Paintsville Lake Marina RFP 112122.pdf

COMMONWEALTH OF KENTUCKY

FINANCE AND ADMINISTRATION CABINET

DEPARTMENT FOR FACILITIES AND SUPPORT SERVICES

DIVISION OF REAL PROPERTIES

Request For Proposals (RFP)

Project Name: PAINTSVILLE LAKE MARINA Proposal Number: 112122

IMPORTANT: PROPOSALS MUST BE RECEIVED BY:

RFP CLOSING DATE: November 21, 2022 by 4:00 p.m. EST

Submit proposals to:

Nancy Brownlee, Buyer

Division of Real Properties Department for Facilities and Support Services Bush Building, 3rd Floor 403 Wapping Street Frankfort, Kentucky 40601-2607

TABLE OF CONTENTS

INTRODUCTION

LOCATION - EXISTING STATE PARK FACILITIES AND BACKGROUND

RFP GENERAL PROCEDURAL INFORMATION

Site Visit RFP Addenda Offeror Responsibility for Proposal Submittal Inquiries No Prior Commitment or Obligation of the Commonwealth Issuing Office Proposal Guaranty Warranty of Suitability ………………………………………………………………

MARINA

SUBLEASE AGREEMENT TERMS AND CONDITIONS………………………………

General Description of Property……………………………………..…………………… Sublease Subject to Prime Lease … Sublease Term Purpose Rental Consideration………………………………………………………………… . 11 Marina Operation....……………………………………………………………… Boat Slips Agreements ……………………………………………………………… 12 Rates and Prices ………………………………………………………………… Staffing…………………………………………………………………………………. 13 Security …………………………………………………………………………………13 Utilities Maintenance Responsibilities Maintenance of Commonwealth/USACE Property Escrow Account……………………………………………………………………….. 16 Promotional Materials and Souvenirs………………………………………………..18 Signage Insurance Construction/Alteration/Renovations on the Subleased Premises……………… 19 Performance Bonds ………………………………………………………………… .. 20 Prohibition from Removal of Vegetation & Minerals ……………………………… 20 Records and Reports Taxes Liens Against the Subleased Premises Sub-Subleasing, Assignments, or Mortgages of Successful Offeror’s Interest ... 22 Improvements and Additions and Removal of Equipment and Supplies Upon Expiration or Termination of Sublease…………………………………………… ... 22 Hold Harmless Attorney’s Fees Notices Offer of Gratuities

Conflict of Interest Protection of Work, Property, Employees, and Public Employment Practices Permits and Licenses Right of Entry Termination of Sublease

Termination for Default Procedure on Termination for Default Force Majeure Conflict of Law and Choice of Law Provision Level of Assets Waiver Disclosure of Financial Information Amendment to Agreement Severability Clause Successors and Assigns Public Use Cancellation Clause…………………………………………………………………. . 29

PROPOSAL

Evaluation of Proposals Point Scoring of Proposals Submission of Proposal Withdrawal of Proposal Proposal Subject to These Terms The Offeror’s Proposal Shall Include the Following Sections Transmittal Letter Marina Operational Plan Financial Background of Offeror and Proposed Method of Financing Project Background and Experience Completed Required Forms Definition of Gross Receipts Revenue Payable to the Commonwealth Offeror’s Past Performance Operating a Marina of similar size to Paintsville Lake Marina ………………………………………… 36

ANNUAL AFFIDAVIT FOR BIDDERS, OFFERORS, AND CONTRACTORS

STATEMENT FINAL DETERMINATION OF VIOLATIONS PURSUANT TO

KRS 45A.485

EXHIBITS

I. INTRODUCTION

The Commonwealth of Kentucky (“Commonwealth”) desires to continue offering a marina amenity at Paintsville Lake State Park in Staffordsville, Kentucky (“Park”). To that end, the Commonwealth solicits proposals from private, third-party developers and operators who will furnish a high quality marina operation at the Park (“Project”), either with existing marina structures or through the financing, design, and construction of new marina structures, and to operate and maintain the marina in accordance with the Commonwealth’s standards, applicable laws, and as set forth in this RFP and the resulting Sublease Agreement.

The Commonwealth has determined that the most feasible and responsible means for completing the Project is by and with private participation through the issuing of this Request for Proposals (“RFP”) and a proposed sublease agreement between the Commonwealth and the Successful Offeror resulting from this solicitation (“Sublease”).

The Commonwealth desires to sublease to a private concern a portion of the Park’s shoreline and water area for the Project (“Subleased Premises”). See attached Exhibit A. The corresponding Sample Sublease is attached as Exhibit B. The Park’s campground is not included and is not a part of this solicitation.

The Kentucky Department of Parks (“Department of Parks”) manages the Park under the terms of Lease Agreement DACW69-1-84-0144 between the United States Army Corps of Engineers (“USACE”) and the Commonwealth (“Prime Lease”), which began May 1, 1984, and expires April 30, 2034 (see attached Exhibit C).

The Commonwealth is currently working with USACE to extend the expiration date of the Prime Lease; however, the Commonwealth does not anticipate that the new lease agreement will be executed prior to the award of the Sublease. See letter from the USACE, as Exhibit D.

The Park’s current marina operation was subleased to a private entity; however, the sublease has expired with no options for renewal.

The Commonwealth is pursuing a high-quality marina operation at Paintsville Lake State Park through one of two options. Option 1 is for an interested party to construct a marina structure that provides at least 52 open slips and 116 covered slips for mooring and docking of various types of watercraft, as well as the other required components set forth in this RFP. Option 2 is for an interested party to acquire title and possession of the existing marina structure at Paintsville Lake and, at the Offeror’s sole expense, to rehabilitate same to satisfy all of the requirements of this RFP.

Regardless of which option interested parties choose to bid, the final specifications for the marina/marina rehabilitation will be finalized in contract negotiations, and the Commonwealth reserves the right not to award a contract, if an agreement cannot be reached.

The Successful Offeror shall provide, at its sole expense, a marina containing, at a minimum, a facility the size and scale of the existing marina structures, with all pertinent amenities, and within ninety (90) days of award, the Successful Offeror shall submit professionally signed drawings and specifications for the marina.

Based on the detailed requirements, plans, specifications, terms and conditions set forth in this

RFP, the Commonwealth herewith solicits proposals from prospective developers and operators who can demonstrate the necessary capability to successfully furnish, construct, and/or rehabilitate a marina, and maintain, operate, and manage said marina at its optimum potential for an initial term of approximately eleven (11) years (January 1, 2023 –April 30, 2034) with the opportunity to renew for an additional ten years as described in Section V, Paragraph D. It is emphasized that the Successful Offeror shall either utilize and renovate the existing marina structures OR install a new marina of at least a minimum size as the existing marina, with pertinent amenities, at Paintsville Lake State Park (including Sections II, IV, and V herein).

It should be noted that the existing marina is subject to liens as evidenced by filings in the Office of the Secretary of State. A Mechanic’s Lien Statement is recorded in the office of the Johnson County Clerk. To the best knowledge and belief of the Commonwealth, the balance owned by the former lessee, which is associated with these filings is approximately $760,000. If an Offeror chooses to acquire and rehabilitate the existing facilities as part of its proposal, it will be the sole responsibility of the Offeror to reach an agreement with the former lessee and lienholders to release all of their claims to the property.

The Commonwealth also wishes to make interested parties aware of ongoing litigation in Franklin and Johnson County courts between the former lessee and the Commonwealth, and the former lessee and its contractors and creditors, over various issues, including the former lessee’s right to continue to operate the marina, claims for compensation for the facilities, and other damages. The Commonwealth expects that such litigation will be fully resolved prior to Offeror initiating construction activities or beginning its operation of the marina.

II. LOCATION - EXISTING STATE PARK FACILITIES AND BACKGROUND

The Park is situated on Paintsville Lake, which is owned and operated by USACE. The lake contains 1,140 surface acres of water and 57 miles of shoreline.

The Park is comprised of approximately 242 acres of land and water area, leased by the Commonwealth from USACE via the Prime Lease, and operated by the Department of Parks.

The Park offers a year-round, 42-site campground; 32 sites are developed with full-service hookups, and 10 sites offer primitive camping. The campground includes restrooms, showers, and laundry. Two of the developed sites are adapted for the disabled.

The Park also offers water and lakefront recreation opportunities via boat launch ramp, courtesy dock, shelters, picnic tables, grills, playgrounds, and recreation courts. A new ADA-compliant fishing pier at the Park is expected in 2023.

This solicitation should result in complimenting the above amenities with a full-service marina, offering at least 52 open slips, 116 covered slips, a restaurant, boat and fishing supplies, and boat rentals. Depending upon post-solicitation arrangements, the award of this solicitation will either replace or improve the existing marina.

III. RFP GENERAL PROCEDURAL INFORMATION

A. Site Visit

A Site Visit will be held on October 12, 2022 at 11:00 a.m. EST at the Paintsville Lake Marina, 1581 KY Route 2275, Staffordsville, Johnson County, Kentucky 41256. Potential Offerors will have an opportunity to view the site, but a question and answer session will not occur at the site visit. If Potential Offerors have questions or inquiries concerning the site or the RFP, those shall be submitted in writing to the Buyer preferably within 10 days after the site visit but no later than Tuesday, November 1, 2022 by 4:00 p.m. EST to allow sufficient time for written responses to be posted as an addendum to the RFP prior to Monday, November 21, 2022 by 4:00 p.m, (hereinafter “RFP Closing Date”) .

Attendance at the Site Visit is optional. If attending, RSVP no later than Monday, October 10, 2022 by 4:00 p.m. EST. If there is no interest by any Offeror in attending the site visit by that date, then it may be canceled. RSVP to the attention of the Buyer, Nancy Brownlee, Division of Real Properties, 3rd Floor – Bush Building, 403 Wapping Street, Frankfort, KY 40601 or nancy.brownlee@ky.gov.

Potential Offerors or their representatives who have a disability pursuant to the ADA, for which the Commonwealth needs to make an accommodation, shall notify Nancy Brownlee of the need when communicating the RSVP.

In no event will failure to inspect the site constitute grounds for a claim after award of the resulting Sublease.

B. RFP Addenda

This RFP may be supplemented or amended at any time by appropriate addenda, which will be distributed to all participants in the RFP process. Addenda may also be necessary after the receipt date and will be sent to all Offerors who have submitted a proposal at that time.

C. Offeror Responsibility for Proposal Submittal

All proposals submitted should be clearly mark with Project Name and Proposal Number on the outside of the proposal. Proposals shall be deemed to have been made with the full knowledge of all of the terms, conditions, provisions, specifications, and requirements contained in this RFP and any addenda and enclosures thereto, and those terms and conditions contained in the Prime Lease, DACW69-1-84-0144, dated May 1, 1984, between USACE and the Commonwealth (Exhibit C).

Each Offeror has the responsibility of submitting his/her proposal by 4:00 p.m. EST on the RFP Closing Date to the Buyer by mail (USPS or other commercial shipping carrier) at:

Division of Real Properties Department for Facilities and Support Services Bush Building, 3rd Floor 403 Wapping Street Frankfort, Kentucky 40601 Attn: Nancy E. Brownlee, Buyer

Hand delivered proposals will be rejected and returned unopened to the Offeror. Timely submitted Proposals will remain secure and unopened until after the RFP Closing Date. Any proposal received after 4:00 p.m. EST on the RFP Closing Date will be rejected and returned unopened to the Offeror. The Commonwealth and its officials and employees shall not be responsible for the premature opening of a proposal through inadvertence or one not properly addressed and marked.

Neither the proposals nor their contents will be made available for public information or inspection until a sublease is fully executed.

All proposals shall be deemed an offer acceptable within a period of one hundred eighty (180) calendar days after the closing date for receipt of proposals (See Section III., Paragraph G.

Proposal Guaranty, infra).

INCOMPLETE PROPOSALS WILL BE DEEMED NON-RESPONSIVE TO THIS REQUEST FOR

PROPOSALS.

D. Inquiries

Contact with Commonwealth agents for information specific to this RFP, bidding procedures and/or regulations, programmatic, technical, or site specifications or location shall be limited to the Buyer for the Division of Real Properties, Attention: Nancy E. Brownlee, Bush Building, 3rd Floor, 403 Wapping Street, Frankfort, Kentucky 40601, nancy.brownlee@ky.gov. All inquiries must be submitted no later than Tuesday, November 1, 2022 by 4:00 p.m. EST to allow sufficient time for written responses to be posted as an addendum to the RFP.

E. No Prior Commitment or Obligation of the Commonwealth

The issuance of this RFP in no way constitutes an expressed or implied commitment by the Commonwealth to award a sublease or to pay for the costs incurred in the preparation of a response to this request.

The Commonwealth unconditionally reserves the right to amend, withdraw, or cancel this RFP and to reject any and all offers at any time and for any reason without recourse. Receipt of proposal materials by the Commonwealth or submission of a proposal to the Commonwealth confers no rights upon the Offeror nor obligates the Commonwealth in any manner.

No sublease resulting from this RFP shall be binding on the Commonwealth until it has been approved by the Secretary, Finance and Administration Cabinet and USACE.

Where the Commonwealth may waive minor irregularities or technicalities, such waiver shall in no way modify the RFP requirements or provisions if the Offeror is awarded the Sublease.

F. Issuing Office

This RFP is being issued by the Finance and Administration Cabinet, Department for Facilities and Support Services, on behalf of the Department of Parks.

G. Proposal Guaranty

1. Offeror’s proposal shall be accompanied by a certified or cashier’s check, made payable to the “Kentucky State Treasurer”, in the amount of Seven Thousand Five Hundred Dollars ($7,500.00) as bid security.

Upon award of the Sublease or cancellation of the solicitation, the certified or cashier’s check of the Unsuccessful Offerors will be returned immediately.

Following execution of the Sublease, the certified or cashier’s check of the Successful Offeror will be returned upon receipt of the performance and payment bonds enumerated herein.

2. In the event an Offeror’s proposal is accepted and the Offeror shall fail to execute the Sublease within ten (10) calendar days after its receipt by the Successful Offeror, the Commonwealth may, at its option, determine that the Successful Offeror has abandoned the Project and the amount of the bid security shall be forfeited to the Commonwealth as liquidated damages, and not as a penalty.

H. Warranty of Suitability

The Commonwealth makes no guaranty or warranty, either expressed or implied, with respect to the property. The property and/or any existing facilities are offered in an “as is, where is” condition subject to the terms of this RFP. There is no warranty given as to any structural, electrical, or mechanical components thereupon. The Offeror shall be responsible for any and all inspections to account for the condition of the facilities prior to bidding. Any and all repairs to the existing facilities shall be the sole responsibility of the Successful Offeror from the date of award of this RFP throughout the resulting agreement. The Offeror is expected to have examined the property and to submit with Offeror’s proposal his/her own formed conclusions as to the suitability of the property for the stated purposes.

IV. MARINA

The existing marina was subleased through a land sublease, to a private operator, whose agreement has expired with no options for renewal. The marina has the capacity to offer 116 covered slips for pontoons, bay liners, fishing boats, and other similar vessels on Docks A, B, and C; 52 open slips for houseboats on Docks D and E; a restaurant; a store offering boat and fishing supplies, merchandise, and other staple items; and rental of fishing boats, pontoons, and pedal boats. An aerial view of the existing marina layout is visible on Exhibit A. It has been reported the covered slips rent for $1600.00/year and open slips rent for $60.00/foot per year, with a minimum annual charge of $2800.00.

The Successful Offeror shall rehabilitate and improve the existing marina facilities or finance, design, and construct new marina structures that will achieve the requirements of this RFP.

Upon award of the Sublease, the Successful Offeror shall have ninety (90) days from the date of award to submit professionally signed drawings and specifications of the proposed new marina. If the Successful Offeror will utilize the existing marina structures, the Successful Offeror must provide a fully executed agreement addressing ownership, satisfactory to the Commonwealth, and clear title of the existing marina structures within thirty (30) days of award and submit within ninety (90) days of award professionally signed drawings and specifications for, at a minimum, the RFP-required improvements to the existing marina structures. The deadlines set forth in this paragraph may be extended at the Commonwealth’s sole discretion.

NOTE: THE DEPARTMENT OF PARKS SHALL NOT PROVIDE ANY PERSONAL PROPERTY

FOR THE OPERATION OF THE MARINA. ALL NECESSARY PERSONAL PROPERTY

SHALL BE THE RESPONSIBILITY AND AT THE SOLE EXPENSE OF THE

SUCCESSFUL OFFEROR.

REQUIRED IMPROVEMENTS TO EXISTING MARINA: If the Successful Offeror intends to purchase and/or utilize the existing marina structures, the marina areas that will require improvements, by and at the expense of the Successful Offeror, in order for the Sublease to be awarded are:

Full-service restaurant with sale of a variety of food and beverages to include foods found in a full-service restaurant subject to Commonwealth approval. Please be advised alcohol sales are currently prohibited on the Subleased Premises, but they may be considered in the future, subject to applicable law, and the approval of USACE and the Commonwealth.

A marina store open and operational during operating hours. Subject to Commonwealth approval, the marina store must sell light refreshments, prepared foods, snacks, ice and souvenirs.

A functioning fuel tank, fuel lines and pumps (with twice-yearly routine maintenance of fueling system).

Repair or replace any damaged/deteriorated decking and structural frames, including concrete walkways, throughout structure.

Electrical infrastructure upgrade that meets current Housing Building and Construction codes and USACE requirements, particularly Docks A, B and C toward the front of the marina structure.

Inspection and any needed repair of underwater anchors, cabling systems, wenches, shore connections or other equipment, per the Guidelines for the Safe Operation and Maintenance of Marinas attached as Exhibit G.

All upgrades must be in accordance with local, state, and federal laws, regulations, and current codes, including approval by the Department for Housing, Buildings, and Construction; the Finance and Administration Cabinet; State or Local Department of Health; and USACE.

V. SUBLEASE AGREEMENT TERMS AND CONDITIONS

A. General

The terms of Sublease between the Commonwealth and the Successful Offeror will include language from: (1) the RFP (and any addenda thereto), and (2) the Successful Offeror’s proposal submitted in response to the RFP. The Sublease shall also be subject to the terms and conditions contained in the Prime Lease. In the event of a conflict in language between the documents referenced above, the provisions and requirements set forth and/or referenced in the Sublease shall govern to the extent authorized by law.

No modification or change of any provision in the Sublease shall be made, or construed to have been made, unless such modification is mutually agreed to in writing by the Successful Offeror and the Commonwealth and is incorporated as a written amendment to the Sublease and approved by the Finance and Administration Cabinet prior to the effective date of such modification or change.

Memoranda of Understanding, written clarification and/or correspondence shall not be construed as amendments to the Sublease.

The Sublease shall be construed and interpreted according to the laws of the Commonwealth. Any legal proceedings against the Commonwealth regarding this RFP or any resultant Sublease shall be brought in Commonwealth administrative or judicial forums. Venue will be in Franklin County, Commonwealth of Kentucky.

B. Description of Property

The Commonwealth proposes to grant to the Successful Offeror the use of a portion of the Park shoreline and water area (“Subleased Premises”), with the approximate area shown on Exhibit A, which is attached hereto and expressly made a part hereof, for the purpose of furnishing a high quality marina operation. The Commonwealth holds the Subleased Premises under the USACE Prime Lease. Within sixty (60) days from award of the Sublease, the Successful Offeror, at its sole expense, shall submit a preliminary boundary survey of the Subleased Premises, which must be completed by a surveyor registered in the Commonwealth of Kentucky. The Commonwealth must approve the survey in writing prior to its finalization by the surveyor. The final survey documents, once agreed upon by both the Commonwealth and the Successful Offeror, will become the official description of the Subleased Premises, as referenced in the RFP and the resulting Sublease.

C. Sublease Subject to Prime Lease

The Sublease between the Commonwealth and the Successful Offeror shall be made subject to all rights of USACE under the Prime Lease. All the provisions of the Prime Lease shall be binding upon both the Successful Offeror and the Commonwealth. The Successful Offeror shall abide by all rules and regulations which may be promulgated by USACE in connection with the use of the Subleased Premises, including applicable minimum wage requirements.

D. Sublease Term

The Commonwealth proposes to grant to the Successful Offeror a Sublease with an initial term of eleven (11) years, which commences on January 1, 2023 and terminates on April 30, 2034.

At the end of the initial term, the Commonwealth will agree to an extension of the Sublease for an additional ten (10) year term, contingent upon:

1. The USACE’s extension of the Prime Lease (see letter attached as Exhibit D), and

2. The Successful Offeror is adhering to the terms and conditions of the Sublease.

E. Purpose

The Successful Offeror shall operate as a marina concession and for no purpose other than outlined herein, except as may be authorized by the express prior written consent of the Department of Parks, upon the terms and conditions set forth in the Sublease. The Successful Offeror shall, at a minimum, conduct the following business activities on the Subleased Premises:

Full-service restaurant with sale of food and beverages. Please be advised alcohol sales are currently prohibited on the Subleased Premises, but they may be considered in the future, subject to applicable law, and the approval of USACE and the Commonwealth.

Marina Store with sale of light refreshments, prepared foods, snacks, ice and souvenirs Furnishing a marina structure that provides at least 52 open slips and 116 covered slips for mooring and docking of privately-owned boats Rental to the public of watercraft, with a minimum of three (3) boats with motors or personal watercraft Sale of boat and fishing merchandise, supplies, tackle, and bait Sale of gasoline, oil, and other desired petroleum products Sewage pumpout services pursuant to KRS 235.230(4) Accessible and operational restrooms when the marina is open, subject to applicable ADA requirements

The Successful Offeror may, at its discretion, also conduct the following business activities on the Subleased Premises:

Subject to USACE and Department of Parks prior written approval, additional boat slips could be added

Rental to the public of kayaks or canoes from the boat launch area subject to Department of Parks approval

Limited incidental sales of boats, motors, and boat accessories subject to Department of Parks prior written approval

Servicing of privately-owned boats Sale of grocery items such as bread, milk, meat, and other related products Other related business activities, subject to the prior written approval of the Department of

Parks

Other than as outlined above, the Successful Offeror shall not conduct, engage, or allow in any form of trade or commercial activity nor perform any type of service on the Subleased Premises or property under the control of the Commonwealth.

F. Rental Consideration

As consideration for allowing the Successful Offeror to furnish and operate a marina on the Subleased Premises, the Successful Offeror shall make monthly payments to the Department of Parks of a percentage of gross receipts derived from operation of the marina concession, boat slip rental, and all other business activities conducted on the Subleased Premises (See Section VI., Paragraph f.).

G. Marina Operation

The mission of Kentucky State Parks is to deliver quality programs, amenities, and services which create memorable experiences and a sense of place, contribute to the economic growth of the Commonwealth, and preserve the historic and natural integrity, and traditions of our parks for existing and future generations. The marina operation will be perceived by the public as being part of a state park system that strives to maintain a positive image and reputation. The Successful Offeror will be expected to operate and maintain the marina in accordance with the Commonwealth’s standards, applicable laws, and as set forth in this RFP and the resulting Sublease Agreement and to offer customer service that will enhance the mission of State Parks and the total tourism effort of the Commonwealth.

The Successful Offeror shall assure that the marina operation provides services to the best standards prevailing for similar businesses and that the marina property is maintained to a safe and functional standard that complies with all codes, laws, and regulations.

The Successful Offeror shall keep the marina facilities open to the public seven days a week with the following minimum hours of operation:

May 1 – October 31 (“Operating Season”): 7:00 a.m. – 8:00 p.m.

November 1 – April 30 (“Off-Season”): 8:30 a.m. – 4:30 p.m. Restaurant and Store operations are optional during Off-Season

The Successful Offeror shall obtain preapproval of operating hours deviating from the above hours from the Department of Parks. The marina can be open longer if the season dictates. The Successful Offeror shall keep the marina open to the public for days and times preapproved by the Department of Parks. Offeror is encouraged to maximize opportunities for business during the off-season as Paintsville Lake does not release for winter pool.

For informational purposes, since Fiscal Year 2015, the amounts paid to the state at 5.5% of annual gross receipts by the former lessee are as follows (Please note: Fiscal Year is July 1-June 30):

FY 2015 $16,344.24

FY 2016 $13,795.14

FY 2017 $17,264.15

FY 2018 $12,715.92

FY 2019 $14,103.50

FY 2020 $14,547.00

FY 2021 $ 7,999.68

FY 2022 $16,255.22

H. Boat Slip Agreements

The Successful Offeror shall annually maintain and keep a dockage license agreement for every slip renter on the Subleased Premises, which shall be a slip rental agreement between the Successful Offeror and the boat owner. The agreement shall be updated annually, and a copy of each slip rental agreement shall be provided to the Department of Parks upon request. The Successful Offeror shall utilize a dockage license agreement similar or identical to the Department of Parks agreement (attached Exhibit E), which form shall hold harmless the Commonwealth and USACE from any negligent acts.

I. Rates and Prices

The Successful Offeror shall set reasonable rates and prices for its goods and services and may be subject to approval by the Department of Parks. In addition, its slip, boat, and personal watercraft rental rates and prices will be subject to review and written approval by the Department of Parks throughout the entire term of the Sublease. The Successful Offeror shall not be permitted to charge for entrance or admission to the Subleased Premises, including, but not limited to, the store, restaurant, and restrooms.

J. Staffing

The Successful Offeror shall employ only competent and orderly employees and contract laborers, who shall be subject to a criminal background check and who will keep themselves neat and clean.

The Successful Offeror, its employees, and contract laborers will accord courteous and competent treatment and service to all guests and patrons. The Successful Offeror, its employees, and contract laborers shall be properly trained in their duties and must be adequate in number and quality to provide prompt, courteous, and efficient service. The Successful Offeror shall issue and enforce an employee uniform policy that has been preapproved by the Department of Parks.

K. Security

The Successful Offeror shall provide suitable security for its entire operation on the Subleased Premises. The Department of Parks will not provide security for the Subleased Premises.

L. Utilities

The Commonwealth divests itself of any and all responsibility to all utility service components located on the Subleased Premises, as well as all utility service components located downstream of each marina utility meter. Consequently, the Successful Offeror shall, at its sole expense, be responsible for all utility service components located on the Subleased Premises and downstream of each marina utility meter throughout the entire term of the Sublease, including, but not limited to, the following:

1. Provide for and timely pay for all utilities for the operation of the marina. The existing marina utilities are metered separately from all other Park facilities; utility providers will bill the Successful Offeror directly.

2. Pay all costs and obtain all regulatory approvals necessary for utility upgrades, rerouting, provider changes, and any other utility modifications.

3. Ensure adequate domestic and fire safety water service for the entire marina. Paintsville Utilities provides water service to the marina and will bill the Successful Offeror directly. The Successful Offeror shall timely pay each monthly bill.

4. Annually certify to the Department of Parks that all water and sanitary systems on the

Subleased Premises have been inspected and comply with federal, state, and local standards and regulations. A licensed plumber shall make the certification. Inspectors with the Department of Housing, Buildings, and Construction must perform inspections for permitted repairs and modifications.

5. Certify to the Department of Parks that all electrical components on the Subleased Premises have been inspected and comply with federal, state, and local standards whenever modifications are made or damages occur to the electrical system. Inspectors with the Department of Housing, Buildings, and Construction must perform inspections for permitted repairs and modifications.

KRS 235.230(4) governs sewage pumpout services to be provided by the Successful

Offeror, Historically, toilets go into holding tanks on individual boats and are emptied by a pump-a-head boat. Only sanitary waste can be discharged (i.e., no oil, grease, cleaning chemicals, etc.). The pump-a-head boat transfers waste to a stationary pump at the marina.

From the marina pump, waste is transferred into the Paintsville Utilities sewer system.

Paintsville Utilities will bill the Successful Offeror directly. The Successful Offeror shall timely pay each monthly bill. In no instance shall waste be discharged into the water. A pumpout log must be maintained by the Successful Offeror along with documentation showing the frequency and location of pumpout services and shall be provided to USACE and Department of Parks upon request.

6. Successful Offeror shall, at its own expense, be responsible for the provision of all internet or telecommunications services to customers and guests should it elect to do so or may permit individual slip occupants to secure these services.

M. Maintenance Responsibilities

At a minimum, the following property and facilities shall be subject to the maintenance provisions of this Section, to wit: (i) all floating docks, gangways, ramps, piers, slips, and walkways, together with all appurtenances, equipment, utility service components, and signage thereupon; and (ii) all marina buildings, fuel tanks and dispensing systems, maintenance and storage sheds, and any and all other structures.

Except as otherwise specifically reserved, the Commonwealth divests itself of any and all maintenance to the marina facilities. The Successful Offeror shall reasonably maintain the entirety of the Subleased Premises in a manner that provides a safe and functioning environment for all patrons and does not detract from or cause ill effect to the overall appearance of the Park or the safety of customers and patrons.

Consequently, the Successful Offeror shall, at its sole expense, be responsible for all maintenance and repair duties throughout the entire term of the Sublease, including, but not limited to, the following:

1. Keeping existing and proposed buildings, structures, and other improvements located on the Subleased Premises, both interior and exterior, and all equipment and personal property within and attached to said buildings and structures in good repair, and not suffering or permitting any waste to be committed or anything to be done on the Subleased Premises that would constitute a nuisance.

2. Conspicuously posting regulatory and other safety signage on the Subleased Premises, such as notifications regarding swimming, stray electrical currents, smoking near fuel, fishing, etc.

3. Daily removal of trash from the entire Subleased Premises, including the dock and shoreline. The Successful Offeror shall frequently monitor the Subleased Premises and remove trash as reasonably directed by the Department of Parks or USACE, to maintain a clean and orderly appearance. Trash from the Subleased Premises shall be properly disposed of in a dumpster, the location of which shall be determined by the Department of Parks. The dumpster shall be procured and maintained by and at the sole expense of the Successful Offeror, and the Successful Offeror shall daily monitor and remove trash in and around the immediate vicinity of the dumpster or as reasonably directed by the Department of Parks or the USACE. The Successful Offeror shall be responsible, at its sole expense, for emptying the dumpster at least twice per week during operating season and weekly during the off-season.

4. Providing all janitorial services, cleaning, painting, pest control services, similar services, and all supplies and materials required thereto.

5. Implementing a program of preventative equipment maintenance that is in accordance with manufacturer recommendations, particularly with regard to fire extinguishers, fuel pumps, sewage pumpout, life preservers, electrical, or any other equipment needed for safe operation of the marina and keeping detailed records that shall be provided to the Department of Parks upon request.

6. Removing any and all debris that should become lodged within the Subleased Premises, to be completed at the direction of and in conjunction with USACE and/or Department of Parks.

7. Rebuilding, restoring, and/or replacing the Subleased Premises necessitated by casualty resulting from fire, flood, wind, rain or other weather event and the negligent, reckless, or intentional acts of the Successful Offeror, its agents, its contractors, its employees, its patrons or guests.

8. Operating and maintaining the gasoline tanks and dispensing systems in compliance with all laws and regulations promulgated by the Energy and Environment Cabinet, Department of Agriculture, and any other applicable local, state, or federal agency. Maintenance of these components includes, but is not limited to, regular inspections, painting, and pumping of sludge and/or water from the tanks (caused by flooding, leaks, or other problems). The Successful Offeror shall promptly provide copies of all gasoline tank and dispensing system inspections, documents, and reports to the Department of Parks. The Successful Offeror shall also assume all responsibility to repair or replace gasoline tank and dispensing system components, in whole or in part, if necessary or required by a regulating agency. The Successful Offeror shall replace the gasoline tank or any dispensing system component if it deteriorates to the point of replacement. All such repairs or replacement shall be made as soon as possible and no later than 30 days, absent agreement of the Commonwealth.

9. Maintaining the grounds of the Subleased Premises including the shoreline. Park staff shall maintain the property adjacent to the Subleased Premises.

If the Successful Offeror does not make necessary repairs or maintenance timely after notice from the Commonwealth, the Department of Parks shall have the right to conduct the repairs or maintenance at the sole expense of the Successful Offeror.

N. Maintenance of Commonwealth / USACE Property

In addition to Subsection M, Maintenance Responsibilities, the Successful Offeror shall be responsible for the proper care and custody of all Commonwealth / USACE property furnished for Successful Offeror’s use in connection with the performance of the Sublease. This responsibility includes the repair and/or replacement due to loss, damage, or negligence, normal wear and tear expected, and to cure deficiencies noted in regular, annual inspections of the marina facilities by the Commonwealth, as described below. Failure to cure deficiencies outlined in the annual inspection report and within the permitted timeframe may result in the Commonwealth exercising its rights under the Sublease.

The Successful Offeror shall do those acts necessary to (1) maintain the property in a reasonably attractive, clean, efficient, and safe condition; (2) prolong the useful life of the property; and (3) cause the property to be in conformity with all federal, state, and local regulatory standards

The Successful Offeror shall participate in annual inspections by the Commonwealth, which may include representatives of the USACE, Department of Parks; the Finance and Administration Cabinet; the Department of Housing, Buildings and Construction; the State Fire Marshal’s Office;

the State or Local Department of Health; and other appropriate representatives of the Commonwealth. The inspections will (1) determine whether the Successful Offeror is in conformity with the provisions of the Sublease, and (2) specify what act or acts are necessary to conform with the provisions of the Sublease. As soon thereafter as practicable, the Commonwealth shall provide to the Successful Offeror a written inspection report detailing the findings and recommendations pertaining to maintenance.

The Successful Offeror shall have thirty (30) days following receipt of the inspection report to either

(1) complete the maintenance recommendations made by the Commonwealth’s representatives or

(2) present a written plan, for approval by the Commonwealth’s representatives, which details the actions to be taken in order to correct any maintenance deficiencies and an anticipated completion date.

In the event the Successful Offeror fails either to (1) complete the maintenance recommendations within thirty (30) days, or (2) submit a reasonable plan, approved by the Commonwealth, within thirty (30) days, together with a projected date of completion by which to accomplish those maintenance recommendations, and to complete such plan of maintenance as agreed, unless good cause be shown for delay, then the Commonwealth may enter upon the Subleased Premises and do that which is necessary to maintain or repair the property.

The Successful Offeror shall indemnify and hold harmless the Commonwealth from all costs and expenses of any such maintenance accomplished by the Commonwealth. Should the Commonwealth be required to do that which is necessary to maintain or repair the property, then the Commonwealth may, at its sole discretion, declare the Successful Offeror in default of the Sublease.

The Successful Offeror shall also submit to inspections by USACE, which may or may not be conducted in conjunction with the Commonwealth’s inspections. The Successful Offeror shall comply with all inspection requirements and recommendations made by USACE. In the event the Successful Offeror fails to satisfy the USACE inspection requirements, then the Commonwealth may, in consultation with USACE, declare the Successful Offeror in default of the Sublease.

O. Escrow Account

In order to ensure that the Successful Offeror shall be sufficiently liquid to indemnify the Commonwealth against the costs and expenses that it may incur to maintain and repair the property, the Successful Offeror agrees that, upon execution of the Sublease, the Successful Offeror shall either deposit $50,000 or on the 10th business day of each month, deposit a sum of money equal to two and one-half percent (2-1/2%) of the gross sales of the total marina operation realized for the preceding one month, as reported to the Commonwealth by the Successful Offeror, but in no instance less than one thousand five hundred dollars $1500 per month (“minimum maintenance deposit”), in a demand deposit account in a Kentucky financial institution authorized to do business pursuant KRS Chapters 286.3 and 286.6 for the purpose of providing to the Successful Offeror a working maintenance account with a balance of up to Fifty Thousand Dollars

($50,000).

The parties agree with respect to such escrow demand account that:

The Successful Offeror may withdraw from the escrow account at any time that funds are available on the condition that the Commissioner of the Department of Parks, or his/her designee, countersigns the check or other instrument to withdraw proceeds from the aforesaid account. The Successful Offeror shall be deemed by the resulting Sublease to be authorized to draw from the above account as needed for the reimbursement of maintenance expenses throughout the year, with the prior written approval of the Commissioner of the Department of Parks. Accompanying each request for reimbursement, the Successful Offeror must provide legitimate estimates for repairs and/or maintenance to the facilities with proof of payment to each of the Successful Offeror’s contractors. In the event funds are withdrawn from the escrow account for maintenance expenses, the Successful Offeror shall resume monthly deposits of the greater of two and one-half percent (2- 1/2%) of the gross sales of the total marina operation realized for the preceding one month, as reported to the Commonwealth by the Successful Offeror, or the minimum maintenance deposit until the escrow account balance returns to Fifty Thousand Dollars ($50,000).

As to the operation of the escrow deposit account, the parties hereto agree:

1. That the account shall be an interest bearing account and that the amounts either deposited in or accruing upon said account shall be considered a cost or an expense of maintaining the subleasehold;

2. That the account shall be maintained jointly in the names of the Commonwealth, Commissioner of the Department of Parks or his/her designate, and the Successful Offeror;

3. Withdrawals from the account shall be made only upon the signatures of the representatives of both parties, only to reimburse the Successful Offeror during each calendar year for those maintenance costs accompanied by verifiable receipts for those maintenance costs incurred during that year as agreed to by the Commonwealth; or to reimburse Commonwealth for maintenance costs incurred as a result of the Successful Offeror’s failure to perform such maintenance. Refusal by the Successful Offeror to authorize a withdrawal from the account to reimburse the Commonwealth for maintenance costs incurred under this section shall constitute a material breach of the Sublease;

4. Escrow account funds shall not be utilized to pay salaries, overhead, or operating expenses;

5. That said escrow deposit account, and the requirement for same, shall exist during the entirety of the term of the Sublease and any extensions thereof;

6. That it is the intention of the parties that distributions shall be made from the escrow deposit account for reimbursement to the Commonwealth for all costs and expenses it shall have incurred to maintain or repair the components of the marina at the failure of the Successful Offeror to perform such necessary maintenance or repair;

7. At the expiration of the term of the Sublease and any extensions thereto, and after the fulfillment of the requirements of the Sublease and completion of any necessary repairs as determined by the Commonwealth at its sole discretion, the entirety of the contents of the account shall be returned to the Successful Offeror.

P. Promotional Materials and Souvenirs

The Department of Parks shall have the right to review and approve the Successful Offeror’s proposed promotional materials prior to the publication, dissemination, or broadcast of such materials including digital or social media. Marina promotional materials may incorporate Department of Parks “branding” upon prior written approval by the Department of Parks.

The Department of Parks shall have the right to review and approve the Successful Offeror’s proposed souvenirs and other similar items that it proposes to sell.

Q. Signage

The Successful Offeror shall, at its sole expense, be responsible for all marina signage throughout the entire term of the Sublease, including, but not limited to, the following:

1. Install or modify marina promotional sign(s) at appropriate locations, subject to the prior written approval of the Department of Parks. Marina promotional sign(s) shall complement existing Park signage in color and lettering and may incorporate Department of Parks “branding” upon prior written approval by the Department of Parks. Proposed signage along state-maintained highways must also be approved by the Transportation Cabinet prior to installation.

2. Post all signs required by regulatory agencies in conformance with the applicable regulatory requirements.

3. Maintain and repair all aforementioned signs as necessary or reasonably directed by the

Department of Parks or USACE.

R. Insurance

Each insurance policy required by this Section shall name the Commonwealth and USACE as additional insureds and shall also provide that said policy will not be cancelled, terminated, or changed without at least thirty (30) days prior written notice to the Commonwealth and USACE.

The Successful Offeror shall furnish to the Department of Parks copies of the initial certificates of coverage for each policy required by this Section within ten (10) business days of the date that the Sublease is fully executed by all parties, or the date the Successful Offeror is granted written permission to enter the property to begin construction and/or operation, whichever date is earlier.

In addition, the Successful Offeror shall furnish to the Department of Parks renewal certificates of coverage for each policy required by this Section at any time upon request but at least ten (10) business days prior to the expiration of each policy, for the full term of the Sublease and any renewals thereof.

FAILURE TO PROVIDE CERTIFICATES OF COVERAGE ANNUALLY MAY BE GROUNDS FOR

DEFAULT OF THIS AGREEMENT AND MAY BE THE BASIS FOR CLOSURE OF THE MARINA

TO THE PUBLIC OR THE PROHIBITION OF ITS OPENING FOR THE SEASON.

Liability Insurance. Prior to commencement and during the term of the Sublease, the Successful Offeror shall be required to obtain from an insurance company authorized to do business in the Commonwealth, and keep in force, at Successful Offeror’s own expense, a commercial general liability insurance policy providing minimum combined single limits coverage of Five Million Dollars

($5,000,000) per occurrence, and having an aggregate annual limit of not less than Five Million Dollars ($5,000,000), with an umbrella of Five Million Dollars ($5,000,000) per occurrence and an annual aggregate limit of Five Million Dollars ($5,000,000).

After award of the Sublease, the minimum liability amounts of required coverage established under this Section may be subject to modification by the Commonwealth upon sixty (60) days notice to the Successful Offeror.

Casualty Insurance. During the term of the Sublease, the Successful Offeror shall maintain, at its sole expense, fire and extended coverage insurance, including theft and vandalism, covering the entire Subleased Premises including the marina in an amount equal to its full replacement cost value. The Successful Offeror shall also carry and maintain fire and extended coverage insuring all contents and inventories in the Subleased Premises to the extent of their full insurable value.