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HomeMy WebLinkAboutResolution No. 2015-60u Suggested by: Administration CITY OF KENAI RESOLUTION NO. 2015 -60 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AUTHORIZING A TEN YEAR EXTENSION WITH THE OPTION FOR AN ADDITIONAL TEN YEARS BY MUTUAL AGREEMENT FOR THE LEASE AND CONCESSION AGREEMENTS FOR THE KENAI GOLF COURSE WITH GRIFFIN GOLF ENTERPRISES, LLC. WHEREAS, on June 7, 1985 the City entered into a 20 year Lease and Concession Agreement with Richard Morgan for the construction and operation of a public golf facility with a 10 year option to extend; and, WHEREAS, on May 28, 1987, the City entered into a second Lease and Concession Agreement for an expansion of the Golf Course with Richard Morgan with similar terms to the first Lease and Concession Agreement; and WHEREAS, since the initiation of the Lease and Concession Agreements there have been various amendments and assignments, and the Lease and Concession Agreements are currently held by Griffin Golf Enterprises, LLC., and are set to expire on December 31, 2015; and, WHEREAS, Griffin Golf Enterprises has successfully managed and improved the golf course for the City of Kenai maintaining an 18 hole course with reasonable green fees; and, WHEREAS, the City has not received interest from any other entities or individuals interested in managing the golf course; and, WHEREAS, Griffin Golf Enterprises has provided written notification to the City requesting amendments to the Lease and Concession Agreements for an additional 10 years; and, WHEREAS, Griffin Golf Enterprises states that it has paid over $84,000 in lease payments to the City over the last 8 years, over $40,000 in Borough and City property tax, $128,000 in sales tax, $376,000 in payroll and expenses and purchased over $200,000 in new golf equipment; and, WHEREAS, Griffin Golf Enterprises indicates that a ten year extension will provide the necessary security to continue equipment purchases and improvements for the course; and, Resolution No. 2015 -60 Page 2 of 2 WHEREAS, Griffin Golf Enterprises has agreed that if an extension is provided, payments to the City will increase to $8,000 per year for each Lease and Concession Agreement beginning January 1, 2016 and then increase each subsequent year by 2 percent. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: Section 1. That the City Manager is authorized to execute amendments for each Lease and Concession Agreement to extend the terms for 10 years and increase payments to the City to $8,000 per year for each Lease and Concession Agreement beginning January 1, 2016 with additional 2 percent increases each subsequent year. Section 2. That this resolution takes effect immediately upon passage. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 21st day of October, 2015. PAT PORTER, MAYOR New Text Underlined; [DELETED TEXT BRACKETED] u "'Villa9e with a Past, C# with a Future" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 �IIIII 1992 MEMO* TO: City Council FROM: Rick Koch DATE: October 14, 2015 SUBJECT: Resolution 2015 -60, Authorizing a Ten Year Extension for Leases & Concession Agreements for the Kenai Golf Course The purpose of this correspondence is to recommend Council approval of the above referenced ten -year lease extension and option for an additional ten -year extension by mutual agreement with Griffin Golf Enterprises, Inc. The existing leases and concession agreements will expire on December 31, 2015. There are two leases, each for a separate tract, which together comprise the golf course. The present lease rate is $5,000 annually for each lease, or $10,000 total. The proposal from Griffin Golf Enterprises, LLC, is to increase the lease rate for each tract to $8,000, or $16,000 total, per year, beginning January 1, 2016, with an increase of two - percent (2 %) per year. Income to the City will be increased under the terms of the lease extensions. I have reviewed Griffin Golf Enterprise's financial statements and find that the proposed lease rates are fair to the City. I also find that the proposed extension to be in the best interest of the City as it will maintain an acceptable level of service to the community, provide for improvements to be constructed to the golf course facilities (which become the property of the City), and increase leave revenues to the City. If you have any questions, please contact me at your convenience. ELEVENTH AMENDMENT TO LEASE AND CONCESSION AGREEMENT KENAI MUNICIPAL GOLF COURSE AND RECREATION AREA NO. II THIS Amendment to Lease and Concession Agreement is made as of the day of 2015, by and between the CITY OF KENAI (City), a municipal corporation whose address is 210 Fidalgo Avenue, Kenai, Alaska 99611, and GRIFFIN GOLF ENTERPRISES, LLC (Lessee), whose address is PO Box 289, Kenai, Alaska 99611. WITNESSETH WHEREAS, on May 28, 1987, the City entered into a lease with Richard I. Morgan, for City -owned lands identified as Exhibit "A ", a Preliminary Drawing for Field Survey to be replaced at a later date by a Field Survey, which lease was recorded at Book 311 Pages 134 - 143, on May 28, 1987, in the Kenai Recording District, Third Judicial District, State of Alaska (the Lease); and, WHEREAS, since May 28, 1987, the rights under the Lease have been assigned or transferred to various Lessees and the current Lessee is Griffin Golf Enterprises, LLC; and, WHEREAS, the Lease has been amended over the years, which amendments are recorded in the Kenai Recording District and are summarized as follows: Amendment to Lease, recorded at Book 362 Pages 002 -003, on March 16, 1990, redetermining the green fees; Amendment to Lease, recorded at Book 395 Pages 754 -756, on February 21, 1992, incorporated Exhibit "A" to supersede the Exhibit recorded with the original lease on May 28,1987; Amendment to Lease, recorded at Book 411 Pages 639 -641, on January 19, 1993, redetermining the green fees; Amendment to Lease, recorded at Book 515 Pages 816 -820, on October 7, 1997, amending the lease rate; Eleventh Amendment to Lease and Concession Agreement Kenai Municipal Golf Course and Recreation Area No. II Page 1 of 3 Amendment to Lease, recorded at Book 522 Pages 726 -729, on February 10, 1998, revising the legal description as follows: Parcel B The unsubdivided remainder of Government Lots 3 and 4, located within the NI/2 NI/2 Section 3, T5N, R11W, S,M, City of Kenai, Kenai Recording District, Kenai Peninsula Borough, Alaska containing 71.919 acres, according to Plat No. 97 -105; Amendment of Golf Course Fees redetermining the green fees dated February 18, 2000 (Lessee and Lessor signed the Amendment; however it is not recorded in the Kenai Recording District); Amendment to Lease, recorded at 2005- 003854 -0, on May 11, 2005, redetermining the green fees; incorporating language that is required by the State Division of Parks and Outdoor Recreation and the National Parks Service; granting the City the right to enter and occupy the premises for a ski trail or trails; and, extending the expiration dates for additional ten -year terms to December 31, 2015; Amendment to Lease, recorded at 2007 - 004091 -0, on April 20, 2007, redetermining the green fees; Amendment to Lease, recorded at 2010 - 003222 -0, on April 23, 2010, redetermining the green fees; Amendment to Lease, recorded at 2013 - 004082 -0, on April 29, 2013 redetermining the green fees; and, WHEREAS, the Lessee has requested the City extend the term of the Lease for ten (10) years, beginning January 1, 2016, with an additional option to renew for an additional term of ten (10) years; and, the lease rate for the term beginning January 1, 2016 as agreed to by the parties shall be $8,000 per year and shall increase two- percent (2 %) annually, with the lease rate for any additional term to continue to increase at two - percent (2 %) each year. NOW THEREFORE, the parties agree as follows: 1. The Kenai City Council has determined to extend the term of the Lease for ten (10) years, beginning January 1, 2016, with an additional option to renew for an additional term of ten (10) years; and the lease rate for the term beginning January 1, 2016 as agreed to by the parties shall be $8,000 per year and shall increase two- Eleventh Amendment to Lease and Concession Agreement Kenai Municipal Golf Course and Recreation Area No. II Page 2 of 3 percent (2 %) annually, with the lease rate for any additional term to continue to increase at two - percent (2 %) each year. Except as expressly modified or stated herein, all other terms and conditions of the Lease (as amended) remain in full force and effect. CITY OF KENAI By: Rick R. Koch Its: City Manager GRIFFIN GOLF ENTERPRISES, LLC By: _ Name: Its: Approved as to rm: Sco loom City Attorney State of Alaska ) ) ss Third Judicial District ) The foregoing instrument was acknowledged before me this _ day of 2015, by Rick R. Koch, City Manager for the City of Kenai. Notary Public of Alaska My Commission Expires: Eleventh Amendment to Lease and Concession Agreement Kenai Municipal Golf Course and Recreation Area No. II Page 3 of 3 State of Alaska ) ) ss Third Judicial District ) The foregoing instrument was acknowledged before me this _ day of , 2015, by (Name), (Title) for GRIFFIN GOLF ENTERPRISES, LLC Notary Public of Alaska My Commission Expires: RETURN TO: CITY OF KENAI 210 Fidalgo Avenue Kenai, AK 99611 -7794 Eleventh Amendment to Lease and Concession Agreement Kenai Municipal Golf Course and Recreation Area No. II Page 4 of 3 TWELFTH AMENDMENT TO LEASE AND CONCESSION AGREEMENT KENAI MUNICIPAL GOLF COURSE AND RECREATION AREA THIS Amendment to Lease and Concession Agreement is made as of the day of , 2015, by and between the CITY OF KENAI (City), a municipal corporation whose address is 210 Fidalgo Avenue, Kenai, Alaska 99611, and GRIFFIN GOLF ENTERPRISES, LLC (Lessee), whose address is PO Box 289, Kenai, Alaska 99611. WITNESSETH WHEREAS, on June 7, 1985, the City entered into a lease with Richard I. Morgan, for City-owned lands identified as Exhibit "A ", a Preliminary Drawing for Field Survey to be replaced at a later date by a Field Survey, which lease was recorded at Book 265 Pages 720 - 731, on July 8, 1985, in the Kenai Recording District, Third Judicial District, State of Alaska (the Lease); and, WHEREAS, since June 7, 1985, the rights under the Lease have been assigned or transferred to various Lessees and the current Lessee is Griffin Golf Enterprises, LLC; and, WHEREAS, the Lease has been amended over the years, which amendments are recorded in the Kenai Recording District and are summarized as follows: Amendment to Lease, recorded at Book 362 Pages 004 -005, on March 16, 1990, redetermining the green fees; Amendment to Lease, recorded at Book 395 Pages 749 -753, on February 21, 1992, incorporated Exhibit "A" and `B" to supersede the Exhibits recorded with the original lease on July 8, 1985; Amendment to Lease, recorded at Book 411 Pages 642 -646, on January 19, 1993, redetermining the green fees; Amendment to Lease, recorded at Book 472 Pages 950 -952, on October 23, 1995, redetermining the green fees; Amendment to Lease, recorded at Book 515 Pages 816 -820, on October 7, 1997, amending the lease rate; Twelfth Amendment to Lease and Concession Agreement Kenai Municipal Golf Course and Recreation Area Page I of 3 Amendment to Lease, recorded at Book 522 Pages 726 -729, on February 10, 1998, revising the legal description as follows: Parcel A The unsubdivided remainder of Government Lots 1 and 2, located within the NI/2 N1/2 Section 3, T5N, R11W, S,M, City of Kenai, Kenai Recording District, Kenai Peninsula Borough, Alaska containing 71.919 acres, according to Plat No. 97 -105; Amendment of Golf Course Fees redetermining the green fees dated February 18, 2000 (Lessee and Lessor signed the Amendment; however it is not recorded in the Kenai Recording District); Amendment to Lease, recorded at 2005- 003854 -0, on May 11, 2005, redetermining the green fees; incorporating language that is required by the State Division of Parks and Outdoor Recreation and the National Parks Service; granting the City the right to enter and occupy the premises for a ski trail or trails; and, extending the expiration dates for additional ten -year terms to December 31, 2015; Amendment to Lease, recorded at 2007 - 004091 -0, on April 20, 2007, redetermining the green fees; Amendment to Lease, recorded at 2010 - 003222 -0, on April 23, 2010, redetermining the green fees; Amendment to Lease, recorded at 2013 - 004082 -0, on April 29, 2013, redetermining the green fees; and, WHEREAS, the Lessee has requested the City extend the term of the Lease for ten (10) years, beginning January 1, 2016, with an additional option to renew for an additional term of ten (10) years; and, the lease rate for the term beginning January 1, 2016 as agreed to by the parties shall be $8,000 per year and shall increase two- percent (2 %) annually, with the lease rate for any additional term to continue to increase at two - percent (2 %) each year. NOW THEREFORE, the parties agree as follows: 1. The Kenai City Council has determined to extend the term of the Lease for ten (10) years, beginning January 1, 2016, with an additional option to renew for an additional term of ten (10) years; and the lease rate for the term beginning January 1, 2016 as agreed to by the parties shall be $8,000 per year and shall increase two- Twelfth Amendment to Lease and Concession Agreement Kenai Municipal Golf Course and Recreation Area Page 2 of 3 percent (2 %) annually, with the lease rate for any additional term to continue to increase at two- percent (2 %) each year. 2. Except as expressly modified or stated herein, all other terms and conditions of the Lease (as amended) remain in full force and effect. CITY OF KENAI By: Rick R. Koch Its: City Manager GRIFFIN GOLF ENTERPRISES, LLC By: _ Name: Its: Approved as t rm: Scott Bloom City Attorney State of Alaska ) ) ss Third Judicial District ) The foregoing instrument was acknowledged before me this day of , 2015, by Rick R. Koch, City Manager for the City of Kenai. Notary Public of Alaska My Commission Expires: Twelfth Amendment to Lease and Concession Agreement Kenai Municipal Golf Course and Recreation Area Page 3 of 3 State of Alaska ) ) ss Third Judicial District ) The foregoing instrument was acknowledged before me this _ day of , 2015, by (Name), (Title) for GRIFFIN GOLF ENTERPRISES, LLC Notary Public of Alaska My Commission Expires: RETURN TO: CITY OF KENAI 210 Fidalgo Avenue Kenai, AK 99611 -7794 Twelfth Amendment to Lease and Concession Agreement Kenai Municipal Golf Course and Recreation Area Page 4 of 3 GOLF Z A w co rn ALASKA Kenai Golf Course P.O. Box 289 Kenai, Alaska 99611 Debbie and Gordon Griffin Kenai Golf Course October 10, 2014 Rick Koch Kenai City Manager Kenai, AK 99611 Dear Mr. Koch, As we have discussed, our lease on the Kenai Golf Course expires in December of 2015. 1 am requesting a 10 year extension on our lease plus a 10 year renewal option. Please note that we are current on all our obligations to the city of Kenai and the state of Alaska. During the past eight years we have paid over $84,000 in lease payments and sales tax on those lease payments to the City of Kenai. In addition, we have paid over $40,000 in borough and city property tax. We also have paid over $96,000 in property insurance on the facility, $376,000 in payroll and expenses, $128,000 in sales tax, and $120,000 in utility related costs. We are happy to continue the current arrangement. It is a great use of the land during the summer and the winter months. Over the past eight years we have purchased over $200,000 in new equipment for the golf course. When we purchased the business from Dick and Shirley Morgan we inherited an elderly fleet of golf carts and major equipment in disrepair. In order to improve the Kenai Golf Course, it was necessary to improve the equipment. We have improved the course in many different areas. We have created new tee boxes for ladies, juniors, and senior golfers. This has made a dramatic difference in the playability of the course for all levels of golfers. We have created a new practice area, nearly finished, which will be the best in the state when complete. We have increased the sizes of the majority of our greens. We have established an operational plan that takes into account the weather conditions in our specific area. We have created a new green and forward tee box on hole #18 which allows players of all levels to play that hole without having to hit over the gully if that is their choice. We have spent over $240,000 on labor and supplies for all needed improvements for the most beautiful course in Alaska. In creating any operational plan, it is important to remember that winter conditions dictate beginning summer conditions. Some winters are easy on the course, while others are very damaging. Therefore, we take each season as it emerges from winter and create an operational plan unique to those conditions. Please find attached the following: Profit and Loss Statements 2007 — 2013, tax return from 2013, a complete operational plan for the Kenai Golf Course, a description of the programs for junior golfers and lady golfers, a special events schedule and a tournament schedule. If approved, the ten year lease extension with a ten year option, gives us the security we need to continue purchasing equipment and to improve the course every year. For the last seven years we have been able to keep our greens fees very reasonable, especially considering Kenai is a full 18 hole golf course. Our goal is to provide 151 class golf for families as well as individuals. Thank you for your consideration. Gordon and Debbie Griffin Kenai Golf Course Kenai Golf Course Operational Plan Personnel Gordon and Deborah Griffin, Owners Ron Goecke, Clubhouse Manager Dusty Culbreath, Greens Superintendent William Perkins, Greens Superintendent Neal Baldwin, Mechanic Jerry Norris, Special Projects /Cart Paths Chris Kimball, Special Projects {Tee Box Construction Charlie Waguespach, Roughs Mower Doug Haralson, Fairway Mower Chris Murray, Tee Box Mower Lara Griffin, Clubhouse Counter Debbie Griffin, Bookkeeper and Clubhouse Counter Gordon Griffin, Clubhouse Counter /Special Projects /General Manager Mark Griffin, Special Projects /Clubhouse Counter Keith Stewart, Special Projects and Repairs Henry Young, Watering Crew 1D Perkins, Watering Crew Ian Haralson, Cart Attendant Connor Haralson, Cart Attendant As you can see, personnel has been assigned to all playing areas. The following is a basic operational plan. Please note that this plan can and does change depending on the conditions on the course after break up. Greens Opening Procedures: 1. The greens are plugged or punched or verticut as soon as we can put equipment on the greens after break up. The greens are slit- seeded and top dressed with sand in all needed areas. After this process, the greens are fertilized and the watering process begins. 2. The greens are fertilized every 18 days and the verticutting process continues as needed. Verticutting is a thatching process that helps aerate the greens by removing dead grass. 3. Fungicide is used on all greens as needed to prevent and remove mold, moss, and other fungus growths. 4. The watering process begins at night. We have two night employees who water the greens and tee boxes. 5. Once significant growth occurs, the greens are cut six days a week, with a rest day every Monday. We gradually cut the greens shorter as the grass gets healthier. 6. The greens are checked regularly and chemicals added to prevent the growth of dandelions and other weeds. 7. Once good growth has been established, the greens are lightly verticut and punched to insure continued healthy growth. Overseeding may occur again. Greens Closing Procedure: 1. During the last two weeks of the season, the greens are cut longer to help them endure the winter. 2. Fungicide is spread on all the greens to help prevent snow mold and other fungus that may occur during the winter months. 3. Rope and flagging are placed around all 20 greens to signify a no access area that prevents skiers from crossing the greens. This also helps keep the moose off the greens during the early break up. 4. Fertilizer maybe applied to the greens for the final time in order to put the greens away as healthy as possible. 5. An attempt is made to keep leaves and small branches off the greens until the snow flies. Roughs, Fair ways, and Tee Ba es When the growth season is in full force, the roughs and fairways are cut once a week. The tee boxes are cut twice a week. The tee boxes are verticut or punched and top dressed as needed. Fertilizer will be applied to all areas as needed. If you have any questions or concerns, please contact Gordon at 398 -8947. Kenai Golf Course Junior Program Program Director: Tommy Carver Instructors: Gordon Griffin, Ron Goecke, John Dahlgren, Mary Armstrong, Truckee LeMay, Craig Jung This past year we held four junior clinics. Included in those clinics were all ability levels. In June of each year, we are part of the national Hook -a -Kid on Golf Program. Our program director and site coordinator with the national office is Bob Sizemore. This program is sponsored by the Kenai Golf Association, Bob Sizemore and the Atigun Corporation, and the Kenai Golf Course. The program is completely free of charge to new junior golfers. At the end of the 5 day clinic, all students are given a free set of clubs to take home. As a graduate of this program, students are allowed to play free of charge every Thursday on the Kenai Golf Course. They also receive reduced rates into other junior clinics we have throughout the season. This allows them to advance their skills to the next level. To enhance our Junior Program, forward tee boxes have been established to encourage success and confidence in their ability to play the game of golf. Free golf balls are made available to all junior golfers, donated by the many members of the Kenai Golf Association. The Hook -a -Kid on Golf program did not exist until Griffin Golf Enterprises purchased the business. The Junior Clinics have also increased after 2007. Because of these clinics, the Junior Golf Program continues to improve each and every year. I can assure you that we will continue to develop our Junior Golf Program as much as possible. If you have any questions, please contact the Griffins. Ladies Golf Prograrn Program Director: Gordon Griffin Instructors: Gordon Griffin, Ron Goecke, Chris Murray, Mark Griffin, Tommy Carver This past year we held 5 three day Beginning Golfer Ladies' Clinics. In addition, we held two 2 day Intermediate Golfer Ladies' Clinics. During the three day clinics, we work on the long game, short game, rules of golf, and golf etiquette. To increase the playability of the Kenai Golf Course for ladies we have introduced the forward tee boxes. The new tee boxes have proven to be very successful. We have created a new green on hole #18 for all those who have trouble hitting over the gully. This idea was presented to us by Dale Sandahl. We implemented his idea this past year. Because of the ladies' clinics, new forward tee boxes, and new green on #18, or ladies' play has increased a great deal. It is our intention to continue to improve the golf course for all ability levels. As you can see, we have put a great deal of thought and effort into this program and will continue to do so in the years to come.