The Kenai Peninsula Borough Assembly unanimously approved the terms of a proposed contract between the Kenai Peninsula Borough and the Arctic Winter Games 2006 Host Society, the organization that will manage the athletic event in March 2006.
The borough already has entered into a contract to host the games directly with the Interna-tional Committee. This latest agreement, voted on Tuesday night as the assembly met in Homer, essentially requires the newly formed host society to perform many of those functions, but leaves with the borough the right to override host society decisions when that is deemed in the best interest of the games. The new contract has not yet been signed.
Before the vote, borough attorney Colette Thompson gave the assembly paragraph-by-paragraph summary of its clauses and answered assembly questions regarding the borough's financial commitment and other aspects of the agreement.
Among other things, assembly members wanted assurances that the borough would not be on the hook for millions of dollars in expenses and facility improvements that may be necessary to put on the games.
The host society has agreed in its contract to manage and stage the games and raise the funds needed to do that job.
Assembly member Paul Fischer of Kasilof pointed out that the proposed agreement requires that there be "no substantial change" from the borough's original bid proposal for the games without the consent of the international committee. That bid, he said, referred to a $5 million budget. He wanted to know if the borough could be left holding the bag if the host society failed to raise the necessary funds.
"Not automatically, no," Thomp-son said. "This is an agreement to conduct these (games). The budget was presented. It's a proposal. The international committee has recognized in its contract that it could be changed with their consent. If the borough or the host society failed to raise the $5 million that is budgeted, (and) say the committee decided to cancel the agreement next month based on that, the committee would not be entitled to recover the $5 million from the borough because they would not be damaged in that amount."
The borough would not be on the hook for the $5 million, because the international committee could seek bids from other communities and successfully conduct the games, she said.
"The other alternative would be that they give their consent to a reduction, and we do games that are different based on necessity," she said, adding that the international committee recognizes that bids submitted by communities for the games are based on the best intentions to raise the necessary funds.
"If they are not successful, the closer they get to the games, the more there may be damage involved, but at this point, there is nowhere in the contract that they are entitled to $5 million," she said.
Fischer continued to press the issue, suggesting that at some point the borough could be liable. Thompson said provisions in the contract serve to protect the borough.
For instance, the contract requires the host society to defend and indemnify the borough from claims arising out of the host society's performance of the contract. The host society is expected to obtain liability insurance for the first $250,000 of any liability claim, as well as event insurance for the games, directors' and officers' insurance and workers' compensation insurance. The borough is to be named as an additional insured on the liability and event policies, Thompson said. Another provision requires the host society insurers waive the right to recover costs from the borough.
The borough, meanwhile, will name the host society as an additional insured on its liability insurance for claims in excess of $250,000. Thompson said that according to the borough's insurance broker, this would not result in any additional cost to the borough under its present coverage.
The proposed contract provides that the host society "take all reasonable steps" to meet the capital requirements necessary to provide such things as an enclosure of the Kenai Ice Rink with a changing room and shower facilities, development of a biathlon range and completion of an ice rink in Homer with temporary or permanent changing and showering facilities. Homer is in line to host the curling competition as well as a cultural event.
The proposed Homer rink is only an idea on paper at this time, however. About $1 million for that project, raised independent of the games, is already in hand in Homer, but a rink could cost twice that much. Assembly members asked whether the borough would be liable for the construction cost if funding fell short.
Borough Mayor Dale Bagley pointed out that the Homer rink was a project long predating the borough's involvement with the games. The rink is not an Arctic Winter Games project. Bagley said it would be nice if the games could result in added financial support that helps the Homer rink get built, but if not, the games could still proceed using existing facilities. The Homer rink is not essential to fulfilling the contract.
Thompson said Wednesday, however, that the international committee is anticipating a facility in Homer. If it can't be built, they would have to OK a substitute, such as a rink in Nikiski that Bagley said would suffice. Thompson said she doubted the committee would balk at such a change.
The borough and the host society agreed to cooperate in negotiating contracts with the cities and other third parties as necessary. Assembly member Betty Glick asked what would happen should a clause in a city-borough contract be in conflict with the borough-host society agreement. Specifically, she wanted to know if the agreement could be amended to resolve such conflicts.
"Yes," Thompson said. "It would require agreement of both parties, but the board of the host society includes representatives from the cities, the borough the goal is to conduct the games successfully, and yes, a contract can be amended."
Other provisions of the contract require the host society to provide quarterly financial and progress reports to the borough and the international committee, as well as the minutes of meetings scheduled by terms of the contract.
The host society will ensure adequate facilities and equipment are available for staging the games, presentations, ceremonies and events, and for feeding and housing participants. It also will establish a ticket or pass system with free access and transportation for athletes, coaches and officials.
The host society is to maintain all business and sports records and provide that data to the committee within 30 days of their conclusion. All accounting records are due within six months of the end of the games.
The host society also is required to provide the international committee with up to 2,000 copies of a video production of the 19th Arctic Winter Games.
The contract will begin when signed officially by the borough and the host society and terminate in March 2007, a year after the games are held.
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