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HomeMy WebLinkAboutResolution 2000-089 RESOLUTION NO. 2000-089 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, that: The City Manager be, and is hereby, authorized to execute the attached Management Agreement with EVERGREEN ALLIANCE GOLF LIMITED, L.P., as the act and deed of the City. PASSED AND APPROVED this 13th day of November, 2000. APPROVED: ~>\\.\"'~'" "....~" . "i; ')"dV>-.......... ,. ~.'~/ )~",'\~." '. /., /~Q~ffi)ST: ""0\;'\ . & ., r 1'f'E . ª 0. £ !1J ;'«--1 : = g U : ::".." :~ ::;~\ . 'ffi /~~ ~ .. ~~, In "..æ:,..,~:;&' , .'$/ ,.' 0) " "~,, . ~/ ~ ;' !...-/' IÍ >, " '/; / h ,/ "0 V( t1/ "'/Pat'fie1"<9IHOtson, City Secretary f, i'': ) L,' , / L.l~ v2, 1 Charles Scoma, May r /1<, /' ., .1/- APPROVED AS TO CONTENT: ~c.~~ Randy Shiflet, Depdfy City Manager APPROVED AS TO FORM AND LEGALITY: / ! / - I '. Reo< McEnt~re, City Attorney çQ)[Plf MANAGEMENT AGREEMENT For the Management of Golf Course and Club House Operations This MANAGEMENT AGREEMENT executed November 14, 2000 is by and between THE CITY OF NORTH RICHLAND HILLS, TEXAS (the "City") and EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership ("EAGL", formerly known as Recreational Services, Limited). WITNESSETH: WHEREAS, the City desires the Iron Horse Golf Course and Clubhouse (which are sometimes hereinafter referred to as the "Facility") to be operated and maintained as a high quality municipal golf course for the benefit of its residents and other guests. WHEREAS, the City and EAGL desire for EAGL to manage and operate the Facility for the City in a cost-effective manner with additional focus on providing quality customer service and protecting Facility assets. NOW, THEREFORE, for and in consideration of the convenants and agreements contained herein, the parties hereto agree as follow: 1, Term Of Aqreement. The term of this Agreement shall begin December 1, 2000 (The "Start Date"), and shall end on the fifth anniversary of the Start Date, unless terminated by the City prior to that date. This Agreement may be extended for five (5) additional years by mutual consent of the City and EAGL. The City shall have the option to terminate this Agreement at the end of the third anniversary of the Start Date, which option may be exercised by giving written notice to EAGL not less than ninety (90) days prior to the termination date. 2. Services To Be Performed by EAGL. During the term of this Agreement, EAGL shall operate the Facility, handling the collection and disbursement of all money, employing all employees, purchasing and selling food, beverages, merchandise, supplies and services, purchasing insurance coverage, handling disputes with third parties, collecting and paying appropriate taxes, and accounting to the City for its activities. The City herby grants and delegates to EAGL the authority and the responsibility necessary to permit EAGL to perform its duties under this Agreement and agrees to take such additional steps as are necessary to evidence such delegation and authorization as is reasonably requested by EAGL in writing, and authorized the exclusive use of the Facility by EAGL during the term of this Agreement for this purpose. With respect to the operation of the Facility, the parties hereto agree as follows: 10/18/00 - 1 - 10/18/00 b. c. d. f. a. Major Decisions. EAGL shall secure the City's prior approval of all major policy decisions, including but not limited to capital improvements and expenditures, operational budgets, and Clubhouse and ground rules. EAGL shall, to the best of its ability, operate the Facility in accordance with the major policy decisions agreed upon with the City. The Facility shall be open to the general public, and all fees charged to customers at the Facility shall be subject to the approval of the City. Periodic Operation Review, EAGL shall, on an ongoing and continuing basis, as is deemed to be reasonable and necessary, but not less than once a month, review its management work, programs and efforts with the City. The City shall be kept fully informed of all Facility management activities and operations, Annual Budqets and Business Plan. Each June 1 st during the term of this Agreement, EAGL shall submit a proposed operating budget and business plan to the City for the upcoming Fiscal Year (the period beginning October 1st and ending September 30th is referred to herein as the "Fiscal Year"). The Annual Budget and Business Plan shall specifically include a marketing plan for the next fiscal year and a five-year capital expenditure budget. Once the proposed annual budget and business plan is approved by the City, EAGL shall use its best efforts to operate the Facility in accordance with the annual budget and business plan. EAGL will submit to the City for approval any material change to the approved annual budget. Policy and Procedure Manual. EAGL shall provide the City a copy of the Facility Policy and Procedure Manual, which addresses the operations of the Facility. Such Policy and Procedure Manual, and all amendments, will be subject to City Management's approval, which approval shall not be unreasonably withheld. e. Promotion of Golf Activities. EAGL shall coordinate and direct all of the work done in the area of advertising and public relations to ensure that the Facility will create an appropriate, continuing visual image and presence in print and communications media. Tournament Rounds Tournament Rounds are an integral part of the Facility's operating performance and profitability. EAGL will use its best efforts to focus all books of outside outings (i.e., non-daily fee play) during the weekdays - 2 - 10/18/00 (Monday - Thursday) in times when the golf course is traditionally realizing less rounds than the weekends. Additionally, EAGL will use its best efforts to book any weekend and holiday tournaments during non-prime times. Accordingly, EAGL will reserve weekend and holiday prime times for resident and non-resident (public play). g. Facility Personnel. EAGL shall recruit, interview and hire the basic Facility staff, including all on-site management personnel (i.e., golf pro, assistant golf pros, golf course superintendent), all food and beverage staff, house and grounds maintenance personnel, janitorial staff, etc. Such personnel shall be hired and employed by EAGL and shall not be employees of the City. EAGL may at its discretion elect to have some functions, such as janitorial and building maintenance services, performed by independent contractors rather than employees, and such service contracts may be awarded to the City on a cost basis. Notwithstanding anything to the contrary herein, the City shall approve the selection of the General Manager, Superintendent, and Head Golf Professional of the Facility within seven (7) business days from notification from EAGL. The City will have the authority to require that EAGL terminate any Facility employee. h. Food, Beveraqe and Merchandise. The City agrees to permit the sale of beer, wine and liquor by the drink at the Facility. EAGL shall comply with all Texas laws relating to the sale of same if EAGL chooses to obtain appropriate licenses and sell same at the Facility. In addition, EAGL shall purchase and sell such other food, beverage and merchandise at the Facility for such prices as it deems prudent, provided that the items purchased and sold are of a type typically available at comparable public golf facilities. A list of comparable facilities shall be mutually agreed upon annually, I. Corporate Purchasinq, Due to EAGL's size, it is able to negotiate national purchasing contracts with certain vendors. If the Facility utilizes such national purchasing contracts, EAGL agrees to pass any savings or marketing allowances received in conjunction with such agreements to the City on pro rata basis, tied directly to the measures used by the vendors and the Facility's participation in such programs, J. Equipment Sharinq. EAGL owns and operates many golf courses in the vicinity of the Facility as well as others across the country. As a result, all of the golf courses can benefit - 3 - from the sharing of certain turf and maintenance equipment. EAGL understands that it owes a fiduciary responsibility to the City and agrees to monitor and record the sharing of equipment to ensure equitable distribution. In the event that EAGL establishes a leasing entity which owns turf and maintenance equipment used at the various golf courses operated by EAGL, EAGL may lease such equipment to the Facility at market rates. EAGL shall include such equipment leasing expenditures in the Facility's annual operational budget. 3. Payments of Excess Cash. On the 15th day of each month during the terms of the Agreement, EAGL shall pay to the City one hundred percent (100%) of Excess Cash from the Facility, determined in accordance with the provisions of this paragraph, for the period ending on the last day of the preceding month. Excess cash shall equal the Cash Balance less the approved reserve amount of $35,000. a. Revenues. Revenues shall mean all cash receipts of any kind from operation of the Facility, including but not limited to green fees, cart rentals, range fees, proceeds from the sale of food, beverage and merchandise, rebates, rentals, proceeds from the sale of assets, and interest. Also revenues shall include advances from the City and insurance proceeds, b. Expenses. Expenses shall mean all cash expenditures and losses of any kind from the operation of the Facility, including but not limited to: (i) Payroll, payroll unemployment taxes, employee insurance and taxes; benefits and (ii) Payments for food, beverage, merchandise and supplies; (iii) Insurance costs; (iv) Payments for advertising and promotion of the Facility; (v) Lease payments and debts service payments for equipment, furniture, fixtures and other capital items, provided that the purchases or lease of the item were approved by the City; c. Approved Capital Expenditures. Approved Capital Expenditures shall mean cash payments or capital lease payments for equipment, furniture, fixtures, Facility improvements and other capital items approved by the City. 10/18/00 - 4 - d. Approved Reserves. Approved Reserves shall mean the amount of cash approved by the City to be held by EAGL for operation of the Facility. 4. Cash Flow Deficits. The City shall immediately advance to EAGL the amount of cash necessary to meet obligations, when net cash flow is not sufficient, but in any event within three (3) business days of EAGL's notice to the City thereof, 5, Fiduciary Relationship. All of the Revenues and Expenses arising in connection with the operation of the Facility shall belong to or be owned by EAGL, all employees of the Facility shall be employees of EAGL, and all assets and liabilities located at the Facility (other than the Golf Course, the Clubhouse and other start-up items funded by the City) shall be the property or obligation of EAGL. However, EAGL shall maintain a separate account for the receipt of Revenues and advances from the City and the payment of Expenses and approved capital expenditures, which account shall be designated as the "Facility Account". EAGL shall have a fiduciary duty to the City with respect to its operation of the Facility, faithfully accounting to the City and paying all payments due to the City in accordance with this Agreement. EAGL shall in no way commingle the Revenues and advances from the City with other money or accounts, and it shall not take any money or property from the Facility Account or the Facility except for Management Fees and expense reimbursements set forth in this Agreement. In addition, no purchase of goods or services shall be made by EAGL as an asset or Expense of the Facility from an entity affiliated with EAGL unless such purchase is on terms reasonably competitive with terms available from non-affiliated sources. Any breach of the covenants contained herein shall be a breach of the fiduciary obligation of EAGL to the City hereunder, 6. Manaqement Fees. In exchange for the services to be rendered by EAGL hereunder, EAGL shall be reimbursed for all direct and indirect out-of- pocket expenses incurred by it in connection therewith, payable from the Facility Account. All indirect or "pass-through" charges shall be subject to the City's approval, provided that such approval will not be unreasonably withheld. EAGL also shall be paid Management Fees, as set forth below. The Fixed Management Fee will include all accounting fees. a. Fixed Manaqement Fee. The Fixed Management Fee for each month during the term of this Agreement shall be $7,333.33 payable from the Facility Account on the 1 st of each month for that month. 10/18/00 b. Continqent Manaqement Fee. During the Fiscal year beginning October 1, 2000, EAGL has the ability to earn a Contingent Management Fee equal to up to 25% of the Fixed Management Fee based upon the criteria set forth below. The Contingent Management Fee for each succeeding fiscal year during the - 5 - 10/18/00 term of this Agreement shall be increased in the amount of $10,000 over the previous year's Contingent Management Fee. The Contingent Management Fee shall be paid to EAGL directly by the City within 45 days following the City's receipt of year- end financials. (i) Performance Goals. The City established the following Performance Goals for the Facility: 1. EAGL shall select, train, motivate and evaluate staff to ensure ethical, efficient and effective operation of the Facility; 2. EAGL shall properly and adequately maintain the course, buildings and other assets located at the Facility; 3. EAGL shall provide excellent customer service and appropriate amenities; 4. EAGL shall run the Facility in a financially responsible manner (e.g., work to increase rounds during non-productive times, efficient merchandising, etc.); 5. EAGL shall operate the Facility in compliance with this Agreement, the Policy and Procedure Manual established under paragraph 2 (d), and all other operational guidelines approved by the City. (ii) Measurement Devices. In conjunction with the City, EAGL shall measure the Facility's performance through golf course audits, customer surveys, and other measurement devices created to provide non-biased feedback. In order to earn the full Contingent Management Fee, performance measurement "devices" shall be completed and satisfactorily confirm performance goal attainment. At a minimum, the following measurement devices shall be utilized: 1. EAGL Audits. EAGL shall perform a minimum of two annual audits of the Facility. 2. Secret Shopper Audits. EAGL shall cause to be performed a minimum of two independent Secret Shopper audits of the Facility annually. The cost of the Secret Shopper program shall be an Expense of the Facility. - 6 - 3. Customer Surveys. EAGL shall distribute Customer Surveys to golf course customers twice annually and the City shall independently conduct customer surveys annually. 4. Group Event Evaluations. EAGL shall distribute Group Evaluation Forms to participants of Group Events at the Facility. 5. City Audits. To the extent the City performs a City Audit pursuant to paragraph 7 below, such audit will be considered as a performance measurement device. 6. Semiannual Reports. Reports of performance, as related to the Performance Goals set forth above, shall be made semiannually to the City, except for reports of financial performance which shall be submitted monthly in conjunction with the Financial Statements as established under paragraph 7 below. 7. Miscellaneous. Other measurement devices as later mutually agreed upon by EAGL and the City. Notwithstanding the foregoing, if this Agreement is terminated for any reason, then any unpaid Contingent Management Fee shall be paid to EAGL within 10 days of notice of such termination. 7. Accountinq. EAGL shall maintain books and records relating to the business activities of the Facility in accordance with generally accepted accounting principles, separate from its other books and records. Monthly financial statements shall be prepared. These statements shall include unaudited balance sheets and income statements (the "Financial Statements") prepared as if the operation of the Facility is a business entity separate from EAGL and the City. EAGL shall deliver a copy of each Financial Statement within a reasonable time after the end of each month. In addition, EAGL shall deliver a copy of its audited financial statements for each calendar year beginning with 2000 and continuing until the termination of this Agreement. At any time during the term of this Agreement, the City shall be entitled to inspect the books and records of the Facility, and it may conduct an audit of the Facility and the Financial Statements, provided that any expense incurred by the City in conducting an inspection or audit shall be borne by the City. 10/18/00 - 7 - 8. Termination Option. In addition to the termination option described in paragraph 1 above, the City shall have the option of terminating this Agreement in the event of a default by EAGL hereunder. 10/18/00 a. Default. The following shall, unless cured in accordance with paragraph 8 (b) below, constitute a default by EAGL (a "Default"): (i) Any breach of the fiduciary obligation of EAGL under paragraph 5 of this Agreement; (ii) The filing of a voluntary petition for protection under federal bankruptcy laws, or the failure to obtain the dismissal of an involuntary petition under the federal bankruptcy laws within thirty (30) days after filing; (iii) A discontinuance by EAGL of its business or abandonment of its activities at the Facility; (iv) A failure of EAGL to perform its duties under this Agreement; (v) Assignment by EAGL of this Agreement within the first two (2) years of the Term without City Council approval; or (vi) The loss of, transfer of, or disposal of control of EAGL by Westbrook Partners, L.L.C. unless the City consents in writing to waive this type of default. b. Cure. EAGL shall have thirty (30) days after written notice from the City specifying the nature of any Default under paragraph 8 (a) above, to cure such Default, provided that if the nature of the Default is such that it cannot be fully cured within thirty (30) days, EAGL shall have such additional time as may be reasonably necessary to cure such Default so long as EAGL diligently pursues cure of the Default. c. Exercise of Termination Option. The City may exercise its option hereunder to terminate this Agreement by giving written notice of the Default to EAGL. In the event of a default under paragraphs 8 (a) (i), (ii) or (iii), this Agreement shall terminate immediately upon delivery of written notice from the City to EAGL of its election to terminate the Agreement. In the event of a default under paragraph (a) (iv) above this Agreement shall terminate upon expiration of the cure period under paragraph (b) following delivery by the - 8 - City to EAGL of its election to terminate the Agreement provided that EAGL has not timely cured the Default. 9. Transfer Upon Termination. Upon termination of this Agreement, EAGL shall transfer and assign all of the assets to the City which would properly be reflected on the Financial Statements of the Facility as provided in paragraph 7 of this Agreement. The City shall assume all obligations and contingent liabilities in relation to the Facility, other than contingent tort liabilities which result from the intentional wrongdoing of EAGL or its agents and other insured tort liabilities. a. Assets to be Transferred. Said assets shall include, but not be limited to, all of EAGL's right title and interest to any of the following arising out of activities of the Facility, advances from the City, or Revenues of the Facility (other than insurance proceeds relating to liabilities not required to be assumed by the City): (i) Cash, including the Facility Account; (ii) Accounts receivable; (iii) Other receivables; (iv) Inventories of merchandise, food, beverages and supplies; (v) All equipment, furniture and fixtures; (vi) Prepaids and deposits; (vii) Contract rights; (viii) Trade names; (ix) Books and records; and (x) Goodwill. b. Liabilities to be assumed. Said liabilities shall include but not be limited to all debts and obligations of EAGL arising out of the operation of the Facility remaining unpaid or unsatisfied at the time, other than tort liabilities resulting from the intentional wrongdoing of EAGL or its agents. c. Closinq. The transfer of assets, and assumption of liabilities shall occur on or within thirty (30) days following the date on which this Agreement is terminated. - 9 - 10/18/00 10. Indemnity. EAGL is not an agent or employee of the City hereunder, and all of its activities relating to the Facility shall be in its capacity as independent contractor to the City. 10/18/00 a. Obliqations of the Facility, Provided that the City is not in breach of its obligations hereunder, at the Expense of the Facility, EAGL shall pay all obligations and defend all disputed claims arising out of or resulting from EAGL's activities conducted in connection with or incidental to this Agreement. b. Indemnification by EAGL. EAGL agrees to indemnify, hold harmless and defend the City, its officers, agents and employees, from and against all liability for any and all claims, liens, suits, demands or actions from damages, injuries to persons (including death), property damage (including loss of use), and expenses, including court costs and attorneys' fees and other reasonable costs arising out of or resulting from EAGL's intentional wrongdoing or gross negligence. c. Limitation of Liability. Notwithstanding anything contained herein to the contrary, the liability of EAGL hereunder shall be limited to the amount of the current fiscal year Fixed Management Fee, and in no event shall any other assets of EAGL or any constituent member or other affiliate of EAGL be subject to any claim arising out of or in connection with this Agreement. d. Indemnification by the City. The City agrees to indemnify and hold harmless and defend EAGL, its officers, agents and employees, from and against all liabilities for any and all claims, liens, suits, demands or actions for damages, injuries to persons (including death), property damage (including loss of use, and expenses, including courts costs and attorneys' fees and other reasonable costs arising out of or resulting from the liabilities and obligations to be assumed by the City in accordance with paragraph 9 of this Agreement. e. Notice of Claim. EAGL and the City will provide each other with prompt and timely notice of any event covered by the indemnity section of this Agreement and in the event a claim or action is filed, each party may employ attorneys of its own choosing to appear and defend the claim or action on its behalf. - 10- 11. Insurance. As an Expense of the Facility, EAGL agrees to obtain public liability insurance of the types and in the amounts set forth below from an underwriter licensed to do business in the State of Texas. EAGL shall furnish to the City certificates of insurance, evidencing the required insurance within thirty (30) days prior to the expiration date of the previous certificate(s). So long as the City is not in breach of this Agreement, EAGL agrees to secure and maintain the following types and amounts of insurance, for the term of this agreement. (3) (4 ) (5) 10/18/00 Type and Amount of Insurance, The minimum type and amount of insurance to be obtained for the Facility is as follows: a. "TYPE" (1 ) Worker's Compensation and Employer's Liability or reasonably acceptable alternative (2) Comprehensive General (Public) Liability (or its equivalent) to include (but not limited to) the following: (a) Premises/Operations (b) I ndependent Contractors (c) Personal Injury (d) Products/Completed operations Fidelity Insurance - covering all employees and officers having access to monies collected. Property Insurance - for physical damage to the property of EAGL located at the Facility, including improvements and betterments to to the Facility. Comprehensive Automobile Liability (or its equivalent) - to include coverage for: (a) Owned/Leased Automobiles - 11 - "AMOUNT" Statutory Bodily Injury: $ 500,OOO-per person $1 ,OOO,OOO-per occurrence and Property Damage: $ 250,OOO-per occurrence or $1 ,OOO,OOO-Combined Single Limit for bodily injury and property damage. Amount sufficient to protect the loss of the largest dollar amount in the control or possession of an employee at any given time, but not less than $125,000 or such other amount as requested by the City. Coverage for minimum of one hundred percent (100%) of the fair market value of property. Bodily Injury: $ 500,000 per person $1,000,000 per occurrence and Property Damage: (b) Non-owned Automobiles (c) Hired Cars $ 250,000 per occurrence or $1,000,000 Combined Single Limit for bodily injury and property damage, (6) Corporate Liability Umbrella At least $10,000,000 b. Additional Insurance Requirements: With respect to the above-described insurance, EAGL agrees to: (i) Have the City named as an additional insured, or an insured as its interest may appear. (ii) Provide for a Waiver of Subrogation in favor of the City. (iii) Provide thirty (30) days written notice of any material change, termination or cancellation. 12. Miscellaneous. a. Assiqnment. The rights and obligations under this agreement are not assignable by either party without the written consent of the other party hereto, Any assignment by EAGL within the first two (2) years of the Term of this Agreement without City Council approval may be deemed an Event of Default under Section 8 hereof. b. Notices. In the event of delivery of any notice provided for or required under this Agreement, the notice shall be in writing and shall be effective upon delivery if delivered in person, or by messenger, or upon the third business day following deposit in the United States mail, if mailed certified mail, return receipt requested, postage prepaid, to the address of the addressee as follows: If to the City: The City of North Richland Hills 7301 N.E. Loop 820 North Richland Hills, TX 76180 Attention: City Manager If to EAGL: Evergreen Alliance Golf Limited, L.P. 8650 Freeport Parkway S., Suite 200 Irving, Texas 75063 Attn: President cc: General Counsel 10/18/00 - 12 - Any party may change its address for notification purposes by giving the other parties written notice of such change in the manner provided above. 10/18/00 c. Entire Aqreement. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof, and this Agreement supersedes all prior letter agreements and correspondence with respect to the subject matter of this Agreement. d. Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Texas, and shall be enforceable in Tarrant County, Texas. e. Attorneys' Fees. In the event any party to this Agreement shall institute legal proceedings or be the defendant in legal proceedings for the purpose of enforcing the terms and provisions of this Agreement and shall prevail in a final, non- appealable judgment entered by a court of competent jurisdiction, then the non-prevailing party shall reimburse the prevailing party for all attorneys' fees and court costs incurred as a result of such proceedings, f. Parties Bound. With the exception of the limitation on assignablility of this Agreement as provided above, this Agreement shall bind the respective successors and assigns of the parties hereto. g. Headinqs. The headings used in the Agreement are used for administrative purposes only, and do not constitute substantive matter to be considered in construing the terms of this Agreement. h. Leqal Construction, In case anyone or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable shall not affect any other provision thereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. - 13 - IN WITNESS WHEREOF, this Agreement has been entered into as of the date first written above. ATTEST: THE CITY: ~'I/ ----/.../. ,__ "'ù ...... ////. ~ ?¿/'" it, Sec~å. ;.(y .::IJ...: :-'- :::0: :(!]: ::.7'.... flrA."::h: ..,p' 'I II ..: ~ ~: THE CITY OF NORTH RICHLAND HILLS, TEXAS By: The City of North Richland Hills, Texas By: '--~...!' . . ,.' -j j . \ ¡ _ ;'''{/(I') ,'î-.-. (( If Larry J. Qunipingham City Manager .J- -- )Æ,( "/ ~~/"'l~ EVERGREEN ALLIANCE GOLF LIMITED, L.P. a Delaware limited partnership, By: EAGL GP, LLC, its general partner By: Lawrence A. Corson President 10/18/00 - 14 -