Memo - Overpass Skate Park Update
MEMORANDUM
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To:
FROM:
DATE:
SUBJECT:
Honorable Mayor and Members of the City Council
Jay Strachota, Facilities Director
February 2, 2005
Update on Overpass Skate Park Finances and Options for the 2005 Season
Background
The Overpass Skate Park, which opened in 2000, was a donation by the Hopkins Jaycees. At the
time there were a handful of skate parks in the metro area. By the summer of 2004 there were
over 50 skate parks in the metro area and more planned for construction in 2005. The number of
parks available has eroded attendance to the Overpass. Last year there were approximately 2000
visits to the park by 817 skaters at the park. The Overpass Skate Park, being a tier II park, joins
the Hopkins Center for the Arts and The Depot Coffee House as three innovative, unique, and
signature facilities of the City of Hopkins.
Faced with a tough budget environment the City Council did not approve a 2004 budget for the
Overpass Skate Park. Instead the Council directed staffto explore options that would retain a
skate park but eliminate or substantially minimize the annual costs associated with operating the
Overpass Skate Park. In exploring the options, staff connected with a small, primarily volunteer
organization and hired this organization to operate the park. The net cost of operations to the
City to operate the Overpass in 2004 was approximately $1,500. Unfortunately, the organization
proved to not have the resources necessary to consistently staff the site.
For 2005 staff intended to find another operator for the park. The budget included approximately
$2,000 for updates or improvements to the park. This was at the recommendation of an operator
that was under consideration for operating the park at the time the 2005 budget was proposed.
That operator is no longer under consideration.
Skate Parks have become a part of most community park systems in our area. Skate parks are
intended to reduce conflicts between youth and authorities, reduce damage to public and private
property, provide a safe place to practice the sport, and expand recreational offerings to youth.
Budget - see attached.
Possible Proposal for 2005
It was demonstrated in 2004 that an operator that is familiar with the skate park industry and the
skaters could make a difference at the Overpass. Last year's operator doubled attendance over
the previous year primarily through promotions, contests, and connecting with the customer.
With this in mind staff approached the management of "The 3rd Lair" a well known indoor skate
park in Golden Valley, MN. Operating a skate park and doing summer skate camps for
recreation departments is their business. They were approached to see ifthey had any interest in
operating the Overpass Skate Park.
The 3rd Lair management is interested in operating the park but the only way they can take it
over this year is under a 5-year agreement, which is different than the one-year agreement that
Council approved last year. In early discussions we talked of a one year agreement but the
owners of 3rd Lair expressed the need to have the park updated and possibly rearranged to attract
customers and they would need the City to bear most ofthese expenses (about $15,000) under a
one year agreement. (The sport is evolving and the equipment is evolving. Once a skater masters
a park's equipment and courses their willingness to pay user fees declines. Change doesn't
necessarily mean bigger. It can mean changing the layout, adding or changing the smaller skill
development equipment, and adding street simulation equipment.) A 5-year agreement gives the
operators the security to do the investing in the park with the knowledge they will be there to
realize the results of their investment.
Here is what we have discussed:
5 year operators agreement
Keep Overpass name but in some way also give 3rd Lair name exposure
There would be advertising on site
The equipment would be rebuiltJreconfigured and other equipment might be added
The reciprocity agreement with St. Louis Park Aquatics Park would be honored (Users of
these facilities enter at resident rates)
New operators would like to do events including "overnight lock ins"
This arrangement is larger than the previous agreement so I am requesting the Council's input on
this arrangement before we get into deeper discussions and drafting an agreement. Here are some
questions. Is the Council:
Comfortable with a 5-year agreement?
o There will be out clauses for both parties.
Comfortable with advertising at the park?
o With the same no tobacco, no alcohol, etc. restrictions that our own advertising
policies carry.
Comfortable with sharing the name recognition?
Comfortable with an operator reworking the equipment?
Other Options?
Is the Council interested in weighing other options?
1. Selling the equipment and purchasing tier I equipment?
· Tier I equipment doesn't require staffing or additional insurance
· Very little used equipment on the market so resale value unknown
2. Operating the park with City staff.
. Annual cost of approximately $13,000 -$17,000 to operate the park
3. Hire an operator on a one-year contract and invest in park equipment/change.
· Cost: up to $15,000
4. Selling the equipment and not rebuild a skate park facility.
The Council's direction on the Overpass Skate Park will aid staff in moving ahead with
arrangements for the 2005 season.
FUND 101
Percent
Change
Budget
2005
Budget
2004
Projected
Actual
2004
REVENUE AND EXPENSE DETAIL
Actual
2003
Actual
2002
Actual
2001
45160
SKATE PARK
PROGRAM
REVENUES
CODE
$
$
$
5,655
$
17,314
$
39,278
$
Admissions
Grants
Interest
750
20
Earnings
Vending
Donations
Transfer in
$
$
$
5,655
$
17,314
$
40,048
$
TOTAL
EXPENSE
Salaries and Employee Benefits
3,428
190
262
$
$
$
1,687
30
7,495
74
725
177
195
10,354
$
13,732
8,734
676
1,660
2,450
501
148
27,901
$
18,191
7
16,714
815
2,649
2,925
607
29
41,937
$
Regular Employees
Overtime
Part-Time Employees
SL Converted/L TD
P.E.R.A. Contribution
F.I.C.A. Contribution
Cafeteria Benefit Plan
Workers Compensation
Paid Leave Accrual
TOTAL
500
501
503
524
525
526
527
531
535
3,910
500
100
924
10
1,453
Supplies and Services
Office Supplies
General Supplies
Equipment Parts
Structural Supplies
Concession Supplies
Materials,
69
28
31
279
1,241
3
Postage
Maint & Repair-EquipmentlVehicIes
Maintenance - Structures
3,000
110
110
449
450
105
Printing
Audit
540
542
543
544
548
560
563
565
568
580
REVENUE AND EXPENSE DETAIL
45160
SKATE PARK
PROGRAM
FUND 101
Budget
2005
Budget
2004
Projected
Actual
2004
Actual
2003
Actual
2002
Actual
2001
Percent
Change
200
100
140
23
347
147
130
975
120
697
78
816
18
121
,000
928
143
272
176
2,266
1
EXPENSE, (cont.)
Materials, Supplies and Services, (cont.)
Advertising and Publication
Expert & Professional Services
Telephone - Cellular
Legal Service
Electricity
Disposal Charges
Equipment Rental
Administration Fee
CODE
Training
General Liability
813
1,469
1,850
697
4,807
1,935
600
7,122
882
595
9,283
Property Insurance
TOTAL
581
582
586
588
604
605
611
622
630
652
653
3,800
7,710
1,469
162
15
35,023
51,220
Operating Expense
Total
(7,710)
,469)
(
(9,507)
(17,709)
(11.172)
Operating Income (Loss)
3,038
3,038
3,038
Non operating expense
Depreciation
680
(7,710)
$
$
(1,469)
$
(I2,545)
$
(20.747)
$
4,210)
(1
$
NET INCOME (LOSS)
(7,710)
(7,710)
2,020
(15,450)
14,565
(5,943)
450
35,312
11,766
Retained Earnings 12-31
12-31
Cash Balance