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Resolution 6228 - Buffalo Hill Golf Course Lease Renewal (NR)RESOLUTION NO. 6228 A RESOLUTION APPROVING A 30 YEAR LEASE RENEWAL BETWEEN THE CITY OF KALISPELL AND THE KALISPELL GOLF ASSOCIATION FOR THE PROPERTY COMMONLY KNOWN AS THE BUFFALO HILL GOLF COURSE. WHEREAS, the City of Kalispell owns certain real property within the corporate limits of the City, which is operated as the Kalispell Municipal Golf Course and commonly known and referred to as the Buffalo Hill Golf Course; and WHEREAS, approximately 140 acres of that real property were gifted to the City of Kalispell in 1938 and in 1973. Both land transfers contained deed restrictions requiring that the property be used for the purpose of developing and improving a municipal golf course; and WHEREAS, the City of Kalispell and the Kalispell Golf Association executed a lease agreement on March 1, 1997 whereby the Kalispell Golf Association leases and manages said golf course from the City for a period of 20 years; and WHEREAS, that lease was updated in 2009 in order to make substantial capital improvements to the course which necessitated extending the lease for financing purposes; and WHEREAS, the Kalispell Golf Association has now approached the City regarding a lease renewal for a new 30-year term in order to potentially fund improvements at the course through lending arrangements. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL, AS FOLLOWS: SECTION 1. That the Lease Agreement between the City of Kalispell and the Kalispell Golf Association, attached hereto as Exhibit "A" and incorporated fully herein by this reference, is hereby approved and the City Manager is authorized to execute it on behalf of the City. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL, THIS 7TH DAY OF OCTOBER, 2024. ram_ Mark Johns Mayor ATTEST: ICI Aimee Brunckhorst, CNfC;"- City Clerk �/fRlii1111®0 Return to: City Clerk P.O. Box 1997 Kalispell, NIT 59903 KALISPELL CITY GOLF COURSE LEASE THIS LEASE, made and entered into as of the day of 2024, by and between the City of Kalispell, Montana, a Municipal Corporation, hereinafter referred to as LESSOR, and the Kalispell Golf Association, a Montana Corporation, hereinafter referred to as LESSEE, WITNESSETH: For and in consideration of the mutual covenants and promises hereinafter set forth, the parties hereto agree as follows: 1. PROPERTY: LESSOR hereby leases to LESSEE and LESSEE hereby leases and hires from LESSOR those certain premises and all appurtenances thereto situated in Kalispell, Flathead County, Montana, as follows: All of that property owned by LESSOR and commonly known, referred to and utilized as the Kalispell City Golf Course. Attached as Exhibit A is a map with the subject premises outlined. Attached is Exhibit B which identifies the boundary and fence line between the golf course and the north portion of the old Lawrence Park. The total area consists of approximately 240 acres. 2. TERM: TO HAVE AND TO HOLD the above rented premises during the full term of thirty (30) years, which term shall begin upon the date above written or the date on which the agreement is approved by the electors and shall terminate upon the expiration of said full thirty-year term, unless terminated sooner as hereinafter provided. 3. GROSS RECEIPTS: For purposes of this Lease, "Gross Receipts" shall be defined as all gross receipts obtained by LESSEE from the operation of the driving range (golf 4:1 t:1 ball rentals), membership fees (season passes), the sale of green fee punch cards and other green fees. All other receipts shall not be defined as gross receipts under the provisions of this lease and shall be and remain the sole income of LESSEE. Kalispell City Golf Course Lease 4. RENT: LESSEE shall pay to LESSOR, as rent, a sum to be determined annually as herein provided, payable for the preceding year, on or before the 30th day of June, throughout the term of this Lease. The annual rent for the full term of this lease shall be based upon Gross Receipts, as defined in Section 3, hereof, and be calculated as set forth in Exhibit C, attached hereto and for purposes of this Agreement made a part hereof. Said rent payment shall be mailed or delivered to LESSOR at the Kalispell City Hall. Upon approval of this agreement as provided in section 2, hereof, this lease shall supersede any and all Leases between the Kalispell Golf Association and the City of Kalispell. In accordance with a 2014 Memorandum of Understanding, LESSEE shall retain the lease payment as identified in this Section of the Lease. In consideration for this, the KGA shall assume responsibilities for any and all obligations that would otherwise be funded by the City of C, Kalispell as identified in Section 6(b) of this Lease. 5. USE OF LEASED PREMISES: LESSEE shall use the leased premises for the primary purpose of operating a municipal golf course. In addition, on March 6, 2006, the City of Kalispell City Council passed a motion to approve a Multiple -Use Policy for Buffalo Hill Golf Course, attached hereto as Exhibit E, which Policy is hereby fully incorporated herein by this reference. LESSEE agrees to observe all Federal, State and municipal laws and regulations including those related to human and equal rights and in particular Bureau of Outdoor Recreation, or its successors, regulations. LESSEE shall not sublease or assign any portion of the leased premises without prior written permission of the LESSOR. LESSOR shall not agree to any such sublease or use agreement unless such lease or use is accessory to the management of a typical golf course. For Z:> example, a restaurant or golf cart concession would be considered such a typical accessory use. 6. MAINTENANCE AND REPAIR OF PREMISES: LESSEE agrees to maintain the above described premises in as good a condition as the same are in at this time, or as good as they may be put by LESSOR during the term hereof in case of a casualty loss causing repair or reconstruction by LESSOR; and to return said property to LESSOR at the expiration of said lease in said condition, reasonable wear and tear and damage by the elements alone excepted. In the event LESSEE refuses or neglects to keep the above -mentioned premises in such order and condition hereinabove mentioned, LESSOR shall have, after first giving ninety (90) days written notice to repair, the right to declare this lease null and void and of no further force and effect. In this case the annual payments of rent shall terminate and LESSEE shall not in any way be responsible for any future rent payments. LESSEE agrees to maintain and keep in repair all water lines and pumps on said golf course, and to attend to the shutting off of the -water supply and draining of all pipe lines in the fall, and to turn the water on to said system in the spring. C�* a). Stormwater Regulations: The City of Kalispell, the LESSOR, is mandated by the federal and state governments to monitor and enforce the Stormwater MS4 Standards within the city limits of Kalispell. Because of the topography, watercourses and frequent, somewhat Kalispell City Golf Course Lease 2 extensive landscaping projects on the Kalispell City Golf Course, it is essential that the KGA Superintendent or his designee closely cooperate with the Kalispell Public Works Department to assure that the MS4 Standards are maintained. For this reason the KGA Superintendent or his representative shall meet with a representative of the Kalispell Public Works Department for a training session on an annual basis so that compliance may be maintained. The KGA shall submit its project stormwater compliance plans to the Kalispell Public Works Department prior to commencement of such projects. The KGA agrees to remain in full compliance with the MS4 Storm water standards. b.) Representatives from the KGA and the City's Parks Department and Department of Public Works shall meet prior to December 31, 2009 to draft a capital protection program for the property covered by this lease. Items of deferred maintenance shall be identified as well as any other assets suffering or threatened with damage or devaluation. Estimated costs, revenue sources and priorities will be developed as a part of a plan to protect and preserve the assets. In the event that the KGA determines to expend its funds for infrastructure improvements that are on the capital protection program prior to that time scheduled and that are otherwise scheduled to be funded by the City of Kalispell, it may apply for a credit of those funds against its lease payments. 7. (a) City of Kalispell's Access to Golf Course: For the purpose of maintaining public utilities, the City of Kalispell may from time to time require access to the golf course. In the event such maintenance is required, the City of Kalispell shall provide adequate written notice to Kalispell Golf Association by providing the KGA with the bid documents upon advertisement. In no event shall this information be provided less than 60 days prior to scheduled work. The written notice shall outline the nature, purpose, access dates, and areas affected on the golf course. In the event that emergency maintenance is required for the purpose of providing city utilities, the City of Kalispell shall, upon discovery of need for access/maintenance, provide immediate written and verbal notice to the Kalispell Golf Association. Upon notice thereof, Kalispell Golf Association will grant access for emergency maintenance as requested. (b). The City of Kalispell has identified the need for a connection in the pedestrian trail system along Highway 93 from Highway 2 going North. This may entail encroaching on the leased property. Both Parties agree that this connection of the trail may need to be constructed through the leased property, and that realignments may need to occur on the golf course itself. While uncertain of what this alignment may be, it is agreed that the Parties will strive to limit the impact on the existing layout, and place the pedestrian trail within the existing Highway right-of- way if reasonably possible. Costs associated with a trail connection and any necessary realignment of the golf course related thereto will be the responsibility of the City of Kalispell if it is in conjunction with the installation of the pedestrian connection. Factors that will be considered for placement of the trail include reasonableness of layout for both the community benefit of the trail and the operation of the golf course, safety, accessibility, and cost. Should the Parties be unable to agree on the connection layout, the final authority shall reside with the Kalispell City Council. 8. ALTERATIONS AND IMPROVEMENTS: LESSEE shall not make any alterations or improvements to the premises or the appurtenances located thereon in excess of Kalispell City Golf Course Lease Twenty -Five Thousand Dollars ($75,000.00) at any one time without having first received approval from the LESSOR of the intended alteration or improvement. LESSEE shall report to LESSOR annually on alterations and improvements costing less than $75,000.00. 9. UTILITIES: During the entire term of this lease LESSEE shall pay when due for required utilities serving, the leased premises, including but not limited to, electrical, gas, telephone, water, sewer and garbage services. LESSEE shall also be entitled to continue use of LESSOR's appropriated water right of the Stillwater River adjacent to the golf course premises without charge. LESSEE in using the water from the Stillwater River under said water rights shall operate and maintain the system and pump for such purposes. 10. PERSONAL PROPERTY AND FIXTURES: All personal property hereinbefore or hereinafter obtained in connection with the operation and maintenance of the Kalispell City Golf Course shall be the property of LESSEE; provided, however, that all fixtures that have been or may be installed on the premises and attached thereto have or will become part of the premises and are the property of LESSOR. 11. COST OF OPERATION: All costs of operation including the cost or providing supplies, equipment, tools, labor and other such items and the entire cost of maintaining and operating the golf course, the club house and other appurtenances shall be the sole responsibility of LESSEE. 12. USE OF CLUBHOUSE BY LESSOR: Although LESSEE shall have the exclusive use and supervision of all buildings on said premises including that structure known as Z� the clubhouse, it is agreed that LESSOR shall be entitled to use of the clubhouse at any convenient time to LESSEE upon adequate notice with LESSOR reimbursing LESSEE for all actual expenses incurred by LESSEE for the reason of any such use by LESSOR. 13. GOLF COURSE FEES: A schedule of membership fees (season passes), green fees punch cards and other green fees shall be presented by LESSEE to LESSOR prior to the first day of April of each year of this Lease. The schedule for such fees for the 2024 golfing season is attached hereto as Exhibit D, and by this reference made a part hereof. LESSEE, at its discretion, may from year to year, during the term of this Lease, increase or decrease its Schedule of Fees, then in effect, up to ten percent (20%) without prior approval of such an increase from LESSOR. LESSOR shall not unreasonably withhold its approval of any proposed Fee Schedule for which its approval may be required under this Lease. 14. LESSEE'S FINANCIAL REPORTS: Annually, on or before the 30th day of June, in conjunction with the payment of the annual rent, LESSEE shall present to LESSOR for review a copy of LESSEE's annual financial report completed in accordance with generally accepted accounting principles. The Association's financial records will be subject to an audit conducted by, and at the option of, the City (internal staff or contract auditor). The cost of such audit shall be paid by the City. 15. LESSEE'S LIABILITY INSURANCE: LESSEE shall obtain and keep in full Kalispell City Golf Course Lease 4 force and effect during the term of this lease, full general liability insurance in the amount of One Million, Five Hundred Thousand Dollars ($1,500,000.00) with a company licensed to do business in the State of Montana; and said policy of insurance shall name LESSOR as additional named insured. In the event the Montana legislature increases the limitations on government liability for damages in tort LESSEE agrees to increase its liability coverage appropriately. LESSOR shall be furnished with a certificate that such insurance is in force and the same shall provide for reasonable notification to LESSOR prior to the same being canceled. LESSEE agrees to hold LESSOR harmless from any and all liability of any nature, whatsoever, arising from or out of LESSEE's possession, use, maintenance, improvement or occupancy of the property herein described; LESSEE further agrees to defend, at LESSEE's expense, any action brought against LESSOR arising out of LESSEE's possession, use, maintenance, improvement or occupancy of said property. 16. FIRE INSURANCE: During the full term of this lease, LESSOR shall maintain its own fire insurance adequate to cover replacement costs on the improvements on said premises. Should the premises during the term of this lease suffer damages which are covered by said fire insurance policy, LESSOR agrees to utilize all insurance reimbursements therefore, toward rebuilding or repairing the damaged premises, or toward providing adequate replacement facilities. The contents of buildings and fixtures located on the premises shall be insured by LESSEE and shall be in such amounts as to assure replacement. The parties mutually agree as to waiver of subrogation rights each with the other. 17. DEFAULT AND BANKRUPTCY: In the event that: (a) LESSEE shall default in the payment of any installment of rent or other sum herein specified and such default shall continue for thirty (30) days after written notice thereof; or (b) LESSEE shall default in the observance or performance of any other of LESSEE's covenants, agreements, or obligations hereunder and such default shall not be corrected within ninety (90) days after written notice thereof; or (c) LESSEE shall be declared bankrupt or insolvent according to law, or, if any assignment shall be made of LESSEE's property for the benefit of creditors; LESSOR shall have the right thereafter, when such default continues, to re-enter and take complete possession of the leased premises, according to law, and to declare the term of this lease ended, and to remove LESSEE's effects, without prejudice. In doing so no additional rent payments may be collected from LESSEE; however, if LESSEE shall default, after reasonable notice thereof, in observance or performance of any conditions or covenants on LESSEE's part to be observed or performed by virtue of any of the provisions in any article of this lease, LESSOR, without being under any obligation to do so and without thereby waiving such default, may remedy such default for the account and at the expense of LESSEE. 18. NOTICE: No notice from LESSOR to LESSEE relating to the leased premises or the occupancy thereof, shall be deemed duly served unless personally served upon or mailed to Kalispell City Golf Course Lease 5 LESSEE, registered or certified mail, return receipt requested, postage prepaid, and addressed to LESSEE at its address as follows: Manager, Kalispell City Golf Course Post Office Box 1116 Kalispell, Montana 59903 Any notice from LESSEE to LESSOR relating to the leased premises or the occupancy thereof, shall be deemed duly served, if personally served upon or if mailed to LESSOR by registered or certified mail, return receipt requested, postage prepaid, and addressed to LESSOR at the address as follows: City Manager City of Kalispell 201 First Avenue East Kalispell, Montana 59903-1997 19. EXISTING LEASE: It is mutually understood and agreed between the parties hereto that no actions taken or not taken by either party in the negotiation or execution of this agreement shall constitute a waiver of any rights that either party may now have or hereafter have relating to or arising out of the existing Lease between the City of Kalispell and the Kalispell Golf Association dated April 1, 1997; and, and each party specifically reserves the right to present any claim or defense to any claim relating to or arising out of said Lease. 20. TIME OF ESSENCE AND BINDING EFFECT: It is mutually agreed by and between the parties hereto that the time of payment shall be an essential part of this lease agreement, and that all of the covenants and agreements herein contained shall extend to and be binding upon the parties hereto, and their successors and assigns. IN WITNESS WHEREOF, the parties have executed this lease as of the date first above written. ATTEST: City Clerk CITY OF KALISPELL City Manager Kalispell City Golf Course Lease 6 ATTEST: Association Secretary KALISPELL GOLF ASSOCIATION President Kalispell City Golf Course Lease STATE OF MONTANA } ) ss. County of Flathead ) On this day of , 2009, before me, a Notary Public for the State of Montana, personally appeared and , respectively, proved to me to be the persons whose names are subscribed to the within instrument; and acknowledged to me that they each executed the same in their respective authorized capacities as City Manager and City Clerk of the City of Kalispell. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year hereinabove first written. SEAL STATE OF MONTANA ) ) ss. County of Flathead ) Printed Name: NOTARY PUBLIC for the State of Montana Residing at: My Commission expires: On this day of , 2009, before me, a Notary Public for the State of Montana, personally appeared and and proved to me to be the persons whose names are subscribed to the within instrument, and acknowledged to me that they each executed the same in their respective authorized capacities as President and Secretary of the Kalispell Golf Association, a Montana not for profit corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year hereinabove first written. SEAL Printed Name: NOTARY PUBLIC for the State of Montana Residing at: My Commission expires: Kalispell City Golf Course Lease 8 Exhibit A MAP WITH THE SUBJECT PREMISES OUTLINED Kalispell City Golf Course Lease Exhibit B BOUNDARY BETWEEN THE GOLF COURSE AND THE NORTH PORTION OF THE OLD LAWRENCE PARK Kalispell City Golf Course Lease 10 Formula for Calculating Annual Lease Payments 1. In determining lease payments the parties shall utilize a rolling average of "Gross Receipts" over the previous three years in calculating the lease payment for a particular year. 2. A minimum base lease payment $13,000 shall be payable so long as the rolling average of the Gross Receipts as defined under section 3 of the Agreement do not exceed $750,000.00. 3. In the event the rolling average of Gross Receipts exceed $750,000.00 but do not exceed $850,000.00, the Lease Payment shall be two percent (2%) of the Gross Receipts. 4. In the event the rolling average of Gross Receipts exceeds $850,000.00 the Lease Payment shall be two and one-half percent (2 1t2%) of the Gross Receipts. Example: Rolling Average Level 1 Level 2 Level 3 Gross Revenue Base Lease $0 — $750,000 $13,000 $750,001 — $850,000 2% 2.5% Kalispell City Golf Course Lease 11 Exhibit D Buffalo Hill Golf Course 2024 Schedule of Fees *Membership (Season Pass) 2024 2023 Adult — All 27 holes $1,050 $990 Adult — Cameron 9 $635 $600 Student (Full -Time College) $265 $250 Junior (High school Sr & below) $185 $175 **Green Fees 18 Hole Championship Course S 82 $ 78 9 Hole Cameron Course $ 35 $ 32 N/A *Above adult season pass rates reflect "regular season" prices. An "early bird" discount rate was offered in 2023 of $869, and $915 in 2024. Note that a "capital fee" of $125 was assessed to each adult member included in the pass price above. **Above Green fees reflect peak season rates. Discounted rates offered to allow for non -peak conditions, promotions, and package rates. A $5 capital fee is included for each 18-hole green fee on the Championship 18, and a $3 capital fee is included for each 9-hole green fee. Kalispell City Golf Course Lease 12 Exhibit E Kalispell Golf Course Multiple Use Policy The Kalispell Golf Association (KGA) leases the golf course from the City of Kalispell for the purpose of providing the best possible golfing conditions for its paying members and guests. As a result, the KGA and the City of Kalispell must be responsible for controlling access to the golf course for both golfers and non -golfers. Personal safety is highest priority. Definitions: For purposes of this Lease, the following definitions apply: 1. Golfers: Golfers include people using the golf course for golfing purposes including people golfing, guests of people golfing_, spectators watching golfing activities, employees of KGA, and others granted explicit access by KGA to the golf course during the golf season. 2. Non -Golfers: Non -Golfers include people who are using the golf course for purposes other than golfing (e.g., joggers, walkers, bird watchers, cross-country skiers, sledders, etc.). Golfer Access: 1. Golfers are allowed on the course only during "open tee time" periods as posted in the Clubhouse Rational: There are predictable periods of time when the course is closed for maintenance; consequently, there are no "open tee times" during these periods of time. 2. Golfers are allowed on the course when the course is safe and ready to play as determined by the Golf Course Maintenance Staff. Rational: There are environmental conditions that occasionally occur that result in the closure of the course. For example, heavy rains can cause dangerous soil conditions for golfers and traffic during saturated soil conditions, resulting in soil compaction, which is detrimental to the playabiliiy of the turf Frost covered turf can die if traffic is allowed; consequently, the course is closed until the frost melts. High winds can result in dangerous debris and hazardous trees on the course; consequently, the course maybe closed until the dangerous conditions have been corrected The Goff Course Maintenance Staff is responsible for making the course playable, and as a result, making the determination when the course is safe to ploy, 3. Golfers are not allowed on the course when lightning is in the area, as determined by the Pro Shop Staff. Rational: Lightning kills golfers every year. The Pro Shop Staff will do it best to close and clear the golf course when lightning is threatening. The Pro Shop Staff will also determine when the lightning appears to have left the area, and then re -open the golf course for play. Kalispell City Golf Course Lease 13 4. Golfers are not allowed on the course during the nighttime hours when the course is "open for the season." Rational. The golf course is irrigated during the nighttime hours. The golf course irrigations system operates at high pressure (tip to 120 PSI). Anyone hit by this high-pressure. high -velocity water can sustain significant injury and possibly even death, consequently, the course is closed to non -golfers during the nighttime hours when the course is "open for the season. " Buffalo Hill Gatf Course has significant elevation changes throughout its grounds, and the limited light during the nighttime hours can impair one's ability to accurately judge the terrain, consequently, the course is closed to non -golfers during the nighttime hours and when the course is "open for the season. " 5. Golfers are not allowed on the course when the course is closed for the season as determined by the General Manager. Rational: Once the course is closed for the season, other non -golfer activities begin such as jogging, sledding and skiing. These non -golfers are not aware of the risks golf brills pose and will not be prepared to look -out for flying golf balls; consequently, when the course is closed for the season, golfers may not play on the course. Non -Golfer Access: 1. Non -Golfers activities are encouraged when the golf course is closed for the season, subject to hours governing city parks, generally open at 6:00 a.m. and closed at 11:00 P.M. Rational: Non -golfing activities such as walking and jogging are encouraged when the golf course is closed for the season, and during hours consistent with other City of Kalispell parks, 2. Skiing and sledding is encouraged when adequate snow cover exists as determined by the Golf Course Maintenance Staff. 3. Non -Golfers are not allowed on the course during the daylight hours when the course is open for the season. Rational: Golf balls have been clocked at over 150 mph, and typically land with a velocity of over 50 mph, consequently, flying golf balls pose a significant danger to Non -Golfers who may stray into landing zones. 4. Non -Golfers are not allowed on the course during the nighttime hours when the course is open for the season. Rational: The golf course is irrigated during the nighttime hours. The golf course irrigations system operates at high pressure (up to 120 PSI). Anyone hit by this high-pressure, high -velocity water can sustain significant injury and possibly even death; consequently, the course is closed to non -golfers during the nighttime hours when the course is open for the season. Buffalo Hill Golf Course has significant elevation changes throughout its grounds, and the limited light during the nighttime hours can impair ones ability to accurately judge the terrain, consequently, the course is closed to Non -Golfers during the nighttime hours and when the course is open for Kalispell City Golf Course Lease 14 the season. 5. Non -Golfers are not allowed on the course when frost covered turf conditions exist even when the course is closed for the season. Rational: Frost covered turf can die if traffic is allowed; consequently, the grounds are closed to all trafjtc until the frost melts as determined by the Golf Course Maintenance Staff, Rational: Skiing and sledding can cause damage to the turf when there is inadequate snow cover; consequently, the course will be closed to skiing and sledding during periods of limited snow cover as determined by the Golf Course Maintenance Staff. 6. Consistent with other public golf courses in the area, dogs are not allowed on the grounds at any time, whether with Golfers or Non -Golfers. Rational For purposes of liability and safety ofpedestrians, dogs are not allowed on the golf course at any time. Additionally, fecal deposits pose significant health risks to skiers and sledders as well as for the Golf Course Maintenance Staff during the turf maintenance seasons. Damage to turf is also a common result of dog waste. Finally, like a baseball field or football field, go f course turf is intended for a specific use, as such, dogs and their waste do not belong on the golf course because both can negatively impact the competition. This policy is for the benefit and welfare of both the golfing and non -golfing community. Kalispell City Golf Course Lease 15