HomeMy WebLinkAboutIR 7765 INFORMAL REPORT TO CITY WUNCIL MEMBERS No. 7765
�pTEAcy�
To the Mayor and Members of the City Council October 5, 1993
*� STATUS UPDATE OF GOLF COURSE LEASE CONTRACTS AND
' A Subject: PROPOSED AMENDMENTS TO ROCKWOOD GOLF COURSE
CONTRACT
During the City Council budget work session on August 19, 1993 the Council asked staff to
present an update on the status of the management contracts on the City's two leased golf
courses.
The following provides background information on the two contract agreements and the
current status of the contracts with American Golf Corporation for Z Boaz Golf Course, and
International Golf of Texas, Inc, for Rockwood Golf Course.
AMERICAN GOLF CORPORATION J Z BOAZ GOLF COURSE
In May 1990, the City approved a lease agreement under which the American Golf
Corporation (AGC) would assume full responsibility for the operation and maintenance of Z
Boaz Golf Course. A separate agreement was signed with AM Golf (a Texas subsidiary of
AGC) authorizing an exclusive license to sell beer at the golf course. These agreements
were for eight years with two additional two year options (primary term ending April 1998),
The golf course lease agreement required AGC to pay the City a$80,000 signing bonus and
a percentage of gross receipts with an escalating annual guaranteed minimum totaling
$1,675,000 during the initial term. This annual minimum would be slightly reduced by the
City's obligation to share with AGC the revenue generated from annual golf passes sold by
the Park and Recreation Department (PARR) of approximately $25,000 per year.
The agreement also required AGC to maintain the golf course in accordance with specified
criteria, and to implement and complete a capital improvement program totaling $231,800
during the first year of the agreement, followed by improvements equal to five percent (5%)
of the green fees each year thereafter. Additional contract requirements included keeping
adequate books and records, providing insurance coverage, paying all taxes and bills,
maintaining specified City owned equipment assigned to the contractor and operating the
course in accordance with the rules and regulations per Chapter 1 of the Park and
Recreation Department (PARR) Golf Division Policies and Procedures Manual.
Overall, AGC has complied with all terms of the lease agreement and quarterly PARD facility
inspection reports have been favorable. Currently in their fourth year, AGC has completed
all capital improvements as per the contract with exception of the maintenance compound
which was delayed due to negotiations resulting in cohabitation of the existing service center.
Completed improvements include renovation of the pro shop, additional cart storage and
trails, drainage and other course amenities. The maintenance compound renovations are
currently under construction. To date AGC has spent a total of $323,377 (unaudited) on
capital improvements at Z Boaz Golf Course. OFFICLU RECORD
C" SECRETARY
L• WORTH, Ta
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS
INFORMAL REPORT TO CITY tJUNCIL MEMBERS No. 7765
To the Mayor and Members of the City Council October 5, 1993
Page 2 of 5
CX ) Subject:
STATUS UPDATE OF GOLF COURSE LEASE CONTRACTS AND
PROPOSED AMENDMENTS TO ROCKWOOD GOLF COURSE
CONTRACT PROPOSED
INTERNATIONAL GOLF OF TEXAS, INC. / ROCKWOOD GOLF COURSE
In August 1990, the City approved a lease agreement under which International Golf of
Texas, Inc. (IGT) would assume full responsibility for the operation and maintenance of
Rockwood Golf Course. Because of the fact that IGT had not been incorporated in Texas
for three years, they were not able to obtain a license with the Texas Alcohol Beverage
Commission to sell beer. It was therefore necessary that the City contract with Links
Catering, Inc., for beer sales at the golf course. These agreements for both the operation
of the golf course and beer sales were for eight years with two additional two year options
(primary term ending July, 1998).
The contractor was required to pay to the City an escalating guaranteed minimum per year
totalling$2.457 million during the initial term. This annual minimum would be slightly reduced
by the City's obligation to share with IGT the revenue generated from annual golf passes sold
by the PARD of approximately $25,000 per year.
The Regular Capital Improvement Program to be completed on a four (4) year schedule
totaled $550,000 and, in addition, the construction of an additional new 9 holes, a new
clubhouse, and a new driving range were included as part of a Special Capital Improvement
Program.
The contract also specifies that the contractor annually furnish to the City evidence of
financial security in the amount of the annual guaranteed minimum license fees. With
respect to capital improvements,the contractor must provide satisfactory documentation that
it has the cash or a line of credit available to fund and finance the capital improvements for
the current contract year.
In accordance with the contract the plans for the new 9 holes were to be submitted to the
City by August 1991 with City review to be completed within thirty (30) days of receipt of the
plans. If the plans are rejected (and they were) the contractor is required to redevelop the
plans within a reasonable time frame as designated by the City Manager. Once plans are
approved by the City the contractor is required to commence construction within ninety (90)
days and complete construction within eighteen (18) months. After completion of the new
9 holes, the contractor shall be reimbursed for the cost of the improvements at a rate of 25%
of the gross receipts from the course.
F OFFRICM
RECORD
D
C oN SECR ET ARY
T. W DRX T MEX
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS
---Apbk 10%k
INFORMAL REPORT TO CITY f.;OUNCIL MEMBERS No. 7765
To the Mayor and Members of the City Council October 5, 1993
Page 3 of 5
ex Subject:
STATUS UPDATE OF GOLF COURSE LEASE CONTRACTS AND
PROPOSED AMENDMENTS TO ROCKWOOD GOLF COURSE
CONTRACT PROPOSED
Delay of the capital improvement program has occurred and is, in part, due to appeals
registered by the contractor relating to the first year audit. Negotiations were necessary and
postponed work until a resolution could be achieved. Specifically, clarification on work
conducted to repair and make improvements to address flood damage was required. These
negotiations were initiated in May 1992 and finalized in July 1992. As a result, adjustments
were made to the Regular Capital Improvement Program giving credit for flood related
improvements, deducting some irrigation improvements and assigning the added balance to
cart paths, which are required to be completed in Year 2 and Year 4. The overall required
expenditure of$550,000 was not adjusted.
To date, IGT is still in breech of contract regarding the Regular Capital Improvement Program
and Special Capital Improvement Program. Throughout the third year staff has continued
to pursue resolution of issues related to both the Regular and Special Capital Improvement
Program. Currently in the fourth year of the contract, IGT has not completed $240,146.74
in the Regular Capital Improvement Program. No work has commenced to address the
Special Capital Improvement Program.
Over the past year,the management of IGT has reviewed the feasibility of the Special Capital
Improvement Program and IGT has determined that the construction of the New 9 Holes and
Driving Range would not be economically feasible given the fact that the estimated
construction cost would total over $1 millon dollars. Staff agrees with these findings.
The contract allows IGT to retain 25%of the gross revenues generated from the New 9 Holes
to retire their debt service. If IGT is required to complete this construction, the City would be
forced to grant the two 2 year option clauses or buy-out the capital improvements as
identified in the contract or both.
An alternate proposal has been submitted by IGT to continue operation of Rockwood Golf
Course under a revised capital improvement program and additional revenue sharing
program (see attached letter from IGT dated August 14, 1993).
IGT PROPOSAL FOR REMAINING YEARS OPERATION
IGT did not complete any capital projects during year two of the contract except for the
carryover from year one expenditures on the driving range and remodeling of the clubhouse.
No additional improvements were completed during year three. Additionally, past audits have
identified concerns regarding the meeting of deadlines for various required submittals,
financial ability and stability and inadequate insurance coverage. OFRCIAL RECORD
CITY SECRETARY
I FT.-WORTUt TOO
ISSUED BY THE CITY MANAGER TVff v-vvvm rR-, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7765
Po To the Mayor and Members of the City Council October 5, 1 993
Page 4 of 5
X Subject:
STATUS UPDATE OF GOLF COURSE LEASE CONTRACTS AND
PROPOSED AMENDMENTS TO ROCKWOOD GOLF COURSE
CONTRACT PROPOSED
With respect to the latter, issues involving insurance and financial stability have been
resolved. With respect to both capital improvements programs, during the past year, the
management of IGT and City staff have conducted negotiations in an effort to resolve these
issues.
IGT has recently submitted an alternate proposal to utilize the remaining capital improvement
monies at Rockwood. In addition, an increased revenue sharing plan has been proposed.
The following is a list of the particular elements of the proposal:
1. Currently, the agreement calls for a 12% per annum on any late payments to the City.
The new proposal would increase this to 24%, or maximum allowed by law not to
exceed 24%.
2. All remaining capital improvement plans and schedules would be submitted at the
beginning of each contract year.
3. The original license agreement included the entire Rockwood Park including the golf
course and ballfields. The proposal would include only the area that is currently
occupied by the golf course and driving range. IGT would fund any survey work
required to meet this condition.
4. A revenue plateau on green fees, cart rentals and tournament fees would be
established for each contract year, above which the City would receive 60% and IGT
would receive 40%. Currently the City receives revenues at an average of 21.6% from
these revenue categories.
5. The City would receive 20% of driving range revenues (identified as an issue in the last
audit, the City currently does not receive any percentage revenue from the range).
6. Contractor will spend $240,146.74 for remaining capital improvements. These would
include continuous cart trails on the Red and White nines during contract year four (4).
Any remaining monies would be spent on improvements during contract year five (5).
The contractor will pay an additional 2% of construction costs to the City for
inspections.
7. IGT will reimburse the City for their costs in reviewing plans for the 4.New 9 Holes in the
O;W
amount of $2,556.46. Cjj_ rp on
R n7
OMCK RECORD
MY SECRETARY
L,FT. WORTIOUIP TEX.
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS
INFORMAL REPORT TO CITY %,OUNCIL MEMBERS No. 7765
To the Mayor and Members of the City Council October 5, 1993
Page 5 of 5
Subject:
STATUS UPDATE OF GOLF COURSE LEASE CONTRACTS AND
PROPOSED AMENDMENTS TO ROCKWOOD GOLF COURSE
CONTRACT PROPOSED
B. All breech clauses in the contract will be thirty days (currently non monetary breeches
require a sixty (60) day correction period).
9. IGT will reimburse the City a$100 per day penalty fee for non-compliance of mandated
insurance, bonding and other related financial matters.
10. IGT will make a $25,000 gift to the City on December 15, 1993 and again on
December 15, 1994 to be expended on park improvements in Rockwood Park.
11. Construction of the New 9 Holes, Clubhouse and Driving Range would be deleted from
the contract agreement.
It is the opinion of the staff that although IGT is technically in breech of contract with respect
to capital improvements, resolution of these deficiencies can be addressed by renegotiating
the contract under the terms proposed. The basis of our position is a change in the
management structure of the local office which has been progressive in pursuing the resolution
of these issues. In addition, although no guarantees can be made to full and complete
compliance of the above by the contractor, staff believes that the renegotiated terms will allow
for a better opportunity for compliance.
Dependent on City Council input, staff will prepare an M & C for the City Council's
consideration to amend the contract with IGT under the terms outlined above.
Should you have any questions regarding this matter please contact Assistant City Manager
Libby Watson at Ext. 6140.
----------
b Te 6
City o
C! Ma
City Manager
Attachments
OFFICK RECORM
CITY SECRETARY
FT. WORTH, TEX.
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS
,00k Aftl�
I ` ATTACHMENT A
CAPITAL IMPROVEMENTS
Z BOAZ MUNICIPAL GOLF COURSE
1. REGULAR CAPITAL IMPOVEMENTS
Original Actual
Contract Contract Amount
Year Capital Improvement Amount Spent Balance
Through
10/5/93
Year 1 Cart Trails $ 85,000 $ 119,972 $ 0
Year 1 Pro Shop Renovation 70,800 123,421 0
Year 1 Drainage #18 0 25,506 0
Year 1 Site Amenities 5,000 5,000 0
Year 1 Cart Barn Improvements 41.000 0" 0
SUB-TOTAL $ 201,800 $ 273,899 $0
Year 2 Maintenance Yard $_30..000 $ 0 $____g
SUB-TOTAL $ 30,000 $0 $ 30,000
Year 3 Maintenance Yard $ 0 $ 13,533* $ 16,467
SUB TOTAL $ 0 $ 13,533 $ 16,467
Year 4 Wash Pad(estimate)+ $ 0 $ 17,985* $ 0
Year 4 Fuel System(estimate)+ 0 3.000* 0
SUB-TOTAL $ 0 $ 20,985 $ 0
TOTAL $ 231,800 $ 308 417 $ 0
" Expenditures combined with Pro Shop Renovation.
* Required expenditures for Year 2 maintenance yard.
+ Currently under construction.
OFFICIAL RECORD
CITY SECRETARY
FT, WORTH, TEX,
Am%
11. SPECIAL. CI ACCOUNT: 5% OF ANNUAL GREEN FEES
Original Actual
Contract Contract Amount
Year Capital Improvement Amount Spent Balance
Through
10\5\93
A 5% of Yr 2 Green fees = $ 23,076
Year 2 Flow Meter $ 0 $_ 2,457 $ 20,619
SUB-TOTAL $ 23,076 $ 2,475 $ 20,619
B. 5% of Yr 3 Green Fees = $ 24,884
r► Year 3 Cart Barn 0 1,000 0
Year 3 Entrance Sign 0 1,725 0
Year 3 Drainage #3 0 9,760 0
SUB-TOTAL $ 24,884 $ 12,485 $ 12,339
TOTAL $ 47,960 $ 14,960 $ 33,000
111. REGULAR CAPITAL IMPROVEMENTS AND SPECIAL Cl ACCOUNT COMBINED
TOTALS
TOTAL CONTRACT CIP $279,760
TOTAL CIP TO DATE $323,377 OFFI SAL RECon
REMAINING CIP = $33,000 C11y SECRUARy
WORTH, TM
ATTACHMENT B
CAPITAL. IMPROVEMENTS
ROCKWOOD MUNICIPAL GOLF COURSE
A. REGULAR CAPITAL IMPROVEMENT PROGRAM
1. Contractor shall pay for and implement the following capital improvements
in accordance with the fallowing schedule and minimum amounts. All
improvements shall be completed and operational before the end of the
indicated contract year, unless otherwise agreed in writing by the parties:
Original Actual
Contract Contract Amount
Years Capital Improvements Amount Spent Balance
through
10/5/93
Year 1 Flood Repairs $ 0 $ 47,075.19 $ 0
Year 1 Remodel Existing Clubhouse 150,000 81,684.61 68,315.39
Year 1 Build Lighted Driving Range 100,000 111,321.22 0
Year 1 Pave Parking Lot 25,000 11,448.00 13,552.00
Year 1 Sand Traps 30,000 13,664.90 16,335.10
Year 1 Irrigation 0 50,328.02 0
Year 1 Cart Paths 0 5,652.54 0
SOB-TOTAL $305,000 $321,174.48 $98,202.49
Year 2 Irrigation Phase 1 75,000 50,328.02+ 24,671.98
Year 2 Cart Paths 30,000 5,652.54+ 24,347.46
SUB-TOTAL $105,000 0 $49,019.44
Year 3 Irrigation Phase 2 75,000 47,075.19+ 27,924.81
Year 3 Cart Paths 0 0 0
SUS-TOTAL $75,000 0 $27,924.81
Year 4 Perimeter Fencing 50,000 0 50,000
Year 4 Cart Paths 15,000 0 15,000
SUB-TOTAL $75,000 0 $75,000
GRABD TOTAL $550,000 $321,174.48 $240,146.74
Total Regular Capital Improvements $550,000
Total. Spent To Date = $321,174.48 OFFI4INAMI RECORD
Balance Required To Most Contract Specified CIP Total $240,14i.I�yGn�'AB
' (
+ Credited to first year CIP. ��'. WORTH, T--M-
iNrERNATff-)NAL
0
03
"'OLF'fF TEXAS
'j-0-
N
August 14, 1993
Mr. Richard Zavala, Director
Park and Recreation Department
City of Fort Worth
4200 South Freeway, Suite 2200
Fort Worth, Texas 76115-1499
RE: Memorandum of amendment understanding to License
Agreemant Rockwood Municipal Golf Course
Dear Mr. Zavala:
Pursuant to the meeting of August 6, 1993, we discussed the
following amendments:
Paragraph 5.
Late payment charges to be increased to maximum amount
allowed by law, not to exceed 24%.
Paragraph 6(a) 11(b) .
Remaining CIP plan schedule to be submitted at beginning of
contract year.
Exibit "A".
Field notes to be amended to exclude all lands not in
current use for golf related activities. (This can be done
with Save & Except clause) .
Exhibit "C".
The combined revenue from green fees, golf cart rentals and
tournament fees above the plateau listed below for each
calendar year will be shared 60% - City of Fort Worth and
40% - IGT.
Contract year: Amount:
4 $1, 002,000 OFRCIAL R[COfD]
5 1,016,000
6 1,029,000 CITY SECRETARY
7s 8 1,057,000 H. WORTH, TEL
1851JACKSBORO H FORT WORTH, TEXAS 76114 • (817)624-0833
WY
20% of all driving range revenue will be paid to the City.
Exhibit "D".
Regular Capital Improvement Program.
1 .0 Contractor will make $240,000 in total, for
remaining Capital Improvements.
1. 1 Contractor will execute a contract for continuous
cart paths which will be installed on the red
(white) nine during the first half of contract
year four (4) .
1 .2 Contractor will execute a contract for continuous
cart paths to be installed on the white (red) nine
during the second half of contract year four (4) .
1.3 The remainder of the $240,000 after installation
of cart paths will be spent during contract year 6
at the discretion of the City Park and Recreation
Department. Contractor will make suggestions of
needed capital improvements to the Park and
Recreation Department during contract year five.
1.4 Contractor will pay 2% of construction cost to
City for inspection.
other Considerations;
1. IGT will reimburse city for their cost in
reviewing plans for the blue nine; approximately
$2,560.
2. All breech clauses in contract will be 30 days .
3. $104.00 per day penalty for non--compliance of
insurance and other related financial matters will
be imposed.
4. IGT will make a $25000 gift to the City Park and
Recreation Department on December 15, 1993 .
5. IGT will make a $25000 gift to the City Park and
Recreation Department on December 15, 1994 .
We understand that you will cause the City Attorney to prepare
the amended contract for our review and evauation.
Sincerely,
u f f n j�•�,
,, otc�
"James R. D RcONU
President - IGT �J Crru SECRETARY
cc: file �. WORTH FX
X
Aft
PARK AND RECREATION DEPARTMENT
CITY OF FORT WORTH
C. I I
00,b,4200 South Freeway, Suite 2200
;ort Worth, Texas 76115-1499
(8 17) 871-PARK
August 23, 1993
Louis Zapata, Coordinator
International Golf of Texas, Inc.
P.O. Box 4350
Fort Worth, Texas 76164-0350
Dear Lou:
We are in receipt of your Memorandum of Amendment Understanding
to License Agreement Rockwood Municipal Golf Course dated August
14, 1993 and find the terms proposed therein acceptable with the
following exceptions:
Exhibit A - Field Notes
Cost of survey shall be born by the contractor . We can use
the City' s crew and accept reimbursement or you can
commission your own survey.
Exhibit D - Regular CIP
1 .0. Contractor will make $240, 146,74 in total remaining
capital improvements (similar change to paragraph 1 .3) .
1 .4. Contractor will pay two percent (2%) of construction
costs to city for inspection. These costs will not be
applied aLrainst the $240,146.74 CIP amount .
Other considerations:
1 . IGT will reimburse City for their cost in reviewing
plans for the New Nine in the amount of $2556.46.
We have forwarded your proposal to our Department of Law who is
in the process of preparing contract amendments . We expect to
receive the draft amendments the week of September 6 , 1993 and
will forward to you for review.
Our target date for presentation to City Council iqFFM
October 5, 1993. coy SECRETARY
F wn TU TEX*
FT. W"�Ufflffq
OUR MISSION
To enrich the lives of our citizens through the stewardship of our resources
and the responsive provision of recreational.cultural and educational opportunities,
0 pmted on recycRqd paper
AWN
International Golf Of Texas , Inc.
August 23, 1993
Page 2
Please review the proposed revisions listed herein and advise us
of your acceptance or recommended changes by August 31 , 1993 .
Sincerely,
aK'Dichard Z
rector
P ar k and Recr eation
Department
cc: George Kruzick, Superintendent
Golf and Tennis Operations
David Yett , Assistant City Attorney
OFFIWC*n
RECOnM n
COY SECRETARY
T. BURIN, IM