Bruce Freedle, left of Phoenix, and Sherrylynn Felder of Greenlawn, New York, take a ride on the Roar rollercoaster at Six Flags Discovery Kingdom on Friday evening. They, and other members of American Coaster Enthusiasts, spent Friday at the amusement park and were planning trips to other Northern California rollercoasters. (J.L. Sousa/Times-Herald)
Six Flags intends to buy the city's $55 million interest in Discovery Kingdom theme park, thus ending a multi-million dollar profit-sharing agreement, the Times-Herald learned Tuesday.
Although Vallejo stands to lose a projected $1 million because of the deal, city officials welcomed the news, saying the buy-out will lessen the city's debt load and improve its bond rating.
The park's president announced the company's intentions in a private meeting with City Manager Joe Tanner Friday, officials said.
Both sides said the deal is financial only and does not signal a downturn in the park's dedication to Vallejo.
"It continues to be good relationship," Mayor Tony Intintoli Jr. said in an interview. "The park is like any other business that needs city services and city support."
The purchase should be done within two months, officials said. The current bond is $55 million, Vallejo Finance Director Rob Stout said. But the park will have to pay more if the city's pending assessment of the 135-acre property's value comes in higher.
Six Flags spokeswoman Wendy Goldberg said the New York-based company - the world's largest regional theme park operator - was poised to buy the Vallejo park outright following recent the
$312 million sell-off of seven other properties.
"This is an opportune time to exercise this option," Goldberg said Tuesday. "We're well-positioned and we have the liquidity to do this."
When Vallejo romanced the park away from Redwood City in the 1980s, the city posted a $63 million bond for the park in exchange for 20 percent of the total annual profits, Stout said.
The deal was renegotiated in 2004 to include a clause that Vallejo would get a "park admission fee" if Six Flags exercised its option to buy out the city's interest.
Since 2003, the city's cut has ranged from $2 million to $3 million annually. But this year, the figures missed projections by $1.2 million due to poor attendance that park officials blamed on rain.
According to terms of the buy-out deal, the city will still receive a share of the total profits for another fiscal year, which it has projected at $1.8 million.
Beginning the following year, Six Flags will begin paying the "park admission fee" that equals a flat 2.5 percent of ticket sales only, which the city has estimated at $750,000 revenue.
Stout says it's too early to determine how the city will make up that $1 million shortfall for the general fund.
Because the park is within the Flosden Redevelopment zone, any new property tax Six Flags is assessed as a result of buying the land will go into the Flosden fund, Stout said. The tax would be unavailable for the city's discretionary use, as it is now.
In January, Six Flags announced it had rebranded the park, investing $16 million in improvements. There are more performances, better rides and increased animal attractions, park officials say.
"We're clearly committed to the city of Vallejo and continue to invest in it," said spokeswoman Goldberg.
She declined to compare the Vallejo park's performance to other Six Flags properties, citing a company policy to keep that information secret. The park employs 200 full-time employees and 1,100 workers during the summer peak season.
City Manager Tanner said he had anticipated the buy-out considering the boon Six Parks received by selling off other parks.
"I don't blame them for paying off the bond issue," Tanner said. "My guess is they've done well, and feel they are better off doing it this."
Councilman Gary Cloutier said the erasure of $55 million bonding on the city's books will dramatically decrease its debt load.
"We can borrow more money at a lower interest," Cloutier said. "The city's bonding capacity is maxed out in terms of Marine World. Getting rid of that definitely helps do other things."
E-mail J.M. Brown at firstname.lastname@example.org or call 553-6834.