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:
Approve an incentive payment of $218,681.44 to American Golf Corporation for FY 2026 operations; and
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 gros...
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