To: Honorable Mayor and Members of Town Council
From: Jeff Brauer - Director of Parks and Recreation
Title
Resolution: Authorizing The Town Of Castle Rock To Enter Into A Memorandum Of Understanding With P3 Advisors, LLC To Outline A Business And Financial Arrangement To Develop A Snowsports Recreational Amenity At Philip S. Miller Park
Body
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Executive Summary
The purpose of this agenda item is to ask for Town Council consideration to enter into a Memorandum of Understanding (MOU) with P3 Advisors, LLC (P3) for the development of a synthetic snow park at Philip S. Miller Park. P3 is currently marketing this potential facility under the brand name of SnowSports 365. If Town Council reaches consensus that this MOU is reasonable, staff will continue working towards a Development Agreement with P3.
Previously, the Town of Castle Rock entered into a 2-year Letter of Intent / Exclusive Evaluation Period for a public private partnership with P3 at Philip S. Miller Park. The Exclusive Evaluation Period expired in October 2015. After months of research and analysis, P3 believes this, is in fact, a viable project and have proposed a Memorandum of Understanding.
This Memorandum of Understanding is a precursor to a potential Development Agreement, and establishes the preliminary interest from both parties, which allows P3 to advance the project to the financial market for consideration by lenders. The terms and conditions of the Memorandum of Understanding has been attached for Town Council review. The lease commits approximately 9.5 acres of Philip S. Miller Park for an initial timeframe of twenty to twenty-five years with two subsequent 10-year optional terms. The time frame requested for this lease has been driven by the concerns for financing of this project.
In order to evaluate the probability of success for a synthetic snow park in Castle Rock, P3 engaged the consulting services of the Innovation Group to assess the market and financial feasibility of this potential project. The Innovation Group study suggests that the project has a high probability of success.
Project costs are anticipated to be approximately $28 million. P3 is asking for a $2.7 million loan from the Town of Castle Rock for a ten year term, paying 2.5% interest and escalating 1% per year after year 5. The purpose of the loan is twofold:
1.) The Town loan demonstrates commitment and confidence from the Town, which will assist P3 as they release this project to the financial market for financing.
2.) The loan funding will pay for improvements that will benefit the park, such as parking lots, utility extensions and lighting.
The Town loan is currently structured as an unsecured loan, which has inherent risk in the case of a default on the loan or the lease. In addition, in the case of a default, the Town may be exposed to remedial costs to restore the property to its original condition, or to repurpose the property.
In order to provide an objective review of this business opportunity, the Town entered into a consulting agreement with Deepwater Point Company. Numerous meetings were held with P3, Deepwater Point and the Town’s Finance staff. Tim Leonard of Deepwater Point has previously assisted the Town with the Promenade negotiations. Tim Leonard has reviewed the business Pro Forma for SnowSports 365 and the Market Assessment and Development Feasibility Study prepared by The Innovation Group.
Discussion
The artificial ski surface product being proposed at SnowSports 365 is Snowflex®, a product of Briton Engineering. Snowflex® is made with a premium, engineered polymer and provides the users with a skiing experience similar to snow by misting the polymer surface with water. This system has been used in several climates in the United States and Europe and can be tailored to Colorado’s unique climate range of bright, sunny days as well as a windy, cold day. Snowflex was first launched in 1996 and has been installed in approximately 50 slopes to date, including the only full slope in the United States at Liberty University in Lynchburg, Virginia.
The greatest advantage of such a system is that it has been recognized as the closest replication of snow. Snowflex also has softer falls that makes the system safer, and it can be operated year round. Slopes with Snowflex® often feature terrain parks that include quarter and half pipes, wall rides, as well as multiple rail and box options for skill development. The project as proposed at this point includes a synthetic snow surface with various jumps, moguls and rails supported by a lift or moving carpet system, a smaller area for tubing and a lodge / concession building. It is estimated that this recreation amenity will bring in 170,000 annual visits.
The vision for this exciting project is to provide a unique recreation opportunity for Castle Rock residents and to create a destination attraction that will drive additional regional daily users and special events into Philip S. Miller Park. This use has been included in the park master plan and would provide family focused outdoor entertainment and adventure experiences. The overall objective is to create a shared vision that produces significant recreation benefits, and capitalizes on private sector capabilities.
Philip S. Miller Park opened one year ago and has since generated well over 500,000 visits. With the existing amenities and scheduled completion of the amphitheater, the millhouse, and new Aerial Trekking Course, Town Council may consider the proposed Snowsports 365 use and compatibility with other uses that have been established within the park.
Acquisition of Required Property
There are two options for the location of SnowSports 365 at Philip S. Miller Park, although only the first option has been studied by P3 as the preferred location.
1.) West of the Adventure Playground
2.) Wolfensberger Road location
On the first location, there is private property parcel that is still under private ownership within the Castle Meadows Development Plan that is critical to this project because it is required for access and parking. The privately owned parcel is currently zoned as PLD (Public Land Dedication) but has not yet been dedicated to the Town of Castle Rock. PLD is the zoning designation for active parks, such as Philip S. Miller Park and limits the development to only public recreation facilities and supporting uses.
The Town owns the property on the Wolfensberger Road option and it appears that no additional land would be required. This second option has been conceptually designed under the same criteria as the first option.
Budget Impact
The Town has funding available in unobligated reserves for the Loan. The loan will not be implemented until such time as P3 has established financing and securing a Development Agreement with the Town of Castle Rock. Reserve funds will be evaluated at the time of the loan for availability.
Staff Recommendation
Staff recommends that Town enter into a Memorandum of Understanding with P3 Advisors, LLC to Outline a Business and Financial Arrangement to Develop a Snowsports Recreational Amenity at Philip S. Miller Park.
Proposed Motion
“I move to approve a Resolution Authorizing The Town Of Castle Rock To Enter Into Memorandum Of Understanding With P3 Advisors, LLC To Outline A Business And Financial Arrangement To Develop A Snowsports Recreational Amenity At Philip S. Miller Park.”
Attachments
Attachment A Resolution
Exhibit 1 Memorandum of Understanding