DATE: May 18, 2026
TO: Mayor and Members of the City Council
FROM: Stefan Chatwin, City/District Manager
DEPARTMENT: City Manager
SUBJECT: APPROVING A TENTH AMENDMENT TO THE LEASE
AGREEMENT BETWEEN V.B. GOLF LLC AND THE CITY OF
FOSTER CITY/ESTERO MUNICIPAL IMPROVEMENT DISTRICT
AND AUTHORIZING THE MAYOR/PRESIDENT TO EXECUTE
THE AMENDMENT
RECOMMENDATION
It is recommended that the City Council/Estero Municipal Improvement District (EMID) Board of Directors adopt the attached resolutions approving the Tenth Amendment to the Lease between V.B. Golf LLC and the City of Foster City/EMID and authorize the Mayor/President to execute the Tenth Amendment; and find the Tenth Amendment to the Lease is not a project under CEQA, and if a project, it is exempt from CEQA pursuant to CEQA Guidelines Section 15061 (b)(3).
EXECUTIVE SUMMARY
On June 10, 1996, the City of Foster City (“City”)/EMID entered into a lease agreement with V.B. Golf LLC (“V.B. Golf”) for property located at 2401 East Third Avenue, Foster City (“Lease”). The Lease provided for the construction and operation of a 9-hole golf course and associated facilities by V.B. Golf. The Lease was initially for a term of 15 ½ years but the term has been extended thrice, most recently on June 20, 2023 for an additional three (3) years, with an option for a fourth year.
It is now recommended that the City Council/EMID Board of Directors review and approve a Tenth Amendment to the Lease granting an extension of the term for an additional five (5) years. The proposed amendment is included as Attachment 3.
BACKGROUND
On June 10, 1996 the City/EMID entered into the Lease with V.B. Golf. Pursuant to the Lease, V.B. Golf was required to construct the following improvements on the leased property (“Premises”):
1. Practice Tees
2. Nine hole golf course
3. Putting course
4. Pro shop
5. Restaurant/Bar and other related facilities
6. Parking areas and roads to service the golf improvements
7. Landscaping, walkways, and other amenities and infrastructures to service the Improvements, such as fencing, maintenance/equipment building, water Conservation irrigation, lighting, utilities, storm drainage, and other improvements as required for the operation of the facilities, including pedestrian pathways and traffic improvements.
The Lease Section 6.2, Conditions of Use, Subsection (g) required that the Premises be available for use by the general public; provided, however that V.B. Golf was allowed to open the facility, free of charge (or at a discount) for use by non-profit community oriented organizations such as City of Foster City or school youth groups, if V.B. Golf notified the City in writing fifteen (15) days prior to the activity (hereinafter “Special Events”). V.B. Golf was also required to cooperate with the City to promote golf and related activities, tournaments, and classes consistent with the best public use of the golf driving range component of the facilities.
The Lease Section 7, Improvements, Subsection 7.1, Prior Consent for Improvements, requires that V.B. Golf obtain written approval from the City/EMID before undertaking any alterations or improvements to the Premises. Subsection 7.2, Ownership of Improvements, provides that all buildings, improvements, fixtures and facilities constructed by V.B. Golf become the property of the City/EMID at the expiration of the Lease subject only to the buy-out or early termination provisions of the Lease.
Since 1996, the Lease has been amended a total of eight times. The First through Fifth Amendments and the Seventh Amendments made relatively minor changes to the Lease provisions to allow various subleases for retail and restaurant operations and allow live entertainment and music in the restaurant and bar. 2006 Amended Lease
The Sixth Amendment, which is dated January 1, 2006 made more substantial changes. Some of the more significant changes are summarized as follows:
Amends Section 1.2, Lease Term, to specify that the “Amended Lease Term” shall be from July 1, 1996 to December 31, 2021 (25 1/2 years). Amends Section 5.1, Monthly Rent- Minimum Rent or Percentage Rent to specify that the annual minimum rent shall be $350,000 or a Percentage Rent as defined in section 5.3, whichever amount is higher.
Amends Section 6.2, Conditions of Use, subsection (g) to expand uses of facilities to require V. B. Golf to do the following:
1. Offer the lowest available published rate to all Foster City residents.
2. Offer a 30% bonus on $100 range cards to all Foster City residents.
3. Sponsor and manage an eight week Fall and eight week Spring golf team from the public middle school(s) located in Foster City. During each eight week period, V.B. Golf was required to conduct try-outs, practice and league play.
4. Offer free practice for up to twenty-five Foster City public elementary school children ten years and older as an after-school program or as part of the school’s physical education curriculum during the school year.
5. Host, at its cost, two Foster City golf events per year. Each golf event is for a maximum of sixty players who are allowed three hours of course time and one hour of time on the driving range.
6. Offer four free clinics per month for Foster City residents to be coordinated with the Foster City Parks and Recreation Department.
A maximum of ten free enrollments per clinic to be offered. Each clinic to be at least an hour in length.
7. Sponsor one $500 scholarship to be awarded to a student attending a public middle school in Foster City and selected by the City and/or School District.
8. Donate for City awards programs twenty-five range cards to the City redeemable for one free medium bucket of range balls annually.
9. Donate free one-hour golf instruction to the City Employee of the Quarter or an employee designated in a similar recognition program during each year of the Amended Lease term.
Amends Section 7.1, Consent for Improvements to add subsection (a) to specify in 2006 process for submittal of plans for review and approval of work for interior office/retail/restaurant space and driving range and golf course.
Also adds subsection (b) to specify in 2007 process for submittal and plan for review and approval of all wind screens to protect driving range stalls. Adds Section 7.4, Capital Improvement Fund (CIRF), which requires effective, January 1, 2008, 4% of all revenue generated from annual golf operations (driving range, golf course green fees, and short game practice center) be placed in CIRF to fund additional improvement projects through the Term of the Amended Lease. Expenditures for capital improvements funded out of this CIRF shall be approved in writing by the City prior to construction which approval shall not be unreasonably withheld, and any funds remaining in the CIRF on December 31, 2021 shall inure to the benefit of the City.
2008 Amended Lease
The Eighth Amendment to the Lease, which is dated March 15, 2021 also made more substantive changes. Some of the more significant changes are summarized as follows:
Amends Section 1.2, Amended Lease Term, to extend term to term of 27 ½ years to commence on July 1, 1996 and terminate on December 31, 2023 unless City/District in its sole discretion provides V.B. Golf with written notice no later than June 30, 2023 that the lease term is extended to December 31, 2024.
Amends Section 5.1, Monthly Rent-Minimum Rent or Percentage Rent, and Section 5.4, Minimum Rent, to specify that the Lessee shall pay the Minimum Rent of $350,000 or a Percentage Rent, whichever is higher. Amends Section 6.2, Conditions of Use, Subsection(g) to specify effective date of January 1, 2006 and reference to Amended Lease. Amends subsection (l) to specify July 1st as deadline for submission of written schedule to City for operation hours and prices charged for all goods and/or services.
Amends Section 7.1, Consent for Improvements, to specify that during the term of the Amended Lease V.B. Golf shall be responsible to fund and construct all improvements, including those necessary to address public safety issues.
2023 Amended Lease
Most recently, at the June 20, 2023 City Council Meeting, the City Council approved the Ninth Amendment to the Lease Agreement, which included the following amendments. Extended the term for three years to expire on December 31, 2026, with an option for City/EMID to extend to December 31, 2027;
Increased the minimum rent from $350,000 to $450,000;
Increased the contribution made by V.B. Golf to the CIRF from 4% to 5%; Allowed installation of food trailer on the Premises and sublease with City/EMID to receive 5% of rent paid by Sublessee to V.B. Golf, conditioned upon V.B. Golf obtaining necessary use permit and any other necessary authorizations to operate food trailer.
ANALYSIS
At the direction of the Council/EMID Board, the City/District Manager has engaged in discussions with V.B. Golf and both parties have negotiated the following terms for the Tenth
Amendment:
Five-year extension from January 1, 2027 to December 31, 2032. Premise Definition: Lessee must keep both entrance gate and gate to the levee path open during business hours and allow members of the public to traverse the parking lot to the gate.
As shown in Exhibit A-1 in the Tenth Amendment to the Lease Agreement (Attachment 3), six (6) designated parking spaces will be available for public use during business hours of the Facilities.
Increased the contribution made by V.B. Golf to the CIRF from 5% to 6%.
Attached for the City Council/EMID Board of Director’s review are the resolutions approving the Tenth Amendment to the Lease. If approved, the foregoing revisions would go into effect including the extension of the term of the Amended Lease to allow operations to continue until December 31, 2032.
California Environmental Quality Act
The approval of the Tenth Amendment is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378 as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.
FISCAL IMPACT
Per the terms of the Tenth Amendment to the Lease Agreement, the contributions made by V.B. Golf to the CIRF will increase to 6% (was previously 5%).
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Smart Planning, Development, and the Local Economy
ATTACHMENTS:
Attachment 1 – City Resolution
Attachment 2 – EMID Resolution
Attachment 3 – Proposed Tenth Amendment to the Lease Agreement