HomeMy WebLinkAboutCity Council Committees - Operations - 11/15/2011 (3) •
KEN T
WASH NOTON
Operations Committee Agenda
Councilmembers: Les Thomas * Elizabeth Albertson * Debbie Raplee, Chair
November 15, 2011
4:30 p.m.
ItennDescription Action Speaker Time Page
1. Approval of Minutes YES 1
Dated November 1, 2011
2. Approval of Vouchers dated YES Bob Nachlinger
October 31, 2011
3. Thunderbirds First Amendment to YES Ben Wolters 5 Min. 5
License Agreement - Authorize
4. SMG Amendment to the Kent Event YES Ben Wolters 5 Min. 17
Center Sales, Marketing, and
Operational Management Services
Agreement — Authorize
5. Merchant Investments YES Bob Nachlinger 15 Min. 25
(Nizar Alimohamed) Appeal of Tom Brubaker
Finance Director's Decision
Unless otherwise noted, the Operations Committee meets at 4:30 p.m. on the I" and 3r' Tuesdays
of each month. Council Chambers East, Kent City Hall, 220 4th Avenue South, Kent, 98032-5895.
Dates and times are subject to change. For information please contact Nancy Clary at
253) 856-5705 or Pam Clark at (253) 856-5723.
Any person requiring a disability accommodation should contact the City Clerk's Office at
(253) 856-5725 in advance.
For TDD relay service call the Washington Telecommunications Relay Service at
1-800-833-6388.
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1
OPERATIONS - MMrTTEE MINUTES
November 1, 3011
C_cgicni M4ali Pre en..: :]armie Peary, Debbie Papiee, Chair-, Le,s "li (Absent)
The meeting was called to order by D Rapiee at 4:3 a p.m.
D. ttaplee noted that an Item 5, has been added to the Agenda, which is a comarment regarding
the Governor's budget.
1, APPROVAL OF MINUTES DATED OCTOBER 4, 2011.
J. Perry mewed to approve the Operations Committee minutes dated October 4, 201L f1.
lt'apiee seconded the motion, which passed 3-0 (with concurrence from L. Thomas).
n APPROVAL OF VOUCHERS DATED SEPTEMBER 30, 2011 AND OCTOBE'R 15, 2011.
J. Perry moved to approve the voluchers dated September 30, 2012 and October 15, 301.1,
D. Raplee seconded the motion, rnwhlc'h passed 3-0 (with concurrence from L. Thomas).
3. 2011 EXPENDITURES BY DEPARTMENT YTD Tl- R U SEPTEMVER 2011 WITH
REVENUE SOURCES — INFO ONLY.
Finance Director, Bob Nachlinger provided a list of sources of funding for varpraris departments as
had been previowsly requesLed, Comrnrtte:e rneri had no qucsuQi— ,
4.. SUMMARY FINANCIAL REPORT AS, OF AUGUST 31, 2011 (INFORMATION ONLY).
Finance Directcr, Bob Nachlinger presented a brief overview of the September '30, 201.1 1-7 urnmary
Financial Report.
General Fund Surnmar
Ba ed on infCrmaGion available through September, General F'uarud rZ=venuea er estimated to, end
about s2,301.403 or 3.81'/6 under budget, vrhde expenditures are projected to end the year about
92:,5t34„103 or 4.91hs bedo�w the budge=t, This resurlts in a projee�:ted �end'ing f nd balance of
S2,267,104 or 4.311/a of the experrdit:rre budget.
Nachlinger rooted that sorare encouraging information is on pages 19 '& ZU of the packet, the
Building Permit and Men Check Fetes charts. Building Permits seern to be tracking upward. Plan
Check Pees are doing better than they had been, although still) not up to budget yet. (Recreation
fees (c:hart on page :2:1 of packet) which had been down earlier in the year are: now headed to came
in aid or above: budget. :i, Pelrry questioned why for last, cor.iplei of months Unity taxes have been
way down. hdachlinger explained reason is that we finally got information from utrlity providers es
to breakout between the city and the annexabon area; an additional arnouint went to the
annexation area. "fhe decline is really over the entire year, clue to more fund.$ needed in the
annexation area as opposed to the General Fund of the City. Basically an adjustment; so although
dawn 'For 'these two months, should be back up for October. Page 47 compares actuail expenditures
to first nine months to budget, if cornpare on budget to budget basis, our, revenues for the General
Fund are up 4.020%. On Page 4.3 the total expenditure side is actually down 12.62,'%. Page 46,
which shows years 2008, 2009, and 2010, the results through nine months were a negative fund
balance in time General Fund. This year for the first time ever that number has not been in brackets
alit year long. September is typic'ailhy our Icw paint until we get second half of taxes In Cctobe:r. 1.
Perry questioned if this includes the adju�stntents, which Nachlingeer respori yes it does,
2
C-perations Coii Minutes
November 1, 2011
Paige: .2
1 5, GOVERNORPS PROPOSED BUDGET - MAJO,R IMPACTS,,
Chief Administrative Officer, John Hiodgsorr provided comrnittee mernbers with a handout
Shownq a ,prelliminary budget Of the Governor's proposed reductions leading Lip to the
specialsea5lon. This is a pr-c1,.-)osal that vvill be amended after the next state revenue
forecasts come out pn two weeks. What was locked at through the 28 page d0CLment
was i are the budgets and reductions proposed right now that affect the city of Kent..
The figures are laid out as what would be the impact for 2012 and 2013. The reason for
that is right row the major proposed cuts don't take effect until either duly 2012 or May
2012, The first two are liquor profit sharing and liquor excise tax. For the last 70 years
the cities and county have shared revenues from the state to liquor profits and liquor
excise tax. For the city of li that Muir! de about 5600k next year. The major one 'is
the reduction of the annexation sales tax credit that wDLId came back to the city. From
May on, that would be almust $2 million. Looking at that from a half year perspec,lve plus
2 more rhori for arinexation, that would be $2.5 milillon for 2012, full year would no $4
million. Other undetermined costs right now are the State Crime Lab, city would assume
cost of non-wolent crime lab services and the State Police Academy, city sNould assume
50% cost of training, (up from 25%)-, $3,000 to $6,000. This is a preliminary proposal
from the Governor. The Assocrat:or of Washinction Cities has a letter going out to the
Governor tomorrow that will be signed by as many Mayor's as possibie. 'rho letter states
concern from cities about Hquor, tax and annexation, things cities depend on, The letter-
also, requests a meeting with Governor through AWC. hope to have a draft of the letter,
to Council later tonight, Will be calflng on council meml to help administration in
preparation of the special session that begins November 28 to calif for assistance from our
6 legisiators and anyone else outside 47'1" and 33" districts. The Governor's Proposed
Budget-Major Impacts handout is attached.
The meeting was adjourned at 4t5O P.m. by D. Ral
l arcy Clary,
Ope rat ion�s`U rn rn i Upp-Secreta ry
Cmernor's Propcsedl ludget - Nla�Dr Impacts
Gnneral F-ind Arnexaticn Tctal
Impart Fund jrnpact Irr pact
ElImilute Hqjcr polls shzdnp, 321576 320;76
9 lm-mmtc fiq.icr excise lax Oaring 71;1/20-2 220,611 221EII
Elkninate annexation sales tax credit 5 1/21012 iL99,925 -q998§25
AM 2012 Impac, 545,187 1,998,425 2,544,1.12
Ellmirmle liquor proMw sharq, 541152 649,152
FlhmirwL liqjcr Pxc,ise tax sharing LQ222 44L222
Eflirninate arnexaJon sa, es tax Z991518 :4998,383
Total 2C13 rnpac.1 ll'ufl year implict: 2,L,98,338 4.0,88,762
Undelen-rhrod r-npz;.c.t
Stay 4:Mrne jb - CRV mumes unt of nw-dolent mono lob senimss
Me l Academy - My asmams 50% of cost of tra4iin� up 4rcnn 25?',-� - �3,000 t-, $6,000
4
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5
ECONOMIC & COMMUNITY DEVELOPMENT
• Ben Wolters, Director
KEN T Phone: 253-856-5703
WnSHINGTON Fax: 253-856-6454
Address: 220 - 4th Avenue S
Kent, WA. 98032-5895
November 15, 2011
TO: Kent City Council Operations Committee
FROM: Ben Wolters, Economic & Community Development Director
SUBJECT: Thunderbirds First Amendment to License Agreement — Authorize
MOTION Move to recommend Council authorize the Mayor to sign the First
Amendment to the License Agreement between the City of Kent and
Thunderbird Hockey Enterprise, LLC.
SUMMARY: Summary: On March 15, 2011, the city of Kent sent a Letter of Intent
("LOI"), to the Seattle Thunderbirds supporting an amendment to the Lease
Agreement between the City and the Seattle Thunderbirds that would revise the
sale of suites and club seats at the ShowWare Center. The LOI contemplated the
following basic changes with regard to the seasonal sale of suites and club seats:
1. The Seattle Thunderbirds would be the sole contractor for the sale of
suite licenses for hockey games only and SMG, as the City's agent, would sell suites
on an individual basis for all non-hockey events.
2. This Amendment would allow suite pricing at approximately $16,200
for a ten person suite, $19,440 for a twelve person suite, $22,680 for a fourteen
person suite, and $25,920 for a sixteen person suite for all hockey games.
3. The Thunderbirds would receive a 15% commission on all "full-season"
hockey game-only suite sales. After accounting for any commission due, the
Seattle Thunderbirds would receive 60 percent and the City would receive 40% of
the net proceeds of the sale of suites for hockey games. The thunderbirds would
also advertise non-hockey events to its full database of customers for the purpose
of selling suites to non-hockey events. The thunderbirds would also be required to
make other reasonable efforts to sell suites to its customers for non-hockey events.
If the Thunderbirds sell a suite for a non-hockey event, the Thunderbirds would
receive a 15% commission. After accounting for Thunderbirds' commission, if any,
the City would retain 100 percent of the net proceeds from the sale of suites for
non-hockey events.
6
4. The Thunderbirds would be allowed to sell, on a single game basis,
tickets to any suite which is not under contract for a Hockey Event at a price to be
determined by the thunderbirds. The revenue from those sales would be included
as Net Ticket Proceeds.
5. All of the "performance clauses" represented in the Exhibits at the end
of the current License Agreement would be mutually adjusted to reflect the revised
pricing structure of certain seats.
(a) Club Seats would be reduced to $975.00 per seat on a Season
Ticket basis. The City would receive the first $75.00 on each ticket sold on a
Season Ticket basis, and the remaining $900 would be split with Thirty Percent
(30% or $270) to the City, and Seventy Percent (70% or $630) to the
Thunderbirds.
This First Amendment (Amendment) to the License Agreement by and between the
City of Kent and Thunderbird Hockey Enterprises, LLC (License Agreement),
amends the original License Agreement executed on August 7, 2007. All other
provisions of the original Agreement not inconsistent with this Amendment shall
remain in full force and effect
If you have any questions prior to the meeting, please call Ben Wolters at
856-5703.
Exhibits: Agreement attached
BUDGET IMPACT: Yes
7
FIRST AMENDMENT
to the
LICENSE AGREEMENT
by and between
THE CITY OF KENT
and
THUNDERBIRD HOCKEY ENTERPRISES, LLC
RECITALS
A. On March 15, 2011, the city of Kent sent a Letter of Intent ("LOI"), to the
Seattle Thunderbirds supporting an amendment to the Lease Agreement between
the City and the Seattle Thunderbirds that would revise the sale of suites and club
seats at the ShowWare Center. The LOI contemplated the following basic changes
with regard to the seasonal sale of suites and club seats:
1. The Seattle Thunderbirds would be the sole contractor for the sale of
suite licenses for hockey games only and SMG, as the City's agent, would sell suites
on an individual basis for all non-hockey events.
2. This Amendment would allow suite pricing at approximately $16,200
for a ten person suite, $19,440 for a twelve person suite, $22,680 for a fourteen
person suite, and $25,920 for a sixteen person suite for all hockey games.
3. The Thunderbirds would receive a 15% commission on all "full-season"
hockey game-only suite sales. After accounting for any commission due, the
Seattle Thunderbirds would receive 60 percent and the City would receive 40% of
the net proceeds of the sale of suites for hockey games. The thunderbirds would
also advertise non-hockey events to its full database of customers for the purpose
of selling suites to non-hockey events. The thunderbirds would also be required to
make other reasonable efforts to sell suites to its customers for non-hockey events.
If the Thunderbirds sell a suite for a non-hockey event, the Thunderbirds would
receive a 15% commission. After accounting for Thunderbirds' commission, if any,
the City would retain 100 percent of the net proceeds from the sale of suites for
non-hockey events.
4. The Thunderbirds would be allowed to sell, on a single game basis,
tickets to any suite which is not under contract for a Hockey Event at a price to be
determined by the thunderbirds. The revenue from those sales would be included
as Net Ticket Proceeds.
First Amendment to City and Thunderbird Lease Agreement Page 1 of 9
8
5. All of the "performance clauses" represented in the Exhibits at the end
of the current License Agreement would be mutually adjusted to reflect the revised
pricing structure of certain seats.
(a) Club Seats would be reduced to $975.00 per seat on a Season
Ticket basis. The City would receive the first $75.00 on each ticket sold on a
Season Ticket basis, and the remaining $900 would be split with Thirty Percent
(30% or $270) to the City, and Seventy Percent (70% or $630) to the
Thunderbirds.
B. This First Amendment (Amendment) to the License Agreement by and
between the City of Kent and Thunderbird Hockey Enterprises, LLC (License
Agreement), amends the original License Agreement executed on August 7, 2007.
All other provisions of the original Agreement not inconsistent with this Amendment
shall remain in full force and effect. For valuable consideration and by mutual
consent of the parties, the parties amend the License Agreement as follows:
AMENDMENT
1. DELETE Section 4.1 of the Agreement, entitled "Term; Performance
Standard," and REPLACE with the following:
4.1 Term: Performance Standards
(a) The term of this Agreement shall be binding and effective as of
the Effective Date and shall continue in full force and effect for a period of
thirty (30 years from the Occupancy Date.
(b) The City or Team may terminate this Agreement effective as of
the end of the Operating Year during which notice of termination is given to
the other Party if (i) for any three consecutive Operating Years, the #et
labeledequals less than eaeh yeaF'S aiggeunt shewn en Exhibit 9 on the ee'UF19R
, , General Admission Revenue, eF (00) feF aMy _... __ __.._____.. _
for Regular Season Games at the Arena
equals less than the each year's amount shown on ,_._-age ef the "Glut Seat
tt,....,_.._e T__get„ . ..gbeF_ listed :_ the _tt__hed _ed Exhibit D in the
column labeled "General Admission Revenue Taraet."fer these three
' q Eqfhibit 0 weuly l -ce=oc ♦ o c0 oc -e-lated y 2 cni i,... _tl._..
(c) If for any two consecutive OperatlnQ years the Piet
^-----ds fFeigg RegUl-- `'-ct=General Admission Revenue for Regular Season
Games at the Arena equals less than each year's amount shown on Exhibit D
First Amendment to City and Thunderbird Lease Agreement Page 2 of 9
9
in the column labeled "General Admission Revenue Target," OF (ii) few any
at RegbllaF Seasen GaFnes equals less than the "Glub Seat Attendanee TaFget"
the City may, at its sole discretion,_ request that the WHL require the Team to
produce a comprehensive business plan covering both business and hockey
operations. If the WHL so requires such a plan, then upon receipt of the
Team's business plan, the WHL and the City will jointly evaluate the plan and
make recommendations regarding proposed actions by the Team to meet the
performance standards. -If the Team agrees to the recommendations of the
WHL/City, the Team will be granted two Operating Years, commencing in the
Operating Year following the date of such recommendations, to achieve the
performance standard set forth above, and the City may not terminate the
Agreement at the end of the third low-attendance General Admission
Revenue Operating Year as described in subsection (b), immediately above.
However, if the General Admission Revenuep-1.d -"endan a (as defined
above) for League Games at the Arena during those next two consecutive
Operating Years (i.e., the third and fourth Operating Years with low
attendance not meeting __Eh both the RegulaF Sea} and Glub Seat test the
General Admission Revenue Target, the City may then terminate this
Agreement effective upon the last date of the fourth Operating Year with low
attendance. If the Team does not provide a detailed business plan or does
not substantially follow the actions recommended by the WHL/City, the
provisions of subsection (b), above, shall then become effective and the
then-current Operating Year shall serve as the final year of the evaluation
period (which period will comprise a total of three Operating Years—the two
consecutive Operating Years referenced at the beginning of this subsection
plus the Operating Year referenced in this sentence). If the City does not
reguest the WHL to reguire the (Team to produce a comprehensive business
plan, then the provisions of subsection (b), above, shall teAeremain in effect.
Seats at Regalar Sensen C=w __ at the A__na equals eF exeeeds ninety
rM
(ed) The Team will use its best efforts to obtain assurance by the
WHL that if at any time during the term of this Agreement, the WHL
determines that the Team is no longer a commercially viable operating
member of the League and is unable to continue to operate, and as a result
the Team forfeits or otherwise loses its franchise rights to the WHL, the WHL
will offer the City the first option to purchase the franchise at fair market
value or to find a buyer acceptable to the City and the WHL.
First Amendment to City and Thunderbird Lease Agreement Page 3 of 9
10
^d Piet Geneessien Sales as sh wn en Exhibit G ("TielEet'Geneessinna/club
"Aetua' Revenue" en Exhibit G), equals a tetal euFnulative negative balanee
business plan EeveFing both business and heElEey epeFatiens �A�H,
joins the Gity h a plan, upon FeEeipt of the Teang's business
in Z
(ge) If the City terminates its license agreement with the Team
without first availing itself of the procedure set forth above in Section 4.1.(c),
the WHL will be under no obligation to maintain a WHL franchise in the
Center.
2. DELETE Section 6.6 of the Agreement, entitled "Suites," in its
entirety and REPLACE with the following:
(a) The term, "Suite License" applies only to the sale of full-season
hockey-only packages for one or more Suites. The term, "Individual Suite
Sale" applies to all other Suite sales, whether for non-hockey events or
individual hockey events.
(b) On or before September 30 of each calendar year, the City and
the Team will collaboratively develop the prices for Suite Licenses to be sold
for the Operating Year that begins in the following calendar year. For the
2011-2012 Operating Year, tentatively agreed Suite License pricing is
approximately as follows: $16,200 for a ten-person suite; $19,440 for a
twelve-person suite; $22,680 for a fourteen-person suite; and, $25,920 for a
sixteen-person suite. Except as provided below, the Team shall be
responsible for the sale of all Suite Licenses. The Team shall serve as the
initial contractor to be responsible for the sale of Suite Licenses, and shall
receive a commission of fifteen percent (15%) of the revenues from the sale
of Suite Licenses, plus, as described below, an amount equal to sixty percent
(60%) of those revenues after the sales commission. The City shall retain
the remaining forty (40%) of Suite License revenues after the sales
commission.
(c) Except as provided below, the City or the City's selected agent
may market or sell all Individual Suite Sales for non-hockey events. The
First Amendment to City and Thunderbird Lease Agreement Page 4 of 9
11
Team, however, will advertise non-hockey events to its full database of
customers and make other reasonable efforts to sell individual suites for non-
hockey events. If the Team completes an Individual Suite Sale for a non-
hockey event, the Team will receive a 15% commission; otherwise the City
will retain all Individual Suite Sale proceeds.
(d) The Team or the City may market and sell Individual Suite Sales
for any hockey event, to the extent any Suite is not encumbered by a Suite
License. Hockey event Individual Suite Sale revenues will be included as Net
Ticket Proceeds.
(e) Within 30 days after the end of each Operating Year
commencing with the first full Operating Year, the Team and the City shall
calculate the actual revenue received by the City in the previous Operating
Year from revenue from the sale of Suite Licenses. So long as the Team is
the contractor responsible for the sale of Suite Licenses, annual revenue
allocations shall be subject to the following incentive and cancellation
provisions.
(i) The actual revenue received by the City in each Operating
Year from revenue from the sale of Suite Licenses shall be inserted in the
column "Actual Revenue" on Exhibit E (or on another substantially similar
record maintained by the City and the Team). The City's Actual Revenue
amount over or under the amount shown for that Operating Year under the
column "Suite Revenue" shall constitute the "Net Difference" between the
City's actual revenue and the agreed projected City revenue.
(ii) For each $5.00 increment of the Net Difference over the
"Suite Revenue," the City shall immediately remit to the Team (or the Team
may retain) $1.00 of the Net Difference (i.e. $1.00 of the $5.00). (For
example, if the City's Actual Revenue from the sale of Suite Licenses in
2008/09 were $412,000, the Net Difference would be $20,000, and the Team
would receive (or retain) $4,000 of that amount).
(iii) For each $5.00 increment of the Net Difference under the
"Suite Revenue," the Team shall immediately remit to the City $1.00 of the
Net Difference (i.e., $1.00 of the $5.00). (For example, if the City's Actual
Revenue in 2008/09 were $372,000, the Net Difference would be ($20,000),
and the Team would pay the City $4,000).
(iv) If in any series of Operating Years in which the Team has
responsibility for the sale of Suite Licenses, the Net Difference between the
City's Suite Revenue and the City's Actual Revenue accumulates a negative
balance of at least $300,000, the City may at its sole option and as its sole
remedy assume responsibility for the sale of Center Advertising. (For
example, if the City's Actual Revenue from the sale of Suite Licenses were
$250,000 in each year starting in the 2008/09 Operating Year, the
First Amendment to City and Thunderbird Lease Agreement Page 5 of 9
12
cumulative negative balance by the end of the 2010/11 Operating Year would
be $426,000, an amount greater than $300,000.)
Notwithstanding any of the foregoing, if during any Operating Year the
Team determines that the Center Manager is, in the Team's view, failing to
provide Non-Hockey Events of sufficient quality to make the purchase of
Suite Licenses attractive to current and prospective Suite Holders, the Team
may deliver a notice to the City that the Team objects to the Center
Manager's performance in that regard. Following such notice, if the Team
determines that during the next Operating Year the Center Manager's
performance with respect to booking quality Non-Hockey Events has not
improved, the Team may in its sole discretion opt out of the Team's
responsibilities for (and commissions from) the sale of Suite Licenses.
(f) If the City assumes responsibility for the sale of Suite Licenses,
the City's process for selecting any Suite License sales contracting for such
sales will provide the Team with the opportunity to participate in the review
of and to comment on the acceptability of the selection of the contractor and
the terms of the City's contract with that entity. If the Team so participates,
the process shall provide the Team with the opportunity to collaboratively
work with the City to narrow the pool of proposals to a maximum of three
finalists. From the final proposals, the City shall, after consultation with the
Team, make the decision as to the selected proposal. Further, if the City
assumes responsibility for the sale of Suite Licenses, then with respect to
each Suite License sold, the City shall pay the Team an amount equal to the
top posted general admission ticket price (excluding Club Seat prices) times
the number of seats in such Suite times the number of League Games held in
the Arena.
(g) Suite Licenses shall permit their holders to view all League
Games without additional charge and to use the lounge, VIP entrance, Suite
level restrooms and Premium Reserve Parking allocated to the Suites. Suite
Licenses shall not permit their holders to attend events that are not open to
the general public, and/or events for which admission is not charged.
(h) For any Hockey Event where a Suite is not subject to a Suite
License or an Individual Suite Sale, the Team may offer tickets for Box Seats
in that Suite to the general public on a per-seat basis at a price to be
established by the Team, but that price shall not be less than One Hundred
Fifty Percent (150%) of the price per Regular Season Game at which Box
Seats are offered or a price mutually agreed upon by the City and the Team.
The proceeds from the sale of such Box Tickets shall be included in Net Ticket
Proceeds and not under this Section.
(i) The City shall reserve a Suite for its use at any and all times,
and at no charge to the City. The City may make the Suite available to
governmental, nonprofit, and school persons or entities, and may determine
whether or not to charge for that use. The City shall, by providing notice to
First Amendment to City and Thunderbird Lease Agreement Page 6 of 9
13
the Team on or before August 1 of each year, have the right to make its
Suite available for sale for an entire Season; in that event, the Team shall
have the option of selling that Suite for that Season to a single person or
entity, or to sell Box Seats in that Suite on a per-seat basis, and all receipts
for the seasonal sale of that Suite or those Box Seats shall be shared with
the Team as Net Ticket Proceeds.
3. DELETE Section 6.7 of the Agreement entitled, "Club Seats" in its
entirety and REPLACE with the following:
(a) The Team shall have the right to sell Club Seats for
Hockey Events. A purchaser of a Club Seat will be a season ticket holder for
Hockey Events, and that purchaser will have the privilege of using the Suite
level lounge, VIP entrance, Suite level restrooms, Premium Reserved
Parking, and such other privileges upon which the Team and the City agree.
(b) The City shall have the right to determine the price of and
sell (or to contract for the price determination and sale of) Club Seats for
Non-Hockey events, and the City shall retain or control the distribution of all
revenues with respect thereto. The price per each Hockey Event Season
Ticket Club Seat for the 2011-2012 season will be $975.00, unless the Team
and the City agree otherwise. The City shall also have the right to make
Club Seats available for Center uses that do not constitute either Hockey
Events or Non-Hockey Events (e.g. governmental or community meetings or
events at which admission is not charged). However, holders of Club Seats
for Hockey Events shall be provided with the privilege of buying seats for
Non-Hockey Events at the price of those seats to the general public, and
those Club Seat holders will have the opportunity to purchase those seats for
such Non-Hockey Events in advance of tickets going on sale to the general
public, so long as such advanced sale can be reasonable accomplished given
the nature and scheduling of the event. However, this does not provide Club
Seat holders with an opportunity to purchase tickets in Club Seats at events
that are not open to the general public, or to attend events for which
admission is not charged.
(c) All revenues realized from the sale of Club Seat tickets
and licenses therefor shall be allocated between City and Team as follows:
the first seventy-five dollars ($75.00) of revenue from the sale of a Club Seat
Season ticket shall be paid to the City, and the balance of revenue from the
sale of Club Seats shall be allocated thirty percent (30%) to the City and
seventy percent (70%) to the Team.
(d) The Team shall bear the costs of sales of Club Seats and
shall not be entitled to a commission on any Club Seats sold.
4. DELETE__Exhibit C to the License Agreement_ ___
REP w^E _to to
First Amendment to City and Thunderbird Lease Agreement Page 7 of 9
14
5. DELETE Exhibit D to the License Agreement and REPLACE with the
new Exhibit D attached to this Amendment.
All acts consistent with the authority of the Agreement, previous Amendments (if
any), and this Amendment, prior to the effective date of this Amendment, are
hereby ratified and affirmed, and the terms of the Agreement, previous
Amendments (if any), and this Amendment shall be deemed to have applied.
The parties whose names appear below swear under penalty of perjury that they
are authorized to enter into this Amendment, which is binding on the parties of this
contract.
IN WITNESS, by executing this Amendment, the parties below accept all
requirements of this Amendment, which will take effect on the last date
entered below.
THUNDERBIRD HOCKEY ENTERPRISES, CITY OF KENT:
LLC:
By:
By: (signature)
(signature) Print Name:
Print Name: Its
Its (title)
(title) DATE:
DATE:
APPROVED AS TO FORM:
(applicable if Mayor's signature required)
Kent Law Department
P:\Civil\Flies\Open Files\1560-Showare\Thunderbirds-FlrsWmendment.docx
First Amendment to City and Thunderbird Lease Agreement Page 8 of 9
15
�� KENT
EXHIBIT C
Deleted by First Amendment to License Aareement
ETC
the .... fell .._(.) _. _..._ . .'. __..._.._, the fell_.....' _. the standaMs ._. the ..
et
neyembies fFeigg the RegtrlafSeasen -vin;,2sefthe Teang fFeigg Piet Tieket PFeeeeds, Piet
__..____._.. Sales,
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^}_.__ ... ___.. _p_.//_��_.��. _. _ .
��'.� feel TT^}....,,LIg. __..._../�_,,P�_�...,_� __ _.._ _._/ .
*eaf R-ev-ef't a R-ev-ef't a Seats Revenue Revenue a+afee
2n� %0 3G�4Q 21� 4C�4o
']�T 7�7 21ZT�e OIL
2n�'] 'l�5 Z3� 21� 874,745
3 ']�3 383,455 21�y OOO�O8
2n� 270,768 219,500
Z374,197 864,465
S 277,683 3O�3 2'f�y OO�Oy
2n� '14� z3n�9 77�c nn�o
7 29ZTr691 n n�cv 2�no n 1�T
2n� 2n�= 41TSn03 77� nn�5
2 n� Z3 1�T A�Q '1'l�o n�=
2929i2l 3�3 nnn 2�no 1 eee'33e
2 n�2 3'1�3 A C�GQ '1� 1 n�9
2 n� 3�T n c�5 2�0 1 n�z
4 346,661 n�5 2�no 1 n�6
2n� Z3�9 nn�5 2�0 1 n4�T
2925i26 'JG�' Cn�GQ 'f'J� 1 les'O11
2n� Z3�6 51�4Q y 1,132,914
2927i28 7OAT C'f� 2A�y 1 1�6
2n� 3n�= Ci1�= y 1 11T�ZT
AAn�T 5C�5 2A�y 1 2n1Z'2L9
2n� 412,092 r 092 g 2no, vv nnn 1,230,000
z3ncvnnn
r � w
2931i3
` A']�GO CO�i '1A�y 1,254,388
2n� A�5 Cn�4Q 'lC� 1,285,4 13
A A AFL G 1�3 2 C�y 1 'J�5
2n� AC�G6 G'l�9 2C� 1�5
6 AAGAL GA�GQ 2C� 1,369,988
2n� AST GC�z3 'lC� 1
,397,380
v AAO�5 GAT 2C� 1,426,186
Exhibit D to Amendment between the City and Thunderbird Hockey Enterprises, LLC
16
Exhibit D
Minimum Regular Seat Revenues
Under the terms of Section 4.1 (c) of this Agreement, the following
are the standards for general admission paid attendance revenue
in each operating year of the Agreement.
Average General General
General Admission Admission
Admission Attendance Revenue
Year Ticket Price Target Target
2008/09 $ 13.50 114,156 $ 1,541,106
2009/10 13.50 114,156 1,541,106
2010/11 13.50 114,156 1,541,106
2011/12 13.50 124,200 1,676,700
2012/13 13.77 124,200 1,710,234
2 013/14 14.05 124,200 1,744,439
2014/15 14.33 124,200 1,779,327
2015/16 14.61 124,200 1,814,914
2016/17 14.91 124,200 1,851,212
2017/18 15.20 124,200 1,888,237
2018/19 15.51 124,200 1,926,001
2019/20 15.82 124,200 1,964,521
2020/21 16.13 124,200 2,003,812
2021/22 16.46 124,200 2,043,888
2022/23 16.79 124,200 2,084,766
2023/24 17.12 124,200 2,126,461
2024/25 17.46 124,200 2,168,990
2025/26 17.81 124,200 2,212,370
2026/27 18.17 124,200 2,256,617
2027/28 18.53 124,200 2,301,750
2028/29 18.90 124,200 2,347,785
2029/30 19.28 124,200 2,394,740
2030/31 19.67 124,200 2,442,635
2031/32 20.06 124,200 2,491,488
2032/33 20.46 124,200 2,541,318
2033/34 20.87 124,200 2,592,144
2034/35 21.29 124,200 2,643,987
2035/36 21.71 124,200 2,696,867
2036/37 22.15 124,200 2,750,804
2037/38 22.59 124,200 2,805,820
17
ECONOMIC & COMMUNITY DEVELOPMENT
• Ben Wolters, Director
KEN T Phone: 253-856-5703
WnSHINGTON Fax: 253-856-6454
Address: 220 - 4th Avenue S
Kent, WA. 98032-5895
November 15, 2011
TO: Kent City Council Operations Committee
FROM: Ben Wolters, Economic & Community Development Director
SUBJECT: SMG Amendment to the Kent Event Center Sales, Marketing, and
Operational Management Services Agreement - Authorize
MOTION: Move to recommend approval of the Amendment to the Kent
Events Center Sales, Marketing, and Operational Management Services
Agreement.
SUMMARY: The City and Contractor are parties to that certain Kent Events Center
Sales, Marketing, and Operational Management Services Agreement dated as of
May 23, 2008, whereby Contractor has been retained by the City to manage,
operate and promote the Events Center on the terms provided therein, and that
certain Kent Events Center - Personal Services Contract for Food and Beverage
Services dated January 20, 2009 (the "Food and Beverage Agreement"). The
Contractor has been retained by the City to provide food and beverage concessions
and catering services at the Events Center on the terms provided therein. Unless
otherwise defined in this Amendment, capitalized terms used in this Amendment
shall have the meanings ascribed to them in the Agreement.
Article III, Section B of the Agreement permits the City to extend the Agreement
for an additional two-year term, the parties desire to enter into this Amendment,
among other things, (i) to extend the Management Term for three (3) years on the
terms provided in this Amendment, to combine the services provided by Contractor
under the Agreement and the Food and Beverage Agreement with one
compensation arrangement during such extended three year period, and to
acknowledge that the Food and Beverage Agreement will terminate effective as of
midnight on December 31, 2011.
If you have any questions prior to the meeting, please call Ben Wolters at 856-
5703.
Exhibits: Agreement attached
BUDGET IMPACT: Yes
18
AMENDMENT TO
KENT EVENTS CENTER SALES, MARKETING,AND OPERATIONAL MANAGEMENT
SERVICES AGREEMENT
THIS AMENDMENT TO KENT EVENTS CENTER SALES, MARKETING, AND
OPERATIONAL MANAGEMENT SERVICES AGREEMENT (this "Amendment') is dated as of
the day of November, 2011, by and between the CITY OF KENT, a Washington municipal
corporation(the "City")and SMG, a Pennsylvania general partnership("Contractor").
BACKGROUND
The City and Contractor are parties to (i) that certain Kent Events Center Sales,
Marketing, and Operational Management Services Agreement dated as of May 23, 2008 (the
"Agreement'), whereby Contractor has been retained by the City to manage, operate and promote the
Events Center on the terms provided therein, and (ii) that certain Kent Events Center—Personal Services
Contract for Food and Beverage Services dated January 20, 2009 (the "Food and Beverage
Agreement"), whereby Contractor has been retained by the City to provide food and beverage
concessions and catering services at the Events Center on the terms provided therein. Unless otherwise
defined in this Amendment, capitalized terms used in this Amendment shall have the meanings ascribed
to them in the Agreement.
While Article 111, Section B of the Agreement permits the City to extend the Agreement
for an additional two-year term, the parties desire to enter into this Amendment, among other things, (i)to
extend the Management Term for three (3) years on the terms provided in this Amendment, (ii) to
combine the services provided by Contractor under the Agreement and the Food and Beverage Agreement
with one compensation arrangement during such extended three year period, and(iii) to acknowledge that
the Food and Beverage Agreement will terminate effective as of midnight on December 31, 2011.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Amendments to Agreement. The following amendments shall be made to the
Agreement:
(a) Article B, Section F of the Agreement(Event Fund) is hereby deleted, as
the Event Fund has been fully expended as of the date of this Amendment.
(b) Article 111, Section B of the Agreement is hereby amended(i)by deleting
the last sentence of such section and(ii)by replacing such sentence with the following:
"Additionally, the Management Tern shall be extended for an additional three-
year term, commencing on January 1, 2012 and ending at midnight on December
31, 2014 (the "Extended Term'), unless earlier terminated pursuant to the
provisions of this Agreement. Unless otherwise expressly provided in the
Agreement, references in the Agreement to the Management Term shall include
the Extended Term."
(c) In order to reflect the fact that the food and beverage and catering
services provided by Contractor under the Food and Beverage Agreement will, effective as of the
#1489059 v.4
19
commencement of the Extended Term, be provided pursuant to the Agreement, a new Article II, Section
H is hereby added to the Agreement,which shall read in its entirety as follows:
H. Food and Beverage and Catering Services. Effective as
of the commencement of the Extended Term (January 1, 2012) and for
the balance of the Extended Term (unless earlier terminated pursuant to
the provisions of this Agreement), the Contractor shall exclusively
provide food and beverage concessions and catering services at the
Events Center pursuant to this Agreement, as further described in new
Exhibit E attached to this Agreement (the "Food, Beverage and
Catering Services"). In addition, at the end of the Extended Term, the
performance of the Food, Beverage and Catering Services may be
extended by the City for a period not to exceed two (2) months, if
necessary in the sole judgment of the City to facilitate the process of
securing competitive proposals on a replacement concessionaire for such
services, at a mutually agreed upon compensation arrangement for the
Contractor during such two month period. The City shall extend the
Food, Beverage and Catering Services by providing the Contractor with
written notice of the extension at least sixty (60) days before such
expiration date
(d) Article IV, Section A of the Agreement is hereby amended by adding a
new Article IV, Section A.3 to the Agreement, which shall read in its entirety as follows:
"3. As base compensation to Contractor for providing the services herein
specified during the Extended Term (including the Food, Beverage and
Catering Services), the City shall pay Contractor during the Extended
Term, an annual fixed fee of $130,000, which amount shall be adjusted
upward on the first day of each Fiscal Year during such term,
commencing with the Fiscal Year that begins on January 1, 2013, by the
change in the CPI as described in Article IV, Section A.2. The foregoing
annual fixed compensation shall be payable in equal monthly
installments due on or before the last day of each month during such
Fiscal Year, and Contractor shall be entitled to draw such amounts for
the account described in Article V, Section H. For avoidance of doubt,
the base compensation described in Article IV, Section A.2 shall only
apply to the Management Term through December 31,2011."
(e) In order to address the new incentive fee arrangement for the Contractor
during the Extended Term, Article IV, Section B is hereby amended by adding the following paragraph to
the end of such section:
Notwithstanding anything to the contrary contained in this Article IV, Section B,
the Annual Incentive Fee that the Contractor may earn for the Fiscal Years
during the Extended Term shall be as set forth below in this paragraph. The
maximum Annual Incentive Fee in any such year shall be $10,000, which shall
be split into four, equal parts of$2,500 each(unless the parties agree in any such
year to modify such split). A condition to Contractor's earning each part of the
Annual Incentive Fee in any such year shall be based upon the Events Center
hosting a concert or show that earns a profit therefrom that covers the full amount
2
#1489059 v.4
20
of such part of the Annual Incentive Fee. The profit from such concert or show
shall be calculated based upon the Operating Revenues and Operating Expenses
therefrom as reflected in the event profit and loss statement prepared by
Contractor following such concert or show. For illustrative purposes only, (i) if
during such Fiscal Year the Events Center hosts six (6) concerts or shows, (ii) if
there is no change in the one-fourth(1/4) split of the maximum Annual Incentive
Fee, and (iii) if the Events Center (A) loses $1,000 on one of them, (B) breaks
even on another one, (C) earns a profit of $2,000 on another, and (D) earns a
profit in excess of $4,000 on the other 3 such concerts or shows, then the
Contractor shall earn an Annual Incentive Fee of$7,500 (which is $2,500 x the 3
concerts/shows that earned a profit equal to or in excess of$2,500). At the end
of any month in which such a concert or show occurs, the Contractor shall
deliver an invoice to the City for any portion of the Annual Incentive Fee earned,
along with a copy of the applicable event profit and loss statement(s), and the
City shall pay such portion of the fee within thirty (30) days after receipt of such
invoice.
(f) Given the provisions of new Exhibit E relating to the Food, Beverage
and Catering Services, Article XIII is hereby amended to apply only to the provisions of Contractor's
management services under this Agreement.
(g) In view of the inclusion of the Food, Beverage and Catering Services
under this Agreement, effective as of the commencement of the Extended Term, each of the definitions of
the Operating Expenses and Operating Revenues contained in, respectively, Article XIV, Sections A.5
and A.6 shall be amended, effective as of the commencement of the Extended Term, so that those
definitions also include expenses and expenditures incurred, and revenues derived, in connection with the
provision of the Food,Beverage and Catering Services
(h) Similarly, in view of the inclusion of the Food, Beverage and Catering
Services under this Agreement, effective as of the commencement of the Extended Term, the references
in Article XV, Section C of this Agreement to "another management company" and to a "successor
management company" following the termination or expiration of this Agreement shall, effective as of
the commencement of the Extended Term, also include reference to "and/or a successor food and
beverage concessionaire."
(i) The notice information for Contractor set forth in Article IX shall be
amended and restated to read as follows:
H. Westley
SMG
300 Conshohocken State Road, Suite 770
West Conshohocken,PA 19428
Phone: 610-729-7900
Fax: 610- -
Email Address: WWestley@smgworld.com
2. Effect of Amendment. Except as amended in paragraph 1 hereof, the Agreement
and all terms and conditions thereof shall remain unaltered and in full force and effect and are hereby
ratified and confirmed in all respects, as hereinabove amended. Any reference in the Agreement or in any
instrument, document or consideration executed or delivered pursuant to the Agreement to "this
3
#1489059 v.4
21
Agreement', "hereof', "hereto", and "hereunder" and similar references thereto shall be deemed and
construed to be a reference to the Agreement, as amended by this Amendment.
3. Termination of the Food and Beverage Agreement. In view of this Amendment
which adds new Article II, Section H to the Agreement, the parties agree that effective as of 11:59pm on
December 31, 2011 the Food and Beverage Agreement shall terminate, except for any outstanding
obligations of the parties thereunder which (i)have accrued thereunder up to the date of such termination,
(ii) are not contained in new Exhibit E attached to the Agreement, and(iii) shall survive such termination.
4. Governing Law. This Amendment will be governed by and construed in
accordance with the internal laws of the State of Washington, without giving effect to otherwise
applicable principles of conflicts of law.
5. Counterparts. This Amendment may be executed in any number of counterparts,
each of which will be deemed to be an original and all of which, when taken together, will be deemed to
constitute but one and the same agreement.
6. Power and Authoritv. Each party hereby represents and warrants to the other that
each has full legal right, power and authority to enter into this Amendment and to perform its respective
obligations hereunder.
4
#1489059 v.4
zz
IN WITNESS WHEREOF, this Amendment has been duly executed by the parties hereto
as of the day and year first above written.
CONTRACTOR: SMG Approved as to Form
By: By:
Name: Name:
Title: Title:
CITY OF KENT Approved as to Form
By: By:
Name: Name:
Title: Title:
5
#1489059 v.4
23
EXHIBIT E—FOOD, BEVERAGE AND CATERING SERVICES
(to the Kent Events Center Sales,Marketing, And Operational Management Services Agreement)
In furtherance of Article II, Section H of the Agreement, the following are the terms under which
the Contractor will provide the Food,Beverage and Catering Services at the Events Center from and after
the commencement of the Extended Term(January 1, 2012).
1. NATURE OF THE FOOD, BEVERAGE AND CATERING SERVICES
The Contractor will be responsible for providing exclusive food and beverage concessions and
catering services in the Events Center, consistent with the goals of the City, in coordination with
the Seattle Thunderbirds Western Hockey League Team("Team")and pursuant to the terms and
conditions established in the License Agreement entered into between the City and the Team
("License Agreement'), attached and incorporated as Exhibit"F." All contracts entered into by
Contractor in connection with such work will be entered into in the Contractor's own name as an
independent contractor(which the parties acknowledge is different than the way Contractor
entered into such contracts pursuant to the Food and Beverage Agreement). All costs related to
the performance of the Food,Beverage and Catering Services shall be an Operating Expense of
the Event Center.
The work of providing the Food,Beverage and Catering Services shall include the purchase,
preparation, and serving of food, alcoholic and non-alcoholic beverages, and other related food
items for the Events Center's events, and the management of such work shall include operation of
concession stands,portable food services, suite catering and other food and beverage services as
may be required by the Events Center as further contained in the REP documents described in
Paragraph 2.A below.
The Contractor shall provide all personnel, materials, tools, supplies, and transportation
necessary, or fease4iRWR reasonably incidental,to providing the Food,Beverage and Catering
Services for the Events Center's events and visitors,using the kitchen, concessions and portable
equipment at the Events Center, all was further described in this Exhibit"E"and in the
Agreement.
2. RELEVANT DOCUMENTS AND INTERPRETATION OF THEM
(a) General. The performance of the Food, Beverage and Catering Services shall be
performed in accordance with the following:
(i) Applicable federal and state of Washington statutes and regulations and City
laws, ordinances and regulations;
(ii) This Agreement;
(iii) This Exhibit"E"to this Agreement;
(iv) The request for proposals (RFP) document and any Addenda to the REP issued
by the City in connection with the Food and Beverage Agreement, which is
attached hereto as Exhibit"G';
(v) The Contractor's proposal responding to such REP;
6
#1489059 v.4
24
(vi) Exhibit`T"to this Agreement(which contains the License Agreement);
(vii) Exhibit`B"to this Agreement,which contains the Insurance and Bond
Requirements governing work to be performed under this Agreement; and
(viii) Any other provision,term, attachment, or material incorporated herein by
referenced or otherwise incorporated.
(b) Conflict In the event of conflict between the Agreement documents and applicable laws,
codes, ordinances, or regulations relating to the performance of the Food,Beverage and Catering
Services, the most stringent or legally-binding requirements shall govern and be considered a part
of this Agreement to afford the City maximum benefits.
(c) Order of Precedence. In the event of any inconsistency in this Agreement with respect to
the performance of the Food,Beverage and Catering Services,unless Paragraph 2.13 above is
applicable,the inconsistency shall be resolved by giving precedent to the documents described in,
and in the order provided in,Paragraph 2.A above.
3. CONTRACTOR INVESTMENT
The parties acknowledge that the Contractor provided$700,000(the "SMG Expenditure')
pursuant to the Food and Beverage Agreement toward the acquisition of food and beverage
equipment for use by the City during the term of such agreement and during the term of this
Agreement The City and Contractor agreed that Contractor shall be repaid in cash by the City on
a seven(7)year amortization schedule, with $100,000 (or such lesser amount if the last payment
is less than $100,000)being paid by the City to Contractor on or before December 31 of each
successive year until fully paid,beginning on or before December 31, 2009.
The City and Contractor further acknowledge that(i)as of the date of the Amendment to this
Agreement(November , 2011), $300,000 of such amount has been paid to Contractor, (ii) as
of January 1, 2012(the commencement date of the Extended Term), the City will Pay an
additional $100,000 on or before December 31s`for the calendar years 2012 and 2013 in
accordance with Section 6 of the Food and Beverage Agreement, and(iii)unless there is a further
extension of the Extended Term, the final payment due to Contractor hereunder on December 31,
2014 shall be $200,000, and at that time the SMG Expenditure will be repaid in full.
A ffee., ent(T,T,.�,.�,.,.dmwn bee 20ir)S200,000 of such.., etmt has has been paid to n,.,.&aat�/�3
^ojafma""� 1,, 20 (the aeffim ee ent date of the 144e. ded TeF ffl) :t:Teoipeated that ..
additional $100,000 shall t,... o woo.. . aid b tho(�4 t,, r;Ofltfaet....:.. ..........a....ee with seetiofl 6
To......, the final........ efA due t,, r�,...tFaeter hereunder on Peee. ber 3 i 20 n shall be e nn nnn
nr-a.o-ra.crrl"'�scco�aoro"xac.orv�r-noconroor , a� ,
In addition to any payments due to Contractor under this Agreement,the City agrees that if it
terminates or does not renew this Agreement, at any time during the amortization period,the
successor food and beverage concessionaire or the City will be responsible for the immediate
(i.e., on the termination date or expiration date of this Agreement, as applicable)repayment of the
Contractor's unamortized and/or unpaid portion of the SMG Expenditure.
7
#1489059 v.4
25
FINANCE DEPARTMENT
440 Robert Nachlinger, Finance Director
Phone: 253-856-5260
N.147KEN T Fax: 253-856-6255
VVASAING-ON
Address: 220 Fourth Avenue S.
Kent, WA. 98032-5895
November 15, 2011
To: Operations Committee
From: Robert Nachlinger, Finance Director
Regarding: Merchant Investments (Nizar Alimohamed) Appeal of Finance
Director's Decision
Recommend that the Operations Committee approve/modify/deny the
Finance Director's October 14, 2011 decision per the Kent City Code
7.02.300 C.(5) regarding the water leak adjustment requested by
Merchant Investment (Nizar Alimohamed).
SUMMARY:
Mr. Alimohamed has asked this committee to consider and earlier decision by
Finance Director Nachlinger on a leak adjustment. See attached memorandum.
BUDGET IMPACT: None
P:\Civil\Motions-BlucSheets\Pppeal Finance Motion Op mtions.docx
1
26
CITY OF KENT
LAW DEPARTMENT
CIVIL DIVISION
220 41°Avenue South
Kent, WA 98032
KEN T Fax: 253-856-6770
WN5",GTON
PHONE: 253-856-5770
Memo
To: Operations Committee
From: Tom Brubaker, City Attorney
Date: November 15, 2011
Re: Merchant Investments (Niar Alimohamed) Appeal of Finance Director's Decision
Nizar Alimohamed of Merchant Investments, dba Global Venture, contacted the city's finance
department requesting a leak adjustment on its water bill. Previously, Mr. Alimohamed
discovered a leak in a portion of his irrigation system that was connected to the back of the
structure on his property. In this case, it appears that a valve in the irrigation system
malfunctioned, and over a 60 day period, this irrigation system discharged approximately
1,150,000 cubic feet of water.
Because the leak occurred in a portion of his property that was not typically in plain view, Mr.
Alimohamed explains that the leak did not become immediately apparent. A letter from Mr.
Alimohamed explaining the problem is attached.
The city denied the request because it did not meet the requirements of the Kent City Code for
a leak adjustment, specifically the city code states:
This rate adjustment is permitted on a one (1) time basis only and can be
applied to one (1) billing period. To be eligible for this rate adjustment,
the affected water system must be owned by or subject to the exclusive
control of the customer and be located between the city's water meter
and the owner's residence or structure. The bill sought for adjustment
must exceed two (2) times the customer's highest usage in any single
billing period during the twelve (12) months prior to the billing period
sought for adjustment.
Kent City Code section 7.02.300(C)(2) (emphasis added) (attached).
Once the water is received by the residence or structure, it is the obligation of the owner to
properly maintain the owner's system. The customer received the water from the city, and the
water went into the customer's internal distribution system. Because this leak occurred in the
landscaped area behind the structure and because the leak occurred at a point that was not
"between the city's water meter and the owner's residence or structure," the Finance Director
denied the claim.
27
The same city code section provides for an opportunity to seek reconsideration of the Finance
Director's decision before the Operations Committee, even though it is undeniable that the
property owner's leak did not occur between the meter and the structure, as required by code.
In making your decision on reconsideration, you should rely on the documents in the record
and on any new information that may be presented at the committee hearing. Legal counsel
from the city attorney's office will be in attendance to provide the committee advice, if
necessary.
P:\Civil\Motions-Bl ueSheet\Appea l Memo.docx
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