The city of Rocklin filed a lawsuit Wednesday against the former operator of Quarry Park Adventures, alleging fraud, negligent misrepresentation and breach of contract.
The roughly $13 million zip-line, rock-climbing theme park and surrounding facilities have been closed since January, when the city terminated its 15-year contract with the operator, a subsidiary of El Dorado-based Legacy Family Entertainment.
The 35-page lawsuit, filed in Placer Superior Court, alleges that within a few weeks of operating the adventure park, David Busch, president of Legacy Family Adventures-Rocklin LLC, told the city it would not be able to meet promised revenue and attendance numbers.
“David Busch and LFA conned the City,” reads the first sentence of the summary of the case in the lawsuit.
The lawsuit also alleges Busch repeatedly misrepresented his amusement park experience. Much of Busch’s experience comes from the Hawaiian Falls Waterpark chain he founded, which opened nine sites in Texas.
Those parks “utilized substantially the same public/private partnership model as Busch utilized with the City (and) were operational and financial disasters,” the lawsuit alleged, “leaving cities in Texas holding the bag.”
Busch sold the company in 2015 to lenders because the chain had defaulted on its financial obligations, according to the lawsuit.
Busch said in an interview with The Sacramento Bee on Wednesday that the allegations are “fabrication” and a “way to make noise and intimidate us.”
He told The Bee earlier this week that the Quarry Park Adventures that opened to the public in October 2018 did not reflect the facility Rocklin promised it would build in its April 2018 contract.
“It was not a park anybody was proud of,” Busch said earlier this week.
“It breaks my heart that they breached their integrity,” with the lawsuit, he said Wednesday. “We’re extremely confident that we have the law on our side because they breached the contract. It’s black and white.”
Other allegations in Rocklin’s lawsuit include that Legacy failed to maintain “true and accurate books and records,” and offered “extremely limited and unpredictable hours of operation.”
Legacy also brought in an “inexperienced management team,” such as a park director appointed in October 2018 with “no familiarity with other adventure parks and no certified operational training,” according to the lawsuit.
“Quarry Park Adventures is important to Rocklin’s future and it is our responsibility to ensure that the Park delivers a great experience for residents and the region,” said Rocklin spokesman Michael Young in an interview Wednesday.
On Jan. 9, the city severed its contract with Legacy and closed the park. The two entities then entered into mediation but failed to resolve concerns, Young said. City manager Stephen Rudolph said in an interview Wednesday the lawsuit is intended to “have the city made whole.” He said he could not comment on the damage amount the city hopes to be awarded.
“There was material information that should’ve been shared with the city, that had we known about this, we would not have entered this transaction,” Rudolph said. “We spent a lot of public money reliance on information Busch provided and we’ve been damaged.”
The Rocklin City Council authorized the legal action after a closed session during its Tuesday meeting.
Tentative deal for new operator
During its meeting Tuesday, the City Council approved a tentative deal to secure a new operator for Quarry Park Adventures and reopen the troubled theme park by April.
The park has encountered hurdles since its inception in 2017, including delayed construction, incomplete amenities, budget increases and several opening dates pushed back.
Now, the city is working to secure its operational management change. The new tentative term sheet approved by the council Tuesday night is a more than three-year agreement with a subsidiary of Bonsai Design LLC, the company that designed and built the park’s structures and adventure elements.
If the term sheet plans are approved and the park reopens in April as anticipated, the contract would be worth about $1.3 million between startup costs, a $200,000 shortfall account, management fees through December 2022 and additional planned construction.
The council approved the tentative term sheet 4-1, with Mayor Joe Patterson voting against it, saying that under the proposal, “the city is taking all the risk.” The council is set to vote on a final contract at its March 12 meeting.
With Tuesday’s approval, the city will immediately begin to spend portions of $300,000 in startup costs, according to Rudolph, the city manager. That money will cover employee payroll, travel expenses, marketing and office supplies, among other costs, according to a submitted budget.
At the meeting, council members emphasized the need to reopen the park year-round as soon as possible. Quarry Park’s adventure elements have cost more than $3.25 million, and Rocklin has spent an additional nearly $10 million on surrounding parking lots, infrastructure and physical structures.
The park has been touted by city officials as a potential economic driver for Rocklin.
“We didn’t build it to keep it closed,” said Councilman Bill Halldin during the meeting. “It allows us to honor passes people bought, and allows them to be used, as opposed to people feeling ripped off.”
Bonsai, a Grand Junction, Colo.-based company, has designed, installed or operated more than 20 adventure parks across the country, according to its website.
General Manager Dylan Burt told The Bee that neither Bonsai nor its subsidiaries has operated a year-round park since 2015. He said at the meeting, however, that he has more than 15 years of experience in operations management in the attraction industry.
This would be the first park Bonsai operates that is owned by a government entity, Burt told the council.
Burt said at the meeting he anticipates 41,000 guests will attend the park in the first year of operations.
“I think that in this market that’s fairly easily attainable,” Burt said.
The park was initially anticipated to bring 120,000 guests annually.
Problems with park rollout
The park ultimately opened to the public in October 2018, but elements in the original April 2018 city contract with Legacy, including a cafe, a boulder climb area and a stream play area, were not built by then, Busch told The Bee. Permanent bathrooms were also not installed until December, Assistant City Manager Marc Mondell said at the Tuesday meeting.
Busch told The Bee that the problems with amenities hurt the park.
“It’s like asking us to play five-card poker and we’re only given three cards,” Busch said. “This was minimal, and not ideal. Food service and beer and wine were going to be a third of the income.”
Busch said Legacy first met with the city in October to discuss issues with the park, telling officials that without improvements, it would draw only 62,000 people and barely make $200,000 annually.
“They said, ‘Well that’s not what you said,’ and we said, ‘yeah,’ ” Busch said. “You didn’t build the park you said you were.”
Busch said the park made $500,000 in September, $200,000 in October, and $75,000 in November and December, but The Bee could not verify the claims.
He said staffers did not keep electronic copies of those revenue and attendance reports, saying they kept track of sales on paper because the park lacked electricity at the time. City Manager Rudolph said in an interview Wednesday night that the city had brought two generators in October to the park to provide electricity and confirmed that the city does not have records of revenue or attendance.
Rudolph said he and the city wanted to push back Quarry Park’s opening to March 2019, but that Busch insisted the park open in October to “build momentum.”
“He’s the expert as it relates to the marketing and operating the facility, and so we deferred to his experience in the area,” Rudolph said.
“It wasn’t as if he was absent” before the October opening, Rudolph said, “and not one time did he say to me or to city council, ‘Hey, the park you’re building is not going to work,’ until after we completed it.”
In a statement, Legacy Family Entertainment said the allegations in the lawsuit are untrue, and that the company notified Rocklin in December that the city had “breached the operating agreement by not delivering a facility that the City was contractually obligated to provide.”
“LFA is disappointed the City is covering-up the true reason for their allegations against LFA — their negligent misuse of taxpayer money,” the statement read.
With Bonsai’s subsidiary as the new operator, Quarry Park Adventures would stay open seven days a week year-round, including during the winter, with the exceptions of Christmas, New Year’s Day and Thanksgiving. Burt said at the meeting the park would also close during high rain and high wind. Bonsai would also honor season passes, tickets and gift cards that were previously sold by Legacy Family Entertainment.
“I didn’t want people coming in when it wasn’t done,” said Councilwoman Jill Gayaldo, before approving the new contract. “To be quite honest, I think it got ahead of us.”
“Is there some missteps? Absolutely there’s some missteps,” she said.