Title
Adopt a Resolution to Approve a $218,681.44 Incentive Management Fee Payment to American Golf Corporation (AGC) for FY 2026 and to Approve an Appropriation of $122,750.44 from the Shoreline Enterprise Golf Course Fund for Payment in FY 2027
Staffreport
COUNCIL PRIORITY
• Quality of Life
SUMMARY
American Golf Corporation (AGC) provides management services for Monarch Bay Golf Course under an agreement with the City of San Leandro. Pursuant to Article 4 of the agreement, AGC receives a base management fee of $150,000 annually and an incentive management fee equal to 20% of Net Operating Income (NOI) exceeding a baseline of $750,000 each year.
For FY 2026, AGC generated a total NOI of $1,843,407.21. This total exceeds the contractual baseline by $1,093,407.21, resulting in an incentive payment owed to AGC of $218,681.44. The FY 2027 adopted budget includes $95,931 for this purpose; therefore, an additional $122,750.44 appropriation is required from the Shoreline Enterprise Golf Course Fund to fully fund the contractual payment.
RECOMMENDATIONS
Staff recommend the City Council adopt a resolution to:
1. Approve an incentive payment of $218,681.44 to American Golf Corporation for FY 2026 operations; and
2. Approve an appropriation of $122,750.44 from the Shoreline Enterprise Golf Course Fund balance to fully fund the incentive payment in FY 2027.
BACKGROUND
On June 1, 2020, the City approved a Management Agreement (the “Agreement”) with AGC through November 15, 2024 (the “Initial Term”). The Agreement permits two (2) optional five-year renewal terms. On September 3, 2024, the City executed an amendment extending the Agreement through November 15, 2029.
Under the Agreement, the City is obligated to pay AGC the following:
Base Management Fee
• $150,000 annually, payable in twelve (12) monthly installments of $12,500.
Incentive Management Fee.
• 20% of the annual Net Operating Income above a baseline of $750,000.
• Net Operating Income is defined as gross revenue minus operating expenses. The incentive management fee is excluded from NOI.
• Payment is due within 45 days of the final calculation of the fiscal year financial results.
Analysis
For the operating period of July 1, 2025 - June 30, 2026, AGC’s management of Monarch Bay Golf Course produced:
• Net Operating Income (NOI): $1,843,407.21
• NOI over the $750,000 baseline: $1,093,407.21
• Incentive Fee Owed (20%): $218,681.44
FY 2026 financial performance resulted in NOI of $1,843,407.21, exceeding the contractual threshold for an incentive management fee by $1,093,407.21. Pursuant to the Management Agreement, AGC is therefore entitled to an incentive management fee of $218,681.44. The adopted FY 2027 budget includes $95,931 for the incentive payment. An additional $122,750.44 must be appropriated from the Shoreline Enterprise Golf Course Fund to meet the full payment obligation.
(See Attachment B - Monarch Bay FY 2026 Incentive Statement)
Previous Actions
• Resolution No. 2020-052 Authorizing the City Manager to Enter into a Management Agreement with American Golf Corporation
• Resolution No. 2024-110 Authorizing the City Manager to Execute Amendment No. 1 to the Management Agreement with American Golf Corporation
Financial Impacts
The FY 2027 budget includes $95,931 for the incentive payment. This action will appropriate an additional $122,750.44 from the Shoreline Enterprise Golf Course Fund (F605) balance, bringing the total authorized payment to $218,681.44.
• Shoreline Enterprise Golf Course Fund (F605-CC103-SC024): $218,681.44
This action will reduce the fund balance by $122,750.44 and provide sufficient expenditure authority to satisfy the City’s contractual obligation under the Management Agreement.
ATTACHMENTS
A: Resolution for Approval of the FY 2026 Incentive Payment and Appropriation of $122,750.44 from the Shoreline Enterprise Golf Course Fund.
B: Incentive Payment Calculation Statement
C: Management Agreement Monarch Bay Golf Club with American Golf Corporation
PREPARED BY: Jennifer Auletta, Parks and Landscape Manager, Recreation and Parks Department