HomeMy WebLinkAbout1998-11-23 City Council (11)City of Palo Alto
7
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:NOVEMBER 23, 1998 CMR440:98
SUBJECT:APPROVAL OF AMENDMENT ONE TO THE MANAGEMENT
AGREEMENT FOR GOLF PROFESSIONAL SERVICES, AND
APPROVAL OF AMENDMENT ONE TO THE FACILITY LEASE AT
1875 EMBARCADERO ROAD TO BRAD LOZARES TO OPERATE A
GOLF RETAIL SHOP; APPROVAL OF BUDGET AMENDMENT
ORDINANCE TO INCREASE CITY EXPENDITURES BY $163,000
FOR IMPROVEMENTS TO CITY FACILITIES AND SYSTEMS
ASSOCIATED WITH THE GOLF COURSE CLUBHOUSE
REPORT IN BRIEF
On March 16, 1998, Council approved a 20-month management agreement for golf course
professional services and a 15-year facility lease to operate a golf retail establishment with
Mr. Brad Lozares (CMR:140:98). One of the provisions of the lease is that the City would
reimburse Mr. Lozares for 50 percent of the costs, up to $150,000, of the golf shop expansion
over the term of the lease. This clause was added because both the City and the tenant will
benefit from the anticipated future growth in sales resulting from the additional space, since
the City receives rent from the tenant based on a percentage of golf shop gross retail sales.
Since the time of the lease agreement with Mr. Lozares, the cost of the golf shop expansion
improvements has increased, and the cost of improvements that are the City’s responsibility
have grown. The City improvements are: roof repairs, Americans with Disabilities Act
(ADA) retrofits to the restrooms and access ramp, structural piers, a new security system, a
new sprinkler and fire alarm systems, and repairs to the breeze-way walkway. Council
approval of the attached Budget Amendment Ordinance (BAO) is needed to fund these
improvements, offset by one time debt service savings~ and to amend the lease and
management agreements to allow for these changes. The amount of the BAO is a net return
to reserves of $33,430.
CMP,:440:98 .Page 1 of 7
RECOMMENDATION
Staff recommends that Council:
.1.Approve the attached Budget Amendment Ordinance (BAO) that would return a net
of $33,430 to the General Fund Infrastructure Reserve by:
a)Reimbursing Mr. Lozares for the costs of improvements to City facilities
associated with the clubhouse remodel. This increase, totaling $163,000, will
be offset by one time savings in golf course debt service payments, and will
have no net impact on reserves;
b)Moving $12,000 from the Financial Database Capital Improvement Project
CIP (18614) to the operating budget to fund the City’s share of costs
associated with a point-of-sale system at the golf course, with no net impact
on reserves;
c)Reducing funding for golf course debt service by $200,000;
d)Reducing the monthly lease rental revenue by $3,570 for the remainder of this
fiscal year.
o Approve and authorize the Mayor to execute Amendment Number One to the
Management Agreement with Brad Lozares for golf course professional services at
the Palo Alto Municipal Golf Course.
1
Approve and authorize the Mayor to execute Amendment Number One to the Lease
Agreement with Brad Lozares for lease of the facility at the Palo Alto Municipal Golf
Course to operate a golf retail establishment.
o Direct staffto enter into a short form agreement for an on-site City representative to
oversee the construction of City-related improvements.
BACKGROUND
On March 16, 1998, Council approved a 20-month management agreement for golf course
professional services and a 15-year facility lease to operate a golf retail establishment with
Brad Lozares (CMR:140:98). One of the provisions of the lease was that the City would
reimburse Mr. Lozares 50 percent of the costs, up to $150,000, for golf shop expansion
improvements over the term of the lease. This provision was added because both the City
and the tenant will benefit from the anticipated future growth in sales that can be expected
CMR:440:98 Page 2 of 7
from the additional space, since the City receives rent from the tenant based on a percentage
of golf shop gross retail sales.
At the time of the lease, Council also directed staff to enter into an agreement to reimburse
Mr. Lozares for the cost of using his architect to design various ADA retrofits on behalf of
the City. This recommendation was made to expedite the improvements and to take
advantage of the efficiencies of making use of the existing architect. These retrofits were
to the restrooms, drinking fountain and exterior ramp of the City-owned golf course
clubhouse. Staff reported that design fees would be reimbursed by using the existing CIP
project # 19309, Americans with Disability Act Compliance. Preliminary estimates of the
cost to construct the ADA retrofits at the time of the report were $100,000. Staff reported
that it would return to Council after the design was completed, with a more precise estimate
of construction costs and a contract with Mr. Lozares to reimburse him for the construction
of the ADA retrofits.
DISCUSSION
City review of the construction drawings during the permit process and inspections of the
facility revealed the need for the City to make several other improvements in addition to the
ADA requirements, at a cost over and above the $100,000 estimate mentioned above. Staff
is recommending the lease be amended to provide for Mr. Lozares to construct improvements
that are considered the City’s responsibility. Those facilities and systems, and related
implementation costs include the following: .
3.
4.
5.
Americans with Disabilities Act improvements for access ramp and restroom
requirements
Clubhouse roof replacement
Installation ot" structural support piers
Security system
Upgrade and improvement of the fire alarm system and installation of a fire
sprinkler system
Replacement of the concrete breeze-way
On-site construction manager.
Most of the additional improvements identified can be funded from existing CIP budget
appropriations. Mr. Lozares would be reimbursed as work is completed and documented
proof of the actual costs has been received by City staff. The use of Mr. Lozares’ contractor
will expedite the entire process and provide a smoother transition for the golf community.
ADA requirements: The remodeling work has triggered additional exterior
work to comply with ADA requirements. Specifically, the public drinking
fountains, public rest rooms, and clubhouse access ramp will need to be
CMR:440:98 Page 3 of 7
retrofitted. Those improvements lie outside the tenant’s lease area and are the
City’s responsibility. Staff proposes to use funds in CIP 19309 (Americans
with Disabilities Act of 1990 Compliance) to reimburse Mr. Lozares for the-
costs associated with ADA compliance. Cost to construct the ADA
requirements is $190,000, which is .$90,000. higher than the estimate given to
Council with the lease agreement. The main reason for the increase is a more
precise estimate based on actual material and labor costs, as well as additional
work to meet design and code requirements.
Roof: The golf shop expansion will add additional roof area that will require
the new roof to be blended with the existing roof. Funds were budgeted in
CIP project 19514 (Facility Roof Replacement) to replace the entire Golf
Course Clubhouse roof in fiscal year 1998-99. The tenant and staff agree that
it would be expeditious to have one contractor replace the entire roof. The
tenant will use his contractor and the City will reimburse the tenant from the
CIP funds for its share of the roof project. The roof work will include
installing skylights for each restroom and removing and repairing the solar
system. Cost of the roof replacement and related items is $43,000.
Additional improvements totaling $163,000 cannot be accommodated within
existing budget appropriations. Staff recommends shifting funds from the
current year golf course debt service budget, as there are one-time savings this
year. Because the City re-financed the existing 1978 golf course bonds when
it issued new Certificates of Participation in August of this year, it realized a
one-time debt service savings as the regular September payment was covered-
through the refinancing. A total of $200,000 in one-time savings will be
realized this year. Staffreco .mmends using those one-time savings as shown
below, returning the remainder to the General Fund Budget Stabilization
Reserve.
Structural Piers: The exterior walls of the golf shop are being expanded in the
front and rear of the existing structure. Prior to construction£ the contractor
was required to install 19 metal piers beneath the ground to support the walls.
The piers were not included in the original estimate and are considered basic
to the exterior support of the entire structure. Cost of the piers is $33,000.
o Security System: The security system for the entire facility is provided by the
City, and serviced monthly at tenant cost. The remodel of the golf shop will
require the system to be updated and expanded. Staff would prefer that the
City retain ownership to the system and the tenant continue the monthly
maintenance. Cost of the security system is $33,000.
CMR:440:98 Page 4 of 7
Sprinkler and Fire Alarm Systems: Current Fire Code requires the golf shop
and the restrooms to be sprinklered. The cost of installing a new sprinkler
system was not included in the original estimate. This system is considered
integral to the safety and security of the entire facility and will also meet
current Fire Code requirements. In addition, the existing fire alarm system has
caused several false alarms during the past few years. Staff feels this is an
excellent opportunity to update and expand the fire alarm system. Staffwould
propose that the City retain ownership to both systems, the tenant pay any
monthly maintenance fees. Cost associated with the new sprinkler system and
upgrade of the fire alarm system are $55,000.
Breeze-way walkway: The breeze-way walkway, located between the golf
shop and the golf course restaurant, has worn to the point that it is now a safety
hazard. Staff feels this is the opportune time to replace the existing concrete
slab with a new concrete walkway, at a cost of $22,000. ¯
On-Site City Construction Manager: Staff is recommending an on-site City
construction manager during construction to serve as the point of contact
between the City and the contractors, to ensure that the construction is built in
conformance with the construction drawings, to handle last minute changes
and generally oversee construction of both the tenant and City improvements.
The cost to provide an on-site manager is approximately $20,000.
Unrelated tO the clubhouse improvements, the City’s Administrative Services Department
budgeted funds for a cash receipting system for the Revenue Collections counter, Animal
Shelter, and golf course. The Management Agreement with Mr. Lozares includes references
to the City’s purchasing a cash receipting system. Since the time of the Agreement’s signing
however, Mr. Lozares has found an integrated point’of-sale system that also contains a golf
round reservation system and an inventory system that suits his business needs better than
the City’s cash receipting system. His point-of-sale system satisfies City audit and reporting
needs, for City revenues collected by Mr. Lozares at the golf course. Stafftherefore proposes
reimbursing Mr. Lozares for the cost of the cash receipting system it would have purchased
itself for the golf course. The cost of the City’s share of the system is half of the total cost,
or $12,000. That is equivalent to what the City budgeted in CIP 18614, "Financial Database
Upgrade" for a point-of-sale system at the golf course. In order to reimburse Mr. Lozares,
the attached BAO requests Council approval to move funds from CIP 18614 to the
Administrative Services operating budget. Amendment One to the Management Agreement
with Mr. Lozares is also attached to this staff report. It modifies the language of-the
provisions that deal with ownership of the point-of-sale system at the golf course.
CMR:440:98 Page 5 of 7
Amendment One..to the Lease Agreement
Amendment One to the lease increases the cost associated with the expansion and perrrfits
Mr.. Lozares to construct and be reimbursed for the City improvements described above.
Council approval is needed to increase the City share-of clubhouse expansion costs from
$150,000 to $200,000 over the 15-year term of the lease. These costs, unlike the costs for
City facilities and systems, are being shared between the City and Mr. Lozares. While Mr.
Lozares will be the primary beneficiary from additional retail space, the City as well will
realize two benefits. First, to the extent retail sales increases, the City will receive more lease
revenue. Second, to the extent a more successful pro-shop generates more golfmg business,
City green fee and driving range revenues should also increase.
The City would reimburse Mr. Lozares for 50 percent of the construction costs for the
expansion work, the total of which is now estimated to be $400,000. Although Mr. Lozares
has worked with the architect and the contractor to modify plans and use less expensive
materials, the total co~ts for the golf shop expansion have grown from an estimate of
$300,000 to $400,000. The estimate for the shared cost has increased, due to additional work
required to meet current Code requirements and a more precise estimate, based on actual
material and construction costs.
The City’s increase from $150,000 to $200,000 would be funded over the 15-year term of
the lease in the form of an additional rental credit. That credit would reduce the amount of
rental income by $1,190 per month, once construction is completed in approximately March
1999. For the remaining three months of fiscal year 1998-99, therefore, the City would
forego $3,570 in lease revenue. The attached BAO reflects this revenue loss.
Amendment One to Management Agreement
Amendment One to the Management Agreement removes any reference from the Agreement
of a City-furnished cash receipting system.
RESOURCE IMPACT
The attached BAO results in a net return to the General Fund Budget Stabilization Reserve
of $33,430. This consists of one-time debt service savings of $200,000, less additional costs
for clubhouse remodeling work of $163,000 and $3,570 in foregone lease revenue earnings.
While this return to the General Fund is one-time in nature, there will be future year ongoing
revenue losses to the General Fund of $14,280 per year for the next 15 years due to the
reduction in the lease revenue. This future year cost is identified on Attachment B which
summarizes the BAO’s approved to date in 1998-99 that impact the General Fund Budget
Stabilization Reserve and estimates future year ongoing costs associated with BAO’s
CMP,:440:98 Page 6 of 7
approved to date. This information is provided to project future resource needs from the
General Fund for those programs approved after the adoption of the 1998-99 Budget.
POLICY IMPLICATIONS
This report is consistent with past Council action and Policy and Procedures 1-25,
"Public/Private Partnerships." .This policy encourages the development of public/private
partnerships to provide services, facilities or capital projects for the community’s benefit.
ENVIRONMENTAL REVIEW
Staff has determined that the golf shop remodel work is exempt from CEQA, pursuant to
Sections 15301 (Existing Facilities) as it is considered a minor change to an existing project.
ATTACHMENTS
Attachment A - Budget Amendment Ordinance
Attachment B - Budget Amendment Ordinances Impacting General Fund Reserves
Approved To Date in 1998-99
Attachment C - Amendment No. 1 to the Management Agreement
Attachment D - Amendment No. 1 to the Lease Agreement
PREPARED BY:William W. Fellman, Manager, Real Property
APPROVED BY:
CITY MANAGER APPROVAL:
CC:Brad Lozares
C.ARL YE~ . Services
~ity Manager
CMR:440:98 Page 7 of 7
ATTACHMENT A
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING THE BUDGET FOR THE FISCAL YEAR 1998-99 TO
PROVIDE FUNDING FOR VARIOUS GOLF COURSE CLUBHOUSE
AND RELATED IMPROVEMENTS OFFSET BY A REDUCTION IN
DEBT SERVICE PAYMENTS RESULTING IN A RETURN TO THE
GENERAL FUND RESERVES OF $33~430
WHEREAS, pursuant to the provisions of Section 12 of
Article III of the Charter of the City of Palo Alto, the
Council on June 22, 1998 did adopt a budget for fiscal year
1998-99; and
WHEREAS, the City has a lease agreement with Brad Lozares
for ~a golf pro shop at the golf course; and
WHEREAS, in the current lease agreement, the City agreed
to reimburse Mr. Lozares for up to half the costs incurred by
him for the cost of constructive improvements to the pro shop;
and
WHEREAS, during the design phase for the clubhouse.
expansion various structural and other related required
improvements to the golf course clubhouse were identified, and
which were not foreseen at the time the lease was .executed;
and
WHEREAS, these improvements are structural and/or to the
exterior of the clubhouse, and are therefore the City’s
responsibility to correct, as the owner of the clubhouse; and
WHEREAS, both the City and Brad Lozares will benefit
financially from an expanded clubhouse retail operation; and
WHEREAS, the refinancing of the previous, outstanding golf
course bonds will result in a one-time savings to the General
Fund, which can be used to fund these improvements; and
WHEREAS, in addition, the City has agreed to allow the
golf professional to buy a cash receipting/point of sale and
inventory system for his operations at the golfcourse that
will also meet the City’s reporting and revenue monitoring
needs for City revenues collected at the golf course (green
fees, driving range revenue, and equipment rentals), and to
share in the cost of such system; and
WHEREAS, the City had already budgeted funds in the
capital improvements budget to acquire a new cash receipting
system at the golf course itself which can be used to fund the
City’s share of the golf professional’s system; and
WHEREAS, the return of $33,430 tO ~the City’s General Fund
Budget Stabilization Reserve is oneUtime in nature, and future
year ongoing revenue losses to the General Fund will be
$14,280 per year for the next 15 years due to the reduction in
the lease revenue; and
WHEREAS, City payment for the additional structural
improvements and the cash receipting system will require an
amendment to the Adopted Fiscal Year 1998-99 Budget, as
hereinafter set forth.
NOW, THEREFORE, the Council of the City of Palo Alto does
ORDAIN as follows:
SECTION i. The sum of $200,000 is hereby reduced from General
Fund transfers to the Debt Service Fund and the Debt Service
Fund expenditures are reduced accordingly.
SECTION 2. The sum of $163,000 is hereby appropriated to the
~Property Management" Functional Area in the Administrative
Services Department Budget .and the Debt Service Fund is
reduced accordingly. ~
SECTION 3. The sum of $12,000 is hereby appropriated to the
~Money Management" Functional Area in the Administrative
Services Department Budget, and the appropriation for the
~Financial Data Base" Capital Improvement Project (number
18614) is correspondingly reduced to an unspent balance of
$i08,408~
SECTIQN 4. The sum of $3,570 is hereby reduced from Rental
Revenue from the Community Services Department operating
budget.
SECTION 5. The transactions approved in Sections 1-4 will
result in a netaddition to the Budget Stabilization Reserve
of $33,430.
.$ECTION 6. As specified in Section 2.28.080(a) of the Palo
Alto Municipal Code, a two-thirds vote of the City Council is
required to adopt this ordinance.
SECTIQN 7. The City Council approved a Mitigated Negative
Declaration for the golf course improvement project itself in
May 1995 (CMR:248:95). The Mitigated Negative Declaration’
determined that any potential impacts can be mitigated to
levels of less than significance and will be incorporated into
the design of the project.
SECTION......8. As provided in Section 2.04.350 of the Palo Alto
Municipal Code, this ordinance shall become effective upon
adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:APPROVED:
City Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
Mayor
City Manager
Director of Administrative
Services
Attachment B
Budget Amendment Ordinances Impacting General Fund Reserves Approved To Date in 1998-99
Estimated Beginning Budget Stablizafion Reserve (BSR)
Balance $19,050,000
Reduction in Rental Income from Utilities Due to Relocation of
Utilities Engineering and Creation of Capital Improvement Project
19921, Relocation / Consolidation of Level A Storage
Increase in the City’s Annual Rental Payment to the Pal0 Alto
Unified School District for Lease and Covenant Not to Develop for
an Extended Day Care Center at the New Hoover School Site
Salary and Benefit Increases Retroactive to May I, 1998 for
Classified Personnel (SEIU) *
Salary and Benefit Increase Retroactive to July 1, 1998 for Polic~
Personnel
Addition of Five Full-Time Positions and Associated Resources to
the Planning and Community Environment Department
Interim Historic Inventory Consultant
Interim Historic Regulations Administration
Phase I - San Francisquito Creek Bank Stabilization and
Revegitation Study
Reclassification of CDBG Position to Senior Planner Position
Acquire Leased Space and Cover Associated Support Costs for a
One-Stop Development Center at 285 Hamilton Avenue
Recruitment Assistance
Formation of Library Advisory Commission
Golf Course Clubhouse and Related Improvements
Salary and Benefit Incieases Retroactive to July 1, 1998 for
Management and Confidential Employees
($231,700)($231,700)($221,000)
($34,792)($34,792)($36,000)
($260,000)($260,000)($702,000)
($182,200)($182,200)($265,000)
($488,364)$300,000 ($188,364)
($437,400)($437,400)
($269,600)($269,600)
($112,500)($112,500)
($7,400)($7,400)
($507,000)($507,000)
($60,000)($60,000)
($22,500)($22,500)
$33,430 $33,430
($334,000)($334,000)
($410,743)
($370,000)
($14,280)
($624,900)
BSR Balance After BAO’s $16,435,974
* The estimated increase for the SEIU agreement in 1999-2000 is the cumulative increase beyond the 1998-99 Adopted Budget.
11/17/98
ATTACHMENT C
AMENDMENT NO. 1 TO THE MANAGEMENT AGREEMENT # 211 BETWEEN
THE CITY OF PALO ALTO AND BRAD LOZARES FOR PROFESSIONAL
SERVICES AT THE PALO ALTO MUNICIPAL GOLF COURSE
THIS AMENDMENT to the Management Agreement between the City of Palo Alto and Brad
Lozares, dated i, hereinafter referred to as "Agreement," is made and entered into this
~ day of~, 1998, by and between the City of Palo Alto, a municipal corporation,
hereinafter referred to as "City" and Brad Lozares, hereinafter referred to as "Golf Professional;"
RECITALS
A.The lease requires Golf Professional to use the City’s cash receipting system.
Golf Professional proposes to purchase a system that is specifically designed for golf
shop sales but will still preform the functions required for City green and driving range
fee collection and provide accurate record keeping to the City; and City agrees to allow
Golf Professional to use its own system, and to amend the Agreement accordingly.
NOW THEREFORE, in consideration of their mutual covenants and agreements, the parties
hereto agree as follows:
SECTION 1 SECTION V (RECORDS AND ACCOUNTS), paragraph A, subparagraph 4b is
amended to read as follows:
b)transmit daily revenue activity recorded on ~aPProved ~ cash
receipting syst _1 .....:-.11.. to ":’-"- -^:-~---- m~ut
City Hall;
SECTION 2 SECTION V (RECORDS AND ACCOUNTS), paragraph B is amended to read
as follows:
B. Records. Golf Professional shall, at all times during the term of this
Agreement, keep or cause to be kept tree and complete books, records, and
accounts of all financial transactions conducted in the operation of all business
activities, of whatever nature, conducted pursuant to the rights granted herein.
The records, books and accounts shall be kept or made available to City at a
location within Santa Clara or San Mateo County. The records must be supported
by source documents such as cash register tapes, purchase invoices, or other
pertinent documents. Except as may be otherwise provided by this Agreement, all
charges shall be recorded by means of a cash register or recording device t~oe
~uppllcd by City which displays to the customer the amount of the transaction and
automatically issues a receipt. The registers shall be equipped withdevices which
lock in transaction records, or with counters which are not resettable and which
record transaction numbers. Totals registered shall be read and recorded at the
beginning and end of each day.
SECTION 3 SECTION V (RECORDS AND ACCOUNTS), paragraph 8 page 8 and
paragraph I page 9 are amended to read as follows:
Golf Professional agrees to use a cash receipting system that is supplied by, or
approved by the City, and to take appropriate steps to keep the system in good
runnin~ der ": ............. ~ .... : ............. ~-- "~- ........ "~-^’~
~. GoN Professio~ ~er a~ees to cooperate M~ Ci~ ~
~g Ci~ approved erect c~d ~or debR e~d aceep~ee. GOLF
PROFESSION~ ~ees to ~e appropriate ~d reportable, colony prae~eed
steps to e~e ~t ~y pa~en~ made for se~ees by pe~onN e~eek or by cre~t
or debit c~d ~e vNid ~d legi~ate.
.SECTION 4 Except as herein modified, all other provisions of and exhibits to the Management
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year
first above written.
CITY OF PALO ALTO BRAD LOZARES
Mayor Golf Professional
ATTEST:
City Clerk
APPROVED AS TO FORM:
¯ Senior Assistant City Attorney
APPROVED:
City Manager
Director of Administrative Services
Director of Community Services
ATTACHMENT D
AMENDMENT NO. 1 TO LEASE # 211 BETWEEN THE CITY OF PALO ALTO
AND BRAD LOZARES FOR THE PALO ALTO MUNICIPAL GOLF COURSE
PRO-SHOP
THIS AMENDMENT to the Lease between the City of Palo Alto and Brad Lozare~, dated ~,
hereinafter referred to as "Lease," is made and entered into this ~ day of " ,1998, by and
between the City of Palo Alto, a municipal corporation, hereinafter referred to as "City" and Brad
Lozares, hereinafter referred to as "Tenant;"
RECITALS
Section XVII-A provides for the City to reimburse Tenant for up to one-half the cost of
the construction for tenant improvements to the Pro-shop, not to exceed $150,000.
City and Tenant agree that the cost of the improvements has increased due to code
requirements and other engineering considerations.
City and Tenant agree that the City’s share of the reimbursement should be increased to
to an amount not exceed $200,000.
Do City and Tenant agree to jointly fund the cost of a cash receipting system for Tenant’s
operation at the Golf Course; and
Eo City and Tenant desire to amend the Lease to provide for the increase in the
reimbursement for tenant constructed improvements and for funding of a cash receipting
system.
NOW THEREFORE, in consideration of their mutual covenants and agreements, the parties
hereto agree as follows:
SECTION 1 SECTION VII (INVENTORY BUY OUT), the first paragraph, is amended to
read as follows:
Upon expiration or earlier termination, TENANT agrees to cooperate with any
successor golf professional regarding sale of its remaining invemory, ~elu~g
the ~ receipting ! CITY agrees to include a clause in any successor
lease requiring the successor golf professional’s cooperation with TENANT.
Should TENANT and any successor golf professional not agree on a sale and
purchase of the remaining inventory and ~_eash re~ipting within 30 days of
successor announcement of the selection of the golf professional, CITY and
TENANT agree that CITY will purchase the remaining inventory and
~iptingsyste~om TENANT provided that:
SECTION 2 SECTION VII (!NVENTORY BUY OUT), paragraph D, is added to read as
¯ follows:
SECTION 3
Co
.SECTION 4
Ao
Cash Receipting System- City agrees to reimburse Tenant for its pro-rated share
of tlae cost of the cash receipting system, should Tenant no longer provide services
at the golf course. City and Tenant agree that .the value of the cash receipting
system as of the date of this amendment is $24,000. City and Tenant agree to use
a prorated straight line depreciation with a 10-year economic life expectancy for
the cash receipting system in order to determine the amount of the Golf
Professional half interest at the time of the inventory buy out.
SECTION XVI (EQUIPMENT TO BE PROVIDED BY TENANT) subparagraph
C deleted in its entiretyand replaced to read as follows:
Tenant shall provide a cash register or related cash receipting system. City will
pay as reimbursement to Tenant one-half the cost (not to exceed $12,000) of the
cash receipting system. Reimbursement will be made within 30 days after the
computer system has been installed and the Tenant has provided proo£of.actual
costs. Tenant shall keep receipts for accepting payments for merchandise sales
and.other incidental sales and golf course equipment rentals separate from golf
round fees, driving range fees, and equipment rental receipts that are collected by
the GOLF PROFESSIONAL under the Management Agreement ( See Section
XIII RECORDS AND ACCOUNTS).
SECTION XVII (CONSTRUCTION AND/OR ALTERATION BY Tenant),
paragraph A is amended to read as follows:
CAPITAL IMPROVEMENTS. On May 15, 1995 the Palo Alto City Council
approved a master plan for the golf course. The master plan includes various
proposed projects for remodeling and improving the Golf Course facilities that
will better service the needs of the golfers. (Pro-shop expansion and additional
cart storage.) Tenant may choose to participate in the Pro-Shop and the additional
cart storage expansions by funding and constructing those improvements, with
City’s written approval, under City supervision and in conformance with the
City’s bid procedures. Once the project is completed and Tenant has provided
documented proof of the actual costs, City agrees to reimburse Tenant for one-
half the costs. Tenant’s reimbursement will be in the form of a no-interest rent
credit rendered in equal monthly amounts over the remaining term of the Lease,
commencing on the second full month after completion of the project. City’s
share of the reimbursement shall not exceed $150,990 $200,000, and the project
must be completed within the first five years of the initial lease term. Should the
Lease be terminated as defined in paragraph XXVI, subparagraph B (Termination
of Lease), City will reimburse Tenant for the outstanding balance of City’s share
at time of termination. Notwithstanding any provisions of this clause, if Tenant
2
SECTION 5
wishes to make improvements that are not covered in the Master Plan and the City
does not wish to participate, Tenant may, upon necessary .approvals from City,
plan and implement capital improvements solely at its own cost.
Tenant and City acknowledge that the expansion of the Pro-Shop will require
certain facilities and systems to be installed, improved and remodeled to meet
current code compliance and to be compatible with the Pro-Shop expansion.
They include the Clubhouse roof replacement, requirements to meet current
Americans with Disabilities Act, installation of structural support piers, upgrade
and improvement of the current security system, replacement of the fire alarm
system, installation of a fire sprinkler system, restroom repair and remodel and
replacement of the breeze-way walkway. The cost to improve these City
facilities and systems is estimated to be $400,000. Tenant and City agree that
Tenant shall construct these City improvements and systems at the same time the
Pro-Shop is remodeled and that City will reimburse Tenant for the full cost of
such improvements, up to the amount of $400,000. Tenant will be reimbursed as
work is completed and Tenant has provided documented proof of the actual costs.
Tenant agrees to comply with all the other terms and conditions of this lease,
pertaining to construction of the City improvements.
Except as he.rein modified, all other provisions of and exhibits to the Lease shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year
first above written.
CITY OF PALO ALTO BRAD LOZARES
Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
Senior Assistant City Attorney
APPROVED:
City Manager
Director of Administrative Services
Director of Community Services
4