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AGENDA REPORT
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| | | | | | | | DATE:
| January 19, 2021
| TO:
| Mayor and City Council
| FROM:
| Stefan T. Chatwin, City Manager
| | SUBJECT: | Resolution 2021-07 of the City Council of the City of Fairfield Approving a Fifth Amendment to the Lease and Management Agreement with Sports Restaurant of Fairfield, Inc. and Sports Restaurant of Rancho Solano, Inc. for the Operations of the Food, Beverage and Banquet Services at the Paradise Valley and Rancho Solano Golf Courses |
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| | | | | | | | | RECOMMENDED ACTION | | Adopt resolution. |
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| | | | | | | | | STATEMENT OF ISSUE | | On March 19, 2020, the City was ordered to close both golf courses as part of Governor Newsom’s State of Emergency declaration regarding the Covid-19 outbreak (Executive Order N-29-20) and Solano County Order 2020-04. The emergency declaration resulted in closures of the food, beverage and banquet facility operations which has had a direct impact with little to no revenue to pay expenses. The proposed amendment will modify the agreements with Sports Restaurant of Fairfield, Inc. and Sports Restaurant of Rancho Solano, Inc. (SRI) by retroactively reducing SRI’s rent obligations. |
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| | | | | | | | | DISCUSSION | The City owns two golf courses with clubhouse, banquet and catering (food and beverage) facilities that have been in operation for more than two decades. Rancho Solano Golf Course (RSGC) opened in 1990 and Paradise Valley Golf Course (PVGC) opened in 1993. The City has been in contract with SRI for food, beverage, banquet and catering services since 1993 and 1998, respectively. The current term of the agreements with SRI for each facility is through December 31, 2022.
On March 19, 2020, the City closed both golf courses due to the State and County mandates to “Shelter at Home”, with the understanding that the City’s golf course operator (Kemper) would agree to continue security and maintenance at both facilities during the closures. On May 19, 2020, City Council approved an amendment with Kemper to implement cost reductions, but those have since ended with the ease in restrictions to outdoor activities.
The City’s golf course operations have experienced recovery to normal capacity. However, the food and beverage operations have had limited chances of recovery since the City does not have control over when the State and County will relax certain Coronavirus (COVID-19) restrictions. Consequently, City staff have been in discussions with SRI to seek alternatives for making it through the remainder of COVID-19 restrictions. Discussions with SRI have resulted in a proposal of a fifth amendment, the general terms of which are summarized as follows:
• Temporary reduction in percentage rents to 6% (from 10%) of all gross revenue less banquet revenues, plus an amount equal to twelve percent (12%) of banquet revenues; and
• City shall assume responsibility for Rancho Solano kitchen alteration project to increase separation of food preparation and dishwashing tasks to maintain compliance with County health codes; and
• Suspension of previously adopted performance standards resulting in deferral of the annual audit (2020) until August 2021 (i.e. conduct a two-year audit in 2021).
City staff is recommending City Council adopt the proposed resolution authorizing a Fifth Amendment to the Lease and Management Agreement with Sports Restaurant of Fairfield, Inc. and Sports Restaurant of Rancho Solano, Inc. for the Operations of the Food, Beverage and Banquet Services at the Rancho Solano and Paradise Valley Golf Courses.
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| | | | | | | | | FINANCIAL IMPACT | | This amended agreement will reduce the amount of rent collected for an unspecified period of time, but will not affect or impose additional expenditures to the General Fund. Project expenses for the kitchen alteration project will be paid by the Golf Enterprise fund balance. |
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| | | | | | | | | PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION | N/A
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| | | | | | | | | ALTERNATIVE ACTION | | The City Council could choose to not approve the amended agreement, or to modify terms of the agreement. |
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| | | | | | | | | STAFF CONTACT | Michael Hether, Assistant Director of Public Works
(707) 428-7493
mhether@fairfield.ca.gov
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| | | | | | | | | COORDINATED WITH | City Attorney's Office
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| REVIEWERS: | | Reviewer | Action | Date | | Hether, Michael | Approved | 1/4/2021 - 8:20 PM | | Kaushal, Paul | Approved | 1/4/2021 - 8:41 PM | | Alexander, Amber | Approved | 1/5/2021 - 12:55 PM | | Alexander, Amber | Approved | 1/6/2021 - 4:57 PM |
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