The Baker City Council will have a special meeting Wednesday evening to consider a proposed contract for management of the city-owned Quail Ridge Golf Course.
The meeting will start at 5:30 p.m. at City Hall, 1655 First St.
After the longtime course manager, Seven Iron Inc., announced this fall that it would not continue to run the 18-hole course, the city submitted a request for proposals.
It received one, from Bill Tiedemann.
City Manager Mike Kee, who has been negotiating a proposed three-year contract with Tiedemann, said he expects councilors to vote Wednesday on whether to accept that contract.
The contract term is Jan. 1, 2014, through Dec. 31, 2016.
The basic terms are similar to the deal the city had with Seven Iron - the contractor manages the course, including taking care of the grass and running the pro shop and bar, and in exchange collects all the revenue.
One difference is that Tiedemann would pay an annual lease fee of just $1 for the first year, and $1 plus "an amount to be determined by golf board" the second and third years.
Seven Iron paid an annual lease fee of as much as $22,500, although its owner, Billy Cunningham, also negotiated reductions for some years.
Another difference that also affects the city's budget is that the city would have to buy several mowers and other equipment, then lease the machinery to Tiedemann, Kee said.
Seven Iron has its own equipment but Kee said the machines are relatively old, so he will propose to the City Council that the city buy new equipment.
The estimated cost is $250,000. The money could come from the city's equipment reserve fund or from another fund, Kee said.
The benefit to that arrangement, he said, is that the city would own the equipment and could then lease it to Tiedemann or a future golf course contractor, using the lease payments to repay the city.
The city might buy some items from Seven Iron, including the front counter, shelving and other equipment in the pro shop, Kee said.
The estimated cost is $30,000 to $40,000, he said.
The proposed contract requires Tiedemann to submit to the city an annual budget, which he has already done, as well as monthly financial reports detailing expenses and revenues.
Tiedemann's proposed annual budget for 2014 includes expenses of about $465,000 and revenues of about $471,000, Kee said.
The expenses include a $75,000 management fee that would constitute Tiedemann's salary, although $10,000 of that could be used to offset expenses if revenues are below projections.
The proposed contract requires the city to review the golf course's budget prior to June 30 each year.
"If the golf course is underperforming prior to June 30, according to the approved annual budget, the City will have the ability to work with Contractor to reduce costs in all areas where it is feasible including the management fee," according to the contract.
If revenues and expenses are in line with the annual budget, Tiedemann would receive the entire $75,000 management fee as salary.
If revenues exceed expenses - Tiedemann's proposed budget for 2014 calls for a gross profit of about $5,500 - that money would go into a reserve fund for golf course expenses, Kee said.
The city's potential expense - besides the estimated $280,000 to $290,000 for the mowers and other equipment - would be if Tiedemann's expenses exceed revenues, at the end of the season, by more than $10,000.
If the difference is less than $10,000, the money to cover the gap would come from the $75,000 management fee.
If the difference is more than $10,000, according to the contract "the City will cover the additional costs."
Here's the complete proposed contract:
This Lease Agreement made and executed this day of , 2013, between the City of Baker City, a municipal corporation of the state of Oregon, hereinafter referred to as "City," and Tiedemann Consulting LLC, hereinafter referred to as "Contractor." "City" and "Contractor" are sometimes jointly referred to as the "Parties".
WHEREAS, it is appropriate that the following lease agreement be entered into for the benefit and convenience of the general public in the use and enjoyment of Quail Ridge Golf Course (hereinafter referred to as "Golf Course"),
In consideration of the mutual promises contained herein, it is agreed by the Parties as follows:
Grant and Description of Lease:
City grants to Contractor and Contractor accepts from City the exclusive privilege of leasing and operating the Golf Course together with all ancillary operations, structures, fixtures, and furnishings owned by City, located at said Golf Course, for a period commencing January 1, 2014 and ending December 30, 2016, unless sooner terminated as provided herein, in accordance with and subject to the terms of this agreement.
Inspection and Condition of Golf Course Premises:
Contractor has examined the Golf Course premises prior to and as a condition precedent to its acceptance of the lease and is satisfied with the physical condition. Its taking possession of the Golf Course premises shall be conclusive evidence of its receipt of the Golf Course and that the licensed equipment and furnishings are in good order and repair, except as otherwise specified, and Contractor agrees that no representation as to the condition or repair of the Golf Course premises has been made by City or its agents whatsoever. Contractor agrees and admits that no agreement or promise to alter, repair or improve the premises or equipment and furnishings either before or after the execution of this agreement, not contained herein, has been made by City or its agents. Contractor agrees to return the premises and the equipment and furnishings to City in a condition as good as or better than when accepted by Contractor, reasonable wear and tear excepted.
Right of Entry:
City reserves the right to enter the Golf Course premises at any reasonable time to ensure compliance with the covenants of this agreement. City also reserves the right of ingress and egress to investigate and survey the Golf Course premises as deemed necessary and reserves the right to do any work of any nature necessary for preservation, maintenance, and operation of this golf course.
Contractor shall be liable for all expenses incurred by City for all work done by City in order to preserve, maintain and operate the Golf Course when the work is a result of Contractor's negligence or noncompliance with the covenants of this agreement
Report to City:
Contractor will create a monthly report to the City Manager detailing the entire expense and revenue generated by the Contractor's operation of the Golf Course. The report will be due by the 15th day of the month following the month of the report. The Contractor will also create an annual report detailing the entire expense and revenue generated by the golf course. Both the monthly and annual report will include a listing of repairs and the value completed by the Contractor.
Contractor accepts this Lease for the term and under the conditions specified herein and agrees to pay City on an annual basis by January 31 of each year during the term of this agreement the following amount:
2014 - $1.00
2015 - $1.00 plus an amount to be determined by golf board
2016 - $1.00 plus an amount to be determined by golf board.
Payment shall be made by check or money order, payable to "City of Baker City" and personally delivered or mailed to the following address:
City of Baker City
1655 First Street
PO Box 650
Baker City OR 97814
Period of Operation:
The golfing season shall be generally from March 1 of each year to October 31, weather permitting. Operation of the Golf Course and/or its ancillary operations at times other than the regular golfing season shall be at the discretion of Contractor. Both the Pro Shop and the bar will be open a minimum of 40 hours per week during the season. Any substantial deviation will be approved by the City Manager.
Use of Premises:
The Golf Course premises and the equipment and furnishings located thereon shall be used exclusively to conduct a Golf Course operation together with its ancillary businesses. Such ancillary businesses include pro shop, golf instruction, food and beverage sales, banquet room rental, community events, and use of the golf course and driving range (if applicable). Contractor shall pay all expenses including labor, equipment costs, and materials expenses for the operation of the Golf Course and its ancillary businesses.
City agrees that the daily greens fees shall be subject to Contractor discretion. Prices for season passes to the Golf Course may also be set at the discretion of the Contractor with the exception that no category of season pass shall have the price raised by more than ten percent in any one year without prior written approval of the Golf Board to the City Council.
Contractor shall pay all expenses including labor, equipment costs, and material expenses for the operation of the Golf Course and its ancillary business. The Contractor shall create and fund a Management Fee of Seventy-Five Thousand ($75,000.00) dollars per season. The Contractor is authorized to compensate William A. Tiedemann a base salary of Sixty-Five Thousand ($65,000.00) dollars per season in equal monthly installments of Five-Thousand Four-Hundred Sixteen Dollars and Sixty-Eight Cents ($5,416.68) from the Management Fee.
If the Golf Course is underperforming prior to June 30th of the season, according to the approved annual budget, the City will have the ability to work with Contractor to reduce costs in all areas where it is feasible including the management fee. If, at the end of each season the Golf Course has reached its financial goals as set forth in the annual budget, Contractor shall pay to Mr. Tiedemann an additional Ten-Thousand ($10,000) dollars from the Management Fee immediately after the year-end financial statement has been approved by the Golf Course Board of Directors. In the event the Golf Course underperforms, the Ten-Thousand ($10,000.00) dollars set aside for the management fee shall be used to cover operating costs that exceed Contractors operating capital. In the event the underfunded operating costs exceed Ten-Thousand ($10,000.00) dollars, the City will cover the additional costs.
Articles of Equipment and Furnishings:
City will provide for Contractor's use at the Golf Course premises all furniture, furnishings, and fixtures currently owned by City or required for normal golf course operations of the Municipal Golf Course by mutual agreement of Contractor and City Manager.
City shall be responsible for repair and replacement of structural and mechanical components and equipment permanently attached to the structure, including roofs, walls, foundations, heating plant, plumbing and electrical systems.
Contractor shall be responsible for maintaining the Golf Course premises, equipment and furnishings in good repair and in a clean, neat, sanitary and safe condition.
Contractor and City will attach to this Contract an inventory, labeled Exhibit A, of equipment indicating the owner thereof. Exhibit A will also establish a maintenance standard and a lease agreement for the equipment necessary to maintain the Course.
Contractor shall, at its own expense, provide regular maintenance and repairs for all portions of the irrigation system at the Golf Course except for items listed in (b) herein.
City shall be responsible for repair, reconstruction, or replacement of the following items:
Main line repair and reconstruction;
Pump repair and or replacement;
Leakage from the main pond located between holes 12 and 14.
City shall be notified prior to actions taken by Contractor to effect repairs, reconstruction, or replacement of items I through III above. City may authorize Contractor to undertake such repairs, reconstruction, or replacement or contract with an outside agency for such work, or perform the work itself with its own forces. City agrees that timeliness of repair shall be a factor in the decision to contract or use its own forces. Contractor will be allowed to supervise any work done on items I through III above.
In the event Contractor is authorized to undertake the repairs, reconstruction or repairs, City shall reimburse Contractor at the following rates:
Labor at 1.2 times the net expenditure after taxes.
Parts at 1.1 times the actual cost unless provided by the city.
Equipment at the hourly rental rate of rental agency unless suitable equipment is supplied or made available to Contractor by City.
Contractor shall not enter into any construction or remodeling projects of any kind in or to any of the buildings located at the Golf Course premises without written permission from City. Similarly, Contractor shall not undertake any significant modification to the playing area of the Golf Course premises without prior written approval of the Golf Board and the City.
City shall continue to supply such water as may be necessary to maintain the premises in a good and healthy condition. This water will be supplied to the course free of any charge to Contractor provided that this water is available from the City mountain watershed system and is surplus to the normal municipal water needs of the City. If sufficient surplus water is not available, Contractor shall have the right to draw water from the Indiana Avenue water connection. All costs associated with pumping the water are the responsibility of the Contractor up to $2,500.00 annually. Pumping costs in access to $2,500.00 are the responsibility of the City. If the City chooses to not supply sufficient water for the irrigation of the Golf Course City agrees to reimburse contractor for all documented expenses related to the decision to not provide sufficient water for the irrigation of the Golf Course and any loss of revenue based on historical revenue period comparison up to $15,000.
The City reserves the right to refurbish the irrigation and drinking water well located within the existing parking lot at its sole discretion without interference from the Contractor. In addition, the City reserves the right to drill an additional well located outside of the existing parking lot should it be required. The Contractor and City agree to work cooperatively to accomplish the well construction with the least impact to the Golf Course activities.
In the event, however, that a water emergency should occur and be so declared by City, City shall have the right to take such water as it may desire from said Golf Course well. In that event, City shall pay for the cost of operation of said well.
With the exception of water as provided for above, Contractor shall be responsible for all utilities within the leased area and will promptly pay all charges for utility services.
Compliance With Laws:
Contractor agrees to comply strictly with all federal, state and local laws, rules and regulations.
Contractor further agrees not to permit or perform any noxious or offensive business trade or occupation on the Golf Course premises and not to permit said premises to be occupied or used for any illegal purpose.
Contractor agrees to provide general public and products liability insurance in not less than the following amounts:
Contractor agrees during the term hereof to keep a policy of public liability insurance in effect with respect to the leased premises with minimum coverage of one million ($1,000,000.00) dollars per occurrence. Contractor shall further maintain Liquor Liability insurance with a minimum coverage of one million ($1,000,000.00) per occurrence.
The required policy or policies of insurance shall contain the following endorsement:
The insurance policy will not be canceled or reduced without 10 days prior written notice to the City of Baker City, PO Box 650, Baker City, Oregon, 97814.
b) The policy shall name the City as an additional insured, and shall contain a clause that the insurer will not cancel or change the insurance without first giving the City at least ten (10) days' notice. The insurance shall be maintained through an insurance company registered to do business in the State of Oregon and a copy of the policy or certificate of insurance shall be delivered to the City.
c) Contractor agrees to file the required policies of insurance, with all endorsements attached, with the City no later than 30 days prior to Contractor's taking possession of the leased premises.
d) At least 30 days prior to the expiration of any policy, a signed and complete certificate of insurance, with all endorsements attached, showing that the insurance coverage has been renewed or extended shall be filed with City.
Worker's Compensation Insurance:
Contractor agrees to provide worker's compensation insurance in accordance with the laws of the State of Oregon. Contractor shall furnish City with satisfactory proof that this insurance is in effect.
Contractor shall indemnify, save and hold harmless the City, its officers, agents and employees and other users of the Golf Course and facilities from any and all loss, claims, charges, liability or damages arising or growing out of the use of the leased premises by Contractor, its employees, agents, contractors and any others acting on behalf of or with permission of the Contractor. The Contractor further agrees to indemnify and hold harmless the City, its agents and employees from any and all liabilities, claims, losses and charges for any damages caused by the Contractor to any persons or property, including but not limited to the property upon which the Golf Course is located and any adjacent private property, excepting acts of negligence by the City or incidents that occur as a result of uncontrolled access to the course during hours and seasons when the contractor is not managing the day to day activities of the course. In case any action or proceeding is brought against City by reason of any such claim, Contractor, upon notice from City, covenants to resist and defend such action or proceeding by counsel.
City will indemnify and hold Contractor harmless from all claims arising as a result of any breach or default on the part of City of Baker under the terms of this lease, or arising from any act of City's agents, officers, contractors, employees, or licensees in or about the leased premises, and from all costs and liabilities incurred in any action or proceeding brought thereon as result of Cities negligence.
Contractor shall pay all taxes on personal property belonging to or leased to Contractor located on the Golf Course premises, and Contractor shall pay all income, sales, and other taxes levied against the operation of the Golf Course. It is anticipated that there will be no real property taxes levied against the real property which is the subject of this agreement.
Contractor agrees to pay promptly all bills arising from the operation of the Golf Course.
Contractor agrees to comply fully with the Federal Equal Opportunities Act and with all applicable state laws. Contractor further agrees that no person shall be denied or refused service or other full or equal use of the leased facilities, nor denied employment opportunities by Contractor as a result of race, creed, color, religion, sex, national origin or ancestry, age, physical or mental handicap.
Relationship of City and Contractor:
It is understood by the parties that the relationship of Contractor to City is that of an independent contractor. Contractor shall have no authority to employ any person as employee or agent on behalf of City for any purpose. Neither Contractor nor any person engaging in any work relating to the lease at the request of or with the consent of Contractor shall be deemed an employee or agent of City, nor shall any such person represent himself to others as an agent or employee of City or as an agent or employee of the Golf Course. Should any person indicate to Contractor or any employee or agent of Contractor by written or oral communication that the person believes Contractor or an employee or agent of Contractor to be an employee or agent of City, Contractor shall use its best efforts to correct or to cause its employee or agent to correct that belief. In ordering any goods or services for the Golf Course, Contractor shall place the order in Contractor's own business name and not in the name of City or the Golf Course.
Contractor agrees to operate the Golf Course personally or to employ sufficient and qualified personnel to operate the Golf Course in a businesslike manner. It is expressly understood that part of the inducement for City to enter into this agreement is the representation that William A. Tiedemann will operate as the Golf Course Manager during the period of this lease. No person other than William A. Tiedemann shall undertake to perform these duties without the prior written consent of City. City agrees not to unreasonably withhold such consent; however the qualifications of any perspective manager will be of primary importance.
Unless otherwise noted, the City Manager of City shall be City's representative empowered to manage City's interest in this lease. The City Manager may make reasonable written requests regarding the operation of the Golf Course to ensure compliance with the terms of this lease and Contractor shall make all reasonable attempts to comply with the request.
Assignment or Subletting
This lease shall not be assigned in whole or in part, nor shall the leased premises or any of the premises be sublet or leased, nor shall any right or privilege granted here to Contractor be sold, transferred or assigned without the written approval of City. However, Contractor may subcontract for the provision of any services at the Golf Course with the exception of management of the course itself without prior approval of City.
Any sale, transfer or assignment, whether voluntary or involuntary, without the written approval of the City shall be void and constitute grounds for the cancellation of this lease at the option of City.
Changes or Amendments to Lease:
This Lease Agreement sets forth all agreements between the parties. No modification or amendment shall be valid unless set forth in writing and signed by City and Contractor.
If in the judgment of City the manner of operation of the Golf Course or the quality of merchandise or services does not meet the requirements of this lease, or if Contractor breaches or is in default of any other term of this lease, City shall give Contractor written notice specifying with reasonable particularity the unsatisfactory performance or default. If the breach or default is capable of being remedied, Contractor shall remedy the unsatisfactory performance or default within 30 days after receipt of notice. If Contractor fails or refuses to so comply, City may terminate the lease. If the breach or default is incapable of being remedied, City may automatically terminate the lease upon written notice to Contractor specifying with reasonable particularity the reasons for terminating.
Contractor may cancel this agreement at the expiration of any calendar year during the term hereof, providing written notice of intent to do so is given to City by September 1st of the year preceding the date of cancellation.
Destruction, Loss or Damage by Fire or Other Causes:
Should any portion of the leased premise be so extensively damaged by fire or other casualty as to render the same un-tenantable, and such damage is covered by insurance payable to City, City shall rebuild or repair the same as soon as practicable. Should City fail or refuse to do so, Contractor shall retain all rights and responsibilities to continue to operate the Golf Course pursuant to the terms of this Lease Agreement.
Vacating the Premises:
Unless renewal is arranged, within 30 days prior to the expiration of this Lease Agreement, Contractor shall, immediately upon expiration or sooner termination, vacate the premises and remove all property to which Contractor holds proper title.
Should Contractor fail to remove or dispose of his property as provided, City may consider the property abandoned and may claim proper title to it or dispose of it at Contractor's expense. In addition, at the expiration or termination of this Lease Agreement, Contractor shall surrender the premises and the equipment, furnishings and fixtures to which the City holds title in as good or better condition as when accepted by Lessee, reasonable wear and tear excepted.
The failure of performance of any of the terms and conditions of this contract resulting from acts of God, war, civil insurrection or riot shall not be a breach of this agreement.
Except to the extent prohibited by applicable law, upon the occurrence of any one or more of the following events, the lease granted Contractor shall be deemed to have terminated automatically:
The filing by Contractor of a voluntary petition in bankruptcy or the making of an assignment for the benefit of creditors;
The filing of an involuntary bankruptcy petition against Contractor which is not withdrawn or dismissed within 10 days;
Consenting by Contractor to the appointment of a receiver or trustee of all or part of Contractor's assets;
The filing by Contractor of a petition or answer seeking an arrangement or reorganization under the Federal Bankruptcy Act or any other applicable state or federal law;
The filing by Contractor of a petition to take advantage of any insolvency act or law.
Waiver or Breach:
The waiver by City of any breach of any term contained in this Lease Agreement shall not be deemed to be a waiver of that term for any subsequent breach of the same or any other term. The acceptance of any payment by City shall not be deemed to be a waiver of any prior occurring breach by Contractor of any term contained herein regardless of knowledge of City of the prior existing breach at the time of the existence of such payment.
If any provision or portion of any provision of this Lease Agreement shall be deemed illegal or unenforceable for any reason, the unaffected provisions or portions shall remain in full force and affect.
In the event suit or action is instituted to enforce any of the terms of this Lease Agreement, the prevailing party shall be entitled to recover from the other party such sums as the Court may determine reasonable as attorney's fees at trial or on appeal of the suit or action, in addition to all other sums provided by law
The City will make every reasonable effort to appoint/approve Quail Ridge Golf Course Board of Directors to satisfy the requests made in the proposal by Tiedemann Consulting, LLC which was approved by the City Council.
IN WITNESS WHEREOF the parties hereto have executed this agreement on December ________, 2013
City of Baker City Tiedemann Consulting, LLC