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1. Kalispell Golf Association - Annual Lease Payment Waiver Requestbass io 1 a. tk�..... -��,. ...?„o ...<...?. .;.:f % _, c r f q .�3.a uR.. iti.�Na.. �:,�3. QnR ...;:.,a.��: �. ae.,'w;.v..' ,�..,yns_�['A.. ,1. Charles A. Harball Office of City Attorney City Attorney 201 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 TO: Mayor Tammi Fisher and Kalispell City Council FROM: Charles Harball, Interim City Manager Tel 406.758.7709 Fax 406.758.7771 charball@kalispell.com SUBJECT: Motion to Consider the Request of Kalispell Golf Association to Waive Annual Rent kylltollft IN '111 pill MEHOM BAC11'GROUND: On November 16, 2009 the City entered into a twenty year lease with the Kalispell Golf Association [KGA] for that property commonly known as the Buffalo Hills Golf Course. Pursuant to the terms of the lease the KGA has presented the City with its annual financial report (submitted herewith) which indicates the rent due according with the formula provided in the lease. Given the costs that the KGA has been bearing in maintaining the asset it is specifically seeking to have the City Council consider forgiving the rent due, or perhaps consider the contributions it has made to that upkeep as full and adequate payment of the rent due. Over the last several years, and particularly last year, the Stillwater River caused significant erosion to the riverbank along the golf course, damaging and threatening the improvements of the course. The City applied to and received from FEMA a grant to implement a riverbank stabilization project along this portion of the river. This project is completed and the FEMA grant funds paid 75% of the costs. The State of Montana also made contributions and the City and KGA were allowed to make significant "in -kind" contributions. The City and KGA cash contributions remain to be made. RECOMMENDATION: That the Council consider applying the KGA rent due to the cash contributions remaining to be made on the Stillwater Riverbank Stabilization Project. FISCAL IMPACTS: As stated. Respectfully submitted, Charl'e-s-fia41, In ,lrim City Manager PLANNING FOR THE FuruRE REPORT TO: Kalispell Mayor and City Council FROM: PJ Sorensen, Kalispell Planning Dept Charles Harball, Interim City Manager Planning Department 2011" Avenue East Kalispell, MT 59901 Phone: (406) 758-7940 Fax: (406) 758-7739 www.kafspell.com/planning SUBJECT Stillwater River/Buffalo Hills Golf Course Bank Stabilization Project MEETING DATE: May 21, 2012 BACKGROUND: As a result of flooding damage in the spring of 2011, the City of Kalispell became eligible for federal funding through FEMA to repair damage to Buffalo Hills Golf Course. The funding anticipated a total project cost of $424,969.77. FEMA would cover 75% of the total cost, with the remainder met through local and state matches. The City Council provided authority to proceed at its November 21, 2011, meeting. LHC was subsequently awarded the bid for the project, and they have substantially completed the repair work at six specific sites along the river bank. We have calculated preliminary final costs pending final submittals from the golf course and LHC (utilizing an estimated final invoice). At this point, the preliminary final accounting is as follows: Total cost FEMA share State share City share 2011 emergency work $ 9,599.10 $ 7,199.33 $ 2,399.77 2012 small project (bridge) $ 2,232.00 $ 966.50 $ 1,265.50 2012 large projects $ 416,656.58 $ 312,492.44 $ 28,797.86 $ 75,366.28 Total $ 428,487.68 $ 320,658.27 $ 28,797.86 $ 79,031.55 The city share has been met in part with in -kind contributions and previous expenditures ($2,399.78 from May 2011) totaling $32,962.22. The estimated remaining $46,069.33 will need to be covered through other sources. Respectfully submitted, PJ Sorensen Kalispell Planning Dept Report compiled: May 10, 2012 c: Theresa White, Kalispell City Clerk Charles HarbZ11 Interim City Manager ..- I% `� In .rl . .` — ..� ,. . IJ •IN �� ' r IN I . r I , . .. .j ' . :6 J Fl I IN SMILE. owrA&-Ic-- r . ' '.r I %AM .. . r I . . %= VI. I W Q ro I Cq O O 9 Return to: City Clerk P.O. Box 1997 Kalispell, MT 59903 € IIlp�II �I1� lIAl1� I� II �Ef �iE'I11 III II� i El I� I 8 Page: I of 24 Fees. $98.00 Paula Robinson, Flathead County MT by Nw 1.2/3/2009 2:58 PM THIS LEASE, made and entered into as of the 16, day of L,,' , 2009, 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 Ieases 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 twenty (20) 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 twenty 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 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. 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 ,tune, commencing with June 30, 2010 and continuing on 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. All prior rents due by LESSEE to LESSOR under that certain lease dated April 1, 1997 are hereby deemed and agreed to be paid in full and Iet it be known and agreed that 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. 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 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 in to said system in the spring. 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 litnits of Kalispell. Because of the topography, watercourses and frequent, somewhat extensive landscaping projects on the Kalispell City Golf Course, it is essential that the KGA illl lllHill ll lllllllllllllllllllllll 111 Illllll 111 lllllllllll1llll 2009 Paula Robinson, Flathead Caunty MT by NW 12/3/1009 Page.°2 of 1418 Fees: $98.00 2;53 PM 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. S. ALTERATIONS AND IMPROVEMENTS: LESSEE shall not make any alterations or improvements to the premises or the appurtenances located thereon in excess of Twenty -Five Thousand Dollars ($25,000.00) 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 $25,000,00. 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 til1S ill l lll1111111111ti11 llltill 11111SUlllS41��I114I4MM 11120090033418 Page93 of 14 Fees. $98.00 Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM 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 iterns 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 the clubhouse, it is agreed that LESSOR skull 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 2009 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 (10%) 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 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. IIIIIIIIIIIIIIIi lllllillllllllllllllill�lll lilllll�lllllllllllll1111Ill Page: 4of i418 Fees. $9&00 Paula Robinson, Flathead County MT by NW 12/3/2009 2:53 PM 16. FIRE INSURANCE: During the full terra 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 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: IIII III11111111�1111111IIIl lllllllllll�lll llillll lil 1111111111111[( Page°5of141$ Fees: $98.o0 Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM 200900033418 1l1ii1113111I1IIN111111111121IfIIIiIIR11111I111]11111111111HIIIIII111 Page: 6of14 Fees:$98.00 Manager Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM 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 tease 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: Theresa White City Clerk ATTEST: Terr 1liams Association Secretary CITY OF KALISPELL ane Howington City Manager KALISPELL GOLF ASSOCIATION Doug Kauffman V President 20090033418 I�lIIti�t�II�II�1��IlIT9III�l��ll�l� Page;7 of 14 Fees. $98.00 STATE OF MONTANA ) Paula Robinson, Flathead County M7 by NW 1213/2009 2:58 PM ss. County of Flathead ) On this 1'.v,.—day of 0. e 2009, before me, a Notary Public for the State of Montana, personally appeared Jane M. Howington and Theresa White, 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. ,��►�tifetriii oTA S EAL f� f.. - STATE OF��W�1`I'�NA ss. County of Flathead Printed Name T- f A E`� `, ,-� NOTARY PUBLIC for the State of Montana Residing at: My Commission expires: 4-11 On thisZ, day of Cam, 2009, before me, a Notary Public for the State of Montana, personally appeared Doug Kauffman and Terry Williams 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. Aa.a tZ �3, •a9 `n•Renw3. Printed Name: r u,r �d s NOTARY PUBLIC for the State of Mont a Residing at: 0-b --F—" !t-t`F My Commission expires: cf Z - Le t 0 7 I III III N II I NI IIIII IINl IINI IINI IIN[ IINI II I II I I1N111 l II I IIN II l III IIN lIII : 8 of 14�8 Fees:$99.00 Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM Exhibit "B" BOUNDARY BETWEEN THE GOLF COURSE AND THE NORTH PORTION OF THE OLD LAWRENCE PARK MCL LINE M4XAM-1 rAISPEtL MICIP COLF COURSff LkMRiNGE PAY Commmancing at the RZ cornor of the (dater Dept. X,aintenanee Autididg is Lawrence Park, thence N 44' 9, SS Feat to the g8 fence corner of the Vatar Dept. Sita is Lsurenca Perk, thence N 680 W, on and along the existlag fence line 50 feat to a polar, Chance li 10, 8 as and along the axisting fence line 243 Fret to the point of begicning of the ftace line roloeation, thence along the follouins courses. X 20' R. 290 fact, N V V. 190 feat, k 88` V, Al feat. N 200 V, 103 feat to s polar on the Loa deter Lint of the Stiliveter River, said point on the Lov Water Lint of the Stillwater River being the and of the fence lice relocation. Lov Water Line Of ---.-stjwore _hewer. MMr All bmarings were obtained through the use of a bond coop•ae. All inforeation hereon vas obtained an Hovembcr Id, 1987. Point Of Beginning - Of Fence Lino Relocation �.�Cris 5eotion Of Fence To b* R*mow:d -- — -- H.B. Pence Corner Vater c Dept. Site In Lavrence Pork Point On Pent* Lia® � _ N-E, Corner Water Dept, Maintenance Building In Lavronce Park 9 lllfl 111 111 ill l l l lllll11141111 i� 11 11 lil[�Ill li 111 ll�l 11 8 Page: 14 Fees. $98.00 Paula Robinson, Flathead County MT by Nw 12/3/2009 2!58 PM 011 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 "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 said "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 1 /2%) of said "Gross Receipts". Example: Rolling Average Level 1 Level 2 Level 3 Gross Revenue Base Lease $0 --- $750,000 $13,000 $750,001-- $850,000 2% I�I I� I(4 I��I� I� �I I�' ISI III lI I� Ill I ��li 111 111 i�l Page:1Q f14$ Fees;$98.00 Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM 10 2.5 % Exhibit "D" Buffalo Hill Golf Course 2009 Schedule of Fees *Membership (Season .pass) 2009 2008 Adult — All 27 holes $659 $599 Adult — Cameron 9 $499 NIA Student (Full -Time College) $225 $225 Junior (High school Senior and below) $150 $140 **Green Fees 18 Hole Championship Course $ 53 $ 50 9 Hole Cameron Course $ 22 $ 20 *Above adult season pass rates reflect "regular season" prices. An "early bird" discount rate was offered in 2008 of $499, and $549 in 2009. In addition, a separate "capital fee" of $125 was assessed to each adult member "Above Green fees reflect peak season rates. Discounted rates offered to allow for non -peak conditions, promotions, and package rates. In addition, (no[ reflected in the fees above) a $5 capital fee is charged for each 18 hole green fee on the Championship 18, and a $3 capital fee is charged for each 9 hole green fee. lilllfll��l ll(f!l II�lIf !l � fE �� If E lq�t ��l 2009Page.alDo€i4 Paula Robinsp11Flathead County M7 6y NW Fees: $98.0o 12/8/2009 2:58 PM 11 �Ii�IIit�1�II�I��ll��4l1I�l�1�5��IiI page., 12 of 04 Fees: $98.0 Pula Robin5a17, Flathead County MT bY N'r'r 12/3/2009 2.53 PM 1OM17=0 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. Golfer Access: 1. Golfers are allowed on the course only during "open tee tune" periods as posted in the Clubhouse Rational: There are predictable periods of tune 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 playability 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 play, 3. Golfers are not allowed on the course when lightning is in the area, as determined by the Pro Shop Staff. Rational: Lightning killsgolfers 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. d. 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 "opera for the season.' Buffalo Hill Golf 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. " 12 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 balls 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 such as jogging and walking are encouraged when the golf course is "closed for the season," subject to hours governing city parrs, 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 ror 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." xational: 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 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 traffic 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. 13 11I1111I 111 111pd 111 (111II 1Il 11 I1111111111111111111111111 i11111 P00900 341 2009pO033418 Paula Robinson, Flathead County MT by NW22/3/ ©09 2 5a Pm 6. Consistent with other public golf courses in the area, dogs are not allowed on the grounds at and time, whether with golfers or non -golfers. Rational: For purposes of liability and safety of pedestrians, 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, golf 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. Violations are subject to public ordinance, which may result in fines or other penalties. IIII !lIIIlIIIll Illlllllllllllillllllll�IllIIIIIIIIIIIIIllll lull llllllli�llil 200900033418 of 14 Fees. $98.00 Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM 14 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT KALISPELL GOLF ASSOCIATION DECEMBER 3I, 2011 AND 2010 junkennier • Clark Campanella • Stevens • P, C. Certified Public Accountants and Business Advisors PAGE INDEPENDENT AUDITORS' REPORT....................................................................... 1 FINANCIAL STATEMENTS Statements of Financial Position................................................................................ Statements of Activities.............................................................................................. 3 Statements of Cash Flows., ................ ................... ............................... .................... 4 Notes to Financial Statements................................................................................... 5-9 SUPPLEMENTARY INFORMATION Statements of Activities by Department..................................................................... 10 - 11 44 2nd Ave. West ellP.O. Box 518 Kalisp, Montana 59903 Junkermier + Clark ph: (406) 755-3681 Campanella • Stevens ' P.C. fx:(406) 755-6661www,jccscpa.com Certified Public Accountants and Business Advisors INDEPENDENT AUDITORS' REPORT To the Board of Directors Kalispell Golf Association Kalispell, Montana We have audited the accompanying statements of financial position of Kalispell Golf Association, a Montana nonprofit corporation, as of December 31, 2011 and 2010, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kalispell Golf Association as of December 31, 2011 and 2010, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were performed for the purpose of forming an opinion on the basic financial statements of Kalispell Golf Association taken as a whole. The statements of activities by department are presented as supplementary information for the purpose of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects to the basic financial statements taken as a whole. Junkermier, Clark, Campanella, Stevens, P.C. March 21, 2012 Bozeman + Great Falls + Hamilton + Helena + Kalispell - Missoula • Whitefish KAALISPELL GOLF ASSOCIATION STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2011 AND 2010 ASSETS CURRENT ASSETS Cash Accounts receivable Inventories Prepaid expenses PROPERTY AND EQUIPMENT, NET OT14ER ASSETS Deferred compensation account TOTAL ASSETS LIABILITIES AND NET ASSETS CURRENT LIABILITIES Current maturities of long -terra debt Accounts payable - trade Accrued expenses: Property taxes Other City lease Salaries and wages Deferred compensation payable Gift certificates Deferred revenue LONG-TERM DEBT, LESS CURRENT MATURITIES NET ASSETS TOTAL LIABILITIES AND NET ASSETS See Notes to Financial Statements 2 2011 2010 $ 329,203 $ 154,781 127,634 41,640 49,948 52,425 4,243 1.290 511,028 250,136 2,223,183 1,912,600 9,000 9.000 $ 2.743.211 $.. 2,171.736 $ 27,231 $ 23,242 27,816 11,884 5,374 2,790 I,462 287 16,780 23,157 41,045 487 9,000 9,000 47,757 40,126 214,909 100,783 391,374 211,756 548,355 1.803,482 1.959980 $ 2,743.211 $ 2,171,736 FOR THE YEARS ELIDED DECEMBER 31, 2011 AND 2010 REVENUE, GAINS, AND OTHER SUPPORT Revenue Interest income Gain (loss) on disposal of assets COST OF SALES GROSS PROFIT EXPENSES Association Pro shop Restaurant Bar Driving range Grounds CHANGE IN NET ASSETS NET ASSETS - BEGINNING See Notes to Financial Statements 3 2011 2010 S 1,835,495 $ 1,909,524 689 3,081 500 1,500 1,836,684 1,914,105 30Z814 312,803 I.533.870 1,601302 709,344 667,659 55,831 53,022 194,617 188,183 91,389 89,354 23,898 6,041 615,289 602,719 1,690.368 1.606.978 (156,498) (5,676) 1.959.980 L965.656 $ 1,803.482 $ 1.959.980 KIM FOR THE FEARS ENDED DECEMBER 31,2011 AND 2010 2011 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from members, customers, others, and all sales, income, and support $ 1,871,947 Merchandise purchased (300,337) Interest (12,375) Labor costs (783,966) Operating expenses (567.306) NET CASH PROVIDED BY OPERATING ACTIVITIES 207.963 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (586,385) Proceeds from sale of property and equipment 500 NET CASH (USED) BY INVESTING ACTIVITIES (585.885) CASH FLOWS FROM FINANCING ACTIVITIES Principal debt payments (32,020) Proceeds from borrowing 584.364 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 552.344 NET INCREASE (DECREASE) IN CASH CASH M BEGINNING OF PERIOD CASH - END OF PERIOD CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash provided (used) by operating activities Depreciation (Gain) loss on disposal of property and equipment (Increase) or decrease in: Accounts receivable Inventories Prepaid expenses Increase or(decrease)in: Accounts payable Accrued expenses Gift certificates Deferred revenue NET CASH PROVIDED BY OPERATING ACTIVITIES See Notes to Financial Statements 4 174,422 154.781. S 329.203 $ (156,498) 275,803 (500) (85,994) 2,477 (2,953) 2010 $ 1,887,467 (298,643) (4,168) (739,872) (622.264) 222,520 (242,973) 1,500 1241.473) (63,006) (63.006) (81,959) 236.740 $ 154,781 $ (5,676) 257,203 (1,500) 56,677 14,160 5,958 15,932 (19,498) 37,939 (2,989) 7,631 3,051 114,126 (84.866) $ 207.963 $ 222,520 DECEIV BER 31, 2011 AND 2010 NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization The Kalispell Golf Association (the Association or KGA) is a Montana nonprofit corporation formed to operate and manage the Buffalo Hill Golf Course in the City of Kalispell, Montana. The Association is governed by a board of directors elected by the members. It is recognized by the IRS as a Section 501(c)(4) organization. The Association is supported by member dues and fees paid by approximately 1,000 members and their guests. Revenue is also derived from the operation of a restaurant and bar, golf pro shop, rental of carts, and green fees paid by non-member players. Basis of Accounting The financial statements are prepared using the accrual basis of accounting. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to Hulce estimates and assumptions that effect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash Equivalents For purposes of reporting cash flows, the Association considers all highly liquid instruments with original maturities of three months or less, not subject to withdrawal restrictions or early redemption penalties to be cash equivalents. As of December 31, 2011 and 2010, the Association had no cash equivalents. Accounts Receivable All accounts receivable are considered fully collectable as of December 31, 2011 and 2010. Therefore, there is no allowance for doubtful accounts. Inventories Restaurant and bar inventories are stated at cost utilizing the first -in, first -out method. Pro Shop inventory is valued at the average cost of each item on hand. Deferred Revenue The Kalispell Golf Association provides discounts for prepayment of annual membership fees. Prepaid membership and cart fees collected for the future year are recorded as deferred revenues. Uninsured Cash Balances The Kalispell Golf Association maintains cash balances at Glacier Bank FSB, Kalispell, which are federally insured up to $250,000. At certain times of the year, the insurance limits may be exceeded. 5 DECEMBER 31., 2011 AND 2010 NOTE I -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes Kalispell Golf Association has been approved as a tax exempt organization under Internal Revenue Code Section 501(c)(4). Accordingly, no provision for income taxes is made in the financial statements. However, the Association can be taxed on certain unrelated business income. The Association has net operating loss carryforwards totaling approximately $71,454 to offset future federal taxable income. Portions of these carryforwards will expire annually through the year 2028 for federal purposes. Realization of deferred tax assets is dependent on future earnings, if any, the timing and amount of which is uncertain. Accordingly, a valuation allowance, in an amount equal to the net deferred tax assets as of December 31, 2011, has been established to reflect these uncertainties. The deferred tax asset before valuation allowance is approximately $10,718 for federal purposes. Effective January 1, 2009, the Company implemented the new accounting guidance associated with accounting for uncertainties in income taxes. The income tax years of 2008 to 2010 remain open to examination by the federal and state taxing authorities. Property and Equipment The cost of property and equipment is depreciated over the estimated useful life of the related asset. Depreciation is computed by the straight-line method. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized. NOTE 2 -- LONG-TERM DEBT On August 16, 2011, KGA executed a note with First Interstate Bank for capital improvements to the golf course in the amount of $584,364. Annual payments of $55,470, including interest at 5%, are to be made beginning September 16, 2011, with a maturity date of August 16, 2026. The note is secured by the equipment owned by the Association. I DECEMBER 31, 2011 AND 2010 NOTE 2 -- LONG-TERM DEBT (CONTINUED) Future principal payments on the note are as follows: 2012 $ 27,231 2013 28,706 2014 30,174 2015 31,718 2016 33,276 Remainder 424,481 Total $ 575,586 NOTE 3 -- LEASE PAYABLE A lease with the City of Kalispell was executed December 2, 2009, covering the land and other property owned by the City for a term of 20 years. KGA shall pay, to the City of Kalispell, annual rents based upon "Gross Receipts". Gross receipts include: a) Operation of the driving range b) Membership fees (season passes) c) Green fee punch cards and other green fees The parties shall utilize a rolling average of "Gross Receipts" over the previous three years in calculating the lease payment for a particular year. A minimum of $13,000 is stipulated. For the years ended December 31, 2010 and 2009, KGA's lease percentage was 2.5%. The lease percentage is as follows: $0 - $750,000 $750,000 - $850,000 $850,000+ Rolling Average Gross Receipts Rolling Average Gross Receipts Rolling Average Gross Receipts 7 $13,000 2.0% 2.5% KALISPELL GOLF ASSOCIATION MOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 NOTE 4 -- .PROPERTY AND EQUIPMENT The additions and disposals of property and equipment during the years ended December 31, 2011 and 2010, are as follows: Balance Balance 1/l/2011 Additions Disposals 12/31/2011 Furniture and fixtures 78,730 4,533 $ (1,527) $ 81,736 Machinery and equipment 1,473,859 55,738 (40,607) 1,488,990 Leasehold improvements: Buildings 542,699 - (1,703) 540,996 Golf course 3.138,767 526,114 - 3,664.881 Total Property and Equipment 5,234,055 5,776,603 Accumulated depreciation (3.321.455) (275,803) 43,838 (3,553.420) Net Property and Equipment $ 1,912.600 $ 2.223.183 Balance Balance 1/1/2010 Additions Disposals 12/31/2010 Furniture and fixtures $ 84,966 $ - $ (6,236) $ 78,730 Machinery and equipment 1,409,541 109,116 (44,798) 1,473,859 Leasehold improvements: Buildings 519,781 22,918 - 542,699 Golf course 3.027.827 110,940 - 3,138.767 Total Property and Equipment 5,042,115 5,234,055 Accumulated depreciation (1115,286) (257,203) 51,034 3321,455) Net Property and Equipment $ 1.926.829 $ L912.600 NOTE 5 -- RETIREMENT PLAN In the year ending March 31, 1999, KGA established a non -qualified deferred compensation plan for the club manager. The plan assets are owned by KGA and held for the benefit of the enrolled employee. In order to avoid current income taxation on the deferred compensation, the manager has no rights in the plan assets other than those of a general creditor. No contributions to the plan were made for the years ended December 31, 2011 and 2010. 9 �-C. .s A 9 DECEMBER 31, 2011 AND 2010 NOTE 6 -- BOARD RESTRICTED NET ASSETS Unrestricted net assets include amounts that have been designated for cart shed repairs and capital improvements by the Board of Directors. The total amount of fiends designated by the Board are as follows: Cart shed repair fund Capital improvement budget Capital assessment fees - deferred revenue Total NOTE 7 -- SUBSEQUENT EVENTS 2011 2010 29,825 $ 29,825 19,266 50,000 31.625 13,850 $ 80.716 $ 93.675 Management has evaluated subsequent events through March. 21, 2012, the date on which the financial statements were available to be issued. E KALISPELL GOLF ASSOCIATION SUPPLEMENTARY INFORMATION STATEMENT OF ACTIVITIES BY DEPARTMENT YEAR ENDED DEC MBER 3112011 REVENUE, GAINS AND OTHER SUPPORT Association Pr� o Restaurant $ar 13rivin Ran e Grounds Tntal Revenue Interest income $ 1,196,427 689 $ 179,549 S 296,543 S 146,684 $ 17,292 $ $ 1,835,495 Gain (loss) on sale of assets 500 689 COSTOP SAFES 1,197,616 8,$49 296543 I ILl31)--�6016) 146684 17,292 1,836,6814�219667)GROSS �302 PROFIT 1,197�616 - ,- 982 - 79,412 9p6g 17292 800 4 EXPENSES 3.870 1.533,870 Supplies Labor 26449 242,514 701 40,112 12,495 149,068 1,539 1,240 55,582 Leases and rent 16,348 64,774 4240 283499 783,966 Bankcard charges 23,220 2 069 S17 432 16,780 Auto allowance 1,283 25,806 Custodial and security 12,140 61 1956 1,837 4,543 - 2,418 5,600 Utilities Repairs and maintenance 28,487 15,040 3,068 3,823 2,539 489 337 24,095 19,037 62 501 Legal and accounting 7,097 2,694 108 63,082 80,924 Dues and subscriptions 3,468 S91 7,097 Depreciation Stationery and printing 175,682 2,094 2 400 2 400 11,321 445 84,000 4,904 275,803 Postage 1,955 2,084 Insurance Business Promotion 9 988 14 793 827 g27 821 21G 13 2 89G 1,968 15,641 Taxes and licenses 10,399 , 81 1 ' 1,462 14,793 Seminars and markets 2,657 83 133 3,624 15,999 Interest 12,375 398 3140 Computer software 1,905 12,375 MSGA handicap dues 11,679 1,805 Gasoline 13,170 11,679 Laundry and linen Small tools J3� 7 057 1,073 2,331 13170 11,000 Contract labor 9,924 1,652 3,290 3,290 Chemicals - - 11,476 Cash long/short 302 240 265 46,693 46,693 Duets and lubricants 807 Sand and gravel 27,152 27152 Equipment rent 10,960 10,960 Seed, sod and flowcrs 9,243 8,243 Uniforms 562 757 27,578 27,578 Advcitising Health insurance 53,733 2 499 2,499 - 1,319 Employee meals l0,G50 1638 5,586 1.GS2 5,586 S 404 16,236 56,232 43,644 a09.344 „ S5.g31 4 61 �G17 1.838 78g GIS.289 11,120 1.69q.3Gg CHANGE IN NET ASSETS $ 8g,272 S 6.949 5 15,205) S 721) $ ,289 $ .. 156 498 L KALISPELL GOLF ASSOCIATION SUPPLEMENTARY INFORMATION STATEMENT OF ACTIVITIES BY DEPARTMENT YEAR ENDED DECEMBER 31, 2010 REVENUE, GAINS AND OTI4CR SUPPORT' Association C'rW Restaurant,„ I3ar �- DrivinRa�c Grounds Total Revenue Interest income $ 1,247,757 3,081 $ 193,253 - $ 297,551 $ 157,995 $ 12,968 $ $ IA9,524 Gain (loss) on sale of assets 1500 3,081 COST OF SAL1 S 1,25� 2,338 1.93,253 141.505) 297,gS1 110 672) jST,ggS 60.626) 12,968 1,914105 GROSS PROFIT 1,25_ 2,338 51.748 18G,819 97.3G9 � `� - = 312 803) 1;XPENSGS Supplies Labor 24,509 216,642 210 38,855 I1,799 1,405 458 10,549 49230 Leases and rent 22,833 147,510 65,310 2,584 268,970 739,871 13ankcard charges 22,042 2,004 501 324 23,157 Auto allowance 1,203 1,644 24,547 Custodial and security 13 452 41 1953 4 2, 5, Utilities Repairs and maintcnance 28,696 18179 3,049 3,879 ,732 2,494 469 568 S68 , 2D,746 46 Legal and accounting 9,366 _ 1310 760 G6,342 42 858 6,5 ,591 Dues and subscriptions 3,408 619 100 9,366 Depreciation Stationery and printing l72 603 2 083 _ 2,400 2,400 1,800 425 18,000 4,552 251203 Postage 2,572 49 2,083 Insurance 11,087 946 94G 946 94 2,715 Business promotion 7751 315 3,309 17,549 Taxes and licenses 7,230 291 1,391 91 - 7,757 Seminars and markets 2,923 39 158 2,377 11,386 Interest 4111 75 3,196 Computersoflwarc 1,870 - 4,111 MSGA handicap ducs 11860 1,870 Gasoline 10,302 11,860 Laundry and linen 382 6,254 984 10,302 Small tools - 1,397 9,007 Contract labor 7,200 3,710 3,710 Chemicals 1,012 8,212 Cash 1oneshort 1001 86 _ (229) 67,618 67,618 Fuels and lubricants 859 Sand and gravel 22,386 22,386 Equipment rent 12,520 12,520 Seed, sod and flowers _ 11,601 11,601 Uniforms 210 95 464 12,931 12,931 Adveitising 52,820 929 Health insurance Employees meal 10,068 1,572 5,280 5,280 5,280 35 15,348 52,855 41,256 --".•• -- 6G7.659 1376 _ _?3.022 5.432 188.183 �... 2.146 354 G 041 910 11.,436 CHANGE IN NET ASSETS $ 584;679 $ 1,274) $ 1304) $ -89 g,p1 x�27 602.719 �L606 978 , "� " � g��G02 719 $� 5,6761 bass io 1 a. tk�..... -��,. ...?„o ...<...?. .;.:f % _, c r f q .�3.a uR.. iti.�Na.. �:,�3. QnR ...;:.,a.��: �. ae.,'w;.v..' ,�..,yns_�['A.. ,1.