City Council Minutes 2010 02 02 - Laserfiche WebLink

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City Council Meeting Minutes February 2, 2010 Page 5 of 8 City Attorney Light introduced Ordinance No. 1565, Series 2010. Mayor Sisk requested a Staff presentation. City Manager Fleming explained both ordinances are related. Ordinance No. 1565, Series 2010 authorizes a loan from the Water and Wastewater Utility Fund to make up the deficit in the ~~009 budget. Ordinance No. 1566, Series 2010 provides a loan from the Watler and Wastewater Utility Fund as a defeasance of the Golf Course General Obligation Bonds, which provided funding for the construction of the golf courSl3. The golf course has been paying off those bonds over a period of ten years. Blecause of the tax laws regarding private activity and the non-profit status, the proposed structure for the operating agreement with Western Golf Properties, is a defeasance of the bonds. The City plans to hold an open house on the contract before it is presented to City Council for their consideration. He asked Parks and Recreation Director Stevens to provide background information on the proposed contract. Parks and Recreation Director Stevens explained the process began in July of 2009 with a letter he sent to VVestern Golf Properties expressing the City's decision to not continue under the current agreement. The agreement paid Western Golf Properties a management fee of $96,000 and the City funded the Pro Shop, the merchandise, equipment and the operation of the golf course. If the golf course was profitable, the City kept the profits, if there were no profits, the City still paid a $96,000 management fee. A focus group made up of golfers and non-golfers was formed and asked at an October 29, 2009 meeting whether the agreement should be modified and if so, what terms should be included. Another question asked was should the City continue with the current agreement contract, or pursue a RFQ and RFP process. The focus group felt they should entertain a good faith agreemE:mt with Western Golf Properties. He noted a performance criterion was incorporated into the agreement. He stated he has discussed this issue with other golf course professionals. Finance Director Watson explained the loan process and defeasance of the golf course general obligation bonds through a loan from the Water and Wastewater Utility fund. Discussions began in November between the Finance Director, Parks and Recreation Director and the City Attorney, which centered on the City's Home Rule Charter and the tax consequences of the agreement. The charter prohibits leasing the golf course due to the definition of open space and there were also some bond IRS taxability issues. The City Attorney suggested a licensing agreement in lieu of a leasing agreement. The discussions lasted throughout the holidays and included bond counsel and the City's financial adviser. A licensing agreement releases the City from some of the restrictions of the Charter however there were still problems with the taxability of the bonds. The City issued some certificates of participation in the 1990's on the golf course, which were refunded in 2002 with General Obligation Bonds (tax exempt revenue