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4.7. SR 03-06-2017 Eclty1� ,.,�� Request for Action River To Item Number Mayor and City Council 4.7 Agenda Section Meeting Date Prepared by Consent Agenda March 6, 2017 Michael Hecker, Parks and Recreation Director Item Description Reviewed by Pinewood Management Agreement Cal Portner, City Administrator Reviewed by Action Requested Approve,by motion, the Pinewood Management Agreement for the Elk River Country Club to operate the Pinewood Golf Course. Background/Discussion The city advertised and received two proposals in November of 2016 for the management/sale of Pinewood Golf Couse. City Council consensus at the November 21, 2016,work session was for the city administrator to meet with the Elk River Golf Club and work out details toward entering into a formal agreement. Staff has been working with the Elk River Country Club staff on the Pinewood contract through the winter months. Our city attorney and specialists at the League of Minnesota Cities collaborated in the development of the final agreement. The Elk River Golf Club Board has reviewed and approved the attached agreement. The Golf Club will make repairs and prepare the clubhouse and grounds for each season. The city is assisting with the startup of the building such as the heater and water. Financial Impact The city will pay the Elk River Golf Club a management fee of$4,000 per month during the months of April through September for the next two years. The city will pay for all operating expenses and all revenues from Pinewood operations will accrue to the city. Attachments ■ Pinewood Management Agreement POWERED 6T AR MANAGEMENT AGREEMENT THIS AGREEMENT entered into this sixth (6th) day of March, 2017 by and between the City of Elk River, a Minnesota municipal corporation, at 13065 Orono Parkway, Elle River, Minnesota 55330 (hereinafter "City") and Elk River Country Club, Inc. a Minnesota corporation d/b/a Elk River Golf Club at 20015 Elk Lake Road, Elk River, Minnesota 55330 (hereinafter "Operator"). WHEREAS, the City has owned and operated Pinewood Golf Course at 18150 Waco Street NW, Elk River, Minnesota 55330 ("Golf Course" or"Pinewood"). Pinewood is a 9-hole executive course with a 1,700 square foot clubhouse and a pole barn maintenance building; and WHEREAS, the City has determined that the continued operation of the golf course would serve a public purpose and provide a benefit to the residents of the City; and WHEREAS, the Operator is engaged to manage the Golf Course; and WHEREAS, the City will retain all revenues from the Golf Course and pay all expenses relating to the operation of the Golf Course as well as required capital improvements. NOW, THEREFORE, the City and the Operator, for the consideration hereinafter named, do hereby mutually agree as follows: 1. Management. The City appoints the Operator as the manager of the Pinewood Golf Course (hereinafter "Golf Course") in accordance with the terms of this Agreement. This appointment is for the purpose of operating, managing and maintaining the Golf Course. The gas pump at the Pinewood Golf Course shall only be used by the Operator and the Operator's employees for operations of Pinewood. The Golf Course shall be deemed to include the equipment listed on Exhibit A, which shall be maintained by the Operator in as good working condition as of the commencement date of this agreement, reasonable wear and tear excepted. The equipment may only be used by the Operator for use on the Pinewood Golf Course. 2. Standards of Operation. Operator represents and warrants to City that it shall maintain an efficient and high quality operation at the golf course comparable to other similar golf courses. 3. Term. This agreement shall be for a period commencing on the date first set forth above and ending on the 31st day of December, 2018,provided however in addition to the termination provisions in paragraph 26, that the City may terminate this Agreement at will, without cause, by delivery (by mail or by personal service) to Operator(at its address stated hereinabove) of a notice of the City's intention to terminate this agreement, one hundred and twenty (120) days after the delivery of the notice. At the expiration of the one hundred and twenty (120) day period (a) this Agreement shall terminate (b) the Operator shall, at its own cost and expense, immediately remove all of its personal property from the Golf Course, and quit and surrender possession thereof to the City, in good order and condition, subject to the terms and conditions herein and (c) the City shall pay to the Operator an additional three (3) months of the current management fee as liquidated damages unless Page 1of11 1914541 the termination is for a reason set forth in paragraph 26. This agreement allows the City to terminate the license at will. The Operator may request to extend this Agreement for an additional one (1) year period, commencing on January 1, 2019 and ending on the 31st day of December, 2019, by giving notice in writing to the City by delivering to the City Clerk by September 1, 2018 of its request. The financial terms of such renewal shall be negotiated between the City and the Operator. Such renewal is subject to City council approval. 4. Legal Compliance. The Golf Course shall be used, occupied, operated, maintained and repaired so as to be in compliance with all statutes, ordinances, codes, rules and regulations. The Operator shall maintain sole and complete discretion to determine and employ whatever methods, practices and procedures it deems appropriate to assure the Golf Course remains in compliance with all stated statutes, ordinances, local laws, codes, rules and regulations however, if such compliance requires additional capital or funding, the City will promptly provide such funding to allow the Operator to ensure such compliance. 5. Indemnity. The Operator must defend, indemnify and hold harmless the City and its officials, employees and agents and from any and all suits, claims, actions or causes of action of every name and description brought against City for or on account of any death, injuries or damage received or sustained by any party or parties from the negligence, gross negligence or willful misconduct of the Operator arising from the Operators use of this agreement. 6. Insurance. The Operator shall take out and maintain during the term of this agreement at the City's expense such commercial liability insurance as shall protect the Operator and the City from claims for damages for personal and bodily injury including accidental death, as well as from claims for property damage, which may arise from operations under this agreement. The City shall be named as an additional insured on the commercial liability policy on a primary and non-contributory basis. Before commencing work, the Operator shall provide the City a certificate of insurance evidencing the required insurance coverage in a form acceptable to City. Such insurance shall be written for amounts not less than: a) Commercial General Liability: A single limit policy in the amount of at least $2,000,000.00 per occurrence for death or bodily injury and property damage liability claims, public liability insurance, blanket contractual liability, broad form property damage liability and fire legal liability. b) Commercial Automobile Liability Insurance. The Operator is required to maintain insurance protecting it from claims for damages for bodily injury and property damage resulting from the ownership, operation, maintenance or use of automobiles which may arise from operations under this agreement. Minimum limits are as follows: $1,000,000 per occurrence Combined Single Limit for Bodily Injury and Property Damage. In addition, the following coverages shall be included: Owned, Hired, and Non-owned Automobiles. Page 2of11 1914541 c) Workers Compensation Insurance: The Operator shall maintain Workers Compensation insurance for its employees during the life of this agreement in accordance with the statutory requirements of the State of Minnesota. In addition Employer's Liability Insurance shall be provided with minimum limits are follows: $500,000 —Bodily Injury by Disease per employee $500,000 —Bodily Injury by Disease aggregate $500,000 —Bodily Injury by Accident d) The Operator shall maintain a blanket faithful performance bond of$250,000 that covers thefts by the Operator and the Operator's employees. The Operator shall furnish a copy of the above-described insurance policies (or a certificate showing the issuance thereof) to the City and shall also name the City as the additional insured in the Commercial General Liability and Commercial Automobile Liability policies on a primary and non-contributory basis. The Operator's policies and Certificate of Insurance shall contain a provision that coverage afforded under the policies shall not be cancelled without at least thirty (30) days' advanced written notice to the City, or ten (10) days' written notice for non-payment of premium. An Umbrella or Excess Liability insurance policy may be used to supplement the Operator's policy limits on a follow-form basis to satisfy the full policy limits required by this agreement. If the Operator obtains a license to sell beer, wine or intoxicating liquor on the golf course premises, the Operator, at its expense, shall be required to maintain liquor liability insurance in the minimum amount of$1,000,000 for bodily injury, destruction of property of others, loss of means of support, and other pecuniary loss in any one occurrence. The City shall be endorsed as an additional insured. 7. Damage/Injury. The Operator agrees to reimburse the City for any and all damages or injury to any real property or personal property of the City that may arise, directly or indirectly, from the intentional or negligence, acts or omissions of the Operator, its agents or employees. Any accident involving significant property damage or bodily harm occurring at the Golf Course property shall be reported to the Park Superintendent as soon as possible and not later than twenty-four (24)hours from the time of such accident. A detailed, written report shall be submitted to the Park Superintendent as soon as possible and not later than three (3) business days after the date of such accident. 8. Independent Contractor. The City hereby retains Operator as an independent contractor upon the terms and conditions set forth in this Agreement. Operator is not an employee of the City and is free to contract with other entities as provided herein. Operator shall be responsible for selecting the means and methods of performing the work. Operator shall furnish and be reimbursed by the City for any and all supplies, equipment (except as indicated on Exhibit A), and incidentals necessary for Operator's performance under this Agreement. City and Operator agree that Operator shall not at any time or in any manner represent that Operator or any of Operator's agents or employees are in any manner agents or employees of the City. Operator shall be exclusively responsible under this Agreement for Operator's and Operator's employees FICA payments, workers compensation Page 3of11 1914541 payments, unemployment compensation payments, withholding amounts, and/or self-employment taxes if any such payments, amounts, or taxes are required to be paid by law or regulation. 9. Employees. The Operator, in its sole and absolute discretion and at the City's expense, shall hire its own staff to operate, manage and maintain the Golf Course. The Operator shall be solely responsible for determining staffing levels and qualifications and setting its employees' compensation, benefits, hours and all other terms of employment. 10. Volunteers. The Operator may attempt to recruit volunteers to assist with various segments of golf Operations, such as customer service and grounds beautification. The Operator may work with the City to recruit volunteers. Any volunteers are under the direction and control of the Operator and are therefore volunteers of the Operator. 11. Notices. Any and all notices and payments required hereunder shall be addressed to the parties at their respective addresses listed on page 1 hereof, or to such other address as may hereafter be designated in writing by either party hereto. 12. Maintenance. The Operator agrees to maintain the Golf Course and cause any required repairs to be made at City's expense unless the operator is responsible for the damage as set forth in paragraph 7. At the expiration of the term hereof, Operator shall deliver up the Golf Course in good order and condition. Notwithstanding the foregoing, the City, at its sole cost and expense, shall maintain, repair and replace, if necessary, the structural components of the clubhouse. The Operator is required to keep the clubhouse in accordance with state health and local building code requirements. The Operator will make repairs and prepare the clubhouse for each season, which includes winterization of the clubhouse. The clubhouse shall be returned to the City in substantially the same state that is was received by the Operator, reasonable wear and tear excepted. The Operator shall maintain the Golf Course under the standards set forth in Exhibit B. The Operator, however, in its sole discretion, shall determine what manners and procedures shall be employed to meet those standards. The Operator, in its sole discretion, has the right to sell and place signage on the Golf Course at each tee box, attached to the hole designation. Any revenue derived from such activity shall accrue to the City. 13. Accounting Standards. Operator shall maintain accounting records relating to the Golf Course using accounting practices in accordance with generally accepted accounting principles (GAAP). The Operator shall keep detailed records of all revenues and expenses as are necessary to reflect the results of the operation of the Golf Course, including bills and invoices for supplies and services. Monthly operating statements shall be furnished to the City by the 10th day following the last day of each month, and annual operating statements shall be furnished by the 45th day following the end of the season. The types of revenue that should be reported should include, but not limited to, green fees, membership fees, concessions, pro-shop sales, golf cart rentals, tournament fees, and advertising/marketing revenue. The Operator shall make its books and records available to the City to request, review and/or audit all records, documents and financial statement related to all aspects of the Golf Course operations. Such books and records shall be made available in such locations and in such manner as the City may reasonably request. Page 4of11 1914541 14. Revenue. All Revenues that the Operator receives from the management and operation of the Golf Course shall accrue to the City, and shall be deposited into the City's designated account. The Operator shall pay the City all revenue received from operation of the Golf Course including but not limited to green fees, membership fees, tournament fees and, concession fees, minus the cost of the Operator purchasing concessions and the cost of advertising approved by the City. The revenue collected during a month shall be paid to the City on or before the 10th day of the following month. 15. Payment. The City shall pay the Operator a management fee of$4,000.00 per month for managing the Golf Course. This fee shall be payable during the months of scheduled operations from April 1 to September 30. If the Operator and the City agree that weather and business is at a level to keep Golf Course open outside the stated window in any year (open before April 1 or remain open past September 30) the payment fee from the City to the Operator shall be at a daily rate of$129.00. Each monthly payment is due by the City to the Operator by the 10'h day of the following month. In addition to the management fee, the City agrees to pay the Operator, after the Golf Course is closed for the year, 25% of net profit for that year. "Net Profit" means all revenue received by the City from the Operator pursuant to paragraph 14 of this Agreement less all expenditures the City incurs in conjunction with the Golf Course including the management fee paid to Operator. All operating losses are the responsibility of the City. Except as specifically provided herein, the City will not compensate the Operator for any expenses the Operator incurs. 16. Concessions. The City shall invest up to $1,500 or any such amount required to improve the concessions area to meet state health code requirements. The Operator at City's expense shall provide the following concessions during the operating season: a. Golf balls, t-shirts, golf polos, sweatshirts and hats. b. Soda, candy, chips and packed sandwiches and other products approved by the City. 17. Advertising. The Operator, with City's approval and at City's expense shall provide the following advertising and promotion: a. Star News for league formation and membership. b. Manage the current Pinewood Golf Course Facebook page but may not delete any old posts, photos or videos. 18. Utilities and Operating Expenses. The City shall at its own expense be responsible for the following payments and obligations: a. All utilities, including gas, electric, water, cable, television, internet and telephone service. b. Burglar alarm and monitoring system. C. Irrigation and pump maintenance and the payment of contract fees for same, including winterization and annual fall blow out. d. Any expenditures over $500 will require prior approval by the Parks and Recreation Director and City Administrator Page 5of11 1914541 19. Fees. The Operator, in its sole discretion, may set the fees for use of the Golf Course but agrees that the fees for 2017 shall be the maximum set forth in Exhibit C, attached hereto and made a part hereof. The Operator, in its sole discretion, shall set the fees for tournament play. The Operator shall provide monthly reports to the City regarding all revenue collected. The monthly reports shall be provided to the City by the 1 ofh of the following month. 20. Bond. The Operator shall be required to have a performance and payment bonds in the amount of$25,000.00. The bond shall be in effect during the entire term of this agreement. 21. Log. The Operator shall create and maintain a general maintenance log of all equipment listed in Exhibit A, attached hereto and made a part hereof. 22. Repairs and Replacement. Equipment repairs or replacement agreed upon by the City shall be the financial responsibility of the City and shall be done by the City. The Operator shall, however, be responsible for any repairs or replacements due to any negligence or willful misconduct. 23. Controlling LawNenue. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. In the event of litigation, the exclusive venue shall be in the District Court of the State of Minnesota for Sherburne County Minnesota. 24. Minnesota Government Data Practices Act. Operator must comply with the Minnesota Government Data Practices Act, Minnesota Statutes Chapter 13, as it applies to (1) all data provided by the City pursuant to this Agreement, and (2) all data, created, collected, received, stored, used, maintained, or disseminated by Operator pursuant to this Agreement. Operator is subject to all the provisions of the Minnesota Government Data Practices Act, including but not limited to the civil remedies of Minnesota Statutes Section 13.08, as if it were a government entity. In the event Operator receives a request to release data, Operator must immediately notify City. City will give Operator instructions concerning the release of the data to the requesting party before the data is released. Operator agrees to defend, indemnify, and hold City, its officials, officers, agents, employees, and volunteers harmless from any claims resulting from Operator's officers', agents', city's, partners', employees', volunteers', assignees' or subcontractors' unlawful disclosure and/or use of protected data. The terms of this paragraph shall survive the cancellation or termination of this Agreement. 25. Assignment. The Operator shall not assign this agreement, or its rights, title or interest herein without the express prior written consent of the City. 26. Termination. The City shall have the right to terminate this agreement if: a. Operator is adjudged bankrupt or makes an assignment for the benefit of creditors; or b. A receiver or liquidator is appointed for Operator or for any of its property and is not dismissed within twenty (20) days after such appointment or the proceeding in connection therewith are not stayed on appeal within twenty (20) days; or d. Operator fails to make prompt payment of fees; or e. Operator is guilty of a substantial violation of any provision in this contract. [Remainder of Page Intentionally Left Blank.] Page 6of11 1914541 CITY OF ELK RIVER By: John J. Dietz, Mayor By: Tina Allard, City Clerk STATE OF MINNESOTA ) )ss. COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this day of 2017 by John J. Dietz and Tina Allard, respectively the Mayor and City Clerk of the City of Elle River, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted by its City Council. Notary Public ELK RIVER COUNTRY CLUB, INC. d/b/a Elk River Golf Club By: Name: Title: STATE OF MINNESOTA ) )ss. COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this day of 2017 by , the of Elle River Country Club, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public Page 7of11 1914541 Exhibit A Equipment provided by City Unit Make Model Hours Serial Number Estimated Number Value 784P Toro Groundsmaster 3500-D 2526 308-260000452 $31,385 782P Toro Reelmaster 5200-D no-meter 03540- $35,200 260000253 783P Toro Greensmaster 3150-Q 1470 0357- $27,765 260000691 786P Toro Greensmaster 3150-Q 305 04358- $27,765 313000251 781P Toro Workman 247 07277- $9,975 260000717 785P Cushman Turf-Truckster 60 99006290 $13,000 Toro Greens Aerator no meter 09120-60403 $4,000 Lely Fertilizer Spreader no meter 2.32021E+13 $3,000 Club Car Utility Cart no meter No number $12,000 present EZGO TXT Golf Cart no meter 2288571 $3,540 EZGO TXT Golf Cart no meter 2288547 $3,540 EZGO TXT Golf Cart no meter 2289143 $3,540 EZGO TXT Golf Cart no meter 2289178 $3,540 EZGO TXT Golf Cart no meter 2289146 $3,540 EZGO TXT Golf Cart no meter 2289893 $3,540 EZGO TXT Golf Cart no meter 2289174 $3,540 EZGO TXT Golf Cart no meter 2288522 $3,540 EZGO TXT Golf Cart no meter 2289553 $3,540 EZGO TXT Golf Cart no meter 2289131 $3,540 EZGO TXT Golf Cart no meter 2289130 $3,540 Page 8of11 191454v1 Exhibit B Maintenance Standards Maintenance • Maintenance Equipment o Operator may use the current equipment allocated at Pinewood by the City at no cost to up keep the course to the standard listed below. Any additional equipment that is needed in the joint determination of the City and Operator shall be provided by Operator at City's expense. • Greens o Mowed daily to keep constant speed and conditions. o Topdressing and fertilizing will be scheduled by Jon Varty, depending upon the turf condition starting the year coming out of the winter. o Topdressing use of the City's top dresser. o Aerification will take place in the late fall and be top dressed in the spring going into the 2018 season. If aerification needs to be done in 2017, it would be done early spring. • Fairways, Rough, Edging, and Tees o Mowed 3 to 4 times a week. o Fertilizing will be scheduled based on weather and turf conditions. o Use of IPM (ingrate pest management). Pesticide and fertilizer may only be used by a certified pesticide licensed company when needed, not a static plan. • Irrigation will be maintained with same parts as presently used, and blown out each fall during late October. • Equipment repairs and replacement are the responsibility of the City; general maintenance will be performed by Operator. • Initial capital improvements are built into expense at this point. The only part that is not built into expense is the repair for water damage in the clubhouse. The parties understand that there may be additional capital improvements required to make the facility fit for public use. Any capital improvements required will be paid by the City. Operator can assist in bidding it out to make sure to keep cost down. Clubhouse • Clubhouse must be maintained in proper condition in accordance with the state health and safety guidelines. • Each day the closing worker will have a checklist to complete and make sure that the clubhouse area is set for the next day. o Wipe down all tables. Page 9of11 1914541 o Empty all garbage receptacles. o Turn off coffee warmer and coffee machine. o Clean coffee machine and coffee pots. o Put hot dog condiments (onions, relish, etc.) in cooler. o Fill pop cooler. o Empty popcorn machine and clean out. o Stock bar (napkins, straws, swords, chips, cups, lids, etc.) o Take roller off on hot dog machine, wash it, and wash inside. o Dishes are done and put away. o Make sure all lights are turned off, upstairs and down. o Make sure windows are shut. o Make sure all doors are locked. o Check patio for garbage and make sure patio is arranged for next day. o Vacuum. o Count cash box in office and deposit in safe. o Close out credit card machine. Page 10 of 11 191454v1 Exhibit C 2017 Golf Season Pricing 9 holes $14.00 $12.00 $10.00 18 holes $19.00 $17.00 $15.00 9 holes $17.00 $15.00 $13.00 18 holes $22.00 $20.00 $18.00 9 holes $5.00 $4.00 18 holes $9.00 $8.00 Adult Single $455.00 Adult Couple $655.00 Adult Family $795.00 Senior Single $395.00 Senior Couple $545.00 Junior $225.00 Page 11 of 11 191454v1