLD is in breach of contract. Section 17.b.ii of the Agreement allows the City to terminate the lease with BLD and take possession of the Park. Should Council decide to exercise this option, BLD will be required to vacate the Park and remove its property. However, in this case, several decisions regarding short- and long-term options must be made. First, the City must act on the operations of the Park. There are many tournaments and leagues scheduled at the Park. Without an operator or budgeted funds with a detailed plan for staff to take over operations, it is likely the Park will need to be shut down, causing the events to be cancelled and impacting the community. As of this writing, it appears BLD has vacated the Park causing a disruption of the aforementioned events. Staff has currently identified the following long-term options Council could choose from: 1. Direct staff to develop and issue a Request for Proposals for a new tenant to lease the Park. 2. Direct staff to develop an operations and maintenance plan to run the Park in house. 3. Direct staff to look into selling the Park to another party. With general direction from Council staff will create plans and develop the strategies needed to ensure the Park can serve the community and work toward restoring it as a quality community asset. Environmental Review This is not a project defined under the California Environmental Quality Act, and no further action is required. Council Priority/City Manager Goals • Government of the 21st Century — `Be relevant and proactive to the opportunities and challenges of today's residents and workforce. Anticipate the future to make better decisions today." Attachments ^Notice of Surrender - BLD Redding 07-25-24 C-0458 BLD Lease C-0458 BLD Lease Amend 1 C-0458 BLD Lease Amend 2 C-0458 BLD Lease—Amend-3 C-0458 Letter of Agreement C-0458 - First Amendment - 2023 - Big League Dreams USA July 25, 2024 VIA ELECTRONIC AND CERTIFIED MAIL City of Redding City of Redding c/o Travis Menne, Director of Community Services c/o Redding City Attorney 777 Cypress Avenue 777 Cypress Avenue Redding, California 96001 Redding, California 96001 Email: tmenne@cityofredding.org RE: Big League Dreams Redding Sports Park Mr. Menne: Our office serves as outside general counsel for Big League Dreams Redding, LLC ("BLD Redding") and its affiliates. As such, please direct all future legal -related communications to our office. All terms not defined herein shall have the meaning as set forth in the Sports Park Lease between City of Redding (the "City") and BLD Redding. This letter shall serve as formal notice of surrender of the Sports Park effective as of July 26, 2024. As previously explained in BLD Redding's correspondence dated July 15, 2024, the Sports Park has operated at a loss for some time. BLD Redding attempted to find an amicable solution that allowed for the smooth transition of the Sports Park, but the City's response made clear it was not aligned with the same belief. BLD Redding simply does not have the funding to continue to operate at a loss. As such, BLD Redding has made the difficult decision to surrender possession of the Sports Park back to the City for the City's continued use and operation. BLD Redding remains willing to provide a certain level of assistance in the transition of the Sports Park. To that end, you may contact Kevin Floraor Larry Reynolds (tarry &re noldssports.com) to discuss logistics of the transition of the Sports Park. If there are questions related to the surrender or other legal matters, please direct those questions to our office. I can be contacted at (972) 370-3333 or via email at justin@plunksmith.com. hank you, ustin J. D in ger Prev'I'OUS Counc'i'l Directive * Presented plan for shOFterm operations to City Council on 8/20/21 At direction staff began • . • short-termoperations plan. * City Council also authorized the City Manager to administratively approve an expenditureof • to $200,000 fi Park operations minor" , . ,. repair. ShortsmTerm PlanmmwmSix Months o City -staffed o Recreation, Parks, and Building Maintenance Division employees o Gate, janitorial, light field prep, facility oversight, maintenance o Focus on serving * Indoor third party activities * Field tournaments * Field practices * Third party adult leagues o Relies on third party scheduling, leagues, vendo umpires, referees, scorekeeping, volunteers ShortmmTerm Plan Satisfies " r * Quickest model to implement * City control •i (phasing) * In-house expertise * Existing City systems * Facility policies * CivicRecsoftware * Improved maintenance * Provides i . learn and plan ShortmTerm Plan No ir-t-house concessions * No in-house leagues * Slightly reduced activibIrA * Less potential revenue, Fewer operational No immediate capitalprovements * Additional workload for existing staff No opportunity for o Only sustainable Three Month Update o Operationally sustainable 0 patrons 0 Host to leagues, tournaments Sponsorshipopportunities * Received $200K sand volleyball cou improvement sponsorship * Applied for and received a grant to upgrade i i o Food vendors in the park o Rebuilt batters boxes Fixed irrigation issues * Borrowed staff from Redding Aquatic Cen el * Limitedrevenue without food and beveragre Maintenance No additional staffin No capital impro" en t b udge t FMIIMkli7CaJiCTiM� * Develop a model for a atyn facility * Develop an RFP for a third pady operator * Explore shuttering or selling the facility Explor'i'ng LongmwTerm Opt'ions o Cityrun facilities * Mistlin Sports Park- Ripon, CA * Lithia Fields -Medford, OR Stockton Sports• Stockton, * Reno Sports ComplexReno, NV * Shadow Mountain Sports ComplexSparks, NV * West Covina Sportsplex (former BLDYest Covina, CA * Legacy Fields Tracy, CA (has outside vendor for food�ubsidized * Sacramento Softball Complex Sacramento, CA o Third party Creekso Twin • # • i A o Big League Cathedral Develop a model for a C'Ityrun facl"I'Ity Costeffective investment- limited available facilities * Retains City control with a publifocused operation * Recreational programming/events * Emergency/Resilience facility * Allows staff to seek • for maintenance • development * Allows for higher quality and creative new uses * May be operationally sustainable * City must budget for staffing and maintenance * Requires operational subsidy Increased existing staff o Would require a third party operator for alcohol/restau rant concessionA, Comparable Fac'1'11"ty=--= Medford Oregon Comparable Fac'1'11"ty=--= Medford Oregon Transient LodgingTax ($7 million per year) Toudsm M&keting gtx! X r s SeN r Parks Projects r Rental Taxes ($2.4million ryear) RogueDebt " FW&ue X Opiio Pads Projwts ExpensesL'Ithia and Driveway Fields Annual Revenues and Park Uy Fee 0,000 Athletics 375,000 Total Revenues S 1,010,000 Expenses Personnel Services $ 1,2` 0,000 tviaterials & Services 250,000' CapiLaf Outlay 300,000 Debt Beryls 510,000 Total Expenses $ 2,260,000 *Deficit covered by General Fund Annual Rogue X Revenues and Expenses Revenues Park Promotions Fees 200,000 Swimming Pool fees 705,000 Athletic Program Fees 300,000 Park Reservations SP 0 Park Utility Fees 1' 64,000 Total Revenues $2,414,000 Expenses Personnel Services , 2ry 00 Materials & Services 466,700 Debt SerAce 3,050,000 *Defick covered by TLT/CRT Outsta,nd'i'ng Issues Ongoing &subsidy * How to handle food and beverage? o RFP o In-house o Basic concessions and vendors o o How • fund initial . Develop an RFP for a th'I'rd party operator o Pros * Minimal responsibility for City +rr corporateff * May result in initial maintenance funding/investment * Potentially limits the City's ongoing maintenance responsibility * Most likely quicker turnaround for projects and operations * Large • •. with other4etwork facilities Can •. • their and beverage an RFP for a th'1'rd party operator o Cons Develop ,a o Same a!previous model with few companies offeringFONTUNW, az o Redding's recr ation spending market is difficult * Difficult to attract • qualified party * Most likely still results in subsidization (Mu&ourt Complex) o RFP timeline is six months or more 11 .1, Mow investments with previous lease terms i q1111111111 0 Does not help City with available facilities o Less control o Less public -focused L ME solicit p • scenarios. expecto Do we i party repairs?initial * If not, how woud the City? Should the City? Ongoing •11 111111 • •11111,11,11ill 1111 qlllri iltil Ili' . ` * Expecting better results? Enforcement problematic. Explore sell'ing or shuften"ng the fac'1'1'1'ty * No investment required Reduces o eliminates a• maintenance i ai, o Potential loss of original $11 + million investment * Legal issues with selling parks * Does not help Recreation fill programming needs * Requires substantial staff time (PLA, research, potential vote, etc.) * Once sold, there is no control of future of Park or property, which may result park space for i community Staff Recommendation o Direct odevelop a City of Reddingstaffed and maintenance of the Redding SportsPark;d o Direct staff to draft a r proposals for • . concessionaire consideration by the City Council.