HomeMy WebLinkAboutID# 14-484 La Laguna Resort & Boat Launch License AgreementC1'I'Y OE ,
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REPORT TO CITY COUNCIL
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: GRANT YATES, CITY MANAGER
DATE: MARCH 10, 2015
SUBJECT: LA LAGUNA RESORT AND BOAT LAUNCH LICENSE AGREEMENT
RECOMMENDATION
Recommendation for City Council to authorize staff to begin cancellation procedures of
the License Agreement with Pyramid Enterprise (Licensee) for Operation of the
Campground, Day Use and Boat Launch Concession at the Lake Elsinore Recreation
Area as described in the 2013 Agreement of Operations with Pyramid Enterprises, section
17.
BACKGROUND
In 2001, the City of Lake Elsinore entered into a short term concession agreement with
Pyramid Enterprises to operate the Lake Elsinore Campground and Day Use Facility
(renamed "La Laguna Resort and Boat Launch ") as a concession with the City receiving
7% of the gross revenue generated. In February 2005, the City entered into a long -term
agreement with Pyramid Enterprise to operate the facilities and develop long -term
renovations for the facility. This agreement received three amendments changing the
scope from long -term to month to month operations.
In October 2014, the City contracted with Moore Campground Consulting to evaluate the
current facilities and present recommendations for the Campground and Boat Launch
operations highest and best use for camping, boating, and various recreational
opportunities.
LA LAGUNA RESORT AND BOAT LAUNCH LICENSE AGREEMENT
March 10, 2015
Page 2
DISCUSSION
During the month of October 2014, Joe Moore of Moore Campground Consulting
performed an extensive evaluation of the operations of La Laguna Resort and Boat
Launch which included: understanding the history of the park's origin of ownership coming
to the City, various iterations of operations at the facility; in depth interviews with staff,
Council members, residents and campground guests; discussions with existing
campground staff and regional comparisons of campgrounds and amenities. From this
information, the Consultant developed a SWOT Analysis (Strengths, Weaknesses,
Opportunities and Threats) and recommend a highest and best use for the campground
and Boat Launch which would necessitate a transfer of operations to the City of Lake
Elsinore and a significant investment into the infrastructure, staffing, marketing, and
branding of the facility. Lake Elsinore (and La Laguna) is in the "magic 50" (50 miles from
Los Angeles County and 50 miles from San Diego County) making it a destination location
for recreation and specifically the campground community.
Based on the campground evaluation and recommendation by Moore Campground
Consulting, the Campground, Day Use area, and Boat Launch has an opportunity to
reach the "Dream Extreme" for a destination recreational amenity for the City of Lake
Elsinore. To this end, the City is recommending to dissolve the current agreement with
Pyramid Enterprises and take on operations of the facility. The process will be long term
and will take an investment by the City to bring the Campground and Day use area up to
the level of the Boat Launch which has increased since re- opening in 2012. Under direct
City management, the Campground will undergo a transformation to better meet City
Council directive of creating a "destination location" and utilizing two of our largest assets:
the Lake and La Laguna Resort and Campground.
The implementation steps going forward will take place over the next 18 — 24 months and
will place the facility in an optimum position to capitalize on the resources. Below are the
various steps that need to be accomplished. City staff will continue to seek direction and
approval from the City Council as the City approaches the milestones related to temporary
and long -term operations set forth below.
Cancellation of Current Agreement
Per 2013 Agreement of Operations with Pyramid Enterprises, section 17
CANCELLATION, staff is recommending cancellation of the existing Agreement (set to
terminate in January 31, 2016) and begin the process of transitioning management of the
facilities to City of Lake Elsinore. This will include:
• Define equipment (City /Pyramid Enterprises) assets
• Obtain advance registrations (if any) past the 60 day cancellation
• Notification of vendors /utilities etc. for change of service
• Negotiate current contracts /agreements for services (septic, electricity, etc.)
• City Manager to send notice of termination
LA LAGUNA RESORT AND BOAT LAUNCH LICENSE AGREEMENT
March 10, 2015
Page 2
Temporary Operations
Part of the transition will require the City of Lake Elsinore to oversee temporary operations
while the Campground and Boat Launch operations are reviewed and developed for long
term success. This will include:
• Review existing assets and secure necessary equipment to operate (capital
purchases)
• Contract with utility companies (septic, water, electrical) to ascertain extent of
necessary repairs to successfully operate the facility
• Development of job descriptions for personnel to continue operations
• Develop "Workcamper"/Volunteer program to reduce staffing expenses
• Interviews of current staff members for possible temporary employment for
operations
• Development of marketing material and connections to promote Campground, Day
Use and Boat Launch to increase revenue
• Upgrades to the facility that will be incorporated into the overall Master Plan of the
facility (i.e Wifi, phone access, computer reservations /campsite
Long Term Operations
The long term commitment to the success of La Laguna will be a multi - phased project
which will take all aspects of the operational needs necessary including:
• Contra^., with a ^^aste, Plaf C'J,Isla lta nt t f! ,a f 'h'+ that t
10 design a campground facility that will ..
meet the needs of current and future users
• Develop a Pro forma that takes into account debt service for campground
reconstruction, staffing and operations, preventative maintenance, replacement of
capital needs
• Create an implementation plan to a) maintain camp operations while phasing in
campground improvements.
FISCAL IMPACT
Currently, the City receives 7% of gross revenue generated at La Laguna Resort and
Boat Launch and Seaport Boat Launch (while in operation). Below are the reported
revenues from Pyramid Enterprises from December 2008 — December 2014:
YEAR
2008
2009
2010
2011
1 2012
2013
2014
GROSS
$345,444
$320,088
$306,904
$334,101
$315,482
$333,455
$348,566
CITY
1 $23,977
$22,492
$21,623
$23,625
1 $22,197
$23,342
$24,400
With the transfer of operations, the City will have complete responsibility for revenue and
expenditures for La Laguna Resort and Boat Launch (100% of revenue and
expenditures). A full in -depth Business Plan and Pro forma will developed, discussed,
and revised through the Economic Development Committee and presented to the City
Council for approval. The interim budget (6 months — 12 months) will be based on the
current Profit/Loss Statement of Pyramid Enterprises for La Laguna Resort with
LA LAGUNA RESORT AND BOAT LAUNCH LICENSE AGREEMENT
March 10, 2015
Page 2
alterations to staffing, marketing, and maintenance and will be included as part of the
FY2015 -16 budget for Community Services Department.
Prepared by: Johnathan O. Skinner
Director of Community Services
Approved by: Grant Yates
City Manager