Title
Adopt a Resolution to Approve a $136,898.87 Incentive Management Fee Payment to American Golf Corporation for Fiscal Year 2025 and to Approve an Appropriation of $40,967.87 from the Shoreline Enterprise Golf Course Fund for Payment in Fiscal Year 2026
Staffreport
COUNCIL PRIORITY
• Quality of Life
SUMMARY
American Golf Corporation (AGC) provides management services 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 2025, AGC exceeded revenue and NOI projections, generating a total NOI of $1,434,494.35. This total exceeds the contractual baseline by $684,494.35, resulting in an incentive payment owed to AGC of $136,898.87. The FY 2026 adopted budget includes $95,931 for this purpose; therefore, an additional $40,967.87 appropriation is required from the Shoreline Enterprise Golf Course Fund.
RECOMMENDATIONS
1. Approve an incentive payment of $136,898.87 to American Golf Corporation for FY 2025 operations; and
2. Approve an appropriation of $40,967.87 from the Shoreline Enterprise Golf Course Fund undesignated fund balance to fully fund the incentive payment in FY 2026.
BACKGROUND
On June 1, 2020, the City approved a Management 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.
• Payment is due within 45 days of the final calculation of the fiscal year financial results.
Analysis
For the operating period of July 1, 2024 - June 30, 2025, AGC’s management of Monarch Bay Golf Course produced:
• Net Operating Income (NOI): $1,434,494.35
• NOI over the $750,000 baseline: $684,494.35
• Incentive Fee Owed (20%): $136,898.87
This strong financial performance exceeds prior year results and outperforms projected revenue targets, reflecting AGC’s strengthened operational management, increased play volume, enhanced customer experience, and improved food/beverage performance tied to recent upgrades.
The adopted FY 2026 budget includes $95,931 for the incentive payment. An additional $40,967.87 must be appropriated from the Shoreline Enterprise Golf Course Fund to meet the full payment obligation.
(See Attachment B - Monarch Bay FY 2025 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 2026 budget includes $95,931 in Account 596-56-001-5831 for the AGC incentive payment. This action will appropriate an additional $40,967.87 from the Shoreline Enterprise Golf Course Fund (Fund 596) undesignated fund balance, bringing the total authorized payment to $136,898.87.
• Shoreline Enterprise Golf Course Fund (Account 596-56-001-5831): $136,898.87
This action will result in a drawdown from undesignated fund balance, which will ensure full compliance with the terms of the Management Agreement and support continued high-performing golf operations.
ATTACHMENTS
A: Resolution for Approval of the FY 2025 Incentive Payment and Authorize the Appropriation of $40,967.87 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