AGENDA
SPECIAL MEETING OF THE
CITY OF KING CITY COUNCIL
TUESDAY, AUGUST 30, 2022
5:00 P.M.
CITY HALL
212 S. VANDERHURST AVENUE
KING CITY, CALIFORNIA 93930
The City Council meeting will be conducted in hybrid in-person/virtual format.
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1. CALL TO ORDER
2. ROLL CALL: Darlene Acosta, Robert Cullen, Carlos DeLeon, Mayor Pro Tem Carlos Victoria, and Mayor Mike LeBarre
3. FLAG SALUTE
4. PUBLIC COMMENT
Any member of the public may address the Council for a period not to exceed three minutes total on any item of interest within the jurisdiction of this Council that is not on the agenda. The Council will listen to all communications; however, in compliance with the Brown Act, the Council cannot act on items not on the agenda. Comments should be directed to the Council as a whole and not to any individual Council Member. Slanderous, profane or personal remarks against any Council Member, staff member or member of the audience is not permitted.
5. WORKSHOP on KING CITY GOLF COURSE
A. Consideration: Proposals for King City Golf Course Operations and Management Services
Recommendation: 1) receive presentations regarding proposals for operation of the golf course and ask questions; 2) obtain public input; and 3) select the preferred proposal and direct to staff to present an agreement with the selected proposal at the September 13, 2022 meeting for consideration.
6. ADJOURNMENT
The City of King is an equal opportunity provider and employer.
Item No. 5 (A)
REPORT TO THE CITY COUNCIL
DATE: AUGUST 30, 2022
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER
RE: CONSIDERATION OF PROPOSALS FOR KING CITY GOLF
COURSE OPERATIONS AND MANAGEMENT SERVICES
RECOMMENDATION:
It is recommended the City Council: 1) receive presentations regarding proposals for operation of the golf course and ask questions; 2) obtain public input; and 3) select the preferred proposal and direct to staff to present an agreement with the selected proposal at the September 13, 2022 meeting for consideration.
BACKGROUND:
The existing contract for operation of the King City Golf Course is due to expire on October 31st. As a result, staff distributed a Request for Proposal (RFP) to select the future operator, which is attached as Exhibit 5. Four proposals were received, but one was withdrawn. Staff reviewed the proposals, conducted initial interviews, and narrowed the proposals to the top two finalists.
At the July 12th meeting, the City Council appointed a City Council subcommittee composed of Council Members Cullen and Acosta to assist staff in developing a recommendation. A second round of interviews was completed, but the subcommittee did not reach consensus on a recommendation. As a result, at the August 9th meeting, staff recommended, and Council agreed, to schedule a special workshop to conduct final interviews with the full City Council.
The special workshop is scheduled at 5:00 p.m. on Tuesday, August 30th.
Following a brief staff summary, each proposal will be provided an opportunity to make a presentation no longer than 20 minutes. Presentations will be followed by time for Council to ask questions, public input, and then the Council will be asked to select the preferred proposal. Representatives from both organizations met virtually prior to the meeting to draw straws to determine the order of presentations. Staff intends to present a final agreement with the selected organization to City Council for consideration at the September 13th meeting.
CITY COUNCIL
CONSIDERATION OF PROPOSALS FOR KING CITY GOLF COURSE
OPERATIONS AND MANAGEMENT SERVICES
AUGUST 30, 2022
PAGE 2 OF 5
DISCUSSION:
Proposals
The final proposals were submitted from the following organizations:
• The First Tee
• Touchstone Golf, LLC
Copies of each proposal are attached as Exhibit 1 and Exhibit 3. Please note that there is a First Tee programming proposal included as Exhibit 3 in the RFP.
This is a separate document from their proposal to operate the Golf Course, included as Exhibit 1 to the staff report. After reviewing each proposal and conducting a series of interviews and questions, staff believes both proposals include a number of features that will improve the quality of play at the Golf Course for both adults and youth and will increase utilization of the Golf Course.
There are a few subtle differences. First, the structure of the contract services will be different, and both represent a departure from the existing contract where the operator was responsible for all aspects of the Golf Course operation and assumed all the financial risks. No costs were incurred by the City except for damage to the facilities. They made most the ongoing management decisions independently except for approvals required by the City for fees and other infrequent policy decisions.
Touchstone Golf is a private business who would provide a contract for their services to operate and manage the Golf Course on behalf of the City for a proposed contract fee. Staff would be employees of, and would report to, Touchstone Golf management. However, the City would reimburse Touchstone Golf for all costs and would receive all revenues. The City would also purchase, own and be responsible for maintenance costs for all equipment, such as the mowers and golf carts.
First Tee is a nonprofit organization who would provide a contract more similar to the existing arrangement where they would purchase and own all equipment and would assume the costs and revenues. However, unlike the existing contract, they propose for the City to subsidize losses up to a maximum amount and would share a portion of profits if there is a net profit.
Balance of Adult and Youth Services
Both proposals would include efforts to maximize both adult and youth play.
They both also include an effort to coordinate and involve existing customers in
CITY COUNCIL
CONSIDERATION OF PROPOSALS FOR KING CITY GOLF COURSE
OPERATIONS AND MANAGEMENT SERVICES
AUGUST 30, 2022
PAGE 3 OF 5
the planning process. The RFP included provisions requiring comprehensive golf instructional programming for youth.
Since First Tee is an organization dedicated to teaching youth life skills through golf, it is assumed youth services will likely be more robust through their proposal. Operating the Golf Course will provide them more flexibility in scheduling youth programs and lessons. However, they have indicated they are also dedicated to accommodating and promoting more adult play.
Touchstone Golf has indicated their initial priority will be to enhance the financial stability of the Golf Course and then the City will provide direction on the future prioritization of adult play, youth play and other services. Under the Touchstone Golf proposal, youth programs will depend upon coordinating with First Tee or establishing other youth services and incentives. They also operate the Touchstone Golf Foundation that is proposed to help raise funds for youth programming.
Experience
Touchstone Golf has extensive experience in directly managing golf courses, which includes 40 properties. They are the 9th largest golf course management company in the United States. Staff contacted references from three facilities with similarities to King City, which were all very positive and satisfied with their services.
The First Tee operates and owns many golf courses throughout the country, but the operations in each area are largely independent. The First Tee – Monterey County operates the Twin Creeks Golf Course in Salinas. Staff has visited and toured the facility and were very impressed with all aspects of the operation.
Staff also contacted The First Tee of San Francisco, who is operating the Golden Gate Park Golf Course. It experienced concerns from existing adult customers when the contract was initially awarded but has since been successful in increasing overall use of the golf course by both adults and youth and has funded a number of improvements to the facility.
COST ANALYSIS:
The financial terms of the two proposals are quite different. As a result, staff requested each organization to submit a projected budget or pro forma, which are attached as Exhibits 2 and 4. Both organizations indicated it was challenging to provide highly accurate projections given the lack of prior financial records available. Under both proposals, the City is assuming some or all of the financial risk which is impacted by revenue levels. Therefore, it is difficult to provide a definitive estimate or comparison on projected costs.
CITY COUNCIL
CONSIDERATION OF PROPOSALS FOR KING CITY GOLF COURSE
OPERATIONS AND MANAGEMENT SERVICES
AUGUST 30, 2022
PAGE 4 OF 5
The First Tee proposal would require the City to subsidize the operation by up to $10,000 per month. The terms have been amended since the proposal document was submitted to limit the total subsidy to the total net loss up to a maximum of $120,000 per year. Any profits would be shared equally. Their projected budget forecasts a loss of $122,184 in 2023, $50,000 in 2024 and $60,000 total profit by 2025. Costs for youth programming would be paid by The First Tee and not be considered in the net loss or profit figure.
Touchstone Golf would charge a monthly fee to operate the Golf Course in the amount of $4,500. The pro forma submitted by Touchstone Golf projects a total loss of $59,958 in the first year, $24,015 in the second year, and a profit of $10,045 in the third year increasing to $41,888 by the fifth year. The Touchstone Golf pro forma also assumes a larger number of golf rounds than the First Tee budget. In addition, the City would be responsible for the purchase of equipment, which will result in an upfront estimated cost of $50,000 to $100,000. Therefore, the initial year cost could be in the range of $100.000 to $150,000.
The City’s revised budget includes $50,000 for operations of the Golf Course.
Therefore, any costs above that amount will require an additional appropriation.
The RFP also assumed the City will make needed capital improvements to the Golf Course totaling a projected cost of almost $300,000 over a 5-year period.
These costs are included in the City facility deferred maintenance program, and funding will be largely dependent upon passage of the proposed local sales tax measure in November. Therefore, the overall costs to maintain the Golf Course will be significant over the next few years.
ENVIRONMENTAL REVIEW:
The proposed action is not a “project” for the purposes of the California Environmental Quality Act (CEQA) as it does not have the potential for resulting in either a direct physical change to the environment or a reasonably foreseeable indirect physical change in the environment. No further action is required under CEQA for City Council action.
ALTERNATIVES:
The following alternatives are provided for City Council consideration:
1. Select First Tee as the preferred operator and direct staff to prepare an agreement for consideration;
2. Select Touchstone Golf as the preferred operator and direct staff to prepare an agreement for consideration;
3. Select one of the proposals and request staff to renegotiate some of the terms; or
4. Provide staff other direction.