Minneapolis Park & Recreation Board

Resolution
2016-251

Resolution Approving the Lease Agreement Between the Minneapolis Park & Recreation Board and the Loppet Foundation Allowing the Loppet Foundation to Lease the Adventure and Welcome Center at Theodore Wirth Regional Park for the Purposes of Supporting Programs and Activities Related to Winter and Summer Recreation

Information

Department:Planning ServicesSponsors:
Category:ContractProjects:No Project

Item Discussion

Whereas, The Minneapolis Park & Recreation Board (MPRB) is the steward of the Minneapolis park system;

 

Whereas, The MPRB has approved a Master Plan for Theodore Wirth Regional Park, which includes, among many other elements, an Adventure and Welcome Center (AWC) focused on cross country skiing, par-3 golf support, hiking, off-road cycling, snowboarding, and snow tubing;

 

Whereas, The Loppet Foundation (Loppet), a Minneapolis-based non-profit entity, provides winter and non-winter recreation programming and activities as part of its core mission and is interested in enhancing its ability to deliver those programs and activities through the proposed AWC;

 

Whereas, MPRB staff, including Golf staff, worked with the Loppet to develop a plan for the AWC and the AWC building that included significant opportunities for public input and resulted in a schematic design for the building, site, and revisions to the back 9 of the Theodore Wirth Golf Course and that satisfies goals stated in the Theodore Wirth Regional Park Master Plan related to creation of a high-quality venue for year-round sports and the disentanglement of golf and winter sports operations;

 

Whereas, The MPRB and the Loppet mutually desire to enter into a lease that allows the Loppet to occupy and operate the AWC building as described in a Lease Agreement; and

 

Whereas, This resolution is supported by the MPRB 2007-2020 Comprehensive Plan, which envisions “Dynamic parks shape city character and meet diverse community needs” and “A safe place to play, celebrate, contemplate, and recreate;”

 

RESOLVED, That the Board of Commissioners approve the Lease Agreement between the Minneapolis Park & Recreation Board and the Loppet Foundation allowing the Loppet Foundation to lease the Adventure and Welcome Center at Theodore Wirth Regional Park for the purposes of supporting programs and activities related to winter and summer recreation; and

 

RESOLVED, that the Board of Commissioner’s approval of the Lease Agreement under this Resolution is subject to the following conditions and actions:  1.) MPRB staff shall submit the Lease Agreement to the Commissioner of Minnesota Management & Budget for his prior approval under Minnesota Statutes 16A.695;  2.) the Board of Commissioners authorizes the President and Secretary to enter into the Lease Agreement and execute the Lease Agreement on behalf of the Board only after the Commissioner of Minnesota Management & Budget gives his prior written approval to the agreement; and 3.) should any change be made to the Lease Agreement as a result of the approval process of the Commissioner of Minnesota Management & Budget, the Lease Agreement will have to be again submitted to the Board of Commissioners for approval and for authorization of the President and Secretary to enter into and execute the agreement.

Body

BACKGROUND

This action considers a series of agreements that, together, allow for the development of an Adventure and Welcome Center (AWC) at Theodore Wirth Regional Park (Wirth) as a collaboration between the Minneapolis Park & Recreation Board (MPRB) and the Loppet Foundation (Loppet). The AWC will be the operational and administrative hub for programs that are part of the agreements, with the focus of programs being winter recreation (tubing and snowboarding at Wirth and cross-country skiing at Wirth and other park locations within the MPRB system) and summer recreation focused on mountain biking and the par 3 golf course. The AWC refers to the building and an area of Wirth where the core programs under the agreements take place.

MPRB staff and the Loppet have developed the three agreements necessary to establish and operate the AWC:

Donation Agreement              establishing a path for the Loppet to construct and deliver to the MPRB the AWC building and areas immediately surrounding the building as a donation according to a schematic design approved by the Board of Commissioners on August 19, 2015 (Resolution 2015-275) and final design and construction documents prepared for the MPRB by HGA, Inc.; the agreement also provides for the Loppet to construct and deliver utilities serving the building.

Operating Agreement              establishing a set of criteria for the operation of the AWC, the provision of programs, reporting requirements, conformance to MPRB policies and practices; this agreements lays out the responsibilities of each party relative to the AWC.

Lease Agreement              establishing a lease of the AWC building to the Loppet according to terms that include rent based on an annual lump sum payment plus a percentage of net income, as well as contributing to a fund that allows for the long-term care of the building; the lease would become effective within one week of satisfactory completion of the building, receipt of a Certificate of Occupancy for the AWC building, and the Loppet’s donation of the AWC building and related utilities to the MPRB.

The agreements are interrelated and supportive of each other. In effect, the Board of Commissioners must approve each agreement and it must award, separately, a contract for construction of Hole 17 and Hole 18 of Theodore Wirth Golf Course in order to advance the project. Pending approval of the agreements and a contract to construct Hole 17 and Hole 18 of the Theodore Wirth Golf Course, the Loppet will engage a contractor and begin construction of the building. MPRB staff will orchestrate a bid process for site work that allows the Board of Commissioners to consider awarding a contract for construction in early September.

In the three agreements, the MPRB and the Loppet have framed directions that allow the Loppet to:

·          construct and donate to the MPRB a complete AWC building and related utility improvements;

·          use the AWC to deliver programming to park users in ways that are superior to what either it or the MPRB could deliver independent of one another; and

·          occupy the AWC building according to terms that support MPRB policies and practices and permit the Loppet to provide services, programs, and activities desired by park users, with programs aimed, in part, to underserved users and communities in Minneapolis and the region.

 

Broadly, the Lease Agreement allows the Loppet to enter into a multi-year lease with the MPRB for the AWC building, from which it would operate winter and non-winter recreation programs and activities. The Lease Agreement allows, with limitations, the Loppet to have sub-tenants in the AWC. The Lease Agreement establishes rent based on an annual lump sum amount plus a percentage of the Loppet’s net income from the AWC. It also provides for the Loppet to contribute to a fund for long-term maintenance and replacements needs related to the AWC building.

Abstract of agreements

Because the agreements are so interrelated, demonstrating their intent is more readily achieved through an abstraction of key directions and provisions of the agreements as a whole, as follows:

1

Goals

Minneapolis has a world-class park system. The MPRB and the Loppet are entering into these agreements to provide world-class outdoor-active opportunities for users of Minneapolis parks and to ensure winter recreation and other programs are extended to Minneapolis residents who are economically disadvantaged and/or are of color. The Loppet and MPRB want to see a highly successful venue that reflects well on both the MPRB and the Loppet. Both organizations want to establish ways for more people to actively use the parks on a year-round basis. They want to create a building that acts as a home base for outdoor activities, where people go to eat, relax, and celebrate year-round outdoor recreational opportunities that are unique to Minneapolis.  The MPRB and the Loppet will achieve these goals by working together at and through the AWC, with the Loppet being the core provider, but with both parties collaborating to make this a successful relationship for Minneapolis and the region.

 

2

Donation

The MPRB and Loppet have worked together on the design of a project that includes a building and utilities for the building, trails and other site improvements, including golf and tubing hill realignment, parking lots and stormwater management that meet the needs of the community and satisfy the requirements of the Master Plan for Theodore Wirth Regional Park. In order to satisfy the goals articulated above, the parties have agreed that the Loppet will construct and donate the building, utilities and trails to the MPRB, and the MPRB will construct the other site improvements.

 

Salient points include:

 

a)      MPRB will cooperate with Loppet in the procurement of permits necessary to construct its donation and provide permits from the MPRB necessary for Loppet to construct its donation.

b)      Loppet will abide by the spirit of MPRB procurement requirements in constructing the building and trails, and will agree to community participation goals intended to align with the City of Minneapolis Department of Civil Rights contracting requirements.

c)       Loppet will provide bonds or escrow in amounts that ensure that MPRB can accomplish the construction of the AWC should the Loppet fail to deliver its donation.

d)      Loppet will deliver the AWC building according to a schematic design approved by the Board of Commissioners and final design and construction documents prepared by HGA, Inc.

 

Loppet and MPRB will coordinate on delivery of the various portions of the project to avoid delay or conflict to the greatest degree practicable.

 

3

Operations

The MPRB and the Loppet will work together to achieve a level of care and maintenance for the AWC commensurate with MPRB regional park standards and, if practicable, achieve a higher standard aimed at enhancing the experience of park users. The Loppet and MPRB intend for the Loppet to be responsible for the financial health of the project, with the MPRB providing certain functions in support of the Loppet’s operations in areas such as storage and maintenance facilities, and park police patrols. The project will be administered so as to minimize risk for MPRB, allowing the MPRB to assume operations with minimal investments should its relationship with the Loppet be unsuccessful.

 

Salient points include:

 

a)      Loppet will be the primary operator of the AWC and be primarily responsible for delivering programs and activities in the AWC area. Loppet will be the primary operator of cross-country ski trail grooming throughout the MPRB system.

b)      Loppet will maintain mountain bike event trails in the AWC area and ski trails throughout the MPRB system.

c)       MPRB will provide snow removal services in parking lots, drives, and any major pedestrian areas serving the AWC building.

d)      Loppet will provide snow removal services on walks and in smaller spaces, and will provide landscape and lawn maintenance in areas surrounding and near the AWC building.

e)      The maintenance facilities at Wirth will be shared, with the MPRB primarily occupying those facilities in the summer months (generally from mid-March to mid-November) and the Loppet primarily occupying those facilities in the winter months (generally mid-November to mid-March).

f)        In order to avoid conflict and to ensure the smooth running of the facilities, Loppet and MPRB will coordinate operations and events calendars on a monthly basis, especially with regard to changeovers between summer and winter operations.

g)       Loppet and MPRB will coordinate on the permitting of events and activities, with the MPRB permitting events and activities in Theodore Wirth Regional Park except those happening solely in the AWC area or, in the winter, solely in the quadrant of land surrounding the AWC (Back-9 and Back-40); in those areas the Loppet will be the permitting agent for events and activities.

 

4

Operations equipment, infrastructure, and storage

MPRB and the Loppet will work together to maintain and store a fleet of equipment for the winter recreation operations associated with the operating and lease agreement. The intent is to use the assets of each party to accomplish this goal. Accordingly, the Loppet will use its fundraising ability as a non-profit organization to purchase new equipment, MPRB will allow the Loppet to use its existing fleet of equipment, the Foundation will maintain the equipment, and MPRB will provide space to store the equipment.

 

Salient points include:

 

a)      MPRB will allow the Loppet to use snow making and grooming for purposes related to the agreements.

b)      Loppet will operate and maintain equipment and infrastructure.

c)       MPRB will provide storage and facilities for Loppet’s maintenance operations, including off-season storage for the snow making and grooming equipment.

d)      Loppet will provide equivalent fleet of equipment back to MPRB at conclusion of lease.

 

5

Programming

Minneapolis park users and particularly Minneapolis youth and families who are economically disadvantaged and/or are of color will be provided with a year-round outdoor active experience commensurate with other experiences provided by the MPRB system. MPRB and Loppet will work together to ensure that the all have a meaningful opportunity to participate in and enjoy the AWC experience, while allowing the Loppet to maintain the financial integrity of the winter recreation operation.

 

Salient points include:

 

a)      Loppet will be primary operators of AWC and will be primary programmers of space.

b)      Loppet will work to include Minneapolis youth and families who are economically disadvantaged and/or are of color in AWC activities and will also provide fee waivers for distribution by the MPRB.

 

6

Relationship to golf

Both parties will cooperate to ensure golf succeeds at Wirth, both because golf is an outdoor activity aligned with the mission of both parties and because the success of golf, particularly the par-3 golf course, will help drive the success of the AWC.

 

Salient points include:

 

a)      AWC will be the headquarters for the Wirth par-3 golf course.

b)      Loppet and MPRB golf parkkeeper forman will coordinate the location of ski trails so as to minimize impacts on golf.

 

7

Policies

The Loppet’s activities at the AWC will occur within the MPRB policy framework, with independence and flexibility provided by the MPRB to ensure the Loppet can succeed. Accordingly, the Operating Agreement and the Lease Agreement require the Loppet to work within MPRB’s policy structure except as specifically noted, and requires the Loppet to specifically seek approval for diverging from MPRB policies where necessary to ensure the financial, operational, and programming success of its activities related to the AWC.

 

Salient points include:

 

a)      Loppet will abide by all MPRB policies or seek a specific variance where a divergence is necessary to ensure successful delivery of the goals of the relationship between the MPRB and the Loppet.

 

8

Staffing and customer interaction

Loppet and MPRB intend for the AWC to be well-staffed with knowledgeable and friendly representatives of both the Loppet and MPRB who are versed in MPRB and national standards of customer service. Loppet and MPRB intend for the AWC to be a facility that runs smoothly with both Loppet and MPRB employees working together to set the highest standards for the entire project so that the project achieves financial, programmatic and operational success and fully reflects a positive image for both parties.

 

Salient points include:

 

a)      Loppet will provide operating and transactional staff, including staff for par-3 golf transactions.

b)      MPRB may provide staff in the form of “ambassadors” to guide park users’ experiences within Theodore Wirth Regional Park and the entire MPRB system.

 

9

Financial goals

The AWC project is designed to provide valuable programs and activities to the public generally and to Minneapolis youth and families who are economically disadvantaged and/or are of color in particular. Prior to entering this agreement, MPRB has provided these services through a more limited partnership with the Loppet with significant public investment. A significant goal of this partnership is to provide consistent and high quality services with a reduced public investment. Accordingly, this agreement envisions the Loppet making a significant initial investment and handling the day-to-day operations of the AWC, with MPRB providing in-kind resources like land, storage, equipment, and infrastructure that do not necessarily come with a direct financial investment.

 

Salient points include:

 

a)      MPRB will provide in-kind help with this project, like snowplowing, storage and land use.

b)      Loppet will collect and retain all revenues related to the AWC except revenues related to par-3 golf will be turned over to the MPRB, and Loppet is also responsible for the expenses related to the AWC. Loppet is responsible for the AWC’s financial success and its ability to provide consistent and high quality programs and activities related to the AWC.

 

10

Lease

The Loppet and MPRB desire to enter a lease that maximizes the financial success of the AWC operation, includes provisions for the future upkeep of the AWC building, and allows Minneapolis youth and families who are economically disadvantaged and/or are of color and both parties to share in the success of the AWC project. The Loppet and MPRB also want the lease to provide enough predictability and certainty so that the Loppet can operate successfully, but also have enough flexibility so that Loppet and MPRB can make the project successful even in the face of unforeseen circumstances or events.

 

Salient points include:

 

a)      MPRB and Loppet will enter into a 20-year lease, with two ten-year options for renewal.

b)      Loppet will pay annual rent equal to 18% of Loppet’s net income, plus an annual lump sum payment of $6,500, with the lump sum amount increasing by $1,000 every ten years of the lease and lease renewals.

c)       Loppet will pay $20,000/year into an escrow account for the long-term maintenance of the building, with the escrow amount increasing by $10,000 every ten years through the initial term of the lease and the lease renewals.

d)      Loppet may have sub-tenants in the AWC, provided such sub-tenants:

·          are chosen through a request for proposal (RFP) process that parallels the MPRB process;

·          are locally operated and managed; and

·          abide by MPRB policies.

MPRB Superintendent or Superintendent’s designee will participate in the selection process to ensure the RFP process meets or exceeds standards of MPRB RFP process.

e)      Loppet will provide MPRB with use of AWC facility for MPRB events. MPRB shall be subject to normal AWC facility charges, except that for two uses per year the Loppet will charge the MPRB 50% of normal AWC rental/permit fees. MPRB shall be subject to normal cancellation fees.

 

11

Reporting

Loppet will prepare annual documentation of its programming and activities as well as financial performance data, including audited statements demonstrating Net Income from the AWC, as a means of ensuring certain terms of the agreements are being addressed. MPRB staff will review information provided by the Loppet and prepare a presentation to the Board of Commissioners on an annual basis. In addition, the agreements envision the parties engaging in regular status meetings.

 

Salient points include:

 

a)      Loppet will prepare and submit to MPRB an annual programming report describing Loppet’s operations related to programs and activities at the AWC and, in particular, Loppet’s provision of programs and services targeted to Minneapolis youth and families who are economically disadvantaged and/or are of color.

b)      Loppet will prepare and submit to MPRB an annual financial report describing Loppet’s operations related to the AWC, with the report being a key element in determining the annual rent to be paid by Loppet for its occupancy of the AWC; the report will be prepared to demonstrate Loppet’s capacity for perpetuating programs and activities under the AWC agreements; the report will identify points of risk related to Loppet’s performance under the AWC agreements and pose strategies for minimizing or eliminating identified risks.

c)       MPRB and Loppet staff will present the programming report and the financial report to the Board of Commissioners on an annual basis.

 

12

Coordination and amendments

The MPRB and the Loppet agree that the agreements cannot address every condition or situation that might be presented at the AWC. To best perpetuation of the agreements, the MPRB and the Loppet will take extra steps to ensure work is well coordinated, especially in the early years of the agreements. It is also likely that modifications to the agreements may be necessary, and the MPRB and the Loppet will determine the need and content of modifications in their mutual interest and, above all, in the interest of park users.

 

Salient points include:

 

a)      The MPRB and the Loppet will each assign an individual as a representative to coordinate activities and interpret areas of the agreements for which direction is not clear.

b)      The representatives shall meet on at least a monthly basis for the first three years of the agreements, and shall involve others as necessary to ensure the work of each party is well coordinated and is performed in the best interests of park users.

 

Schedule

Execution of the Lease Agreement is predicated upon the Loppet’s satisfactory completion of the AWC building and related utilities, the discharge of any liens related to the Donatinon of the AWC by the Loppet, the receipt of a Certificate of Occupancy from the City of Golden Valley, and the MPRB’s acceptance of the AWC building and related utilities as a donation from the Loppet.

Funding

Related to the Lease Agreement, the MPRB will have costs related to oversight of the three agreements with the Loppet. Because the agreements are intended to provide a benefit to park users, staff believes it is appropriate to share in the costs of the oversight. To that end, the annual lump sum portion of the rent ($6,500) would be directed to staff time related to agreement oversight. The annual amount would increase by $1,000 every ten years of the initial term of the lease and every ten years of the lease renewals.

Over time, the costs for the MPRB relate to long-term maintenance and replacements for the AWC building. The Lease Agreement provides for an annual contribution from the Loppet of $20,000 for the first ten years of the Lease Agreement and an annual contribution from the Loppet of $30,000 for the second ten years of the Lease Agreement which would be directed to an interest bearing account to be used for long-term maintenance and replacement needs of the AWC building. Each additional term of the lease under its renewal would result in an increase of $10,000 in the amount of the previous annual contribution for the purposes of long-term maintenance and replacements for the AWC building.

The Lease Agreement has been reviewed and approved by MPRB’s legal counsel.

 

Recommendation

Staff recommends that the Board of Commissioners approve the Lease Agreement between the Minneapolis Park & Recreation Board and the Loppet Foundation allowing the Loppet Foundation to lease the Adventure and Welcome Center at Theodore Wirth Regional Park for the purposes of supporting programs and activities related to winter and summer recreation.

This action is supported by the following vision and goal statements in the MPRB 2007-2020 Comprehensive Plan:

Vision Theme 3:              Dynamic parks that shape city character and meet diverse community needs

 Goal:              Create opportunities for entrepreneurs, both non-profit and for-profit, to enrich the park experience and implement innovative approaches to revenue generation.

 Goal:              Parks shape and evolving city.

 Goal:              Park facility renewal and development respects history and focuses on sustainability, accessibility, flexibility, and beauty.

 Vision Theme 4:              A safe place to play, celebrate, contemplate, and recreate

 Goal:              Parks are safe and welcoming by design

 

 

 

Meeting History

Aug 3, 2016 5:20 PM  Administration & Finance Committee Committee Meeting
RESULT:ADOPTED [UNANIMOUS]
MOVER:Liz Wielinski, Vice Chair, Commissioner District 1
AYES:Scott Vreeland, Liz Wielinski, Jon Olson, John Erwin
ABSENT:Steffanie Musich, Annie Young
Sep 7, 2016 5:00 PM  Minneapolis Park and Recreation Board Regular Meeting

Approved on a Roll Call Vote

RESULT:ADOPTED [UNANIMOUS]
MOVER:Scott Vreeland, Commissioner District 3
SECONDER:Meg Forney, Commissioner At Large
AYES:Anita Tabb, Brad Bourn, Meg Forney, Steffanie Musich, Jon Olson, Scott Vreeland, Liz Wielinski, Annie Young
ABSENT:John Erwin