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City Attorney Goodrich reviewed the provisions of the agreement. He noted that Karl has <br />incorporated into TK Enterprises, LLC. He stated that this use has to have a public purpose and <br />it does — it will be a potential source of revenue for the Happy Days celebration. The City does <br />not want to be a partner nor a co -owner — we want to be a leasee who happens to get return via <br />the profit sharing. To Council he stated that your number one obligation is not to this agreement <br />— it's to look to see that the ordinance is complied with and whether or not you grant that. He <br />emphasized what Council has to look at to issue the CUP. One hundred dollars would be the <br />base rent and then there would be profit sharing. They would add up the revenue and deduct the <br />expenses and what's left, TK will get 50 percent and the City will get 50 percent. That does not <br />include things they might sell at the site, including beverages, etc. This is only for fees to see the <br />race as well as the entry fees to be allowed to race. <br />Karl Jansen stated we will split everything except the concession money as that will be done by a <br />private party. <br />Mr. Goodrich continued that Mr. Jansen has identified the following categories - $5 to watch the <br />race, $20 to drive in it, $10 for a pit pass and $10 for race staff. There may be 14 races per <br />season with about 40 people attending the race. <br />Mr. Jansen suggested this could net $16,000 to $33,000 depending on how many show up — so <br />for the City's half — it could be anywhere from $8,000 to $16,000 or so. <br />Mr. Goodrich added that the $100 monthly rent would be deducted from that. <br />Mayor Ramsey reminded Mr. Jansen that the vendor that will sell concessions will have to <br />contact the City to get a license /permit to do so. <br />The group talked briefly about "kitty kat" races in the winter, as well as a couple of lawnmower <br />races. <br />Mayor Ramsey presented the scenario of what if the government gives us $30 million to do <br />Highway 10 improvements tomorrow — what happens. <br />Mr. Jansen stated that he has agreed to a six -month termination clause. <br />Mr. Goodrich added that this is a 36 -month lease — Mr. Jansen has identified that he may want to <br />do winter events three or four times per year, such as the little kids events (kitty kat races) and <br />possibly four lawnmower events per summer. It totals approximately 20 events per year. <br />Councilmember Backous inquired what Acapulco and other businesses in the area are expecting <br />for the number of events. <br />Mr. Jansen stated that we have talked with them about the numbers — an event about every other <br />Friday night. <br />Special City Council — April 5, 2011 <br />Page 2 of 7 <br />