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Home My WebLink About2/7/2001 - STAFF REPORTS (17) DATE: February 7, 2001 TO: City Council FROM: Director, Department of Facilities PALM SPRINGS TENNIS CENTER RECOMMENDATION: That the City Council consider the Parks and Recreation Commission's recommendation that lease payments forthe operation of the Palm Springs Tennis Center be suspended for a total term of one year to allow Collas Enterprises, Inc. to build its business; or direct the City Attorney to commence proceedings declaring Collas Enterprises, Inc. in default of Lease, Agreement No. 4200, dated February 16, 2000. SUMMARY: At its February 16, 2000 meeting, City Council voted to enter into a Lease with Collas Enterprises, Inc. (CEI)forthe operation of the Palm Springs Tennis Center, located at 1300 E. Baristo Road, for a term of six years with two two-year options. CEI officially took possession of the tennis center on October 1, 2000. At its January 17 meeting, the Parks and Recreation Commission voted to recommend that City Council suspend the lease payments for a total term of one year to allow the operator to build the business. The operator has made one payment since taking possession. BACKGROUND: In mid-April 1999,the Palm Springs Tennis Center's(PSTC)previous operatorwas 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, 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. In addition to the standard language provided in the agreement, the following deal points were recommended: Term: Six years with two two-year options. 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. PALM SPRINGS TENNIS CENTER DATE: January 7, 2001 PAGE: Two 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. Utilities: The water will be split 50/50 between the City and the tenant. The tenant shall be responsible for all other utilities. Construction and Improvements: Tenant will resurface, to a condition satisfactory to the City, all nine 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. 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. At its February 16, 2000 meeting, City Council voted to enter into a Lease with CEI for the operation of the PSTC for a term of six years with two two-year options, and allocated funds in the amount of $35,000 for facility improvements, i.e., court resurfacing, interior repair and painting. CEI officially took possession of the PSTC on October 1, 2000 and came before the Parks and Recreation Commission at its January 17 meeting, seeking relief from the payment of the monthly lease payment and shared costs of utilities and landscape maintenance. Tenant claimed that business was very slow to acquire due to the fact that the PSTC had been closed for so long and former patrons had gone to other tennis facilities. Tenant stated that relief from the obligations to the City is needed or CEI will be forced to abandon the lease agreement. The tenant has made one payment since taking possession of the facility. The Parks and Recreation Commission voted 9/0 to recommend that City Council suspend lease payments for a total term of one year to allow the tenant to build the business. ;7 S OTT MIKESELL, Director Department of Facilities City Manager ATTACHMENT: REVIEWED BY DEPT.OF FINANCE 1. Minute Order (2) r' Erick Chollas 1' Palm Springs Tennis Cent r _. 1300 E.Batisto Palen Springs,CA92262 w il7unr iiL.�— PALM300 922623w02'2 ' IN 04 02/05/01 RETURN TO SENDER NO FORWARD ORDER ON FILE UNABLE TO FORWARD RETURN TO SENDER MINUTE ORDER NO. SUSPENDING LEASE PAYMENTS FOR THE OPERATION OF THE PALM SPRINGS TENNIS CENTER FORA TOTAL TERM OF ONE YEAR TO ALLOW COLLAS ENTERPRISES, INC. TO BUILD ITS BUSINESS. I HEREBY CERTIFY that this Minute Order, suspending lease payments for the operation of the Palm Springs Tennis Center for a total term of one year to allow Collas Enterprises, Inc. to build its business, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 71" day of February, 2001. BY: PATRICIA A. SANDERS City Clerk I �� f Y oi- l?I014, 0 rD L LP P fj) ,,D-0,01s,,e Erick Chollas Palm Springs Tennis Center 1300 E.Baristo Palm Springs,C PAU,13 00 OR�36 3033 JAN 16 OR/iq/ol RETURN TO NO FvORWARD ORDER ON Fri.,r-- 1 ,3 FORVJ,,%i-tD RETURN TO 5ENIM-111 MINUTE ORDER NO. DIRECTING THE CITY ATTORNEY TO COMMENCE PROCEEDINGS DECLARING COLLAS ENTERPRISES, INC. IN DEFAULT OF LEASE, AGREEMENT NO. 4200, DATED FEBRUARY 16, 2000. I HEREBY CERTIFY that this Minute Order, directing the City Attorney to commence proceedings declaring Collas Enterprises, Inc. in default of Lease, Agreement No. 4200, dated February 16, 2000, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 7`h day of February, 2001. BY: PATRICIA A. SANDERS City Clerk 18C