Parks Board Suggests Council Should End Lions Club Relationship, Send Tube Rental Out To Bid

Terra Rivers | Managing Editor

On Thursday, the San Marcos Parks and Recreation Board discussed the renewal of Lions Club Tube Rental’s lease with the City.

In 2011, the City of San Marcos held a special election proposing a lease longer than three years to allow Lions Club to operate a tube rental business out of a city facility.

The lease is up for renewal every five years and will be due for renewal in April 2021.

Typically, the San Marcos City Manager and staff renegotiate lease renewals with City vendors or contractors before submitting the proposed lease agreement to City Council for final approval.

According to the board, the current lease agreement stipulates a $900 monthly rent rate, which helps offset the funding needed for City Park Rangers.

One of the board’s concerns included the crowd of tubers that swarms San Marcos during the summer season, making it difficult for residents to utilize the river’s other recreational uses such as kayaking, swimming, and paddleboarding.

A nonprofit organization, the Lions Club Tube Rental is operated by the San Marcos Lions Club, which is run out of a portion of the San Marcos Rec Center.

According to the organization’s financials, the tube rental generates a little over $1 million in revenue annually.

Approximately $500,000 covers operating expenses, with around an additional $150,000 covering employee salaries. The remaining $350,000 is donated to the community through other local public service programs and organizations.

Dennis Gutierrez, president of the San Marcos Lions Club, said the organization currently donates money to over 110 local organizations with more applying every year. Several applications are currently pending while the organization identifies what kind of funding they can provide.

The San Marcos Parks and Recreation Board created a subcommittee to help develop a recommendation for the lease agreement for the city council.

The subcommittee identified four items they believe should be added to the lease agreement if it is renewed.

These items include:

1. “Limiting the days of operation for the commercial tubbing (rental and/or shuttle) to; e days out of Monday thru Friday. 1 day out of the weekend. This will provide the river a recharge from the commercial tubing operation and allow citizens to utilize the river for active recreation which is restrictive during the commercial tubing operation.”
2. “The City of San Marcos currently faces budget shortfalls. The rent of physical real estate, almost exclusive use of the drop-off lanes, and vending exclusivity in our two most populated parks is worth more than the ~$900 a month being charged. Either rent must increase or a subcharge per tube rental and shuttle ride must be added then provided to the City of San Marcos. This recommendation even factors in closing certain days of the week as well.”
3. “Full transparency from the Lions Club on revenue generated on municipal property as well as where the proceeds go to and in what amount. This report must be submitted bi-annually and available for all citizens to review.”
4. “During operating hours, the Lions Club must have an employee picking up trash from the river bed to account for their customers’ littering. We recommend that at least two hours per day when in operation an employee is active in performing this task.”

The board also recommended adding a new condition to the lease agreement, which would reduce the term from 5 years to 1 to 2 years.

“I think we need to stop patching this thing up. It appears to me that the Lions club wants to be in command of what they do,” Frank Contreras, Board Member, said.

Contreras continued to say that while the Lions Club’s business plan may be in the interest of the people of San Marcos, the City should be in control over a business utilizing city property.

He wanted the city to consider a lease agreement format where the lease and operation are reviewed every few years to assess how well it is working.

During an earlier Parks sub-committee meeting, Contreras stated he wants the council to have the upper hand and be in a strong position while renegotiating the lease agreement.

According to Drew Wells, Director of Parks and Recreation, most private companies need real estate leases to be longer than three years to recover their original investment costs to open and additional startup costs.

Diane Phalen, Chair of the Parks and Recreation Board, said the board had been requesting the organization’s financials for over a year, which is not a standard way of doing business.

Businesses, for-profit or nonprofit, don’t usually hand over their financials or books while negotiating or renegotiating real estate contracts. It would give one side the upper hand in the negotiations.

Gutierrez noted that the financials are available at all times on the Internal Revenue Service’s website and must follow the guidelines established by the financial accounting standards board.

During the board meeting, members shared a consensus on a desire to see the City utilize a competitive process (sending it out to bid) to operate a tube rental business on municipal property.

According to Wells, vendors of the City of San Marcos are companies or organizations under contract to provide a service for the City; in the case of the Lions Club, the City is not receiving a service from the Lions Club and is simply the recipient of rent per a lease agreement.

Thus, the Lions Club is not considered a vendor and would not be subject to a competitive bidding process.

Wells said the organization would be subject to a request for proposals to provide a program stipulated by the City to provide specific service.

The board decided a recommendation for an RFP process to be put forth to garner more control over the operation on City property and the community support it is providing.

The recommendation would be provided to the council separately over the upcoming months.