DATE:
March 7, 2023
TO:
Mayor and City Council Members
FROM:
Nils Bentsen, City Manager
BY:
Casey Brooksher, Director of Administrative Services
Keith Cheong, Management Analyst
SUBJECT:
Golf Cart Lease Agreement
RECOMMENDED ACTION
It is recommended that the City Council authorize the City Manager to approve and execute a lease agreement with VGM Financial Services, in the not-to-exceed amount of $387,652, for a five (5) year golf cart lease pertaining to the operations of the Hesperia Golf Course & Country Club (Golf Course).
BACKGROUND
In April 2010, the former Hesperia Community Redevelopment Agency purchased the Golf Course, while the City of Hesperia (City) purchased the associated water rights. Upon the dissolution of the RDA on February 1, 2012, the Golf Course’s ownership was transferred to the City. On August 16, 2011, after the City conducted an extensive public outreach program in order to determine the long-term use of the property, the City Council voted to maintain the property as a golf course and negotiate with the Hesperia Recreation and Parks District (HRPD) for an agreement to operate and maintain the golf course. The HRPD managed the operations and maintenance of the golf course until the HRPD notified the City in June 2019 that they were no longer interested in continuing operations and the agreement expired in September 2019.
On August 20, 2019, the City Council authorized the award of a five (5) year professional services agreement to Donovan Bros. to assume golf course operations management from the HRPD and to make capital improvements.
The City’s previous golf carts lease agreement for the Golf Course expired on August 16, 2022, with the golf course currently utilizing a temporary fleet of golf carts in order to maintain business operations. Due to the age of the fleet of golf carts and expiring lease agreement, the City solicited quotes in February 2022 for a new five (5) year lease of new golf carts to replace the existing fleet. Three quotes were obtained by the City with VGM Financial Services determined to be the lowest bidder.
On March 1, 2022, the City Council approved Resolution No. 2022-15 and authorized the City Manager to approve a five (5) year golf cart lease agreement to VGM Financial Services in the amount of $335,769.
ISSUES/ANALYSIS
Due to production delays in manufacturing the golf cart fleet along with the increase in inflation since City Council’s original approval, the lease agreement amount with VGM Financial Services has increased to $387,652. Despite the increased lease costs, the revised VGM Financial Services lease agreement is still less than other comparable golf cart lease quotes.
FISCAL IMPACT
Initial payments for the golf cart lease are paid for by Donovan Bros. as part of golf course operations management agreement. The City is responsible to fund the golf course operating losses incurred by Donovan Bros. Funding for the Fiscal Year (FY) 20212-23 golf course operating losses was included in the FY 2022-23 adopted budget. Funding for golf course operating losses in subsequent fiscal years will be included in the annual budgets.
ALTERNATIVES
1. Provide alternative direction to staff.
ATTACHMENTS
None
City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT
Staff Report to the Mayor and City Council Members
Golf Cart Lease Agreement
March 7, 2023