Title
Staff Report for a City of San Leandro City Council Resolution to Approve an Appropriation of $260,834.19 from the Shoreline Enterprise Golf Course Fund (596); and to Approve a $360,234.19 Disbursement for Fiscal Year 2020-2021 for American Golf Corporation's Incentive Management Fee for the Management of Monarch Bay Golf Club
Staffreport
SUMMARY AND RECOMMENDATIONS
American Golf Corporation (AGC) completed the first fiscal year of management of Monarch Bay Golf Club for the City of San Leandro (City). The City's agreement with AGC states the City shall pay AGC 20% of the amount by which net operating income for a given operating year exceeds $750,000. The first operating year was June 2, 2020 to June 30, 2021 (13 months). Staff recommends that the City Council adopt a resolution to approve an appropriation of $260,834.19 from the Shoreline Enterprise Golf Course Fund (596) unrestricted fund balance, and to approve a $360,234.19 payment for AGC's Incentive Management Fee for the management of Monarch Bay Golf Club.
BACKGROUND
On November 15, 1997, the City entered into a lease agreement with AGC for the operation and maintenance of Monarch Bay Golf Club, which includes the 9-hole, par 30, Marina golf course, the 18-hole, par 71, Tony Lema golf course, the Everett Rooney driving range and the 9,000 square foot clubhouse.
The general terms of the 1997 Lease Agreement were:
* 20-year term with two 5-year extensions, if mutually agreed to;
* AGC to spend $8.1M on renovations;
* Creation of a Golf Capital Improvement Project account;
* Minimum rent of $750K annually, or 75% of the average total annual rent paid for the previous three years, whichever is greater; and
* Escalating percentage rent from years 1-10, with the highest rate of 30% on golf revenues and 6% on clubhouse revenues.
Subsequent lease agreement addendums included:
* 2006 - Agreement for AGC to purchase the City's reclaimed water;
* 2010 - Addition of cell sites at the driving range, w...
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