The City Council created an initiative at its Jan. 13, 2014, meeting to return a $100,000 reserve for the Oasis Water Park, 543 Aronson Ave., to the Better Billings Foundation so the money could be used to install another waterslide. The reserve, in the form of an Irrevocable Standby Letter of Credit, was required as part of a Funding and Development Agreement with the Foundation, which created the Oasis in conjunction with Harvest Church.  The agreement was approved by the Council on Dec. 14, 2009.  The City donated approximately 6.7 acres to the Foundation, with the provision that the land and facility revert to City ownership if the waterpark ceased operations as a public aquatic facility.  The standby letter of credit could be used for demolition or repairs if the property reverted to the City. The Irrevocable Standby Letter of Credit is backed by a Certificate of Deposit (CD) and the CD's interest goes to pay the costs of the letter of credit. If the letter of credit was released, the Better Billings Foundation could use the CD for other purposes, such as the new slide.

The Foundation already has raised about $80,000 through donations and a matching grant to fund the slide, which is estimated to cost about $100,000. Foundation Executive Director Chuck Barthuly has said that no more than $25,000 of the CD would be used for the slide, with the balance of the money going to a maintenance fund.

The Council may also desire to consider eliminating the deed restriction, i.e. property reversion, which is summarized in Section Three of the attached Development Agreement. There are legal uncertainties and risks to eliminating the deed restriction.

The Parks, Recreation & Cemetery Board held two meetings to discuss the request, one a special meeting on Feb. 6 and the other a regular meeting on Feb. 12. Park Board members asked if the Foundation could obtain a performance bond or other financial instrument that would be less expensive for the Foundation. Mr. Barthuly said the Foundation could not. At the Feb. 12 meeting, the Parks, Recreation & Cemetery Board members voted to recommend that the City Council not approve the release of the letter of credit. Board President Rick DeVore is expected to be present at the March 10 City Council meeting to discuss the recommendation.

The City Council must hold an advertised public hearing and then may:

• Approve an amended Resolution releasing the Better Billings Foundation from the required $100,000 Irrevocable Standby Letter of Credit and amending the development agreement between the City and Foundation as shown in Attachment A and reflecting only that change. 
• Approve an amended Resolution releasing the Better Billings Foundation from the $100,000 Irrevocable Standby Letter of Credit, and amending  the development  agreement, and amending the deed to eliminate the reversion of the property to the City if the Foundation fails to comply with the Development Agreement, as shown in Attachment B.
• Postpone a decision to a date certain and direct further study by staff in the interim.
• Deny the proposal and continue the agreement and letter of credit and deed restrictions as they exist now.  The agreement calls for a review by the City's and the Foundation's representatives every 10 years on the anniversary of the agreement's approval. 

There is no immediate financial impact to the City in denying or approving the release of the Irrevocable Standby Letter of Credit.  The Foundation has the sole responsibility under the agreement to operate the water park and to indemnify the City from all claims arising by negligent or intentional acts or omissions of the Foundation.  However, if the Council decided to approve the release of the Irrevocable Standby Letter of Credit and amend the agreement, it could leave the City in the position of having to either demolish or repair any damage at its own expense if the water park closed, and perhaps operate the facility in the future.

The Parks, Recreation & Cemetery Board recommends that the City Council deny the request to release the Better Billings Foundation/Oasis Water Park letter of credit.