6. Golf Course LeaseAgenda -February 3, 1997
AGENDA ITEM 6 - GOLF COURSE LEASE
ADDITIONAL INFORMATION: As per Council Member Donahue's
suggestion, I have discussed with the KGA Manager the addition of
the City's right of first refusal for the golfing equipment if the
KGA declares bankruptcy. It is my opinion that reopening the
discussion for this item would be a non -productive exercise. We
would have to go back to the committee for their approval. I'm not
certain, if the KGA would be going bankrupt, that we would be
interested in the equipment and/or inserting ourselves into a
financial situation that may pit us against other finance interest
groups.
I would recommend that we approve the contract as it is currently
proposed. I believe it is time to conclude this process and put
all of the negotiations and/or irritants into the history books.
THIS LEASE, made and entered into as of the
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,
W I T N E S S E T H:
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.
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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 of approval of this lease as required by section 7-8-
4201 (2)(b) MCA, and shall terminate upon the expiration of said
full twenty year term, unless terminated sooner as hereinafter
provided.
3. GROSS RECETI?TS.: 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 June, commencing with June 30,
1998 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 § 3, hereof, and be
calculated as set forth in Exhibit "C", attached hereto and for
purposes of this Agreement made a part hereof.
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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 July 1, 1988 are hereby deemed and
agreed to be paid in full and let it be known and agreed that upon
approval of this agreement as proved in § 2, hereof, this lease
shall supersede any and all Leases between the Kalispell Golf
Association and the City of Kalispell.
5. USE OF LEASED REMISES: LESSEE shall use the leased
premises for the primary purpose of operating a municipal golf
course; however, LESSEE shall also encourage members of the general
public to utilize said premises for such other purposes as cross-
country skiing, sledding and jogging, subject however, to
reasonable rules and regulations regarding the conduct of such
activities as may be promulgated from time to time by LESSEE.
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.
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
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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.
7. 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.
g, L1TIL4ITIES: During the entire term of this lease LESSEE
shall pay when due for required utilities serving the leased
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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.
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.
10. 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.
11. TiSE OF CLI HOUSE 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
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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.
12. 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 1997
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.
13. LESSEE'S FINANCCIAL--RE_PORTS: Annually, on or before the
first day of November, 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
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the option of, the City (internal staff or contract auditor). The
cost of such audit shall be paid by the City.
14. LESS EEIS 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.
15. FIRE INSURANCE: During the full term of this lease,
LESSOR shall maintain its own fire insurance adequate to cover
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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.
16. DE,FALrr_.`_r` ANTS 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;
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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. In the event of default LESSOR shall have the right of
first refusal to purchase the equipment and personal property used
by the LESSEE in maintaining the golf course.
17. 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
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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:
Manager
City of Kalispell
Drawer 1997
Kalispell, Montana 59903-1997
18. EXISTING ,FASE: 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 July 1, 1988; 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.
19. 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.
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FENCE LINE RELOCATIL-..: KALISPELL MUNICIPAL
GOLF COURSE LANRENCE PARK
Commencing at the WE corner of the Water Dept.
Maintenance Building in Lawrence Park. thence
N 441 E. S6 feet to the NE fence corner oY the
Water Dept. Site is Lawrence Park. thence N 68'
W. on and along the existing fence line 50 feet
to a point. thence N 10' E on and along the
existing fence line 243 feet to the point of
beginning of the fence line relocation, thence
along the following courses. N 20' E, 290 feet,
N 3' W. 190 feet, N 88' W. 47 feet, N 29' W.
103 feet to a point on the Low Water Line of the
Stillwater River, sold point on the Low Water
Line of the Stillwater River being the and of
the fence line relocation.
Low Water Line Of
Sti22wgigr River NOTE: All bearings were obtained through the
�Y use of a hand compass. All information hereon
ape was obtained on November 18, 1987.
4 v
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Point Of Beginningr,,,W
Of Fence Line Relocation
This Section Of Fence
To Be Removed
N.E. Fence Corner Water
50 ML Dept. Site In Lawrence Park
Point On Fence Line N.E. Corner Water Dept.
Maintenance Building In
FT Lawrence Park
EXHIBIT "C"
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 §
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 (2t) of said "Gross Receipts".
4. In the event the rolling average of "Gross Receipts" exceed
$850,000.00 the Lease Payment shall be two and one-half
percent (2%!k) 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%-
$850,000 + 2.5%-
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