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Res 012-2011 2/15/2011 RESOLUTION NO. 12-2001 Resolution Authorizing The City Manager To Execute A Professional Services Agreement With AmusementAquatic Management Group, Inc., For Management, Operation, and Consultation Services For The Castaway Cove Water Park WHEREAS, the City purchased Castaway Cove Water Park on February 4, 2010 from Brook Avenue Associates, LP and Castaway Cove Waterpark, LP, and engaged AmusementAquatic Management Group (AMG) to provide management, operation, and consultation services for the water park on behalf of the City; WHEREAS, AMG successfully and professionally managed the water park operations and finances during the 2010 operating season; WHEREAS, City Council finds that the procurement represented by this contract is exempt from an obligation for competitive bidding pursuant to Texas Local Gov't Code § 252.022(a)(4) as a procurement of professional services; and WHEREAS, the City Council finds that cost effectiveness, management continuity, and marketing consistency warrant the continued use of AMG to manage the water park on behalf of the City. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WICHITA FALLS, TEXAS, THAT: The City Manager is hereby authorized to enter into the attached Professional Services Agreement with AmusementAquatic Management Group, Inc., for management, operation, and consultation services with respect to the Castaway Cove Water Park, with such changes as are approved by the City Attorney. PASSED AND APPROVED this the 15�" day of February, 2011. ` Q4� MAYOR ATTEST: City lerk Professional Services Agreement between the City of Wichita Falls and AmusementAquatic Management Group, Inc. for the Wichita Falls Municipal Water Park (Castaway Cove) For and in consideration of the covenants and agreements contained herein, and in order to obtain the mutual benefits provided herein, this agreement is made and entered by and between the City of Wichita Falls, Texas, a home-rule municipality (hereinafter referred to as the "City") and AmusementAquatic Management Group, Inc., (hereinafter referred to as the "Contractor"). 1. Grant and Term (A) Grant. City hereby retains Contractor to operate and manage the Wichita Falls Municipal Water Park (Currentty know as The Castaway Cove Water Park and referred to in this agreement as "Water Park" or "Castaway Cove") located at 1000 Central Freeway E., Wichita Falls, Texas 76301, and to serve as General Manager for the Water Park. Contractor covenants and agrees to utilize its professional skills and abilities to operate and manage the Water Park in accordance with the terms and conditions hereinafter provided and set forth. (B) Reportinq Structure. Contractor shall report to the City Manager or a designated representative of the City Manager. (C) Term. The initial term of this Agreement shall be for 12 months commencing on February 4, 2011 ("Start Date") and ending on February 3, 2012. Thereafter, this Agreement shall be automatically extended for consecutive one-year periods, unless either party terminates this agreement in accordance with Section 10 or gives at least 90 days prior written notice of non-renewal. 2. Scope of Contractor Services and Duties (A) Management Services. Contractor shall provide all professional services and advice necessary to manage the Water Park including, without limitation, the planning, coordination, supervision, marketing, and management of Water Park maintenance and operations. It is agreed that Contractor shall work to improve operating conditions at the Water Park, enhance operations, attendance, revenue, and overall market appeal. Contractor shall operate and manage the Water Park in a manner comparable to water parks of a similar size and quality including the following departments and functions: 1. Planning a. Operating Plans b. Revenue Plans c. Marketing Plans 2. Marketing a. Creative b. Production c. Media Advertising d. Promotions e. Publicity f. Group Sales 3. Operations a. Aquatics/Safety b. Admissions c. Park Services d. Maintenance e. Security 4. Revenue/Resale a. Food & Beverage b. Merchandise c. Rentals d. Games 5. Staffing � a. Recruitment b. Hiring c. Interviewing d. Training e. Supervision f. Discipline 6. Administration a. Human Resources b. Accounting c. Cash Control d. Financial Reporting (B) Personnel. Contractor shall be responsible for providing general management, operations management and other Contractor personnel as may be necessary to staff the Water Park. The two general managers (currently Kent Lemasters and Dave Simon or any other designated General Manager) and the operations manager, shall be employees or contractors of the Contractor and shall be compensated by Contractor out of Contractor's fee without City reimbursement, but the compensation including but not limited to payroll related expenses, taxes, benefits, etc. for all persons other than the generai manager and operations manager will be chargeable as an expense to the City. Such compensation for the aforementioned employees (other than general and operations managers) shall not exceed the amount approved in writing by the City Manager or his designee in the budget approval process. Contractor shall also ensure that all employees are provided the necessary training to properly operate and maintain the Water Park. All employees will be hired by the Contractor and will be considered City employees and paid for by the City, except for the general and operations managers. Contractor shall serve as the City's agent in hiring seasonal City employees, but hiring permanent employees must be done with the approval of the City Manager or his representative. Contractor shall obtain and maintain all City-required data on all employees of the Water Park. All personnel shall display at all times customer service through courtesy, prompt service, and knowledge of business. By virtue of the duties assigned to Contractor with respect to City employees pursuant to this Agreement, Contractor shall be considered the City's Agent for the purposes of TEX.LAB.CODE408.001(a). (C) Compliance with Personnel Ru�es and Requlations. Contractor shall adhere to all federal, state, and City employment laws, rules and regulations, including but not limited to, Equal Employment Opportunity, Department of Labor, and Fair Labor Standards in the management of City personnel. If Contractor is notified of any harassment or discrimination complaint, then Contractor shall promptly forward such complaint to the City's Human Resources Department and coordinate with any investigation thereof. Contractor shall notify the City of the termination of any City employee and document the reasons thereof. In other personnel related issues, Contractor will work closely with the City's Legal and Human Resources Departments to help ensure open communication between the parties. City shall also notify Contractor, in writing, of any problem or concerns it may have with any Contractor employee and Contractor will conduct an immediate investigation. Contractor will then take appropriate action in response. Contractor will provide a written, timely report to the City indicating the outcome of the investigation, and any actions taken. Contractor shall conduct a criminal background check on all employees who are 17 years of age and older prior to hiring them for the operation of Castaway Cove. Contractor will not hire felons or registered sex offenders for the Water Park. If Contractor hires a current City employee to work a second job at the Water Park, Contractor will ensure that such City employee only works for the Water Park on a part- time, occasional or sporadic basis, in a different occupation than the employee's full-time City job unless the City Manager or his representative has provided written authorization for more extensive work. (D) Admission Ticket/Passes. The Contractor shall have a duty to maximize revenue and net income for the City. The Contractor shalt not waive or discount any admission fees outside the approved pricing Group Sales plan and ticket promotions plan based on the approved operating schedule projected to begin May 14' and end September 15� without approval of the City Manager or his appointee. (E) Dates and Hours of Operation. The parties agree that the Water Park will be open to the public during the approximate dates of May 14 thru September 15� unless a variance in those operating dates is approved by the City. The hours of operation for the Water Park shall begin on or before 11AM based on the approved operating schedule and end no earlier than 6PM, unless inclement weather or other operating, financial, maintenance or safety issues, etc. prohibit the reasonable use of the Water Park and a change in operating hours is required. Notwithstanding, additional dates and hours of operation and special early ctosing times will be specified in a schedule approved in writing by the City Manager (or his representative) and the Contractor unless a later opening or earlier closing schedule is required or necessary due to an emergency, weather, maintenance, financial or safety issue. (F) Concessions. Contractor is obligated to provide and operate food and beverage concessions to the public on the Water Park premises, including acquisition and maintenance of the necessary Texas Alcoholic Beverage Commission licenses and/or permits sufficient to offer a variety of alcoholic beverages at the Facility. Service of alcoholic beverages is subject to rules and regulations of the Texas Alcoholic Beverage Commission. Contractor shall provide a diverse menu of quality food choices consistent with the capability of the food service equipment at the facilities. The prices of goods sold shall be similar to prices at similar water park or amusement park operations. This contract does not waive or otherwise affect the regulatory authority of the City to inspect the food and beverage operations to ensure proper permitting and compliance with ordinances designed to protect the health of the public. The Contractor shall comply with all state and local health-related rules and regulations. All concession personnel shall receive all training required by local ordinance. (G) Water Park Merchandise. Contractor shall make available to the public for purchase or rent a variety of aquatic supplies and equipment including floats and rafts, sunglasses, hats, towels, sunscreen, water toys, and other such items. Contractor will maintain an adequate inventory of such merchandise to meet the needs of the public. The prices of goods sold shall be similar to prices at similar water park operations. (H) Water Park Marketinq/Promotion and Proqrams. Contractor will implement marketing, sales and promotional events and programs and conduct activities to promote public interest in the use of the Water Park. At a minimum, this will inciude offering various structures for seasonal passes, group rates, media advertising, and a website presence. Contractor agrees to promote the Water Park by providing and updating a Website with current program/activities and other informational content. This website should be consistent with or better than those maintained by comparable water parks in the state. The website will contain at a minimum: a. Current Fees and Seasonal Passes b. Layout of facility c. Pictures of the facility d. Facility history and description e. Contact information f. Directions to the facility g. Customer feedback mechanism h. Hours of operation (I) Maintenance Propram. At the City's written request, Contractor is to prepare an annual Water Park maintenance program report. Each such report shall be due within 60 days following the City's request therefore, but Contractor shall not be required to prepare such a report more than once in any 12 month period. The report shall at a minimum consist of information related to the maintenance and repair of the following areas: (1) Buildings and Parking Facilities (2) Water Slides (3) Grounds, Fencing and Landscaping (4) Water Pools (5) Pumps/Motors and Other Mechanical Equipment (6) Bridges 3. Performance Review City shall have the right to perform monthly performance reviews of all aspects of the Water Park operation. These reviews may include onsite inspection of the property and services as well as an informal audit of the financial records and a review of the marketing program. This review is expected to focus mostly on progress made since the previous review, but can cover any and all aspects of the operation and/or terms of this agreement. 4. Inspection of Contract Premises, Assets, and Equipment By executing this Agreement, Contractor certifies that he has inspected the premises, supplies, and equipment related to this Agreement, that he has found them to be in good and acceptable condition, and that he accepts them in their present condition. The parties agree to conduct a full inventory and evaluation of the condition of the premises and equipment up to 7 days prior to the Start Date. Contractor agrees that upon termination of this Agreement he will return and deliver to the City all property belonging to City in as good condition as he received said property, normal wear and tear excepted. No alterations or improvements shall be made to the Facilities without receiving prior written approval of the City. 5. Rates, Charges, Management Fees, Expenses, Revenues, Financial Records and Reports (A) Right to Set Fees and Charqes. The City and the Contractor shall plan, develop, implement and revise admission rates and charges for use of the Facility. Jointly, the City Manager (or his designee) and Contractor will establish rates for the following: 1. Daily Admissions 2. Seasonal Passes or Other Frequent-User Pricing. 3. Group Rates 4. Promotional Discount Rates Any and all rates, fees, charges and structures not listed above shall be set at the sole discretion of the Contractor. (B) Manaqement Fee. In exchange for the services described above, the City will pay Contractor a management fee of 10 000 per month. This fee is intended to cover the compensation and out-of-pocket expenses including travel for the General Management services currently provided by Kent Lemasters and/or Dave Simon and associated Operations Management services of Contractor. The management fee will be paid in equal installments of 10 000 per month due and payable on or before the 1 S` day of each month. Partial months will be prorated. (C) Water Park Expenses. All Water Park expenses not described in (B) above will be the responsibility of the City including providing funding and payment for all Castaway Cove operating expenses, including but not limited to, management fees, labor cost, salaries and employee benefits for City employees, marketing, media advertising, creative, advertising production, operations, maintenance, food and beverage and retail related expenses, in addition to any expenses necessary to implement daily operation of Castaway. The City will establish a separate bank account to be used exclusively by the Contractor and the City for miscellaneous Water Park expenses. Any draft from this bank account in excess of $1,000 will require two signatures of agents of the Contractor, including at least one of the General Managers listed above. Contractor will be required to adhere to an approved budget as submitted by the Contractor and approved by the City for the period December 27, 2010 to December 25, 2011. Such budget will be submitted to the City by March 1, 2011 for the initial term, and by October 1 st annually for each renewal term thereafter. The City and Contractor will jointly approve the budget (both operating and capital) for the subsequent operating period. (D) Water Park Revenues. All revenues from park admissions, group sales, seasonal passes, rental of inerchandise, sale of inerchandise, etc. shall be deposited on a daily basis to the City's bank account. Additionally, all sales shall be reconciled daily to the Contractor's point of sale computer system. (E) Net Income Maximization Incentive. In addition to the management fee, at the end of the period December 28, 2010 to December 26, 2011, the City will pay Contractor an incentive payment of 10% of the amount by which Castaway Cove's actual net income for that fiscal year exceeded the projected net income in that fiscal year's budget that was jointly approved by the City and Contractor. Net income is defined as the difference between the Park's gross sales/revenues and the Park's operating expenses excluding capital improvement, debt service, interest, taxes, depreciation and amortization. (F) Financial Reportinq and Record Keepinq. The Contractor shall establish and maintain records in accordance with requirements prescribed by the City, with respect to all matters covered at the Park by this contract. Except as otherwise authorized by the City, the Contractor shail retain such records for a period of three years after receipt of the final payment under this contract or termination of this contract. All costs shall be supported by properly executed payrolls, time records, invoices, contracts, vouchers, orders, and/or any other accounting documents. Any of the above related in whole or in part to this contract shall be clearly icfentified and readily accessible. The Contractor shall provide to the City a Profit and Loss Statement for each operating month by the 15 of the following month. (G) Sales Tax. Contractor shall collect and pay all sales, use, alcoholic beverage and similar taxes on taxable goods and services sold under this Agreement. 6. City Inspection of Records. Contractor agrees that the City or its agents shall have the right to review the books and records required to be made and preserved by Contractor. Contractor shall make those books and records available to the City during normal business hours and agrees to otherwise provide to the City upon request the full disclosure of all financial information relating to Contractor's operations or Contractor's performance under this Agreement within 5 days of written request by City. These records shall be maintained for a period of at least 3 years from the date they were created. 7. Liability The City hereby releases the Contractor, its employees, officers and/or owners from and against any and all claims, liabilities, or damages based on negligence resulting from the Contractor's management and/or operation of the waterpark including (1) Personal injury or wrongful death claims, (2) Claims based on the condition of the premises, (3) Claims arising out of any legal duty or obligations for which the City is responsible, (4) Claims arising out of or related to any environmental conditions, occurrences at the site, (5) Claims related to construction, (6) Claims arising out of marketing or advertising services for the waterpark or City. As used in this section, the term "Claim" includes any right of the City to seek contribution from the Contractor as the result of the claim of any third party made against the City or any claim made against the Contractor by a third party. The term "damages" shall mean any direct or consequential damages together with any costs, expenses, losses or attorney's fees incurred by the City or the Contractor as a result in defending against any claim. In accordance with the clause, the City will direct its insurer to provide a waiver of subrogation from any third party claim against Contractor. The provisions of this section shall survive termination of this Agreement and cover all activities related to the services provided by Contractor. The City and the Contractor will jointly establish policies designed to reduce the probability of the Contractor being named in any lawsuit involving the Water Park, and the signs and other public representations at the Water Park will solely name the City, to the extent possible, as the owner and operator of the Water Park. 8. Disclaimer of Warranties and Limitation of Liability Contractor makes no representations or warranties regarding any attendance, revenue, or financial projections as these projections are based on industry standards, information supplied by Castaway Cove and Contractor's expertise. City acknowledges and agrees that Contractor has made no representation or warranties regarding the performance or financial success of City including any projections prepared by any of the parties in assessing the financial risks and rewards of this enterprise. Contractor will make its reasonable best effort to provide overall day- to-day turnkey planning, operating and management services to include all Park operating, marketing and administrative services as provided in the overall Scope of Contractor Services and duties in section 2 of this Agreement. Contractor shall have no liability to City with respect to this Agreement for any loss of income or profits or any indirect, special consequential or incidental damages. 9. Insurance The City will maintain general_liability insurance on the Water Park in the amount of $1,500,000 per occurrence with a$2,000,000 aggregate. The Contractor will be named as Additional Insured on that policy, and the policy will provide a waiver of subrogation. The City agrees that it will pay any deductible amount for any claim covered by such policy_ 10. Termination In the absence of a violation of this contract, neither party shall have the right to terminate this agreement during its initial 12-month term. Thereafter, either party may terminate this agreement any time, with or without cause, by giving written notice terminating this Agreement not less than 90 calendar days prior to the proposed termination date. Either party may also terminate this agreement for breach of the terms of this agreement. In case of breach of contract, the complaining party will notify the violating party of the alleged violation in writing, and provide the violating party with at least 10 calendar days to remedy those items stated in the written notice. If, at the conclusion of the 10 calendar days, the violating party has not remedied or made significant progress in remedying the items listed, the other party may cancel this agreement by providing at least 60 calendar days written notice of termination. 11. Miscellaneous � Non-Solicitation of Contractor Employees. City shall not solicit or accept, if offered, with or without solicitation, or in any other manner, the services of any person who is an employee or independent contractor of Contractor's corporate staff. City further agrees not to solicit any of Contractor's employees to terminate employment with Contractor. This excludes City employees who are on the City's payroll or for whom the Contractor is reimbursed. (B) Protection Aqainst Accident to Emplovees and the Public. The Contractor shall at all times exercise reasonable precautions for the safety of employees and others on or near the contract Premises and shall comply with all applicable provisions of Federal State, and Municipal laws. This provision shall not be construed to abrogate or limit the provisions of Section 7 above. (C) Laws and Ordinances. The Contractor shall at all times observe and comply with all Federal, State, and local laws, ordinances and regulations, which in any manner affect the Contractor or the work, and shall indemnify and save harmless the City against any claim arising from the violation of any such laws, ordinances and regulations whether by the Contractor or its employees. Contractor shall appiy for all permits required to operate Castaway Cove. The permits shall be in the City's name. (D) Liens. Contractor agrees that it will at no time engage in any activity which will cause a lien to be attached to City property. In the event a lien is filed on City property as a result of Contractor's activities, Contractor shall immediately ensure the removal of the same. (E) Venue. This Agreement and all of the transactions contemplated herein shall be governed by and construed in accordance with the laws of the State of Texas. The provisions and obligations of this Agreement are performable in Wichita County, Texas such that exclusive venue for any action arising out of this Agreement shall be in Wichita County, Texas. (F) Assiqnment and Sublettinq. The Contractor agrees to retain control and to give full attention to the fulfillment of this Agreement, that this Agreement will not be assigned or sublet without the prior written consent of the City. The parties recognize that Contractor may choose to form a corporation, professional corporation, limited liability company or other business entity in which he is the principal or majority owner and such shall not be construed an assignment for this Agreement. In the event the Contractor is incorporated, the sale of more than 50% of the stock of the corporation shall be construed to be an assignment. (G) Paraqraph Headinqs; Construction. The paragraph headings contained in this Agreement are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several paragraphs hereof. Both parties have participated in the negotiation and preparation of this Agreement and this Agreement shall not be construed either more or less strongly against or for either party. (H) Bindinq Effect. Except as limited herein, the terms and provision of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, devisees, personal and legal representatives, successors and assigns. (I) Gender. Within this Agreement, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to inciude the plural, unless the context otherwise requires. (J) Exhibits. All exhibits to this Agreement are incorporated herein by reference for all purposes wherever reference is made to the same. (K) Computation of Dead�ines. If any deadline contained herein ends on a Saturday, Sunday or a legal holiday recognized by the Texas Supreme Court, such deadline shall automatically be extended to the next day that is not a Saturday, Sunday or legal holiday. (L) Entire Aqreement. It is understood and agreed that this Agreement contains the entire agreement between the parties and supersedes any and all prior agreements, arrangements or understandings between the parties relating to the subject matter. No oral understandings, statements, promises or inducements contrary to the terms of this Agreement exist. This Agreement cannot be changed or terminated orally and no written modification of this Agreement shall be effective unless executed by both parties. (M) Non-Discrimination. Contractor shall abide by the City's affirmative action plans and equal employment opportunity policies as may be adopted by the City insofar as they are applicable to Contractor's employees and shall abide by all local, state and federal laws and regulations in the operation of Water Park. The Contractor or his employees shall not discriminate against any individual on the basis of race, creed, color, sex, nationai origin or disability in the Water Park and concession operation or in providing any service contemplated by this Agreement. (N) Notices. Any notice required or desired to be given from one party to the other party to this Agreement shall be in writing and shall be given and shall be deemed to have been served and received (whether actually received or not) if (i) delivered in person to the address set forth below: (ii) deposited in an official depository under the regular care and custody of the United States Postal Service located within the confines of the United States of America and sent by certified mail, return receipt requested, and addressed to such party at the address hereinafter specified; or (iii) delivered to such party by courier receipted delivery. Either party may designate another address within the confines of the continental United States of America for notice, but until written notice of such change is actually received by the other party, the last address of such party designated for notice shall remain such party's address for notice. If to City: City of Wichita Falis Darron J. Leiker City Manager 1300 7 th Street Wichita Falls, Texas 76301 If to Contractor: AmusementAquatics Management Group, Inc. Kent Lemasters President 2472 Chambers Road, Suite 250 Tustin, CA 92780 (0) No Third-Partv Beneficiaries. Nothing herein shall be construed to give any rights or benefits to anyone other than City and Contractor. (P) Independent Contractor. In performing services under this agreement, the relationship between City and Contractor is that of independent contractor, and City and Contractor by the execution of this Agreement do not change the independent contractor status of Contractor. (Q) Intellectual Property. The City shall have the right to use the "Castaway Cove" name, all service marks, trademarks, trade secrets, patents, and copyrights associated with Castaway Cove and documents containing such intellectual property and innovations associated with the operation of Castaway Cove. Use of the "Castaway Cove" name shall not give Consultant or any employee of Consultant any intellectual property rights therein that will survive this agreement. All documents prepared and/or assembled by Consultant pursuant to this agreement shall be the property of the City, and upon the City's request shall be delivered to City without restriction on future use. Consultant may make copies of any and all documents for its files, and re-use information that may be used for the operation of its other businesses. This Agreement shall be binding upon the parties hereto, their successors, heirs, personal representatives and assigns. IN WITNESS WHEREOF, the parties have executed this agreement on the dates indicated below. The City of Wichita Falls, Texas AmusementAquatic Management Group, Inc. Darron J. Leiker, City Manager Kent Lemasters, President Date: Date: seal ATTEST: ATTEST: Lydia Ozuna, City Clerk APPROVED AS TO FORM: Miles Risley, City Attorney