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Home My WebLink AboutCC AG PKT 2004-12-13 #X AGENDA REPORT gr 62M DATE: December 13, 2004 TO: Honorable Mayor and City Council THRU: John B. Bahorski, City Manager FROM: June Yotsuya, Assistant City Manager SUBJECT: Approval of Agreement with Eric Stephens for Management and Operation of Seal Beach Tennis Center and Approval of Funds for City Maintenance Services at Center SUMMARY OF REQUEST: Requested that City Council: 1. Adopt Resolution 5292 authorizing the City Manager to execute an Agreement with Eric Stephens for the management and operation of Seal Beach Tennis Center and, 2. Authorize funding not to exceed $160,000 annually for City maintenance of center for a two -year period. DISCUSSION: Previously, the City Council directed staff to re- solicit Requests for Proposals (RFP's) for the operation and maintenance of the Bixby Ranch Tennis Club that will now be known as the Seal Beach Tennis Center. In June 2004, RFP's were sent to interested parties. The City received four responses to the RFP process. 1. Theresa and Michael Alenikov 2. Bill Behrens /Larry Hartmann 3. Rusty Miller 4. Eric Stephens Using an interview panel comprised of one City Council member, the City's Property Manager, and two recreation professionals from other cities that run successful tennis operations, the panel interviewed and recommended the participant they deemed to have submitted a proposal that would be most advantageous for the City. Based on the panel's recommendation, the Assistant City Manager entered into negotiations with Bill Behrens and Larry Hartmann. Mr. Behrens and Mr. Hartmann also do business as the Huntington Beach Tennis Academy that currently provides tennis instruction at the center. During the course of negotiations, Mr. Behrens determined it was more prudent to withdraw from the process, continue to run the Huntington Beach Tennis Academy and become a Agenda Item December 13, 2004 City Council Agenda Report — Approval Agreement for Operation and Maintenance of Seal Beach Tennis Center and Authorization of Funds for City Maintenance Services at Center Page 2 subcontractor of the new operator. The City continued negotiations directly with Mr. Hartmann as an independent contractor. Due to an inability to agree with the final terms of agreement, on December 13, 2004, City staff contacted Eric Stephens, another individual who submitted an RFP response and deemed advantageous by the interview panel, who is willing to accept all the negotiated terms of the agreement and sign an agreement with the City. The major points of the proposed agreement for services include the following: Introductory Period From December 24, 2004 to January 31, 2005, contractor will provide professional management of center, providing the courts for public play at no charge, on a first come. first serve basis as a marketing tool to introduce the center to the community. Services such as the pro shop, snack bar and fitness room will not be operated during this period. The introductory period will provide the contractor opportunity to set up operations and services, hire employees, establish subcontracts, apply for a liquor license, initiate a marketing campaign and fulfill the startup requirements identified in the agreement. • Terms of Agreement Agreement will be for a two -year period from February 1, 2005 through December 31, 2007. The City may extend the agreement annually for three one -year periods for a maximum term of five years. Scope of Services Scope of services include management of center including courts, pro shop, snack bar and fitness room, general upkeep of facility, and providing, individually or through subcontracts, tennis lessons, tennis racket repair, tournaments, etc. Standards and Quality of Service The City will establish written reasonable standards of performance for the contractor to meet as part of the operation and maintenance of the center during the term of the agreement. Payment Terms The contractor will pay a monthly base amount of $1500 or $18,000 annually. In addition, the contractor will pay a monthly percentage of gross revenue minus the base amount per a graduated scale between 8 % -10% as identified in the agreement. The base amount will also be adjusted annually per certain terms as identified in the agreement. Capital Improvement and Equipment Fund If the contractor elects to contribute towards capital improvements and/or equipment purchases for the center, such as exercise equipment, kitchen upgrades, etc. the City will use up to the December 13, 2004 City Council Agenda Report — Approval Agreement for Operation and Maintenance of Seal Beach Tennis Center and Authorization of Funds for City Maintenance Services at Center Page 3 amount of funds paid to City under the agreement to match the investment by contractor. The expenditures from said fund would be made upon the recommendation of contractor and approval of City and such purchases would become the property of the City upon expiration of the agreement or early termination of the agreement. Non - Related Tennis Use of Center Clubhouse The City will have the right to use center clubhouse for community purposes at no charge up to six times a year. The contractor may rent the clubhouse for non - tennis center activity and will be included in the gross revenues of which the City receives a certain percentage. Hours of Operation and Fees Contractor will have the ability to set hours of operation and to set fees per the agreement. The operator's initial fees include a $105 monthly center fee which allows players monthly use of the courts, fitness center and locker facilities, etc. and an $8 per person court fee for individuals who use the center on an irregular basis. Performance Bond Contractor will be required to post a $5000 bond or its equivalent as security for faithful performance and non - negligent performance of the terms of the agreement. Utility Expenses Contractor will be responsible for electricity, gas and telephone services. The City will provide water, sewer and refuse, landscaping and janitorial services. Indemnity and Insurance Contractor shall comply with indemnity and insurance requirements set forth in the agreement. The City Attorney's Office has reviewed and approved the agreement as to form. Staff believes that a fair and equitable agreement has been - negotiated that provides management and operation of the center and provides groundwork to enhance the center's appeal and use within the community. At a previous City Council meeting, staff reviewed with the City Council the contribution that was received from Bixby Ranch Company at the time of the transfer of the tennis center property to the City. In prior actions, the City Council authorized certain expenditures of said monies. The City will incur additional expenses to provide maintenance services on an annual basis at the center. Staff has estimated that such services will cost approximately $160,000 annually to provide for landscaping, janitorial and its share of utility services at the site. Attachment A provides a breakdown of expenses (actual and proposed) from the Bixby Ranch contribution. December 13, 2004 City Council Agenda Report — Approval Agreement for Operation and Maintenance of Seal • Beach Tennis Center and Authorization of Fund's for City Maintenance Services at Center Page 4 FISCAL IMPACT: The City will receive $18,000 annually and, in addition, will receive a percentage of gross revenues based on a calculation formula identified in the agreement. The City will incur expenditures of approximately $160,000 each year to provide landscaping and janitorial services and its utility responsibilities at the Center. Staff recommends using a portion of the Bixby Ranch contribution to the City to cover the City's maintenance service expenses at the Center for a two -year period. • RECOMMENDATION: It is recommended that the City Council: 1. Adopt Resolution 5292 authorizing the City Manager to execute an Agreement with Eric Stephens for the management and operation of Seal Beach Tennis Center and, 2. Authorize funding not to exceed $160,000 annually for City maintenance of center for a two -year period. Submitted by: Ju Yotsu , Assistant City Manager NOTED AND APPROVED: John B. Bahorski, City Manager Attachments: Resolution 5292 Agreement for Services Summary of Bixby Ranch Contribution to City