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HomeMy WebLinkAbout12/12/2007 - STAFF REPORTS - 2.I. iy c U y w � m�eeopnfeo P'4 µ City Council Staff Report DATE: DECEMBER 12, 2007 CONSENT CALENDAR SUBJECT: FIFTH AMENDMENT TO AGREEMENT NUMBER 3469 TO ARNOLD PALMER MANAGEMENT LLC, FOR GOLF COURSE MANAGEMENT SERVICES AT TAHQUITZ CREEK GOLF RESORT. FROM: David H. Ready, City Manager BY: Assistant City Manager—Administrative Services SUMMARY The current management agreement with Arnold Palmer Golf Management for the operations and management of the Tahquitz Creek Golf Resort is scheduled to expire on December 31, 2007. Arnold Palmer Golf Management is presently in the process of assigning their interests in both their lease on the Legends Course, and the management agreement they have with the City, to another party. This process, which will likely take several months to complete, must ultimately be approved by the City Council. The proposed amendment extends the term of the existing agreement for a period of six (6) months, from January 1, 2008 through June 30, 2008 to facilitate the proposed assignment of the lease and management agreement. All other terms and conditions of the existing agreement remain in full force and effect. RECOMMENDATION: 1. Approve Amendment Number Five to Agreement 3469 with Arnold Palmer Management, LLC, extending the term of their Management Agreement for a period of six (6) months from January 1, 2008 through June 30, 2008. STAFF ANALYSIS: On January 2, 1995, the City entered into agreement with Arnold Palmer Golf Management (Arnold Palmer) for the management and operation of the City's golf resort. The agreement, which was originally scheduled to expire on June 30, 2006, has been extended several times to allow Arnold Palmer the opportunity to sell its interests in both the management agreement and lease that they hold on the Legends Course to another company. The agreement is now scheduled to expire on December 31, 2007. Unfortunately, Arnold Palmer has had some difficulty selling their leasehold interest. Over the past 18 months, three separate companies have indicated an interest in Item 2 . 1 . City Council Staff Report December 12, 2007 -- Page 2 Fifth Amendment to Management Agreement with Arnold Palmer Management acquiring the lease from Arnold Palmer and all of them have ended up withdrawing their offers. The most recent offer, which was from Touchstone Golf Management LLC, was withdrawn in September. In October, the City received correspondence from Arnold Palmer Golf Management requesting assignment of the lease and management agreements to a partnership consisting of Matthews Investments Southwest, a development company based in Texas, and Century Golf Management, the company that currently manages both golf courses for Arnold Palmer. To date, staff has not received a formal proposal from this partnership detailing their qualifications, experience and financial capabilities to manage the golf course. This information is required under the lease agreement for any assignment request. Until such a time as the City has a formal proposal with this information, staff is unable to make a formal recommendation to the City Council. Since the term of the existing management agreement with Arnold Palmer Golf Management will expire at the end of the month, staff believes that it would be in the City's best interest to extend the term of the management agreement for an additional six (6) months. By extending the agreement at this time, the City will ensure that its golf course will continue to be properly managed until a successor-in-interest to the lease and management agreement is determined. FISCAL IMPACT: There is no direct financial impact as a result of the proposed action as it is strictly an extension of time being requested. Tro Butzlaff, ��sti.�tant City Manager David H. Ready, City M�n'� r Ad I ` trative 5erves Attachments: 1. Fifth Amendment to Management Agreement 000002 AMENDMENT NO. 5 TO AGREEMENT NO. 3469 FOR GOLF COURSE MANAGEMENT SERVICES AT TAHQUITZ CREEK GOLF COURSE This Fifth Amendment to the Golf Course Management Agreement (the "Fifth Amendment") is made and entered into on the _ day of December, 2007, by the City of Palm Springs ("City"), a California charter city, and Arnold Palmer Golf Management LLC ("Manager"), a Delaware limited liability company. Recitals A. On or about January 2, 1995, the City and the Manager entered into that certain Golf Course Management Agreement ("Agreement") for the provision by Manager to City of certain services for the management and operation of the real property and related amenities for use as a municipal golf facility. B. On November 17, 1999, the City and Manager entered into the "First Amendment to the Agreement for Golf Course Management Services" ("First Amendment"), which modified the term of the Agreement. C. On April 25, 2002, the City and Manager entered into the "Second Amendment to the Agreement for Golf Course Management Services" ("Second Amendment"), which revised certain reporting requirements, clarified procedures for the improvement of land and the use of the Capital Improvement Fund and modified certain defined terms. D. On June 21, 2006, the City and Manager entered into the "Third Amendment to the Agreement for Golf Course Management Services" ("Third Amendment"), which extended the term of the Agreement for an additional period of time. E. On June 27, 2007, the City and Manager entered into the "Fourth Amendment to the Agreement for Golf Course Management Services" ("Fourth Amendment'), which extended the term of the Agreement for an additional period of time. F. The current amendment with Manager expires on December 31, 2007. G. The City and Manager have been unable to reach agreement on a new contractual arrangement prior to the expiration of the current amendment. H_ It is the desire of the Parties to continue the existing Agreement for an additional six (6) months to provide additional time to reach a new agreement or alternate management arrangement. 000002 Agreement 1. Section 2.3 of the Agreement is amended to read: 2.3 Term- The term of this Agreement shall be extended to the close of business on June 30, 2008. 2. Except as specifically provided in this Amendment No. 5, all other terms and conditions of the Agreement, as amended by previously approved amendments, shall remain in full force and effect- IN WITNESS WHEREOF, the parties have executed and entered into this Third Amendment as of the date stated above- "City" CITY OF PALM SPRINGS, a ATTEST: California charter city City Clerk City Manager APPROVED AS TO FORM: City Attorney "Manager" ARNOLD PALMER GOLF MANAGEMENT L.LC, a Delaware limited liability company Title: Title: - 000004 - 2 -