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E2. KGA RequestCity of Kalispell Charles A. Harball Office of City Attorney City Attorney 201 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 TO: FROM: SUBJECT: MEETING DATE: MEMORANDUM Doug Russell, City Manager �Z Charles Harball, City Attorney Tel 406.758.7709 Fax 406.758.7771 charball@kalispell.com Kalispell Golf Association request for approval to enter into Concessionaire Agreement for food and beverage operations January 16, 2018 — Regular Council Meeting BACKGROUND: The lease agreement between the City of Kalispell and the Kalispell Golf Association (KGA) states that KGA shall not sublease or assign any portion of the leased premises without prior written permission of the City. The KGA has notified the City of its intent to secure an independent contractor to operate the food and beverage portion of the business that has, until now, been operated by the KGA. Food and beverage operations are traditionally an accessory use in the management of a golf course and concessionaire agreements are common in the industry. RECOMMENDATION: It is recommended that the Council approve the request and give the staff direction to communicate this approval in writing to the KGA. ALTERNATIVES: Council may seek further information to consider before giving its approval. MEMO Report To: Doug Russell, Kalispell City Manager 0 From: Steve Dunfee, Buffalo Hills Golf Club General Manager Subject: Intention to Lease F&B Operations via Concessionaire Agreement Meeting Date: January 16, 2018 The purpose of this memo is to announce Kalispell Golf Association's intent to secure an independent contractor to operate Food & Beverage (F&B) effective March 1, 2018. The KGA desires a long term lease with its independent contractor and is prepared to offer a lease agreement to the only the most qualified and capable candidate. Concession Includes: ➢ Clubhouse food and beverage operation ➢ Halfway House at the 101h tee ➢ Beverage Carts ➢ Private parties, small and large groups, golf tournaments, etc. ➢ Patio Bar & Grille ➢ Catering Services ➢ Service to Men's and Ladies Leagues ➢ Rotary host ➢ Kiwanis host Why is the KGA leasing out the F&B Operation" After 35 years of management experience at Buffalo Hill Golf Club, KGA's F&B Manager is retiring effective February 28, 2018. Kalispell Golf Association is interested in moving forward under a concession agreement with an experienced, successful, and well qualified F&B operator. This will allow KGA to focus on golf course operations, and to allow the F&B operation to grow under the professional direction of an owner who is well capitalized and experienced in the F&B industry. Terms of the concession will be subiect to negotiation: ➢ Term — length of lease (Prefer a long term lease of at least 5 years). ➢ Base monthly lease payment for space, furniture, fixtures, phones, supplies, janitorial, and kitchen equipment. ➢ Plus: Percentage of gross sales from all food sales, including clubhouse, HWH, beverage cart, patio, and all other on site food sales. ➢ Plus: Percentage of gross sales from bar sales, including clubhouse, HWH, beverage cart. ➢ KGA owns the "Full Beverage Liquor License" in place at Buffalo Hill Golf Course, and therefore must remain in control of the bar operation. KGA may pay a management fee to the concessionaire, but bar prices, bar sales, deposits, purchases of alcohol, and labor costs related to the bar must be paid out the KGA controlled "bar" bank account. We are currently working through details of the concession agreement, and hope to have a signed agreement in place by February 1, 2018. If you have any questions, please do not hesitate to contact me. Sincerely, Stephen Dunfee General Manager Buffalo Hills Golf Club Return to: City Clerk P.O. Box 1997 Kalispell, 0 MT 59903 �`' I IIlIIIII 11111111IIIIIlIIIZIIII IIII IIIII IIII IIII IINI NII IIIII 11111 IIII II I Ili Ifs fIN 200900033418 Page: 1 of 14 (� Fees: $98.00 Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM 0 Qo IcaKALISPELL CITY GOLF COURSE LEASE ct r p THIS LEASE, made and entered into as of the 1day of �Gy , 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, rc3 M 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: Vq ro 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 OO 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 O 4 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. '0 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 June, 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 let 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 limits 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 2 fI�II��I�IIIIIIIItIII��lll�ll�tl��ull���ll�Ifl��I�1lIII�I�IIIIIIIIIII�IIIN�I�IIIII�II��I 200 018 2 of 14 Paula Robinson, Flathead County MT by NW 12Fees: $98.00 %3J2009 2:s8 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 (Ilf�lllllllilllll{IIIIIII{INIIIIIIIII!!{IIIII{Nlll�llllillllllllal111111ll{IININ Page: 3of14*g 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 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 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 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. I pypy pgli 1ti`i` !p{I`! 4 If �i II 1ff u11f Ip'II i lIII(I���I�II�IIIII�IdI'I��II�I�I�II IIII��I�InI���I�lUlilllll�l{III�fI1�I��1 18 Page: 14 Fees: $98.00 Paula Robinson, Flathead County MT by NW 12J3J2009 2:58 PM 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 airy 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�IIIIlIIIIIIIIIIIIIIIIIIIIIlillllllIIIIIIIIIIIllilIllllIIIIIIIIIIIIIIIII�IIIIIIIII 18 Page: of 14 Fees: $98.00 Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM I1i1�111 II II I II IIIII IIII IIII illl IIIII till IIIII II I illl Ilili IIIII Ill1 II 1 III 1111 IN Page:20090033418 8 of 14 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 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: Theresa White City Clerk ATTEST: Terr i liams Association Secretary 6 CITY OF KALISPELL 1 ` a Vane Howington City Manager KALISPELL GOLF ASSOCIATION Doug Kauffman — President ! {I II��I���I���1lIuI�1�IItlIIII�III�I�I�ll�q'IINItINIII11lI�plll(III�I�IIII Page:7 of 14 8 Fees: $98.00 STATE OF MONTANA ) Paula Robinson, Flathead County MT by NW 12/3/2009 2:58 PM ss. County of Flathead ) On this t'L4�i.. day of 0, ,,tre „ 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. '— SEA 4oTA SEAL `Je 0F' STATE OF M'NW'ANA SS. County of Flathead Printed Name: !;N, NOTARY PUBLIC for the State of Montana Residing at: My Commission expires�� On thi,,;1 day of 1�, 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 .- yearhereinabove first written a ,N a V , T AA, � t9fl�NQ s'�,V Printed Name: NOTARY PUBLIC for the State of Montalia Residing at: A-cr My Commission expires: ct Zef - z,e t ()