San Jose could turn to a private vendor to run the Lake Cunningham Action Sports Park

The recreational amenities at Lake Cunningham, like the Action Sports Park, have lost some of their luster in recent years, but San Jose may turn to a public-private partnership model to revitalize the regional park and make it more profitable.

Elected officials have given the city the nod to seek out proposals to operate its waterpark, formerly known as Raging Waters, and include the Action Sports Park and other park attractions like the marina as part of the package.

“I think it’s a win-win situation,” said San Jose City Councilmember Bien Doan. “Not only will the city get some funding, the local (union) will continue with different jobs and even perhaps new positions. I think the private-public collaboration is a must.”

Since reopening after COVID-19, the Action Sports Park has struggled to recover. Before the pandemic, the park’s attendance was approximately 18,500 guests. During the last fiscal year, attendance dropped to 4,658 guests.

While San Jose has traditionally subsidized the Action Sports Park, the dreary numbers saw the city recover only 10.5% of the $1 million in its expenses last year, the lowest percentage since the 2020-2021 fiscal year.

Making matters worse, last year’s winter storms damaged the bike portion of the park, which the city has been slow to repair, leaving park officials realizing it may not have the expertise to properly care for and run it.

“The investment we need to make to do more marketing and make more partnerships and things like that is probably beyond our ability to cost recover given the attendance levels,” said Jon Cicirelli, director of Parks, Recreation and Neighborhood Services.  “Even if we got back to double the attendance levels we’re doing now, we’re still not breaking even.”

The lake’s marina is also currently unstaffed. Lake Cunningham’s major attraction is the waterpark, for which the city seeks a long-term operator.

In February, California Dreamin’ Entertainment temporarily took over its operations after Palace Entertainment vacated its lease two years early. This left city officials scrambling to find a short-term solution to keep the park open this year.

California Dreamin’, which also operates the former Raging Waters in Sacramento, has since reopened the park under a new name: CaliBunga Water Park.

As part of its agreement with the city, California Dreamin’ made $6 million in capital improvements to get the park back up and running while paying San Jose rent equating to 6% of gross receipts. If California Dreamin’ does not become the park’s long-term operator, it will receive $3.45 million back on its investments.

While California Dreamin’ is only contractually obligated to run the park until next year, its representatives and Thomas Lochtefeld, the original lessor and developer of San Jose’s Raging Waters, saw the promise of Lake Cunningham becoming a regional attraction.

“I really want to let you know there’s a magnificent opportunity with Lake Cunningham as a regional park,” Lochtefeld told the City Council in February. “And not only that it’s regional, but we can make it a destination for worldwide recreational opportunities for families, kids and what I envision as sporting elements.”

San Jose has had some success with private vendors overseeing public assets, including San Jose Municipal Golf, LLC, which operates three of the city’s golf courses.

The 15-year lease agreement signed last year to operate the Rancho del Pueblo, Los Lagos and the San Jose Municipal Golf Courses saw a 3.9% increase in usage and 6.4% increase in revenue in year one.

The agreement absolved the city of any cost liabilities to run the courses while requiring San Jose Municipal to make capital improvements and a rental payment based on revenue.

City records show San Jose received $916,129 in rent for its golf courses while adding an additional $400,000 for course improvements.

However, the “privatization” of public assets spurred some discussion about what would happen to the park’s employees currently working at the Action Sports Park and what protections were available to keep them publicly accessible.

“Our public resource assets are meant for the public and that is for all the public, “said District 10 Councilmember Arjun Batra.

While the city could opt against the public-private partnership if it is not satisfied with proposals, City Manager Jennifer Maguire vowed there would not be any layoffs unless “the budget situation was absolutely devastating.”

As to public accessibility concerns, Cicirelli said the city could stipulate those conditions, like requiring its approval for all price hikes, directly in their agreement.

The golf course lease, for example, required an agreement with First Tee Silicon Valley, which offers programs to youths and financially disadvantaged families. San Jose Municipal Golf, LLC also offered to set up a scholarship fund, host other community events, and grant high school teams access to the facilities.

“It’ll be in black and white and they’ll have to sign to it,” Cicirelli said.