A month after Schlitterbahn's opening, four rides remain closed at the KCK water park

Schlitterbahn: A dream gone bad

EPR Properties is warning investors that criminal indictments against the water park operator and its co-owner could hurt Schlitterbahn's chances of repaying the $174.3 million balance on the loan.
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EPR Properties is warning investors that criminal indictments against the water park operator and its co-owner could hurt Schlitterbahn's chances of repaying the $174.3 million balance on the loan.

More than a month after opening for the 2018 season, four rides at the Schlitterbahn water park in Kansas City, Kan., remain closed to visitors after an audit by regulators found that each did not comply with the Kansas Amusement Ride Act.

Permits for four rides — Soaring Eagle, Boogie Bahn, Whirlpool and Wolfpack — expired on July 1, and there's no clear timetable on when they can operate again for the public. The four were among 11 that were scrutinized during a visit by regulators from the Kansas Department of Labor on May 16 and 17, more than a week ahead of the park's May 25 opening for the summer.

The audit described missing safety signs, operation manuals and inspection reports, and a couple of instances of rides needing replacement parts, resulting in 11 rides being closed on opening day. While seven have returned to service, the audit was another black eye for the embattled KCK water park.

Schlitterbahn said the company awaits a follow-up visit from an inspector but would not discuss when that will occur.

"Three of the four rides required additional time to address certain administrative issues raised in the audit findings," Schlitterbahn spokeswoman Winter Prosapio said in an email.

While Schlitterbahn has described the audit's findings as administrative in nature — paperwork issues, essentially — a newly released labor department document claims two of the rides had maintenance issues.

An audit narrative, released to The Star as part of an open records request, claims that Schlitterbahn could show no records indicating that the company had a certified weld inspector take a look at the Soaring Eagle Zipline after 5,000 uses, as a manufacturer's maintenance schedule required.

What's more, the audit report claimed that Schlitterbahn contacted the ride's manufacturer to have it issue new inspection guidelines while the two-day audit was going on.

Schlitterbahn said that new maintenance schedules were going to be issued by the manufacturer even without the audit of the KCK water park.

"It is not the case that Schlitterbahn attempted to get a service bulletin after KDOL pointed out a problem," Prosapio said in an email.

A new service bulletin was issued by Soaring Eagle's Utah-based manufacturer on May 17, the second day that KDOL auditors inspected the water park. The service bulletin released owners from the requirement of having weld inspections after 5,000 uses, instead suggesting that the inspection occur after six seasons of use.

Cody Davis, a vice president at Utah-based ride manufacturer Soaring Eagle Zip Line Inc., said he had received a call from Schlitterbahn about the new service bulletin.

"They have been going through all of their documents and they did call to discuss it with me at that time," Davis told The Star. "I have written letters to other customers in the past letting them know that they don't have to have a certified weld inspector do that, but that's the first time I did actually issue a service bulletin."

One of the other four rides — Whirlpool — will not open this season after Schlitterbahn's maintenance team learned that a pump needs to be replaced, Prosapio said.

The KDOL audit has marked another in a rolling series of crises in 2018 for Schlitterbahn, which has been the subject of law enforcement and regulatory inquiries since the 2016 death of 10-year-old Caleb Schwab on the Verruckt water slide.

In March and again in April, key Schlitterbahn personnel involved in the making of Verruckt were indicted by a grand jury in Wyandotte County on charges ranging from second-degree murder to involuntary manslaughter to interfering with law enforcement. All defendants have pleaded not guilty and deny wrongdoing.

In April, EPR Properties, which holds a mortgage on the land Schlitterbahn owns in KCK, disclosed in a filing with the Securities and Exchange Commission that negative publicity from the indictments could imperil Schlitterbahn's ability to repay a $174 million loan balance. Schlitterbahn's other water parks in Texas are EPR Properties' collateral for the KCK mortgage loan.

The Kansas Commerce Department also said it was evaluating whether to continue issuing sales tax revenue (STAR) bonds — identified as a mechanism for the company to repay its EPR Properties debt — in light of Schlitterbahn's legal situation.

Then in May came the Department of Labor audit.

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Schlitterbahn said it believes the company is being singled out by the KDOL.

"[T]here is very little question that it is," Schlitterbahn said in a statement.

Schlitterbahn said KDOL's audit of the KCK water park involved a third-party inspector and took two days to complete in a process that "bears no resemblance to the process" of an audit earlier this year of another water park in Kansas. Schlitterbahn said that audit took one day and was undertaken by one KDOL employee.

Schlitterbahn's statement doesn't specify the water park in question, but it's likely referring to Great Wolf Lodge in KCK, which has five amusement park rides.

A single-page record of that audit shows Great Wolf Lodge was visited by an inspector on April 20 and the rides passed all 13 areas of inspection.

"It is obvious that the KDOL is applying wholly different standards to Schlitterbahn than to other operators in the State despite the fact that the ride involved in the 2016 fatality is no longer operating and there is no history of safety issues associated with any other ride at the park."

Schlitterbahn has also protested KDOL because it was not a random audit, as set out in the Kansas Amusement Ride Act, which the Kansas Legislature passed after the death on Verruckt.

The audit narrative said KDOL secretary Lana Gordon "exercised her discretion" to carry out the audit due to Schlitterbahn's own inspection in May, the May 25 opening of the park, no audits of the water park since July 1, 2017, and the fact that company leaders had been indicted.