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Agenda Item 21.
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| City Council Meeting |
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| Subject: |
| Ten Month Interim Contract with Western Golf Properties for Brea Creek Golf Course and Funding for the Maintenance and Operations and Other Related Costs |
| RECOMMENDATION |
- Award interim ten month contract to Western Golf Properties LLC in the amount of $513,500 for Brea Creek Golf Course;
- Increase the FY 2019-20 General Fund estimated revenues by $593,760 for the gross revenues of the operation and decrease estimated lease revenues by $80,000; and,
- Appropriate $578,760 to the FY 2019-20 General Fund (Fund 110) budget for the maintenance and operations contract ($513,500) and other related costs ($65,260)
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| BACKGROUND/DISCUSSION |
In 2007, City Council approved a lease agreement with Imperial Golf to operate and maintain the 9-hole Brea Creek Golf Course. Per allowable provisions in the lease agreement, Imperial has decided to opt-out of the agreement and will conclude their operation and maintenance responsibilities as of August 31, 2019. This item addresses the interim operation and maintenance of the golf course from September 1, 2019 through June 30, 2020 while a permanent operator from July 1, 2020 and beyond will be selected in the coming months.
During the interim period, the City will be operating the Brea Creek Golf Course using a contract operator as opposed to a lease agreement. This means the City will take in all the revenues generated (through the operator) and pay the operator a fixed fee for the maintenance and operations of the golf course. Additionally, the City will be responsible for other costs such as the cost of goods sold in the restaurant and pro-shop; well operations for water, and credit card processing charges.
Contract Operator
The initial interim period was expected to be six months. In preparation for this interim period, staff issued a Request for Proposal (RFP) in June of this year to twelve companies. Of the twelve, two proposals were received, one from Touchstone Golf and the other from Western Golf Properties (Western). Touchstone's proposal did not provide the requested monthly pricing information and their proposal was deemed incomplete. Staff then interviewed Western who currently operates and maintains the course as a sub-contractor to Imperial Golf. Staff was impressed with Western's proposal and their ability to provide a seamless transition by utilizing existing staff along with existing equipment. Western's monthly proposal of $54,500 per month was negotiated down to $51,350 per month by extending the term to ten months from the original six months, resulting in a final contract amount of $513,500 over the length of the term.
In addition to the ten month term, other terms in the agreement include:
- Provide full maintenance and operation of the course
- Provide all the maintenance equipment and golf carts for the operation
- Provide a daily accounting of all sales and provide all revenues to City
The full scope of work is available in Exhibit “A” of the agreement. Staff recommends awarding the contract to Western Golf Properties.
Additionally, there are other golf course related costs that are not the responsibility of the contract operator during this period. The following costs are estimated to be approximately $65,260 for the ten-month period:
- Cost of Goods Sold – Food and Beverage
- Cost of Goods Sold - Merchandise in the Pro-shop
- Credit Card Processing Fees
- Well water for irrigation
Based on the information received under the current lease agreement, revenues at the golf course for the same 10 month period from the prior year (September 2018 through June 2019) were $593,760. The projected gross revenues less the contract operator cost and the other estimated costs are as follows:
| Gross Revenues |
$593,760 |
Expenses
Contract Operations
Cost of Goods Sold |
$513,500
$65,260 |
| Total Expenditures |
$578,760 |
| Revenues Over Expenditures |
$15,000 |
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| FISCAL IMPACT/SUMMARY |
The FY 2019-20 General Fund budget includes estimated lease revenue of $80,000 for the ten month period from September 1, 2019 through June 30, 2020. The projected net revenues over expenditures from this interim operation are $15,000. The fiscal impact to the General Fund is a reduction in revenues over expenditures of $65,000 for the interim ten-month period.
An RFP was issued for an interim operator of the Brea Creek Golf Course. Staff recommends awarding a ten month contract to Western Golf Properties for the maintenance and operations of the course in the amount of $513,500. Additionally, staff recommends the FY 19-20 General Fund (Fund 110) budget be adjusted the during the First Quarter Budget Adjustments to reflect the change in revenues over expenditures for the interim ten-month period.
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| RESPECTFULLY SUBMITTED: |
William Gallardo, City Manager
Prepared by: Bill Bowlus, Public Works Superintendent
Faith Madrazo, Revenue & Budget Manager
Concurrence: Tony Olmos, Director of Public Works
Cindy Russell, Administrative Services Director |
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