Palace offers $4 million to end Silver Springs lease
Published: Wednesday, January 16, 2013 at 7:15 p.m.
Last Modified: Wednesday, January 16, 2013 at 7:15 p.m.
Palace Entertainment is willing to spend $4 million to terminate its lease for Silver Springs before the end of the year, according to state records, a major victory for local environmentalists that clears the way for Florida's oldest tourist attraction to become part of the state park system.
Gov. Rick Scott and the Cabinet will vote next week on whether to allow Festival Fun Parks, a subsidiary of Palace Entertainment, to buy its way out of its lease.
As it stands, Palace Entertainment's lease runs through the end of 2029.
If the plan is approved, the state Department of Environmental Protection would assume control of the 242-acre park on Oct. 1.
Patrick Gillespie, spokesman for the DEP, said Silver Springs would then reopen as part of the adjacent Silver River State Park.
"I think this is a great opportunity for DEP and the state of Florida to continue improving the health of Silver Springs, one of Florida's most iconic landmarks," DEP Secretary Herschel Vinyard said in an email to the Star-Banner.
"This effort will aid in our efforts to restore Silver Springs, while providing additional resource-based activities."
Silver Springs, Gillespie added, would remain open as normal through Sept. 30.
But in the interim, Palace Entertainment would begin to transition the park to "bring it back to its natural state," Gillespie noted.
That was what state environmental regulators envisioned when the state purchased the property from the Florida Acquisition Corp. in July 1992.
The proposed terms call for Palace Entertainment to plow $4 million into the facility.
As the Cabinet staff noted in a report, despite "constant maintenance" and Palace Entertainment's "investments" over the years, Silver Springs "remains in serious need of repair."
The exotic animals and their associated habitat and infrastructure would be removed under the plan, as would all the amusement rides and other structures that state parks officials determine must go.
Gillespie said that the DEP intends other changes that were noted in a temporary management plan the agency floated almost two weeks ago.
That document pointed out that the roofs and air conditioning units in some of the historic structures, first built in the 1950s, must be replaced.
Deteriorating buildings and other infrastructure that cannot be refurbished or were deemed inessential or incompatible with a state park would be torn down.
That would include the Jeep Safari area, the petting zoo, the Lost River Voyage launch and the Kids Ahoy Playland, gift shop and restrooms.
The DEP also wants to rip up some of the asphalt in the 1,750-space parking lot, and upgrade the stormwater systems at Wild Waters and within Silver Springs.
Silver Springs' core amenities — the glass-bottomed boats, the Wild Waters water park and the series of concerts and special events — would remain intact.
The documents released Wednesday indicate that the DEP wants to provide more opportunities for recreational activities, such as hiking, biking, wildlife-viewing and picnicking. Environmental regulators also have discussed "interpretive" programs focusing on the park's natural, cultural and water resources.
The state also wants to bring in private concessionaires to provide many of the services now offered by Palace Entertainment, as well as launching new ones.
According to Gillespie, admission fees have yet to be determined. But, he added, the Florida Park Service plans to honor all the passes sold.
In time, DEP officials have said, the agency will develop a 10-year management plan for Silver Springs, as they have done at all other state parks.
Parks officials anticipate retaining Silver Springs' current staff "to the extent possible," the documents say.
Some familiar with the proposal said Palace Entertainment seeks an exit because Silver Springs does not fit the company's main product.
Palace Entertainment operates eight theme parks, 11 water parks and 21 "family entertainment centers" in 11 states, according to its website, drawing some 13 million customers a year.
The California-based amusement park operator has run Silver Springs since 2002, the longest-surviving company in a series of renters over the past two decades.
But according to the Cabinet staff report, Silver Springs is suffering economically.
The park once boasted a 23.5 percent profit margin.
After the series of hurricanes blew through Marion County in 2004, that fell to about 5 percent and apparently never recovered.
The company sought — and received from the state — a reduction in its annual lease payment. Palace Entertainment's rent has run about $600,000 a year.
That state-granted relief has not been enough, however, to reverse fortunes at the park.
"This chain of events, along with the current economic downfall, has left (Palace Entertainment) unable to profitably manage Silver Springs," the Cabinet documents noted.
"In an effort to avoid additional loss of funds, (Palace Entertainment) is requesting early termination of its lease."
Last February the company announced that it had raised $430 million from privately issued bonds, cash on hand, and shareholders' equity to refinance its existing debt.
DEP officials have said local governments will not be asked to contribute funds toward the state takeover.
If the Cabinet approves the staff recommendation, that provision, and the DEP's overall plan for making it part of Silver River State Park, appear to vindicate the position held two years ago by County Commissioner Carl Zalak and then-Commissioner Mike Amsden.
At that time, Commissioner Stan McClain revealed a plan for the county to take control of the park if Palace Entertainment could be convinced to leave.
The company at the time offered the county management rights so long as the County Commission accepted the park "as is."
That meant local taxpayers pumping in roughly $6.3 million over three years for infrastructure improvements.
McClain's idea, which won support from former Commissioner Charlie Stone, featured much of what the DEP is now proposing in terms of other recreational opportunities and allowing private vendors.
Yet the proposal stalled, and eventually died, when Commissioner Kathy Bryant declared a conflict of interest — her former spouse worked at Silver Springs — and Zalak and Amsden declined to go along.
They countered that the cost was prohibitive and that the state should operate the site.
Contact Bill Thompson at 867-4117 or firstname.lastname@example.org
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