HomeMy WebLinkAbout2/16/2000 - STAFF REPORTS (2) DATE: February 16, 2000
TO: City Council
FROM: Director, Department of Facilities
PALM SPRINGS TENNIS CENTER AGREEMENT
RECOMMENDATION:
That the City Council enter into a lease with Collas Enterprise, Inc. for the operation of the Palm
Springs Tennis Center, located at 1300 E. Baristo Road, for a term of six years with two two-year
options, and allocate funds in the amount of$35,000 for facility improvements.
BACKGROUND:
In August 1974, the City entered into a lease agreement with the Palm Springs Unified School
District for seven (7) acres of unimproved land for the development of a municipal tennis complex.
The term of the agreement is 36 years, terminating in 2010. Provisions of the agreement require
option renewal every three(3)years. The current option renewal period expires July 30,2001. The
annual cost to the City for the lease is $150.
Records indicate that the Palm Springs Tennis Center(PSTC)was constructed and developed by
the City of Palm Springs at a cost of approximately$250,000 in 1975 Since its opening, PSTC has
been operated at various times by both City staff and several private operators. An analysis of
departmental records indicate that total operating revenues since 1975 for the City have been
$121,500, while expenses, without depreciation, have totaled $79,750.
In April 1985, an independent audit and analysis of the City's leasehold interest in the PSTC
property was commissioned by the City's Real Property Agent. This analysis was performed by
R. F. Sweet & Associates, who determined that the "probable mean value" of the property and
improvements was$1,163,000(property-$913,500; improvements-$250,000). In today's dollars,
this value would obviously be somewhat higher.
All nine courts are in need of resurfacing to bring them up to acceptable standards for leasing to an
operator. Additionally, due to a leaking roof, which is now repaired, the building's interior ceiling
needs to be replaced and the facility needs painting. Court resurfacing is expected to cost$25,000
and an additional $10,000 is being requested to repair the building's interior and paint the facility.
Therefore, the total repair estimate is $35,000.
Earlier this year, the facility's previous operator was evicted for failing to make annual lease
payments. Upon doing so, the City, through the Procurement Division's RFQ and RFP processes,
selected a potential operator and began negotiating an agreement.The proposed operator, Collas
Enterprises, Inc.(CEI), currently operates and manages three other public or semi-private facilities
in the United States. From 1983 to the present, it has operated Silver Sands Racquet Club in Palm
Desert, California. Since 1991, it has managed Montauk Racquet Club in Montauk, New York. In
1997, it began management operations for the State of New York at the Montauk Downs State Park
Tennis Facility.
The proposed agreement stipulates that the City initially would bring the facility into acceptable
condition by making the aforementioned improvements. Future upkeep would be the responsibility
of the tenant.
At the recent January 26 Study Session, a report was presented to the City Council that analyzed
historical PSTC operations and made certain assumptions for projected revenue to the City of Palm
Springs. This data was the best available at the time and based upon information provided by CEI
from its original RFP submittal.The revenue projections were extended forward using the operating
budget presented for the first year's cost of operations only.Additionally, CEI did not include in this
first year's operating budget any realized revenue from league play or tournaments, as it will be in
the business development phase.This was an oversight by staff in the Study Session presentation.
Afterdiscussing this issuewith the proposed operator,a subsequent pro-forma has been developed
(see attached) for City Council's consideration. Staff initially determined that there would be little,
if any, pay back to the City over a five-year term based upon the revenue projections presented on
January 26. Since that time, staff analyzed the attached seven-year pro-forma from CEI and 1A
determined that a full recovery of capital investment is expected to be attained within the sixth year
of the agreement and that$24,933 in net revenue to the City is expected to be realized within seven
years, as the attached pro-forma indicates.
JAX
REVENUE TO CITY
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Lease Amount 5,199 12,510 13,551 14,442 15,372 16,303 17,206
Total Revenue to City =$94,583
EXPENSES TO CITY
Operations and
Maintenance 4,800 4,800 4,800 4,800 4,800 4,800 4,800
PSUSD Lease 150 150 150 150 150 150 150
Capital Expense 35,000 0 0 0 0 0 0
Totals 39,950 4,950 4,950 4,950 4,950 4,950 4,950
Total Expenses to City=$69,650
Net Income Loss to Cit =$24 933
In addition to the standard language provided in the agreement, the following deal points are being
recommended:
1. TERM: Based on the length of the agreementwith the school district and as a business decision,
the agreement is for a period of six (6) years with two (2) two (2) -year options for extension.
2. COMPENSATION:The tenant shall pay the City$500 per month or 5%of gross revenue for the
first year of the lease, and$750 per month or 7%of gross revenue for the second year through
the sixth year.
3. MAINTENANCE: The City shall be responsible for and maintain the roof, exterior, HVAC, and
the basic structure of the PSTC and tennis court slabs as are existing at the time of the
execution of the agreement. The tenant shall be responsible for all other maintenance, repairs
and replacement. Landscape maintenance will be split 50/50 between the City and the tenant.
4. UTILITIES: The water will be split 50150 between the City and the tenant. The tenant shall be
responsible for all other utilities.
5. CONSTRUCTION AND IMPROVEMENTS.Tenant will resurface, to a condition satisfactory to
the City, all nine (9)tennis courts beginning the fifth year of the lease and before the end of the
sixth year of the lease. Any and all improvements affixed to the premises shall become the
property of the City upon termination of the agreement
6. PUBLIC FACILITY: Tenant shall operate the PSTC as a public facility, open for use to anyone
Who pays court fees as established by tenant and approved by the City.
At its November 17, 1999 meeting, the Parks and Recreation Commission voted 5/1 to recommend that City
Council approve the agreement between the City and CEI.
S TT MI ELL, Director
Department of Facilities
t'1E GOfrL PJ6=
APPROVED: y'
Interim City Manager � L
ATTACHMENTS:
1. Pro-Forma from Collas Enterprises, Inc.
2. Letter from Collas Enterprises, Inc.
3. Agreement
4. Resolution Amending 1999/2000 Budget
5 Minute Order
COLLAS ENTERPRISES,INC.
REVENUE
2000 2001 2002 2003 2004 2005 2,006
Court Fees $ 51,300 $ 56,430 $ 60,380 $ 63,400 $ 66,000 $ 68,500 $ 70,500
Memberships 4,800 5,100 5,400 5,600 5,800 6,000 6,200
Lessons 36,250 42,250 45,500 47,000 48,500 50,000 51,500
Jr. Clinic 7,800 9,800 10,300 11,500 12,500 13,400 14,100
Adult Clinic 8,640 10,000 11,000 12,000 13,000 14,000 15,000
Tournament 12,000 13,500 15,000 16,500 18,000 19,500
Shop Sales 37,500 43,200 47,500 52,100 57,300 63,000 69,000
TOTAL REVENUE S 146,290 $ 178,780 $ 193,580 S 206,600 S 219,600 S 232,900 $ 245,800
EXPENSES
Rent $ 5,199 $ 12,511 $ 13,552 $ 14,442 $ 15,372 $ 16,303 $ 17,206
Utilities 5,100 5,610 6,000 6,300 6,700 7,100 7,500
Phone 2,000 2,200 2,400 2,600 2,900 3,000 3,200
Insurance 2,500 2,700 2,900 3,100 3,300 31600 3,900
Advertising 2,600 3,000 3,200 3,200 3,400 3,700 4,100
Flyers/Brochures 3,000 2,000 2,000 2,000 2,500 3,000 3,500
Licenses/Dues 600 600 650 650 675 700 750
Fixtures 600 600 300 200 300 300 300
Office Supplies 1,000 1,000 1,100 1,100 1,200 1,300 1,400
Merchandise 30,000 31,500 33,000 34,500 36,500 38,500 41,000
Lessons(Independent Contractor) 23,100 31,500 31,700 31,900 33,950 35,000 36,000
Clinics,Jr. 4,320 4,500 4,700 4,900 5,400 5,900 6,400
Court Washer 3,072 3,072 3,400 3,400 3,800 3,800 4,000
Manager 12,000 14,000 16,000 18,000 20,000 22,000 24,000
Payroll 28,800 28,000 29,000 29,000 30,000 31,000 32,000
Payroll Tax 8,000 8,400 9,000 9,400 - 10,000 10.600 11,200
TOTAL EXPENSES $ 131,891 $ 151,193 S 158,902 $ 164,692 S 175,897 S 185,803 S 196,456
/ 4Y COLLAS ENTERPRISES,
INC.
Servicing the residents of Palm Spring.
Junior Clinics are important to us because,luniois are an important part of the commumty. We will be
offering several different types of programs at different times for all ages, ability and income level.
These clinics will be held during the week as well as weekends and holidays. We will spend extra
care and time with ourjunior development program. Out juniors will be placed by ability level in
P 0 Box 13044 regular groups and advanced levels. We like to begin our Junior kids in the age range of 5 to 6 years
Palm ocscu,CA 92255-3044 old. This is our pee wee group and very important to start ourjuivors young for excellent stroke pro-
Phone' (760) 345-5343 ductto
n and good social skills. Ow advanced juniors are taught mental skills as well good stroke tech-
Fax: (760)3�45-5343 pique. Our junior program will include 5 years of age to 18 Ourjunior programs and teaching are of a
E-mail High quality learned through forty years of teaching
ELCOLLAS@aol.com Servicing the local residents by offering working adults leagues and clinics scheduled before and after
WO
rking hours The above program will be priced at a fee that all residents of the city can afford. The
tennis complex will be open all year round notjust seasonal. Other facilities in the area do not offer a
full variety of services with the quality for all income levels that Callas offers.
Hotel
We will hold national benefits and charities for the city. Sanctioned USTA tournament for adults and
juniors
By offering corporate clinics and tournaments packages, adult week clinics and weekend getaway
packages we will help the hotels and business owners in our community.
Tennis Shop
We will have a discount store with a wide variety of brands. Presently you can only buy tennis equip-
ment from Big 5 sporting goods store or from a tennis shop at a club Pahons either pay low amount
with no professional help or pay the full sale price at the tennis shop We will have a tennis shop with
merchandise at discount prices.
City Pride
The city should be proud of their parks and recreation facilities. Throughout the past 4 years, numer-
ous cities in the area have built state of the art tennis facilities, or have improved the present site and
hired concessionaire to run the tennis program. The city and the residents are quite proud of their
achievement Some of the cities are Chandler, AZ, Mesa, AZ, Gilbert, AZ and Monterey, CA.
Collas Enterprises,Inc.
Lease Agreement for Tennis Center
AGREEMENT#4200
M06575, 2-16-00 Related
LEASE
THIS LEASE ("Lease") is made and entered into this Jao— day of
llonvr+�- -CDC) by and between the CITY OF PALM SPRINGS, a
n cipal corp tion ("iandlord") , and Collas Enterprises, Inc.
("Tenant") .
1.0 LEASE SUMMARY. Certain fundamental lease provisions are presented
in this Section and represent the agreement of the parties hereto, subject to
further definition and elaboration in the respective referenced Sections and
elsewhere in this Lease. In the event of any conflict between any fundamental
lease provision and the balance of this Lease, the latter shall control.
References to specific Sections are for convenience only and designate some of
the Sections where references to the particular fundamental lease provisions may
appear.
1.1 Demised Premises. The "Demised Premises" shall refer to that
certain real property located in the County of Riverside, state of California,
as more particularly described in Exhibit "A" hereof together with the
improvements located thereon and as depicted on the Plot Plan attached as Exhibit
"B" hereof.
1.2 Lease Commencement.D3e.`—k_ -�, ��, Term: 6 years
(See Section 2.1) . T�
1.3 Extension Options. 2 options for a term of
2 years each. (See Section 2.2)
1.4 Monthly Rental. $ See Exhibit F • (See Section 3.1) .
Percentage Rental: % per month of Tenant's gross sales. (See
Section 3.2) .
1.5 Security Deposit. $ , N/A (See Section 3.10) .
1.6 Use of Demised Premises. Public tennis facility for pap
(See Section 4.1) .
1.7 Tenant's Address for Notices.
Collas F.nterorises, Inc.
P.O. Box 13 44
Palm Desert, CA 9 2 25 5-3 044
1.8 If Section 4.6 of this Lease relating to charitable leases
is applicable, please mark here If Section 4.6 is applicable, the fair
market rental value of the Demised Premises is $
2.0 TERM.
2.1 Initial Term. The initial term of this Lease shall commence
on the date specified in Section 1.2 ("Commencement Date") and shall continue for
the period specified therein unless earlier terminated as provided herein.
2.2 Option Term. Tenant is given the option(s) to extend the
term on all of the provisions contained in this Lease for the period specified
FS2%276\099999-3000%2022700A 03/05/98
�m�a
March 13, 2000
Collas Enterprises, Inc.
P.O. Box 13044
Palm Desert, CA 92255-3044
Dear Mr. Collas:
Attached is one executed copy of the agreement regarding the lease between Collas Enterprises,
Inc., and the City of Palm Springs, approved by the City Council on February 16, 2000, by Minute
Order No. 6575. Agreement 94200.
Certificates of Insurance should be provided, naming the City of Palm Springs as an additional
insured, for General Liability for $1,000,000 CSL; Personal Property for full replacement value;
and Worker Compensation in Califonua Statutory requirements. Further, the cancellation clause
shall state as follows: Should any of the above-described policies be canceled before the expiration
date thereof, the issuing company will mail 30 days written notice to the certificate holder named to
the left.
Should you have any questions,please let me know.
Sincerely,
PATRICIA A. SANDERS, CMC
City Clerk
cc: Parks &Recreation w/agreement
Finance w/agreement
PROOF OF PUBLICATION This is space for County Clerk's Filing Stamp
(2015.5.C.C.P)
STATE OF CALIFORNIA
County of Riverside
I am a citizen of the United States and a resident of Proof of Publication of
the County aforesaid; I am over the age of eighteen -- — - - -
years,and not a party to or interested in the NO.633
above-entitled matter.I am the principal clerk of a Ciry OF PALM SPRINGS CALIFORNIA
RFOLIEST FOR LETTERS OF INTEREST AND
printer of the,DESERT SUN PUBLISHING STATEMENTS OF QUALIFICATIONS
COMPANY a newspaper of general circulation, (soQ m M STEP I
printed and published in the city of Palm Springs, PALM SPRINGS TENNIS CENIEk(
OPERATION OF THE
County Of Riverside,and which newspaper has been NOTICE IS HEREBY GIVEN mat this City of Paln,
adjudged a newspaper of general circulation by the Springs is soliciting Proposals from interested and
cIu Spngs Tennis
n
Superior Court of the County of Riverside,State of Canteo,ilih.d firms to operate The Palm located at 1300 Fast earisto Road. Copies
California under the date of March 24, 1988.Case of the Step I document, SOO 07-99, are available
at the addresses below or by tolep hone request.
Number 191236;that the notice,of which the The;,;is no charge for maarng this document to in-
annexed is a printed co set in a not smaller Wrested firms.
P copy type SIRFEI" ADDRESS
than non panel,has been published in each regular CIF'.' OF PALM SPRINGS
and entire issue of said newspaper and not in an ATTN" Procurement Manager
y 3200 E Tahquil: Canyon Way
supplement thereof on the following dates,to wit: Pain, Spnnr s, CA. 92262
PHONE: (7b10) 323-8239
May 28th MAILING ADDRESS
y P O. Be; 2743
—---—------_----—____-------------— _ Palm Springs, CA 92263-2743
----'-- Responses receivod which are not in conformance
with the instructions outlined in [he City's SOO
—_—_—-------------—-----
-- ——------------ ---_ document may be rejected as non-responsive.
These snbmitting proposals do so enmely at Iheir
expense There is no expressed not implied obligs-
All in the year 1999 tion by the City to reimburse any firm or Individual
for any costs i j•red in prepanng ci sulin"Wng
c propcal,,-papanng'or subbmatmq additional Infor-
1 certifyor declare under penalty of perjury that the mab.+n requested by th,`City, or for participating in-
P h' P J �' any selection Interviews.
foregoing is true and correct. The purpose or this Req nest for Letters of interest
3rd and S¢dercl bits of Oual Woollens r to pre-quaiiry
nceresred and quarried time firms for Step If of the
Dated at Palm Springs,California this----------day process which will miude the submission or meth-
June ecologies, plans, time lines, costs and other relev-
ant Ini'm metion Only those firms ire-qualified in
-------------------1999 this Step I process will he allowed [o particopa[e in
Step II "ihe City may elect to conduct Step II as
D 'DL (RaILIssrP10l For Proposal) process
DEADLINE: Pro Cosa t must he received .1 the
Procurement the
nt Office at .he street address above
--'--'----'- pplhol to P.M. I deadline of is the, June 11, y of at
Signature Offoris local thin.. It is the al se nsrbdrty or the
Offeror to ^ee that any proposal sent through the
mall shall have sufficient time to bb roe erili by
this sppecified date and time Tole( be co phon-
Ic or lacsnnlle(Pax) proposals well not be accepted
EVALUATION OF SUBMITTALS: Responses to
[his SOO received by the due date will be evaluat-
ed by en Fvaivation Committee to determmc oh.r-
bohty to proceed to Step If of this process. All sZ
mdtals, when sent to the Cny, becoe the pproper-
ty or 'h< City and well not be m
returned. Tho City
may at anv rime inDslyiv, or va llndi'aw 11,Is�'Pyn�=
for Letters of Interest and Statements or UUaIlilea=l
ions, reject all submittals, and/oi-teimmate negoti-
ations a discussions with any or all respondents
without recourse.
INSURANCE REQUIREMENTS: The successful
Offeror must ,.at all Insurance requirements of
tire City
Harold C. Good, CPPO
Date. May 2e, 1999 Procurement Manager
Publish._ Mav 2II. 1999
CITY OF PALM SPRINGS, CALIFORNIA
REQUEST FOR LETTERS OF INTEREST AND
STATEMENTS OF QUALIFICATIONS (SOQ 07- 99) - STEP I
FOR
OPERATION OF THE PALM SPRINGS TENNIS CENTER
NOTICE IS HEREBY GIVEN that the City of Palm Springs is soliciting proposals from interested and
qualified firms to operate The Palm Springs Tennis Center, located at 1300 East Baristo Road. Copies
of the Step I document, SOQ 07-99, are available at the addresses below or by telephone request.
There is no charge for mailing this document to interested firms.
STREET ADDRESS MAILING ADDRESS
CITY OF PALM SPRINGS CITY OF PALM SPRINGS
ATTN: Procurement Manager ATTN: Procurement Manager
3200 E. Tahquitz Canyon Way P. 0. Box 2743
Palm Springs, Ca 92262 Palm Springs, CA 92263-2743
PHONE: (760) 323-8239 PHONE: (760) 323-8239
Responses received which are not in conformance with the instructions outlined in the City's SOO.
document may be rejected as non-responsive. Those submitting proposals do so entirely at their
expense. There is no expressed nor implied obligation by the City to reimburse any firm or individual
for any costs incurred in preparing or submitting proposals, preparing or submitting additional
information requested by the City, or for participating in any selection interviews.
The purpose of this Request for Letters of Interest and Statements of Qualifications is to pre-qualify
interested and qualified firms for Step II of the process which will include the submission of
methodologies, plans, time lines, costs and other relevant information. Only those firms pre-qualified
in this Step I process will be allowed to participate in Step Il. The City may elect to conduct Step II
as an RFP (Request for Proposal) process.
DEADLINE: Proposals must be received in the Procurement Office at the street address above prior
to the deadline of Friday,June 11, 1999 at 5:00 P.M. local time. It is the responsibility of the Offeror
to see that any proposal sent through the mail shall have sufficient time to be received by this specified
date and time. Telegraphic, telephonic or facsimile (fax) proposals will not be accepted.
EVALUATION OF SUBMITTALS: Responses to this SOQ received by the due date will be evaluated
by an Evaluation Committee to determine eligibility to proceed to Step II of this process. All
submittals, when sent to the City, become the property of the City and will not be returned. The City
may at any time modify or withdraw this request for Letters of Interest and Statements of
Qualifications, reject all submittals, and/or terminate negotiations or discussions with any or all
respondents without recourse.
INSURANCE REQUIREMENTS: The successful Offeror must meet all insurance requirements of the
City.
Date: May 26, 1999
HAROLD E. GOOD, CPPO Publish: May 28, 1999
Procurement Manager
�r
MINUTE ORDER NO. % '
APPROVING A LEASE WITH COLLAS ENTERPRISE, INC. FOR THE
OPERATION OF THE PALM SPRINGS TENNIS CENTER,LOCATEDAT 1300 E.
BARISTO ROAD, FOR A TERM OF SIX YEARS WITH TWO TWO-YEAR
OPTIONS,
I HEREBY CERTIFY that this Minute Order, approving a lease with Collas Enterprise, Inc. for the operation
of the Palm Springs Tennis Center, located at 1300 E. Baristo Road, for a term of six years with two two-year
options, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on
the 16`h day of February, 2000.
BY: PATRICIA A. SANDERS
City Clerk
RESOLUTION NO. 19751
OF THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR
THE 1999-00 FISCAL YEAR.
WHEREAS Resolution 19541, approving the budget for the fiscal year
1999-00 was adopted on June 16, 1999; and
WHEREAS the City Manager has recommended, and the City Council
desires to approve, certain amendments to said budget;
NOW THEREFORE BE IT RESOLVED that the Director of Finance is
authorized to record inter-fund cash transfers as required in
accordance with this Resolution, and that Resolution 19541,
adopting the budget for the 1999-00 fiscal year is hereby amended
as follows:
SECTION 1. ADDITIONS
FUND Activity Account Amount
No. 261 2493 6XXXX $ 35,000
Title:
ti
Capital Projects Park Improvements Tennis Center
Capital Improvements
Purpose:
To provide funds for Tennis Center Improvements
SECTION 2 . SOURCE
FUND Activity Account Amount
No• 001 29301 $ 35,000
Title:
General Fund Fund Balance
Adopted this 16th day of February 2000
AYES: Members Hodges, Jones, Oden, Reller-Spurgin and Mayor Kleindienst
NOES: None
ABSENT: None
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By
City Clerk City Manager
REVIEWED AND APPROVED AS TO FORM
I