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AMENDMENT NO. 1 TO THE ARCADIA PAR 3 GOLF COURSE
° . •
A. 190J LEASE AGREEMENT BY AND BETWEEN THE CITY OF ARCADIA
AND AMERICAN GOLF CORPORATION
2aj�&!n, , _, This Amendment No. 1 ( "Amendment No. 1") is hereby entered into this f� day of
20 by and between the City of Arcadia, a municipal corporation of the
State of CaMfornia, and American Golf Corporation, a California Corporation, with respect to that
certain Agreement between the parties dated December 29, 2008 ( "Agreement).
The parties agree as follows:
1. Section 8 of the Agreement is amended by extending the term from December 1,
2013 to November 30, 2018 ( "Extended Term ").
2. All of the remaining terms and provisions of the contract are hereby reaffirmed.
In witness whereof the parties have executed this Amendment No. 1 on the date set
forth below.
CITY OF ARCADIA
By: ' _ -tea
Dominic Lazzarett
City Manager
Dated: --:S 2. 20 1 L -
(SEAL)
APPROVED AS TO FORM
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Steph n P. Deitsch
City Attorney
AMERICAN GOLF CORPORATION
By:
Title:
Dated:
By:
Title: crctc
Dated: LIEU/ F-
CONCUR:
T m Tait
Public Works Services Director
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LEASE AGREEMENT
ARCADIA PAR 3 GOLF COURSE
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EXECUTION ORIGINAL
This Lease Agreement (the "Lease" or the "Agreement') is by and between the City of Arcadia,
a municipal corporation, (hereafter referred to as City) and American Golf Corporation (hereafter
referred to as Lessee.) In consideration of the mutual promises and covenants set forth herein,
both parties agree as follows:
SECTION 1 — PROPERTY LEASED
The City leases to Lessee, for its management and operation, the real property known as the
Arcadia Par 3 Golf Course located at 620 East Live Oak Avenue, Arcadia, which is fully
described in Attachment A, incorporated as part of this Agreement (the "Facility "). The name
of the golf course shall not be changed unless authorized in writing by the City.
SECTION 2 — USE
(A) Primary Use. Lessee agrees that the Facility is designed to provide the general public with
golf and golf - related recreational facilities and Lessee shall not materially alter this use
without the written consent of City. Lessee agrees to promote the site and its facilities and
to operate the course so that it meets the golfing needs of the general public to the
reasonable satisfaction of the City. Lessee further agrees to provide instructional services
in golfing technique and practice and to coordinate and promote the activities of golf clubs
(organizations), training programs and local and regional tournaments. Lessee shall also
provide starter and driving range services and shall monitor the play of the course to
assure that proper golf etiquette is practiced by course participants. Lessee shall have the
privilege of using the site and facility solely for the purpose set forth in this Agreement. It is
understood and agreed that the Arcadia Par 3 Golf Course is one of the public recreational
facilities owned by the City of Arcadia, and its conduct and operation are for service to and
for the benefit of the general public.
(B) Recreational Use. Lessee shall collaborate with the Recreation and Community Services
Department to provide a reasonable variety of quality golf related, affordable recreational
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programs to the City of Arcadia residents. These recreational opportunities should be used
to enhance and increase recreational golf participation in the community year round.
Programs and activities shall be offered through the City, while both advertising and
marketing will be a shared responsibility by the City and Lessee; provided that any
advertising and /or marketing materials to be used by the City and /or Lessee shall be
subject to the reasonable prior approval by City and Lessee. Staffing and a Golf
Professional for programs and activities shall be provided by Lessee at no cost to the City;
provided that the rates for such programs and activities shall be structured so that the
proceeds therefrom shall be sufficient to cover City's and Lessee's costs of administering
and implementing the programs and activities. Such programs and activities shall be as
set forth on Attachment B, attached hereto and incorporated herein by this reference.
SECTION 3 — FACILITIES
(A) Lessee agrees that at its own expense, it will maintain and operate the Facility listed
below in accordance with the terms and conditions of this .Agreement. Lessee shall
operate and maintain the Facility in accordance with the following standard and
requirements (the "Operating Standard "): (i) as a quality municipal golf facility comparable
in quality with other municipal golf facilities in the Southern California market having
similar revenue and costs structures as that of the Facility; and (ii) with appropriate
agronomic, maintenance and playing conditions, comprehensive customer service, and
operational efficiencies, all in a manner to meet the maintenance standards set forth on
Attachment E attached hereto and incorporated herein by this reference. The Operating
Standard shall be modified from to time to account for certain events including but not
limited to the events set forth in Section 14, any reconfiguration of the Facility pursuant to
Section 3(D), or any damage, destruction or condemnation of the Facility. Minimum
operational requirements shall include:
i. An eighteen hole par 3 golf course illuminated for night play;
ii. A practice putting green illuminated for night play;
iii. A driving range illuminated for night play;
iv. A clubhouse and pro shop for the sale and rental of golfing related equipment
and supplies;
V. A coffee shop serving sandwiches and refreshments;
vi. Adequate parking facilities;
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vii. Course and range irrigation system; and
viii. Restrooms and drinking fountains on course.
(B) Subject to Section 14 of this Agreement, Lessee also agrees that it will use reasonable
commercial efforts to complete all improvements and renovations to the reasonable
satisfaction of the City as detailed in Attachment C of this Agreement (the
`Improvements "). Both Lessee and City agree that time is of the essence with respect to
the completion of the Improvements and Lessee shall use reasonable commercial efforts
to complete the improvements in compliance with the construction schedule set forth in
Attachment C (the "Completion Schedule "). City shall approve any modification or
deviation from the Completion Schedule and shall have the opportunity to approve the
construction of the Improvements as set forth in Section 3(C) below; provided that such
approval shall not be unreasonably withheld or delayed. Any changes to the scope,
design or specification of the Improvements shall be made only pursuant to a change
order executed by Lessee and City.
(C) Construction of Improvements.
i. Approved Designs. Lessee shall be responsible for the design of the
Improvements, including, without limitation, grading, irrigation, lighting, pathway
design and installation, kitchen griddle upgrade and related plans and
specifications (collectively, the "Designs "). Lessee shall provide City with a copy
of the Designs no less than thirty (30) days prior to the construction of the
Improvements for its review and approval. City shall have ten (10) business days
from receipt of Designs to review, accept or reject the Designs. In the event the
Designs are rejected, in whole or in part, City shall provide written notice of such
rejection, together with a detailed description of the rejected portion or portions of
the Designs ( "Design Rejection Notice "). City shall not unreasonably reject or
delay the review and/or approval of the Designs, it being understood that the
review and approval process is intended to ensure that the Designs conform with
the description and scope of the Improvements set forth on Attachment C. If
City fails to provide a Design Rejection Notice to Lessee within ten (10) business
days of receipt, City shall be deemed to have accepted such Design(s). Lessee
shall correct or modify any Design noted in the Design Rejection Notice and
resubmit the corrected or modified Design to City. City shall have five (5)
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business days to re- inspect the corrected Design and accept or reject such
Design, which review and notice process shall continue until City accepts the
Design. If City fails to provide a Design Rejection Notice within five (5) business
days of receipt of the re- submitted Design, City shall be deemed to have
accepted the Design. Lessee shall cooperate with City in good faith to address
any concerns which City may have with the Design(s). The City agrees that the
review and approval of the Designs (or re- submitted Designs) shall not result in
a material increase in the project budget or actual costs to complete such
Improvements and shall not result in a material deviation from the Completion
Schedule. Accordingly, the review and approval of such Designs shall be
conducted within the parameters of the project budgets, scope of work and
Completion Schedule set forth on Attachment C.
ii. Modification of Designs. Lessee shall not modify the approved Designs without
the written consent and approval of City which shall not be unreasonably
withheld.
iii. Completion Schedule and Requirements. Subject to Section 14, Lessee shall use
all reasonable commercial efforts to complete the construction of the
Improvement in accordance with the Completion Schedule and shall give City
notice of any material delay in the Completion Schedule.
iv. Construction Costs. Lessee shall be responsible for all costs and expenses
associated with the construction and design of the Improvements, including, but
not limited to, construction costs, design changes, licenses, permits and
insurance. In the event that a delay by Lessee in commencing construction of
the Improvements results in an increase in the cost of the Improvements beyond
the scope set forth in Attachment C, Lessee shall be responsible for such
additional cost.
V. Inspection. City, its experts and consultants, shall have the right to inspect and
approve the Improvements and shall have the opportunity to accept or reject
such construction of such Improvements (the "Work') when performed; provided
that such inspections and approvals shall not be unreasonably withheld or
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delayed. Lessee shall provide City with written notice of completion of each
improvement or renovation ( "Inspection Notice "). City shall have ten (10)
business days from receipt of an Inspection Notice to inspect, or have inspected,
the Work and to accept or reject the Work in its reasonable discretion. In the
event any Work is rejected, City shall provide written notice of such rejection,
together with a detailed description of the rejected Work and requested correction
( "Rejection Notice "). If City fails to provide a Rejection Notice to Lessee within
ten (10) business days of receipt of an Inspection Notice, City shall be deemed to
have accepted such work. Lessee shall correct any Work noted in the Rejection
Notice and reissue an Inspection Notice to City. City shall have five (5) business
days to re- inspect the corrected Work and accept or reject such Work, which
inspection and notice process shall continue until City accepts the Work, in its
reasonable discretion. If City fails to provide a Rejection Notice within five (5)
business days of receipt of the reissued Inspection Notice, City shall be deemed
to have accepted the Work contained within the reissued Inspection Notice. If
Lessee fails to correct the Work in accordance with this Section 3(D), City shall
have the right to terminate this Agreement in accordance with the procedures
outlined in Section 12.
(D) Reconfiguration of Course. City shall have the right, at any time during the term
of this Lease, to sell one or more portions of the real property which makes up
the Facility, subject to the following conditions:
i. At all times while this Lease remains in effect, City shall retain sufficient real
property to allow for an 18 hole par 3 golf course at the Facility. Such real
property shall allow for the reconfigured Facility to contain elements and features
comparable to the condition of the Facility prior to the reconfiguration;
ii. In the event that the reconfiguration and /or sale of any portion of the Facility
renders a portion of the golf course unusable, then City shall be responsible for
all costs associated with the reconfiguration of the golf course to allow for such
sale, including without limitation, all design, development, construction,
landscaping and other necessary infrastructure in order to meet the requirements
of Section 3(D)(i). Subject to Lessee's rights under Section 3(D)(iv), Lessee shall
cooperate with City in carrying out such activities, provided, however, that Lessee
shall be entitled to additional compensation for any work in connection with such
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reconfiguration which is outside of the scope of Lessee's obligations under this
Lease;
iii. During any period in which construction related to a reconfiguration results in a
loss or impairment of the use of the Facility as a full 18 hole golf course ( "Period
of Impairment "), City shall guarantee to Lessee minimum net cash flow from the
operation of the Facility for each calendar month (or portion thereof) during the
Period of Impairment. For the purposes of this section, the "minimum net cash
flow" for any calendar month shall be calculated as a running average of the
difference between gross revenue received by Lessee in that calendar month
from all fees, charges and concessions during the past three (3) years of full golf
course operations minus the operating costs and monthly expense accruals for
such calendar month during the past three (3) years of full golf course operations.
If the actual net cash flow during each calendar month or portion thereof during
the Period of Impairment falls below the minimum net cash flow, then Lessee
shall have the right to offset the monthly rent by the amount of the difference. If
the difference exceeds the monthly rent, then the City shall pay such excess to
Lessee. Such payment shall be made on the fifteenth day following each
calendar month or portion thereof during the Period of Impairment. The
foregoing payment shall be Lessee's sole and exclusive remedy for any loss of
revenue during the Period of Impairment and all of Lessee's obligations under the
Lease, including the payment of rent, shall continue without offset or abatement.
V. Lessee shall be included in planning meetings and discussions with the designer
in connection with any proposed reconfiguration of the course and shall have the
opportunity to provide input and comments with respect to the effect of the design
on course operating costs and revenue. City shall consider Lessee's comments
and concerns as part of the design process. Lessee shall notify City in writing if it
believes that any design for a reconfiguration being submitted by staff for final
approval by the City Council will result in an adverse economic impact on the
operation or economic performance of the Facility. If Lessee determines that
there will be an adverse economic impact on the operation or economic
performance of the Facility and the City Council approves the final design
notwithstanding such determination, then Lessee shall elect to either: (a)
terminate this Lease upon six (6) months notice to the City; or (b) continue to
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lease the Facility and modify the Lease in accordance with Section 3(D)(v). Such
election by Lessee shall be made within thirty (30) days after the completion of
the reconfiguration. In the event Lessee elects to terminate the Lease pursuant
to this Section 3(D)(iv), City shall pay to Lessee a reimbursement amount to
compensate Lessee for (i) that portion of the actual cost of the original
Improvements which remains unrecovered by Lessee as of the date of
termination; and (ii) that portion of the actual cost of any subsequent
Improvements which remains unrecovered. The applicable recovery and
reimbursement amounts are set forth on Attachment I.
V. If Lessee elects to continue to lease the Facility and modify the Lease pursuant
to Section 3(D)(iv), the Lease shall continue in full force and effect for a period of
two (2) years after the completion of the reconfiguration (the "Interim Period "). At
the end of the Interim Period, Lessee and City shall in good faith negotiate a
mutually acceptable modification to the Lease after taking into account the actual
impact of the reconfiguration on the economic performance of the golf course. If
City and Lessee are unable to agree on the modification of the Lease, then
Lessee shall have the right to terminate the Lease upon sixty (60) days prior
written notice to City. In the event Lessee elects to terminate the Lease pursuant
to this Section 3(D)(v), City shall pay to Lessee a reimbursement amount to
compensate Lessee for (i) that portion of the actual cost of the original
Improvements which remains unrecovered by Lessee as of the date of
termination; and (ii) that portion of the actual cost of any subsequent
Improvements which remains unrecovered. The applicable recovery and
reimbursement amounts are set forth on Attachment I.
SECTION 4 — HOURS OF OPERATION
All said facilities shall be operated and opened, weather permitting, for business at least twelve
(12) hours per day during the winter season and sixteen (16) hours per day during the spring
and summer season, three hundred sixty (365) days per year during business hours that will be
established at the discretion of the Lessee. In no event shall the Facility be opened for business
during the hours of 10:00 p.m. to 5:30 a.m. without the written approval of the City Manager.
Lessee shall operate business on a daily schedule which enables the largest number of
participants to enjoy the facility.
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SECTION 5 — FACILITY FEES
Lessee shall have the right to set and charge fees for the use of the facility. Initial fees and
charges shall be as set forth on Attachment D. Upon written notice to the City, Lessee shall
have the right to adjust said fees at its discretion based upon increases in the Consumer Price
Index (Los Angeles -Long Beach - Glendale, CA) ( "CPI Index ") for the period October 1 through
September 30 immediately preceding the proposed increase. Notwithstanding the foregoing, if
the proposed increase of the fees and charges (on a blended basis of all fees and charges) is
greater than three (3 %), such increase shall be subject to City action and approval pursuant to
the following process: Lessee shall provide City with a written request to increase such fees or
charges at least thirty (30) days prior to implementation, provided, however, such written
request shall not be required for any charges related to the sale of goods, driving range fees,
food or beverage which can be set at the discretion of the Lessee. Written request shall be
addressed to the City Manager and a copy shall be sent to the Public Works Services Director.
Lessee's written request (for increases greater than 3 %) shall provide justification for the
increase in fees and charges. City reserves the right to disallow the establishment of any
service fee increases greater than 3% which are substantially inconsistent with those of other
similar type facilities. In the event City believes the increase in Lessee's service fees in excess
of 3% are substantially inconsistent with those other similar type facilities, City shall forward a
letter to Lessee describing City's objections to a new fee or fee adjustment. Lessee shall
respond in writing to the City within fifteen (15) days explaining in detail its rationale for the
proposed new fee adjustment. City staff and Lessee shall discuss Lessee's reply. If within an
additional forty -five (45) days from submittal of the Lessee's request, City staff still disagrees
with Lessee's request, the matter shall be submitted by City staff to City Council for final
determination.
An uncured default by Lessee in the compliance with the above procedure shall be cause for
termination pursuant to Section 13.
No fees shall be charged for parking without prior written approval of the City. Lessee shall
maintain a preferential reduced golf fee structure for senior citizens over the age of 62 years,
students who are enrolled in public or private schools in the City through grade 12, and certain
recreational uses as set forth on Attachment B.
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SECTION 6 — MAINTENANCE
Lessee shall have the exclusive duty to maintain the golf course and all site facilities in
accordance with the Operating Standard, including comparable agronomic, turf and playing
conditions on a year round basis. At a minimum Lessee's regular maintenance schedule shall
conform with the schedule set forth in Attachment E, incorporated as part of this Agreement,
and Lessee's capital improvement and repair requirements shall be set forth on Attachment C,
incorporated as part of this Agreement. Lessee shall perform its duties and obligations under
this Agreement in a prudent and professional manner in order to meet the Operating Standard.
Maintenance shall include, but shall not be limited to, regular mowing, edging, vericutting,
aerifying, fertilizing, irrigating and all necessary landscape procedures which are required to
keep the golf course and driving range and practice green consistent with the Operating
Standard. Regular maintenance shall also include, but shall not be limited to, the requirement
to change cups, top dress playing areas, repair divots, rake sand traps, renovate turf, provide
weed and insect control, maintain watering systems including pumps and controls and to
conduct re- sodding and re- seeding when necessary to meet the Operating Standard. The
pruning of trees, shrubs and plants and the clipping of grass around all poles, fences and
walkways located within the Facility shall also be part of the regular maintenance. Lessee shall
be responsible for maintaining the clubhouse, pro shop, coffee shop, public course restrooms,
parking lot area and all storage areas to meet the Operating Standard. Maintenance of these
facilities shall include regular exterior and interior painting and repair so that all facilities meet
the Operating Standard. In addition, all interior furnishings shall be kept clean and maintained in
accordance with the Operating Standard, subject to reasonable wear and tear. All equipment
shall be maintained in accordance with the Operating Standard and at the reasonable request of
City, Lessee shall provide City with its existing schedule and /or policy for the replacement of
equipment in the ordinary course of business in order to meet the Operating Standard. Storage
areas shall be kept clean and orderly and shall be reasonably screened from public view when
not in use. Kitchen and dining facilities shall be maintained in accordance with all applicable
health and safety requirements. No offensive or refuse matter, nor any substance constituting
an unnecessary, unreasonable or unlawful fire or health hazard shall be permitted to remain on
the site and Lessee shall prevent any such matter or material from being or from accumulating
at the Facility. Lessee shall furnish trash receptacles for use by the public and shall empty and
clean each in order to maintain the Operating Standard.
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Lessee shall maintain the course and all related facilities in order to meet the Operating
Standard, and in accordance with all applicable City Code provisions applicable to public
facilities, including property maintenance requirements, or such higher standards as may be set
forth elsewhere in this Agreement.
SECTION 7 — MERCHANDISE
Lessee shall provide and maintain an inventory in the pro shop and the coffee shop of quality
golf equipment and food and beverage products. All merchandise, food and alcoholic
beverages sold on the site shall conform to all federal, state and municipal laws and ordinances.
At the request of City, Lessee shall sell branded merchandise containing the name of the City
and /or Facility in the pro shop, provided, however, that Lessee shall have discretion to set
pricing and inventory levels of such merchandise in response to customer demand. City shall
have final approval on the design and logo used on any City or Facility branded merchandise in
its sole and absolute discretion. Within thirty (30) days of the execution of this Lease, City and
Lessee shall meet to review any existing branded products and to discuss what design and logo
shall be used on a going forward basis.
SECTION 8 — LEASE TERM
(A) The term of this Lease shall be for five (5) years commencing December 1, 2008, and
ending November 30, 2013. Lessee shall have the option to extend the Lease term for
three (3) additional five (5) year terms. Lessee may request to exercise each option
during the period beginning twelve (12) months and ending six (6) months prior to the
scheduled expiration of the initial term or either of the first two extension periods. As
part of the request of Lessee to exercise for the first option term, Lessee shall submit a
written acknowledgment that Lessee shall complete the Option Term 1 Projects
(described on Attachment C) in accordance with and subject to the review and approval
process set forth in Section 3(C) above.
(B) If Lessee exercises one or more options to renew the term, and provided that Lessee is
not in material breach of any of its obligations under this Lease, this Lease shall be
extended for the option term. The rent for the option term shall be as set forth on
Attachment F.
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(C) In the event that Lessee is in material breach of any of its obligations under the Lease,
then City shall have the right to deny the request for extension and this Lease shall
expire at the end of the then current term.
SECTION 9 — RENT
(A) For the uses granted herein, Lessee agrees to pay City and City agrees to accept annual
rental payments equal to the amounts indicated in Attachment F incorporated as part of
this Agreement.
(B) Rent shall be payable quarterly in arrears with the first rental payment being earned for
the period commencing December 1, 2008 and terminating December 31, 2008. All
subsequent rental payments shall be due and payable in full within forty -five (45) days of
the end of each calendar quarter; provided, however, the first rental payment under this
Lease shall be due and payable in full on or before February 14, 2009. All rental
payments shall be paid in lawful money of the United States by check or draft to the order
of the City of Arcadia, mailed or delivered to the Administrative Services Department, City
of Arcadia, City Hall, 240 West Huntington Drive, P.O. Box 60021 Arcadia, CA 91007.
(C) Each quarterly payment submitted by Lessee shall be accompanied with a financial
statement indicating the gross sales by category with respect to such quarter. Categories
shall include golf course, driving range, cart rental, equipment rental, merchandise, food
and beverage sales for each month of the proceeding quarter.
(D) Lessee acknowledges that Lessee's failure to pay any rental payment as and when due
may cause City to incur costs not contemplated by City when entering into this Lease, the
exact nature and amount of which would be extremely difficult and impracticable to
ascertain. Accordingly, if any rental payment is not received by City as and when due,
then, without any notice to Lessee, Lessee shall pay to City an amount equal to five
percent (5 %) of the past due amount, with an added penalty of 5% of said due amount on
the last day of each month after the due date thereof, providing that the amount of such
penalty to be added shall in no event exceed one hundred (100 %) of the amount of rental
payment due.
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SECTION 10 — RECORDS AND INSPECTIONS
(A) Lessee shall be required to maintain a method of accounting, to the satisfaction of the
City, which correctly and accurately reflects the gross receipts and disbursements of the
Lessee in connection with the site operations. The method of accounting including bank
account, shall be separated from the accounting system used for any other business
operated by Lessee. Such method shall include the keeping of the following documents:
i. Regular books of accounting such as general ledgers;
ii. Journals including any supporting and underlying documents such as vouchers,
checks, tickets, bank statements, etc.;
iii. Cash register tapes (daily tapes may be separate but shall be retained so that
from day to day the sales can be identified), golf starter sheets and golf cart
rental forms; and
iv. Any other reasonable reporting records that the City deems necessary for proper
reporting of receipts.
(B) Within ninety (90) days after the close of the Lease's fiscal year, Lessee shall provide, at
no cost to the City, a certified statement with an opinion prepared by a Certified Public
Accountant detailing all gross revenue as defined in Attachment G, incorporated as part
of this Agreement, derived from green fees, driving range services, food sales, beverage
sales, sale of merchandise, cart rentals and miscellaneous rentals and all other
concessions and services. The statement shall include computations which show all rent
due to the City and Lessee shall include a payment for any rents due at the time that the
statement is submitted to the City.
(C) At the direction of the City, Lessee shall provide City with a Certified Financial Audit with
an opinion prepared by a Certified Public Accountant selected by the Lessee covering all
financial aspects of the course operation. The City shall have the right to require that the
audit be prepared by auditors selected by the City. The City will assume all costs related
to the preparation of an audit by a City - selected auditor except that the Lessee will
- assume the cost if the City audit reveals a discrepancy of three percent (3 %) or greater in
revenue or expenses for capital improvements previously reported to the City or if the City
determines that the audit is necessary to determine the validity of service or fee changes
proposed by the Lessee which are not in conformance with this Lease. If an audit shall
reveal a discrepancy in the revenues or expenses for capital improvements, Lessee shall,
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within thirty (30) days of such audit, remit payment of the full amount plus 5% of such
discrepancy to City. Likewise, in the event such discrepancy is found to have been in favor
of City, City shall remit payment of the full amount of such discrepancy to Lessee within
thirty (30) days of such audit.
(D) All documents, books and accounting records shall be open for inspection and re-
inspection at any reasonable time during the term of this Lease and for twelve (12)
months thereafter. In addition, the City or its auditors or representatives, may from time to
time at its discretion, conduct an audit and re -audit of the documents, books and
accounting records and the business conducted by Lessee and/or observe the site
operations of the Lessee, as needed, to determine the accuracy of the Lessee's records
and to confirm operations. Lessee shall not be required to retain any documents, books or
accounting records for more than seven (7) years.
(E) The City shall have the exclusive right to inspect the Facility at any time during Lessee's
normal business hours to determine maintenance and operational compliance and to
observe Facility operations.
SECTION 11 — EMPLOYEES
(A) Lessee shall recruit, hire, train, discharge, promote, supervise, manage the work of, and
compensate all employees necessary to operate the Facility in accordance with the
terms of this Agreement, including any management staff working at the Facility.
Lessee shall be solely responsible for the payment of all wages and compensation, the
payment of all payroll taxes and any required withholding of taxes for Facility
employees. Lessee shall provide all eligible employees with employee benefits similar
to those offered at similar facilities leased or managed by Lessee. Lessee shall
establish or follow established policies concerning safety in the workplace, equal
opportunity employment, anti - discrimination in the workplace and such other employee
policies as may be required by applicable state, federal and local laws. Lessee shall
use reasonable efforts to maintain a consistent workforce and supervisory personnel
and to reduce employee turnover.
(B) Lessee shall employ and supervise appropriate personnel in order to meet the
Operating Standard. City shall have the right to participate in the interview process with
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respect to the hiring of the General Manager of the Facility and Lessee shall reasonably
consider any input from the City regarding the candidates for such position, provided
that the decision to hire the General Manager shall be made by Lessee. Lessee shall
keep City informed of the hiring of the General Manager and any proposed change in
the General Manager. The General Manager shall have a copy of this Agreement at the
Facility and shall be able to administer and implement the terms and specifications set
forth in this Agreement. City shall have the right to request the termination or re-
assignment, at the discretion of Lessee, of any employee at the Facility for cause if such
employee has acted in an inappropriate manner which City reasonably believes (i) is in
violation of law or presents a threat to public safety; or (ii) is materially inconsistent with
or materially violates the Operating Standard (subject to Lessee's employment
disciplinary practices and procedures). Subject to Lessee's employment disciplinary
practices and procedures, Lessee shall reasonably cooperate with such request unless
it would result in a violation of federal, state or local labor laws. The foregoing rights and
obligations are intended to ensure that the Facility is managed in a manner consistent
with the Operating Standard, however, the City shall not directly or indirectly supervise
the activities of the General Manager or any other employee of Lessee at the Facility.
The hiring, supervision and termination of employees at the Facility shall remain the sole
responsibility of Lessee.
(C) Any liability, fine, penalty or award (including the cost of defense and attorney fees,
collectively, "Damages ") with respect to claims, demands, arbitration or litigation arising
with respect to violations of federal, state or local laws, ordinances or regulations
governing the employment or working conditions of the employees arising out of acts or
omissions of a Lessee employee, or the failure of a Lessee employee to properly
supervise Lessee's employees or administer employment practices, or other wrongful
conduct of Lessee shall be the sole responsibility of Lessee and Lessee shall not be
entitled to any reimbursement by the City for such Damages unless such Damages were
(1) the result of a policy or procedure which was required in writing by the City, or (ii) the
result of working conditions at the Facility which were identified in writing as non-
compliant by Lessee and were the responsibility of City which were not remedied after
written notice to City.
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SECTION 12 — NOTICE TO COMPLY
In the event that the Lessee fails to comply with any terms or conditions of this Lease including,
but not limited to, provisions related to operational standards, maintenance standards, rental
payments, records submitted or capital improvement programs, the City Manager shall provide
the Lessee with a written notice of the deficiencies causing the non - compliance and Lessee
shall have thirty (30) days to comply with the notice unless otherwise extended or amended in
writing by the City Manager or unless compliance cannot be properly achieved within thirty (30)
days, in which case Lessee shall have such additional time as necessary, as reasonably
determined by City, in writing, in order to achieve compliance, so long as Lessee is proceeding
in good faith with efforts to achieve compliance. Failure to comply within the thirty (30) day
period, or any amended period, shall be grounds for default and eventual termination of this
Lease.
SECTION 13 — DEFAULT AND TERMINATION
(A) Following the provisions set forth in Section 13, in the event Lessee fails in the
performance of any terms, conditions or provisions of this Lease, including all operational
and maintenance requirements, or fails to conform to the rules and regulations or any of
the directions or instructions that may be reasonable and properly made by City or fails,
neglects or refuses to pay the full rent amount within thirty (30) days after the same shall
become due, or becomes unable through corporate incapacity or files a petition under
the United States Bankruptcy code or the subject of a petition for involuntary bankruptcy
filed against it, or defaults in the performance of a petition for involuntary bankruptcy filed
against it, or defaults in the performance of any of the other terms, conditions or
provisions herein required, or makes any misrepresentations to the City, City shall have
following options without further notice or authorization to Lessee:
City may give Lessee a written notice of default. If the Lessee fails to cure said
default within twenty (20) business days, City may assume the operations of the
Facility and City may perform such work as it deems necessary to cure said
default and shall charge Lessee for the full cost of all labor and materials
expended plus ten percent (10 %) of said costs for administrative overhead and
may exclude Lessee from the Facility.
ii. City may seek to recover at law any and all claims which may be due to it.
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City may retain any of Lessee's money in its possession and any of Lessee's
property at the Facility and may seek to apply this to any and all claims due to the
City.
iv. In the event of bankruptcy, this Agreement shall terminate automatically with no
action by City; may not be assigned to a third party; and will be subject to all costs
incurred by City upon early termination.
(B) Except for a default caused by the filing of a bankruptcy, petition, after providing Lessee
with a written notice of a default pursuant to Subsection (i),above, City may terminate
the Lease upon forty -five (45) days written notice following expiration of the twenty (20)
business day cure period.
(C) The acceptance of all or part of a rental payment by City for any period after a default,
shall not be deemed a waiver of any of these options, nor a waiver of the default or any
subsequent default of the same or any other term, covenant and condition. Any waiver
by City of a default on the part of the Lessee shall not be construed as, or constitute a
waiver of, any subsequent default of the same or any other term, covenant or condition.
(D) City's choice of any option above shall in no way waive or limit its right to select any
other option to cure a default or terminate the Lease.
(E) Surrender. Upon termination or expiration of this Lease, Lessee shall reasonably
cooperate with City and any new management company under this or a similar lease or
management agreement in the transition of management responsibility as set forth in
Section 21.
SECTION 14 — FORCE MAJEURE
Should either of the, parties to this Lease be delayed in or prevented, in whole or in part, from
performing an of the obligations or conditions hereunder by reason of acts of terrorism, acts of
God, landslides, lightning, forest fires, storms, floods, severe weather, freezing, earthquakes,
other natural disasters, the threat of such natural disasters, epidemics, pandemics, quarantines,
civil disturbances, acts of the public enemy, wars, blockades, public riots, governmental or
regulator prohibitions or restraints, or other causes, whether of the kind enumerate or otherwise,
and whether foreseeable or unforeseeable, that are not reasonably within the control of the
16
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affected parties (each, a "Force Majeure Event'), then either party shall be excused from such
performance to the extent caused by said acts and the rights and obligations of parties hereto
shall not be otherwise affected by such failure.
In the event that there is drought resulting in the imposition of mandatory water conservation or
restrictions on water use at the Facility, such event shall not be a "Force Majeure Event',
however, City and Lessee shall meet within thirty (30) days of such restrictions being imposed
to discuss the impact of the restrictions on the operation of the Facility. Lessee and City agree
to negotiate in good faith to make temporary or permanent modifications, as appropriate, to the
terms of the Lease in the event that the restrictions have a material adverse effect on the
condition or operation of the Facility. In the event that the drought causes material damage to
the Facility and City and Lessee are unable to agree upon a mutually acceptable modification to
this Lease, City acknowledges and agrees that: (i) Lessee shall not be obligated to repair such
damage caused by the drought; and (ii) the Operating Standard shall be reasonably modified to
account for such damage.
SECTION 15 — LEGAL COMPLIANCE
Lessee shall be solely responsible for compliance with all Legal Requirements. "Legal
Requirements" shall mean any and all laws, statutes, ordinances, codes, orders, rules,
regulations, permits, licenses, authorizations, entitlements, official orders and requirements of,
or conditions imposed by, all federal, state and local governmental regulatory agencies and
authorities which are as of the date hereof or hereafter become applicable to the Facility, its
operation and employees, including, without limitation, any of the foregoing relating in any way
to (i) occupational health and safety; and (ii) hazardous materials or hazardous waste. Lessee
shall, at its own cost and expense, obtain and maintain all licenses and permits required to
operate the Facility, including but not limited to, obtaining and maintaining a liquor license.
Lessee shall comply with all federal, state and local laws and regulations pertaining to the
storage, use and disposal of "hazardous or toxic wastes, substances, or materials" as defined
by applicable law.
SECTION 16 — INDEMNIFICATIONS
(A) Hold Harmless Agreement. Lessee shall indemnify and hold harmless the City, its
elected and appointed officials, officers, boards, commissions, agents and employees,
against and from any and all claims, demands, causes of action, actions, suits,
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proceeding, damages, costs or liabilities (including costs or liabilities of the City with
respect to its employees), including but not limited to damages for injury or death or
damage to person or property including any reasonable attorney fees, arising out of or
pertaining to the performance and activities of the Lessee pursuant to this Lease.
(B) Defense of Litigation. Lessee shall at the sole risk and expense of Lessee, upon demand
of the City, made by and through the City Attorney, appear in and defend any and all suits,
actions, or other legal proceedings, whether judicial, quasi-judicial, administrative,
legislative, or otherwise, brought or instituted by third persons or duly constituted
authorities against or affecting the City, its elected and appointed officials, officers,
boards, commissions, agents, or employees, and' arising out of or pertaining to the
performance and activities of the Lessee pursuant to this Lease.
(C) Lessee shall pay and satisfy and shall cause to be paid and satisfied any judgment,
decree, order, direction, or demand rendered, made or issued against Lessee, the City, its
elected and appointed officials, officers, boards, commissions, agents, or employees for
which Lessee is required to indemnify and hold harmless the City pursuant to Section
16(A). Such indemnity shall exist and continue without reference to or limitation by the
amount of any bond, policy of insurance, deposit, undertaking or other assurance required
hereunder or otherwise; provided that, neither Lessee nor City shall make or enter into
any compromise or settlement of any claim, demand, cause of action, action, suit, or other
proceeding, without first obtaining the written consent of the other which consent shall not
be unreasonably withheld.
SECTION 17— INSURANCE REQUIRED
(A) Lessee shall, as a condition precedent to execution of this Lease by City, furnish to the
City and file with the City Clerk and City Attorney, and at all times during the existence of
this Lease, maintain in full force and effect, at its own cost and expense, a general
comprehensive liability insurance policy, including but not limited to coverage for premises
operations, explosion and collapse hazard, underground hazard, contractual insurance,
property damage, independent contractors and personal injury or death, and automobile
liability in comprehensive from, in protection of the City, its elected and appointed officials,
officers, boards, commissions, agents and employees, by a company approved by the
City Manager and in a form satisfactory to the City Attorney, protecting the City and all
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persons against liability for loss or damage for personal injury, death and property
damage, occasioned by the operations of Lessee under this Agreement, with minimum
liability limits of Two Million Dollars ($2,000,000) for personal injury or death of any one
person and Five Million Dollars ($5,000,000) for personal injury or death of two or more
persons in any one occurrence, and One Million Dollars ($1,000,000) for damage to
property resulting from any one occurrence.
(B) The City shall be named as an additional insured in the insurance policies referenced in
Section 17(A). Such insurance shall contain a provision that a written notice of
cancellation or reduction in coverage of said policy shall be delivered to the City Clerk,
with a courtesy copy to the City Attorney, at least thirty (30) days in advance of the
effective date thereof.
Said insurance policy shall contain the following endorsements:
i. The naming of an additional insured as herein provided shall not affect any
recovery to which such additional insured would be entitled under this policy if not
named as such additional insured; and
ii. The provision of the policy will not be changed, suspended, cancelled or
otherwise terminated as to the interest of the additional insured named herein
without first giving such additional insured thirty (30) days written notice.
(C) Fire Insurance. Throughout the term of this Agreement, Lessee shall insure all structures
erected or installed on the site under a policy of extended fire insurance coverage in an
amount equal to the replacement value of said structures. Lessee shall be a named
insured and City shall be a 'loss payee" under the said policies of fire insurance. Any
payment resulting from damage or destruction to said property shall be paid into an
escrow account and shall be used by Lessee solely and exclusively for the repair,
reconstruction or replacement of said buildings or facilities. In the event that Lessee fails
to undertake such repairs, construction or replacement within one hundred twenty (120)
days, or such additional time as may be approved by the City, following the damage or
destruction to said buildings or facilities, the entire proceeds of the fire insurance policy
shall be paid to City. In the event that Lessee shall fail or neglect to take out or to
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I» 03674 -00004/1662123.6
maintain said fire insurance, City may, but nothing herein contained shall be deemed to
create any obligation or liability on its part to do so, secure fire insurance for such period
as Lessee shall fail or neglects to do so, and City shall have the right to collect the cost of
the insurance policy from Lessee.
Fire insurance shall be obtained from an insurance company authorized to do business in
the State of California with a rating by Best & Company of Los Angeles as B +, XII or
above, and issued by its office or authorizing an agent in the County of Los Angeles.
Lessee shall file with the City Clerk a policy or example certificate, subject to the approval
of the City Attorney, indicating that the required insurance is in full force and effect.
(D) Workers' Compensation. Concurrently with the execution of this franchise, Lessee shall
furnish to the City and file with the City Clerk a certificate of Workers' Compensation
Insurance and at all times during the term of this Lease, maintain in full force and effect, at
its own cost and expense a policy of Workers' Compensation Insurance.
(E) Umbrella or Excess Liability Insurance with a limit of not less than Five Million Dollars
($5,000,000).
SECTION 18 —SECURITY
(A) Security Deposit. Within thirty (30) days after the execution of this Lease, the Lessee
shall deposit with the City Treasurer an-amount equal to three (3) months minimum rent in
cash as a security deposit for the term of the Lease to guarantee the payment of any
compensation, rental payments penalties or fees which are set forth in this Agreement
(the "Security Deposit "); provided that any security deposit currently on deposit with the
City shall be applied to the payment of the Security Deposit. Within fifteen (15) days after
the termination of the Lease, the balance of the Security Deposit shall be refunded to
Lessee. Upon an uncured default by Lessee, the City Manager shall have the right to
withdraw sums for any due rent, damage or destruction to the Facility or any other fee or
penalty to which City shall be entitled pursuant to this Agreement, as reasonably
determined by the City Manager. No interest shall be paid to the Lessee on the Security
Deposit. Such utilization of the Security Deposit by the City shall not be in lieu &other
remedies available to City and shall not be deemed a waiver of any other rights and
remedies of the City, or an exoneration of Lessee. Remedies shall be cumulative. If the
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term is extended, the Security Deposit shall remain on deposit and no additional deposit
shall be required. In the event the City Manager properly withdraws funds from the
security deposit account, Lessee shall, within ten (10) days of notice of such withdrawal,
replenish the Security Deposit. The failure to timely replenish such account shall be
deemed a default under this Agreement and City may terminate this Agreement if the
default remains uncured after the expiration of the cure period under Section 13.
(B) Facility Account. Within fifteen (15) days prior to the commencement of the construction of
the driving range work and the irrigation replacement work outlined on Attachment C,
Lessee shall establish a bank account at a banking institution reasonably approved by the
City ( "Facility Account "). Lessee shall deposit into the Facility Account funds in a sufficient
amount to pay for the driving range work and the irrigation replacement. Subject to
customary terms and conditions, the City shall be authorized to draw upon the Facility
Account to pay for such work in the event Lessee has failed to complete such work in
accordance with this Lease.
SECTION 19 — DESTRUCTION OF PREMISES
In the event that the facilities located or installed on the site during the term of this Lease are
partially destroyed for any circumstances beyond its control, whether or not foreseeable,
including, without limitation, a Force Majeure Event, then the affected party shall receive an
abatement or reduction of rent to the extent the destruction interferes with the use of the Facility.
Lessee waives the provisions of Civil Code Section 1932(2) and 1933(4) with respect to any
destruction of the Facility. Lessee and City shall meet to discuss the extent of destruction and
required remediation, repair or reconstruction required to restore the Facility to meet the
Operating Standard. Both City and Lessee shall each have the right to terminate this
Agreement in the event the destruction is deemed, in either party's sole and absolute discretion,
to be so pervasive as to make restoration, remediation, repair or reconstruction inadvisable or
infeasible. In the event of such termination, City and Lessee shall reasonably agree on a
termination payment to be payable from the insurance proceeds to compensate Lessee for that
portion of the actual cost of the Improvements which remains unrecovered based upon an
amortization of such cost recovery over a term of twenty (20) years. If the Improvements are
damaged or destroyed, the Lessee and City shall cooperate in the filing of insurance claims and
the application of insurance proceeds to the restoration, remediation, repair or reconstruction of
the Improvements.
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SECTION 20 — IMPROVEMENTS
Lessee agrees that no Improvements now existing or later constructed at the Facility shall be
removed or permitted to be removed by Lessee at any time when Lessee is in default (after the
expiration of the applicable cure period) of any provision of this Lease nor removed contrary to
any provision of this Lease. In the event that this Lease is terminated by the City for any reason
resulting from any default of any provision herein, including the failure to pay rent and to
maintain all facilities as required herein, all Improvements located at the Facility at the time of
termination shall, at the election of the City, be and become the sole property of the City.
SECTION 21 — SURRENDER OF PROPERTY
At the termination or expiration of this Lease, Lessee agrees to return the Facility, including any
improvements to the City in the same condition less ordinary wear or tear and subject to any
Force Majeure Events, reconfigurations and /or modifications of the Facility. Attachment I
identifies the only property approved by the City that can be removed by the Lessee at the
termination or expiration of this Lease; provided that all proprietary information, non - capital
improvement operating expense data, systems, equipment, information, materials and
instruments ( "Lessee's Proprietary Materials ") shall remain the property of Lessee and may be
removed by Lessee upon the surrender of the Facility. Lessee shall surrender and vacate the
Facility and the Improvements in broom clean condition, and City may reenter and take
possession of the Facility and the Improvements and eject all parties .in possession, or eject
some and not others or eject none. Any alterations or improvements authorized by the City at
the Facility shall become the sole property of the City at the termination or expiration of this
Agreement. Upon termination or expiration of this Lease, Lessee shall reasonably cooperate
with City and any new management company under this or a similar lease or management
agreement in the transition of management responsibility. In connection with such transition,
Lessee agrees to provide all requested documentation and information (excluding Lessee's
Proprietary Materials) in its possession regarding the Facility and the operation of the Facility
and to facilitate a smooth, seamless and efficient transition of management responsibility.
In the event that the Lease has been terminated by City after an uncured event of default, then
Lessee further agrees that all equipment used in the operation of the Facility shall remain in use
by City, new management company or a new operator for a period not to exceed six (6) months
following any such termination, at no charge to City or new management company or operator;
22
03674 - 00004/1662123.6
provided that if such equipment is leased to Lessee pursuant to a lease agreement with a third
party lessor and City elects to retain such equipment for continuity of operations, then such
lease shall be assigned to and assumed by City and Lessee shall be released therefrom. As
soon as replacement equipment has been delivered, Lessee shall remove the leased equipment
from the Facility and make arrangements for such third party contract to be terminated unless
Lessee and the new operator agree to an assumption of the existing equipment lease in lieu of
procuring replacement equipment. Termination shall not relieve Lessee from the payment of
any sums then due to City hereunder plus interest thereon from the date due at the Prime Rate,
which shall be the reference rate as announced by Bank of America from time to time, or from
any claim for damages previously accrued or then accruing against Lessee up to the date of
termination.
SECTION 22 — CONDEMNATION
Lessee takes and leases the Facility subject to all encumbrances, easements, rights and right -
of -way of record and upon the condition and understanding that in the event of condemnation by
any legal entity having the power to do so, Lessee shall be deemed to have a leasehold interest
in the land and shall be entitled to a portion of any payments made as a result of the
condemnation in accordance with applicable law. Lessee shall have a leasehold interest in the
Facility under or by virtue of this Lease, including an interest as to the value of any
Improvements thereon erected by Lessee. Such claim of interest shall be made only if Lessee
is not in default (after the expiration of the applicable cure period) of any substantive provisions
contained herein. For the purpose of this Section 22, the value of any Improvements erected by
Lessee shall be equal to their value at the time the eminent domain proceedings are filed by the
condemnor, depreciated in proportion to the ratio between the remaining life of the Lease and
the entire Lease period. If the entire or a material portion of the leased property is taken by
condemnation, either party shall have the election to terminate this Lease. The termination date
shall be the date of taking.
SECTION 23 — TAXES
Lessee shall be responsible for the payment of any taxes that may be assessed against the
Facility or fixtures, improvement and equipment thereon, or imposed upon the sale of products
or prepared foods and beverages.
03674 - 00004/1662123.6
23
SECTION 24 — UTILITIES AND PERMITS
Lessee shall be responsible to pay for all utilities used on the property and in connection with
the operations of the site. Lessee shall also be required to pay for any permits or licenses, at
standard City rates, required by the City as part of its operation.
SECTION 25 — LIMITATIONS
(A) Any permission required by this Agreement shall be secured in writing by the Lessee from
the City and any errors or omissions therein shall not relieve the Lessee from its obligation
to faithfully perform the conditions herein.
(B) Lessee hereby acknowledges that it has inspected the Facility and that it accepts the
Facility in its present condition and that it agrees not to call upon the City to make any
repairs or improvements to the Facility. Any alterations or improvements authorized by
the City on the Facility shall become the sole property of the City at the termination or
expiration of this Agreement.
SECTION 26 — ATTORNEY'S FEES
(A) If either party commences any action against the other party arising out of or in connection
with this Agreement, the prevailing party shall be entitled to have and recover from the
losing party reasonable attorney's fees and cost of suit.
(B) In case any suit shall be brought for an unlawful retainer of the Facility, or for the recovery
of any rent due under the provisions of this Lease, or because of any breach by Lessee of
any condition or term herein contained, Lessee shall pay to City a reasonable attorney's
fees which shall be fixed by the court.
SECTION 27 - NOTICE
Any notices to be given hereunder shall be in writing and deemed to be duly given if and when
deposited in the U.S. mail properly stamped and sent by certified mail to the party for whom it
was intended at the address of such party as herein specified or at such other address of such
party as herein specified or at such other address as the party may designate by proper notice
from time to time.
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03674 - 00004/1662123.6
American Golf Corporation
Legal Department
2951 281h Street
Santa Monica, CA 90405
City Manager
City of Arcadia
240 W. Huntington Drive
P.O. Box 60021
Arcadia, CA 91066 -6021
SECTION 28 — NO SUBLETTING OR ASSIGNMENT; NON - TRANSFERABLE
Lessee shall not voluntarily assign, transfer or encumber its interest in this Lease or in the
Facility, or sublease all or part of the Facility, or grant a license to any other person or entity, or
allow any other person or entity to occupy or use all or any part of the Facility, without first
obtaining the City's written consent. Any assignment, encumbrance, or sublease without the
City's consent shall be voidable, and at City's election, shall constitute a default. No consent to
any assignment, encumbrance, or sublease shall constitute a further waiver of the provisions of
this Section.
SECTION 29— DEPARTMENT RESPONSIBILITIES
The City of Arcadia Public Works Services Department (PWSD) Director or the City Manager's
Designee shall be responsible under the City Manager for supervising the maintenance of the
Facility pursuant to this Lease; the Administrative Services Department (ASD) Director or the
City Manager's Designee shall be responsible under the City Manager for supervising the
payment of rent pursuant to this Lease; the Recreation and Community Services Department
Director or the City Manager's Designee shall be responsible under the City Manager to monitor
the quality of the golfing program offered to the community pursuant to this Lease. Lessee shall
cooperate with the above named City officials in their respective area of responsibility.
SECTION 30 — EFFECTIVE DATE
The effective date of this Lease, for all purposes hereof, shall be December 1, 2008.
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SECTION 31 — MISCELLANEOUS PROVISIONS
(A) Captions. The captions used in this Lease are for the purpose of convenience only and
shall not be construed to limit or extend the meaning of any part of this Lease.
(B) Counterparts. Any executed copy of this Lease shall be deemed an original for all
purposes. This Lease may be executed in one or more counterparts, each of which shall
be an original, and all of which together shall constitute a single instrument.
(C) Time of Essence. Time is of the essence for the performance of each covenant and term
of this Lease.
(D) Severability. If any one or more of the provisions contained herein shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had not been contained
herein.
(E) Interpretation. This Lease shall be construed and enforced in accordance with the laws of
the State of California. The language .in all parts of this Lease shall in all cases be
construed as a whole according to its fair meaning, and not strictly for or against either
Lessee or City. When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership or corporation or joint venture or other entity, and
the singular includes the plural. Unless otherwise specified "days" shall mean calendar
days.
(F) Successors and Assigns. The covenants and agreements contained in this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and their respective
permitted heirs, successors, and assigns (to the extent this Lease is assignable with the
written consent of City).
(G) Waivers. The waiver of any breach of any term, covenant or condition herein contained
shall not be deemed to be a waiver of such term, covenant or condition or any subsequent
breach of the same or any other term, covenant or condition herein contained.
(H) Remedies. All remedies herein conferred shall be deemed cumulative and no one remedy
shall be exclusive of any other remedy herein conferred or created by law.
(1) Good Faith. Except where a party hereto is specifically permitted to act in its sole and
absolute discretion, each party hereto agrees to act reasonably and in good faith with
respect to the performance and fulfillment of the terms of each and every covenant and
condition contained in this Lease.
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03674 - 00004/1662123.6
(J) No Partnership. The parties hereto agree that nothing contained in this Lease shall be
deemed or construed as creating a partnership, joint venture, or association between
Lessee and City, or cause either party to be responsible in any way for the debts or
obligations of the other party, and neither the method of computing rental payments nor
any other provision contained in this Lease nor any acts of the parties hereto shall be
deemed to create any relationship between Lessee and City other than the'relationship of
landlord and tenant.
(K) Integration. This Lease, and the Attachments, Schedules and addenda, if any, attached
hereto, constitute the entire agreement between the parties, and there are no agreements
or representations between the parties except as expressed herein. All prior negotiations
and agreements between Lessee and City with respect to the subject matter hereof are
superseded by this Lease. Except as otherwise provided herein, no subsequent change or
addition to this Lease shall be binding unless in writing and signed by the parties hereto.
(L) Commissions. Lessee and City each represent and warrant to the other that they have
employed no broker, finder or other person in connection with the transactions
contemplated under this Lease which might result in the other party being held liable for all
or any portion of a commission hereunder. Lessee and City each hereby agree to
indemnify and hold the other free and harmless from and against all claims and liability
arising by reason of the incorrectness of the representations and warranties made by such
party in this Section, including, without limitation, reasonable attorneys' fees and litigation
costs.
(M) Survival. Notwithstanding anything to the contrary contained in this Lease, the provisions
(including, without limitation, covenants, agreements, representations, warranties,
obligations, and liabilities described therein) of this Lease which from their sense and
context are intended to survive the expiration or earlier termination of this Lease (whether
or not such provision expressly provides as such) shall survive such expiration or earlier
termination of this Lease and continue to be binding upon the applicable party.
(N) IRCA. Lessee will comply with the requirements of Immigration Reform and Control Act
( "IRCA ") with respect to the operation, management, maintenance, and improvement of
the Facility. Lessee agrees to indemnify, defend and hold harmless the City, its agents,
officers and employees, from any liability, damages or causes of action arising out of or
relating to any claims related to Lessee's failure to comply with the IRCA.
27
I. 111614-111104/1661121,6
�
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the291" day of ems, 2008, by their respective officers duly authorized in their
behalf.
ATTEST:
By:
s, City Clerk
APPROVED AS TO FORM:
By:
Steven P. Deitsch, City Attorney
CITY OF ARCADIA, a Municipal Corporation
By: `rJ
Donald Penman, City Manager
GOLF CORPORATION, a California Corporation
A i I
By:
I
By:
Secretary
28
03674 - 00004/1662123.6
ATTACHMENT A
LEGAL DESCRIPTION EXISTING
PAR 3 GOLF COURSE
That certain real property in the City of Arcadia, County of Los Angeles, State of
California, described as follows, to wit:
A portion of Lob B, Tract 7465, per map recorded in Book' 84, page 98, of Maps; and
a portion of Lots 12, 16, and 17 of the Western Two - thirds Rancho San Francisquito,
per map recorded in Book 42, pages 93 and 94 of Miscellaneous Records in the
office of the Recorder of said County, described as follows:
Beginning at a point of intersection of the westerly boundary of the City of Arcadia as
same existed on October 1, 1957, with the southerly line of said Lot B, thence North
56 45' 03" East along said southerly line to the westerly line of Santa Anita Wash as
shown on Los Angeles County Flood Control District Map No. 36 -RW 11.1; thence
South 10 30' 11" East 723.23 feet; thence southwest along a curve concave to the
northwest and having a radius of 594.12 feet, 504.99 feet; thence South 38 11' 50 ";
West 448.74 feet; thence South 45 05' 57" West 273.59 feet; thence North 74 52"
45" West 301.27 feet more or less to a point of intersection with the previously
mentioned westerly boundary of the City of Arcadia; thence northerly and easterly
along the various courses and distances of the said boundary to the point of the
beginning.
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03674-00004/1662123.6
LEGAL DESCRIPTION OF EXISTING OVERFLOW
PARKING AREA JUST NORTH OF PAR 3 GOLF COURSE
EAST OF ACCESS ROAD
That certain real property in the City of Arcadia, County of Los Angeles, State of
California, described as follows, to wit:
That portion of Lot B, Tract 7465, per map recorded in Book 84, page 98, of Maps, in the
office of the Recorder of said County, lying westerly of the Santa Anita Wash, as shown
on Los Angeles County Flood Control District Map No. 36 -RW 11. 1, excepting therefrom
the northerly 1177.96 feet and the westerly 25 feet of said LOMB.
LEGAL DESCRIPTION EXISTING 25'
ACCESS ROAD FROM LIVE OAK AVENUE
TO PAR 3 GOLF COURSE
That certain real property in the City of Arcadia, County of Los Angeles, State of
California, described as follows, to wit:
The Westerly 25 feet of Lot B, Tract 7465, per map recorded in Book 84, page 98, of
Maps in the office of the Recorder of Los Angeles County
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03674 - 00004/1662123.6
ATTACHMENT B
RECREATIONAL USE
Lessee shall collaborate with the Recreation and Community Services Department to provide a
variety of quality golf related, affordable recreational programs to the City of Arcadia residents.
These recreational opportunities should be used to enhance and increase recreational golf
participation in the community year round. Programs and activities shall be offered through the
City, while both advertising and marketing will be a shared responsibility by the City and Lessee'
provided that City and Lessee shall each have reasonable approval rights over the advertising
and marketing materials. Staffing and a Golf Professional for programs and activities shall be
provided by Lessee at no cost to the City. Such programs and activities shall include:
• A minimum of four (4) golf tournaments per year for the community.
• A minimum of four (4), beginner level Golf clinics per year offered in the City's
Recreational Classes Brochure.
• A minimum of four (4), intermediate level Golf clinics per year offered in the City's
Recreational Classes Brochure.
• Provide a summer golf camp program for children.
• A minimum of two (2) special events per year that would be geared toward the family
and run in conjunction with the Recreation and Community Services Department.
(ex. Family golf events, promote health /wellness, life long sport, picnics, contests,
etc).
• Work with Director of Recreation and Community Services to increase level of
service to the community by marketing the golf course, programs, classes,
tournaments and activities to the general public.
• Work with the City's Director of Recreation and Community Services to promote the
course on the City's website. Create link from City website to
www.arcadia.americangolf.com. Highlight special events and classes on City
website and through City publications.
Rates shall be set for the foregoing activities such that the proceeds shall be sufficient to cover
Lessee's and City's costs of administering and implementing the programs and activities.
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03674- 00004/1662123.6
ATTACHMENT C
IMPROVEMENTS
Lessee shall complete the following capital Improvements on or before July 1, 2010:
Driving Range:
• $300,000 project budget
• Remove synthetic turf and dispose
• Rough grade landing areas and construct six target (mounded green -like complexes)
• Install irrigation to landing area
• Sod landing area with Bermuda 419 hybrid Bermuda sod
Anticipated Driving Range Schedule:
• Work starts weather permitting April 1, 2009
• Expected completion July 1, 2009
Golf Course Irrigation Replacement:
• $600,000 project budget
• Install Wall to wall irrigation system including new Mainline
• "Valve in Head" irrigation heads
• Stand alone irrigation field satellites
• Designed with the goal of converting to reclaimed water as soon as it is available.
• Quick coupler valves around greens to hand water.
• Professionally designed by an irrigation designer to optimize the system
Anticipated Golf Course Irrigation Replacement schedule:
• Work starts weather permitting April 1, 2009
• Trenching will be done on one to two holes at a time. Interruption will require one to two
holes closed at certain times. Scheduling will be done to keep interruptions to a minimum
and to allow for continued play on unaffected holes.
• Expected completion July 1, 2009
Driving range and golf course irrigation projects above require scheduling after wet season and
require sodding during hot late- Spring /Summer months. Work will be subject to weather
conditions and normal force majeure delays. Subject to force majeure or extreme weather
interruptions, work will not extend past July 1, 2010.
32
03674 - 00004/1662123.6
Option Term 1 Projects:
Installation of a 2- burner, 24 inch heavy duty griddle (minimum size with actual size to be
determined due to spatial restrictions and exhaust hood and ancillary costs — total cost not
to exceed project budget). Including the installation of health department exhaust hood
requirement. Project budget $65,000
Installation of concrete path to the dirt road along holes #1 and #18 with 750 feet of 7 foot
wide concrete. Project budget $35,000
Option Term 1 Project Schedule:
• To commence in Year 1 of the first Option Term and to be completed by the end of Year 1 of
the first Option Term subject to permitting and approval delays.
CAPITAL RESERVE FUNDS and ELIGIBLE WORK
Use of 2.5% Capital Reserve Funds shall be as follows:
Starting in Year 3, American Golf Corporation shall make quarterly payments to the City in the
amount of 2.5% of Annual Gross Revenues for future capital improvements ( "Capital Reserve
Fund ")
The Capital Reserve Fund shall be available exclusively to pay for capital improvements and
major repairs at the Facility ( "Eligible Work "), but not for ordinary maintenance or routine, minor
repairs. The Capital Reserve Fund shall be expended to depletion during the Term of this
Lease on Eligible Work that is mutually agreeable to Lessee and City.
Beginning January 2010, City and Lessee shall meet every January to discuss and identify
future project needs to be funded by the Capital Reserve Fund. City and Lessee shall
reasonably approve all such project proposals with the understanding that Eligible Work shall
include without limitation capital improvements or major repairs that cost in excess of $2,000
(approximately 7% of the anticipated annual Capital Reserve Fund payment) and extend the
useful life of the Facility including major repair and or replacement of major mechanical
systems. Such projects agreed upon shall commence in July with written notice submitted by
Lessee to City. City shall promptly pay all invoices for the completed Eligible Work submitted by
Lessee.
Notwithstanding the foregoing, Eligible Work shall also include, and Lessee shall be permitted
to make emergency, and /or health and life safety capital improvements at the Facility prior to
obtaining City approval as determined by urgency.
Eligible Work may include but is not limited to:
• Design and construction of a nursery.
• Design and construction of a short game practice area for chipping and sand bunker
shots.
• Install new fencing and screening along the back of the golf course.
• Install new energy efficient air conditioning units for the Facility.
• Install new Air Quality Management District compliant gas dispensing pumps.
• Installation of double pane windows for the Facility clubhouse.
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03674 - 00004/1662123.6
• Upgrade indoor /outdoor lighting to energy efficient fixtures.
• Installation of waterless urinals in men's restroom.
• Equipment Repair or Replacement (except golf carts or course maintenance vehicles or
small tools)
• Interior or Exterior painting to the extent costing in excess of $2,000
• Hot water heater and other major clubhouse mechanical repairs or replacement in
excess of $2,000
• Major roof repair or replacement in excess of $2,000
34
03674 - 0000411662123.6
ATTACHMENT D
INITIAL FEES AND CHARGES
Rate Type
Current
Weekday Weekend
As of January 1,
2009
Weekday Weekend
Rack Rate before 4PM
$12.00
$15.00
$12.25
$15.50
Rack Rate after4 PM
$12.50
$15.00
$12.75
$15.50
Senior Rate before 4PM
$9.00
n/a
$9.25
n/a
Senior Rate after 4PM
n/a
n/a
n/a
n/a
Junior Rate before 4PM
$7.00
n/a
$7.25
n/a
Junior Rate after 4PM
n/a
n/a
n/a
n/a
Twilight Rate after 8PM
$5.75
$5.75
$6.00
$6.00
Replay Rate
$5.00
$5.00
$5.25
$5.25
112 Cart Rate
$6.00
$6.00
$6.25
$6.25
Single Rider Cart Rate
$9.00
$9.00
$9.25
$9.25
Pull Cart Rate
$3.00
$3.00
$3.00
$3.00
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03674 - 00004/1662123.6
ATTACHMENT E
MINIMUM MAINTENANCE STANDARDS
Golf Course Maintenance Standards
1. Greens, Practice Putting Greens $ Nurseries
A. Mowing.— At least five (5) days per week at a height of 3116" — 5/16" during the growing
season.
B. Change cup locations on all greens and practice putting greens daily during the active
season and at least five (5) times weekly in the off - season.
C. Repair ball marks, divots, or any other damaged turf on all greens and practice greens
daily.
D. Aerify all greens practice putting greens and nurseries at least three (3) times per year
during the growing season, i.e., March /April, June, and September /October, or more
frequently as directed by the Public Works Services Director or his designee.
E. Topdress all greens, practice putting greens and nurseries:
a. After any aerification performed with 1/2" or larger tines;
b. And additionally, as needed to maintain a smooth putting surface. Topdressing will
be sand or a mix similar to that used to construct the greens.
F. Light vertical mowing of all greens, practice putting greens and nurseries shall be
performed as appropriate to smooth and true the putting surfaces.
G. Spiking of all greens and practice greens shall be performed as needed between
aerifications to maintain water infiltration.
H. Fertilization — All greens, practice greens, and nurseries shall be fertilized with nitrogen,
phosphorous, potash, and other elements as needed to maintain color, growth, health
and turgidity of the turf, without allowing excessive or excessively succulent growth.
Fungicide - All greens, practice greens and nurseries shall have appropriate fungicide
applications to prevent and /or control fungal disease activity.
J. Pre - emergent herbicides such as Balan, Dacthal, etc., shall be used if necessary in the
appropriate amounts and appropriate times to prevent intrusion into the greens of weeds
difficult to eradicate such as goosegrass, crabgrass, etc.
K. Weed I Control — All greens, practice greens and nurseries shall be maintained free of
undesirable grasses and weeds.
L. Insecticides — All greens, practice greens and nurseries shall be treated as necessary to
prevent or halt insect damage.
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03674- 00004/1662123.6
M. All greens shall be kept substantially free of other types of grass. Only Poa annua shall
be the predominant type of grass in the greens
2. Fairways — to include area around concrete tees
A. Mowing — All fairways shall be mowed three (3) times per week at a height of 1/2° — 7/8"
during the growing season and as needed for the balance of the year.
B. Aerification — All fairways shall be aerified a minimum of three (3) times per year, in the
spring and in the summer, i.e., March, June, September. Aerification holes or the use of
the Aerway slicer (no plugs) shall be permitted.
C. Fertilization — All fairways shall be fertilized with nitrogen, phosphorous, potash, or other
elements as needed to maintain color, growth, health and turgidity of the turf, without
allowing excessive or excessively succulent growth.
D. Vertical Mowing — All fairways will be vertically mowed as necessary to control mat or
thatch buildup.
E. Weed Control — Fairways shall be kept weed free to an extent of at least 90% of the area
by the proper and timely application of pre- emergent and /or post- emergent herbicides.
The goal of this standard is to not overseed the fairway's but to follow other accepted
landscape practices that will maintain good quality turf coverage throughout the year
subject to normal weather, pest infestations and reasonable water quality, quantity and
availability. The goal is to produce a product that provides a quality municipal golf
experience for our guests. If these practices fail, the City may require that the contractor
overseed the fairway's in the fall with perennial rye or a fine fescue at a rate not less
than 275 lbs. per 1,000 sq. ft. acre.
G. Any improvements to the turf areas shall be completed within thirty (30) days of written
notification from the Public Works Services Director or his designee to the Maintenance
Superintendent at the golf course.
3. Roughs
A. Aerification
a) Shall be performed wall to wall at least two (2) times per year, i.e.
February/March and September /October.
b) Within wooded play areas — as necessary to establish and /or maintain turf.
B. Fertilization — Roughs shall be fertilized as necessary to maintain turf
C. Weed Control — Shall be performed as necessary to control seed formation, or to allow
proper play.
D. Mowing — Roughs shall be mowed at a height not less than 1 '/ "
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03674- 00004 /1662123.6
4. Driving Range
A. Mowing — Lessee shall mow the driving range a minimum of once per week at a
height of 1/2" — 7/8" during the growing season and as needed for the balance of the
year.
B. Aerification - Driving range shall be aerified a minimum of three (3) times per year in
the .spring and summer season, i.e. March /April, June, and September /October.
Aerification holes shall not exceed a spacing of eight (8) inches on center or be of a
diameter of less than 1/2°
C. Fertilization — Driving range shall be fertilized with nitrogen, phosphorous, potash, or
other elements as needed to maintain color, growth, health and turgidity of the turf,
without allowing excessive or excessively succulent growth.
D. Vertical Mowing — Shall be vertically mowed as necessary to control mat or thatch
buildup.
E. Weed Control — Shall be kept weed free to an extent of at least 90% of the area by
the proper and timely application of pre- emergent and /or post- emergent herbicides.
F. Natural grass tees shall be available two (2) weekdays per week and one (1)
weekend day per week.
G. The goal of this standard.is to maintain the good quality of turf coverage throughout
the year subject to normal weather, pest infestations and reasonable water quality,
quantity and availability. The goal is to produce a product that provides quality a
quality municipal golf experience for the guests.
H. Any improvements to the turf areas shall be completed within thirty (30), days of
written notification from the Public Works Services Directoi or his designee to the
General Manager or his designee at the golf course.
5. Planters —
A. Clean -up — Daily, all planters shall be maintained free of trash and debris such as paper,
drinking cans, bottles, fallen limbs and leaves, etc.
B. Weed Control — As needed, all planters shall be maintained free of weeds or grass
whether by mechanical or chemical means.
C. Trimming — Monthly, the plant material (trees, shrubbery and ground covering) in
planters shall be trimmed for protection from wind, insect damage, and for appearance.
6. Trees —All Trees Within the Prooertv Lines of the Golf Course
All trees shall be maintained according to International Society of Agriculture (I.S.A)
specifications, or the following specifications, whichever is greater.
38
03674- 00004/1662123.6 -
A. Stakes — Trees shall be staked as necessary until sufficient size to stand unassisted.
Stakes shall be installed and maintained. Stakes shall be removed as soon as possible.
B. Pruning — All trees shall be properly pruned for protection from wind and pests as well as
for appearance and safety at least once every four (4) years, or 114 annually. Trees or
limbs that are deemed hazardous shall be removed immediately.
C. Irrigation — All trees shall be irrigated to provide adequate moisture for normal growth.
D. Mowing — Large area mowers shall not be used within one foot of the trunk of any tree.
E. Removal and Replacement — All dead trees, for whatever cause, or diseased shall be
removed within twenty (20) working days from written notification from the Public Works
Services Director or his designee. Replacement shall be a 24' tree of appropriate type
within ten (10) working days of the removal. Lessee shall be responsible for replacing
up to ten (10) trees per year as part of the normal operating costs and as reasonably
determined by Lessee.
F. Unsightly sucker growths (i.e., water sprouts) shall be removed as necessary from all
tree bases and trunks.
7. Irrigation
A. Lessee shall monitor the requirements of the plant material, soil conditions, seasonal
temperature variation, wind conditions, and rainfall and make appropriate changes in
duration of watering cycles. All landscaped areas shall be irrigated as required to
maintain adequate growth and appearance.
B. Lessee shall provide personnel fully trained in all phases of the irrigation systems
operation, maintenance, adjustments and repair; in all types of components to include
electrical and battery operated control clocks, valves and sprinkler heads.
C. All systems shall be adjusted in order to provide adequate coverage of all landscape
areas; prevent runoff and /or erosion; prevent water roadways, hard surface areas and
private property. Persistent puddling of water for more than one hour directly resulting
from the use of the irrigation system is unacceptable.
D. All system malfunctions, damage, and obstructions shall be repaired immediately within
72 hours following written notification from Public Works Services Director or his
designee.
E. In addition to required testing, all irrigation systems shall be tested and inspected as
necessary when damage is suspected, observed or reported. Daily testing may be
required if necessary.
F. In areas where wind creates a problem of spraying onto private property, the controller
must be set to operate during the period of lowest wind velocity.
G. A solid probe or tensiometer shall be used to determine the soil moisture content in
various areas when necessary.
39
03674 -00004 /1662123.6
H. Lessee shall observe and note all deficiencies occurring from the original design and
review these findings with the Inspector, so necessary improvements can be made.
Lessee shall repair all leaking or defective valves within 72 hours following written
notification from the Public Works Services Director or his designee of such a deficiency
(problematic with obsolete pars).
J. Lessee shall repair /replace sprinklers that are causing excessive run -off or puddling
within 24 hours following written notification from the Public Works Services Director or
his designee of such a deficiency.
K. In the event of a reduction of the volume of water supplied to a golf course during peak
demand periods, or during water conservation efforts as required by the City Council for
the community as a whole, the priority of water distribution by Lessee shall be as follows:
1. Greens
2. Tees
3. Fairways
4. Other turf and landscaped areas
In no event will overseeding be allowed during mandatory water conservation phases as
required by the City Council.
If mandatory water conservation results in damage to the Facility,, Lessee may use funds
from the Capital Reserve Fund (as defined in Attachment C) to repair such damage and
otherwise restore the Facility.
L. Irrigation part requirements:
a. Plastic pipe shall be polyvinyl chloride (PVC), Type 1
b. Plastic Pipe fittings and connections shall be PVC Schedule 40, except nipples,
which shall be Schedule 80
c. All sprinkler heads shall match existing heads in the system
M. Notification .of work to be performed. Lessee shall provide written notification to the
Public Works Services Director at least ten (10) days prior to any major improvements to
the course including major trimming, planting, or removal of trees.
8. Fences — All Fences and Walls, Block Chain Link or Barbed Wire etc on or Within
Boundaries of the Prooert v
A. ,Repair all broken or damaged fencing as necessary within twenty (20) days of written
notification from the Public Works Services Director or his designee.
B. Repair or replace as necessary all fences, gates, and locking devices needed for the
protection of the golf course or equipment within seven (7) days of written notification
from the Public Works Services Director or his designee.
9. Edging
40
03674 - 00004/1662123.6
All sidewalks, patios and concrete cart paths must be kept edged. Edging around valve boxes,
meter boxes, backflow preventers, etc. shall be done as needed (minimum monthly to insure
that there is no obstruction of play or maintenance from growth around these items.
10 Sand Traps
All sand traps shall be edged as necessary to maintain an appropriate lip, raked daily and filled
with fresh sand as needed to maintain a minimum 4 inch depth on slopes and in the bottom.
Replacement sand will be of a dust -free type, suitable for trap use.
Sand traps shall drain and not hold standing water. Contractor shall be responsible, as part of
maintenance operations, to install French drains or gravel pits below the traps to accomplish the
standard of "no standing water'.
11. Color Areas
The various planting areas throughout the course shall be cultivated, weeded, and pruned on a
regular basis, with at least three (3) re- planting programs for annuals scheduled each year, i.e.,
March, June, October.
12. Construction and Remodeling
Any change in the physical characteristics of any area of the golf course, such as addition or
removal of sand traps, addition or removal of any hazards (water, trees, or native vegetation),
movement of soil exceeding 20 cubic yards in any single area, or the modification of any portion
of the golf course or the buildings, shall not be undertaken without the direct approval of the
Public Works Services Director or his designee.
13. Crews
American Golf shall have sufficient staff assigned to the golf course daily to meet the
requirements and provisions contained in these specifications. These employees shall be
supervised by an on -duty superintendent. Regular hours will be established and maintained.
The superintendent's hours shall normally be the same as those of his crew.
14. Trash and Refuse
Shall be collected daily and removed from the property as necessary to ensure minimal
problems from refuse odors, insects, etc. Approved trash receptacles shall be conveniently
stationed on tees and other appropriate areas and emptied daily. All outdoor trash receptacles
shall have seal tight lids so as to prevent odors, insects, etc.
15. Vertebrate Pest Control
Shall be routinely performed throughout the property on an on -going basis, in such a manner
that vertebrate pest populations are steadily reduced and eventually eliminated.
16. Soil and Water
Analysis will be performed annually in September by an approved professional laboratory. The
results of these tests shall be used to guide the type and amount of fertilization, aerification, or
41
03674 - 00004/1662123.6
other maintenance standards required to provide healthy plant growth. Results of the analysis
shall be forwarded to the Public Works Services Director with recommendations for corrective
action if reasonably. required to maintain the Operating Standard no later than October 31 of
each year. ,.
17 Lighting
Any repairs or replacement of lighting system to ensure proper night lighting shall be completed
within twenty (20) days of written notification.
18. Monthly Inspections /Course Walks
The Public Works Services Director or his designee shall walk the course and inspect the
driving range, practice areas and the clubhouse and appurtenant facilities during the first week
of each month with the General Manager of the Lessee. These walks shall be performed
quarterly with the Regional Director in January, April, July and October of each year.
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03674- 00004/1662123.6
Building and Facility Maintenance Standards
Clubhouse and Structures — All Structures within the Boundaries of the Golf Course
A. Course Restrooms — All course restrooms shall be maintained daily in a manner so
as to provide clean and sanitary facilities for the public as well as employees of the
course. Soap, towels, toilet paper, etc. shall be provided in adequate quantity at all
times. Portable facilities shall be maintained similarly.
B. All buildings and structures shall be maintained in good repair at all times.
Surrounding areas shall be maintained free of weeds, brush, disorganized junk or
broken -down equipment, trash piles, etc. Interior areas shall be clean and neatly
organized, safe and sanitary, for customers and employees. Painting, rodent and
insect control shalt be performed as necessary. "Housekeeping" duties shall be
assigned to all maintenance crew members and shall be performed daily.
C. Lessee shall be responsible for all maintenance and repairs to the Course
Monument/Entrance Sign.
D. City shall be responsible for all maintenance along the driveway from Live Oak
Avenue to the parking lot.
E. The golf course superintendent is responsible for all facilities and structures
maintenance not within the clubhouse area proper, whether performed by his own
staff or some other.
F. Proposed Facility Maintenance Inspection for Par Three Golf Course Normal
Maintenance:
a. Clean cobwebs and dust from the exterior of building; four (4) times a year or as
necessary, June, September, December, March;
b. Carpet and hard surface floors shall be vacuumed & swept daily. Carpets shall
be wet or dry cleaned and hard surface floors shall be stripped and waxed four
(4) times a year, June, September, December, March;
c. Clean and disinfect restaurant eating areas daily per Department of Health
standards;
d. Clean and disinfect bathrooms daily;
e. Clean grease traps monthly per Department of Health standards;
f. Spray interior and exterior of building for insects monthly;
g. Wash all windows inside and out, four (4) times a year or as necessary, June,
September, December, March; and
h. Paint walls and cabinets inside of the Facility in a manner to meet the Operating
Standard; provided that the obligation to perform such work may be satisfied
pursuant to Attachment C. If required to meet the Operating Standard, use
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03674 -00004 /1662123.6
gloss /semi -gloss finish for snack bar area and restrooms and use eggshell finish
for all other areas.
i.. Doors and cabinets should be in properly working condition so as to close
completely and properly.
j. Check for and repair all water leaks on the Facility.
k. Use energy efficient light bulbs for all lighting fixtures in the Facility.
I. All outdoor electrical outlets and panels shall be in compliance with the electrical
building code and inspected monthly to ensure safe and proper working
condition.
m. Chemicals, cleaning products and paint shall be stored appropriately in proper
storage facilities as required by the California Fire Code.
n. All electrical wiring throughout the Facility shall be concealed and in compliance
with the electrical building code.
o. Bi- monthly visual inspection of the Facility.
44
03674- 0000411662123.6
ATTACHMENT
RENTAL PAYMENT SCHEDULE
The rental payments from AGC to the City shall be the greater of either:
Percentage
Year 1 -5: Fifteen (15) percent of all green fees, cart fees, and range fee revenues,
and
Eight (8) percent on all other revenue (excluding green fees, cart fees
and range fees)
Year 6 -10: Seventeen (17) percent of all green fees, cart fees, and range fee
revenues, and
Eight (8) percent on all other revenue (excluding green fees, cart fees
and range fees)
Notwithstanding the foregoing, the increase in rent for years 6 -10 will be
contingent upon the Facility generating annual Gross Revenue of no less
than $1,200,000 in Year 5. If the Facility generates Gross Revenue less
than $1,200,000 in Year 5, then the rent shall remain unchanged until
Gross Revenue has hit the $1,200,000 threshold in any subsequent year.
Once the threshold has been reached, the rent will go into effect for the
next contract year and shall remain in effect thereafter.
Year 11 -20: Nineteen (19) percent of all green fees, cart fees, and range fee
revenues, and for each and every dollar thereafter, and
Eight (8) percent on all other revenue (excluding green fees, cart fees
and range fees)
Notwithstanding the foregoing, the increase in rent for years 11 -20 will be
contingent upon the Facility generating annual Gross Revenue of no less
than $1,350,000 in Year10. If the Facility generates Gross Revenue less
than $1,350,000 in Year 10, then the rent shall remain unchanged until
Gross Revenue has hit the $1,350,000 threshold in any subsequent year.
Once the threshold has been reached, the rent will go into effect for the
next contract year and shall remain in effect thereafter.
W
45
03674 -0000411662123.6
Minimum Rent
Beginning at $125,000 in Year One and increasing to $150,000 annually thereafter for
Year Two through Year Twenty.
AND
Capital Improvement Reserve: Starting in Year 3, Lessee shall make quarterly payments to
the City in the amount of 2.5% of Annual Gross Revenues for future capital improvements and
ongoing repair requirements, as more fully set forth on Attachment C.
Terms herein used shall be as defined in Attachment F (Gross Revenue — defined).
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03674 - 00004/1662123.6
ATTACHMENT G
GROSS REVENUE — DEFINED
For purposes of calculating percentage rent, gross revenue shall mean all money received by
Lessee as a result of the sales and rental of all goods and services at the Facility, but shall not
include:
(1) Cash refunds or credits allowed on returns by customer;
(2) Sales taxes, excise taxes, gross receipts taxes and other similar taxes nor or later
imposed upon the sale of food, beverages, merchandise or services and paid by
Lessee or the appropriate taxing authority, whether added to or included in the selling
price;
(3) Fees charged for golf lessons and instruction;
(4) The actual uncollectible amount of any check or bank draft received by Lessee as
payment for goods or services and returned to Lessee from a customer's bank as
being uncollectible (commonly "non - sufficient funds" checks) but only after Lessee has
made reasonable efforts to collect on the check;
(5) The actual uncollectible amount of any charge or credit account (commonly "bad
debts ") incurred by Lessee for the sale of merchandise or services; provided, however,
that the credit was extended to the customer by Lessee, and that reasonable efforts to
collect said account have been made;
(6) The actual uncollectible amount of any sale of merchandise or services for which
Lessee accepted a credit card; provided, however, that Lessee has made reasonable
efforts to collect the debt after being notified by the issuing bank of the invalidity or
uncollectibility or the charge;
(7) Interest or other charges paid by customers for extension of credit;
(8) Sales made by any concessionaire or licensee of City, it being the intention of this
Lease that only Lessee's share of the receipts of such concessionaires or licensees, if
any, are to be included in the calculation of Lessee's gross revenue, subject to
approval by the City of Arcadia of all concession or license agreements prior written;
(9) Sales or trade -ins of machinery, vehicles, trade fixtures or personal property used in
connection with Lessees operation of the leased premises;
(10)Unless otherwise disallowed by City, the value of any merchandise, supplies or
equipment exchanged or transferred from or to other locations of business of Lessee
where such exchange or transfer is not made for the purpose of avoiding a sale which
would otherwise be made from or at the leased premises;
(11)Receipts in the form of refunds from or the value of merchandise, supplies or
equipment returned to shippers, suppliers or manufacturers;
47
03674- 00004/1662123.6
(12)The amount any cash or quantity discounts received from sellers, suppliers or
manufacturers;
(13)The amount of any gratuities paid or given by customers to or for employees of
,Lessee;
(14)Receipts from the sales of uniforms or clothing required, to be worn by employees;
(15)Amounts attributed to meals served or provided to employees of Lessee;
(16)Receipts from the sale of waste or scrap materials resulting from Lessee's operations;
(17)Amounts attributable to play by members of the American Golf Club exercising their
membership right to play a limited number of rounds without separate payment of
greens fees; and provided that the City can, at its option, require this activity to be
included as gross revenue if in the opinion of the City, this activity is causing a
reduction in green fees.
(18)The amount of any cash received from operation of an advance reservation system;
provided that the Lessee receives prior approval from City to operate a cash advance
reservation system.
48
03674- 00004/1662123.6
ATTACHMENT H
PROPERTY INVENTORY
Property Inventory to be removed
• All Maintenance Equipment
(mowers, blowers, trimmers hand tools, ball retriever etc.)
• POS System (computer's, printers and related items)
• Golf Carts, riding and pull along
• Shade cover over a portion of the driving range tees
• Range balls
• Ball dispensing machine
• TV, flat screen in clubhouse
• Score Cards
• Video camera (swing analysis machine and system)
• PA System
• Time Clock
• Refrigerator (owned by Coca Cola) in kitchen [large and small]
• All merchandise in pro shop
• Lessee's Proprietary Materials
EN
03 674-00004/3662123.6
ATTACHMENT
RECOVERY AND REIMBURSEMENT AMOUNT SCHEDULE
Year in which
Termination
Occurs
Column 1
Reimbursement Amount
Payable to Lessee for Initial
$900,000 Capital
Improvements
Reimbursement Amount
Payable to Lessee for
Option Term 1 $100,000
Capital Improvements
Total Reimbursement
Amount Payable to Lessee
if Termination Occurs in
Year stated in Column 1
Year1
$900,000
$0
$900,000
Year2
$900,000
$0
$900,000
$0
$900,000
$847,059
$0
$847,059
$794,118
$0
$794,118
N$900,000
$741,176
$100,000
$841,176
$688,235
$92,857
$781,092
$635,294
$85,714
$721,008
$582,353
$78,571
$660,924
$529,412
$71,429
$600,840
Year 11
$476,471
$64,286
$540,756
Year 12
$423,529
$57,143
$480,672
Year 13
$370,588
$50,000
$420,588
Year 14
$317,647
$42,857
$360,504
Year 15
$264,706
$35,714
$300,420
Year 16
$211,765
$28,571
$240,336
Year 17
$158,824
$21,429
$180,252
Year 18
$105,882
$14,286
$120,168
Year 19
$52,941
$7,143
$60,084
Year20
$0
$0
$0
50
03674 - 0000411662123.6