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Council Agenda - City of BurbankTuesday, August 28, 2007Agenda Item - 8 |
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PURPOSE
The purpose of this report is multifold. Staff requests City Council approval of an Interim Operating Agreement with Raymond and Michelle Lucero (d.b.a. R&M Concessions, Inc.) for the DeBell Golf Course while the new clubhouse is being constructed. The existing agreement between the City of Burbank and R&M Concessions, Inc. was for a period of five years, which expired February, 2007. However, the agreement allowed for a month-to-month continued operation beyond its expiration date until such time as the concessionaire and the City determined terms and conditions of a new agreement.
Secondly, approval is required for a temporary agreement to lease a catering truck from Command Performance operated by R & M Concessions, to provide continued food and beverage services during the demolition and construction of the DeBell Clubhouse.
Thirdly, approval is required to enter into a 48 month lease with Jacobsen EZ-Go Textron for a mobile food and beverage refresher cart that will enhance a reduced level of service to our golfing patrons during the construction process. It will allow R&M Concessions, Inc. to provide snacks, cold drinks, sandwiches, candy and such to our golfing patrons while on the course.
Fourthly, is to enter into a five year agreement with R&M Concessions, Inc. to commence once the new clubhouse has been reopened. The terms of the agreement will remain the same as required in their current agreement.
BACKGROUND
The DeBell Golf Course Food and Beverage Concession agreement between R & M Concessions and the City expired in February 2007. Food and beverage services are continuing to be provided by R&M Concessions, Inc. under the same terms and conditions of their original agreement. The existing agreement was in effect for a period of five years, and allowed for one extension for an additional five years. At this time, the existing agreement can no longer be renewed.
ANALYSIS
The existing clubhouse is due to be demolished in September 2007. It is anticipated that the new facility will be completed in fourteen to eighteen [C1]months. It is important to continue to offer food and beverages to the golfing public during this period of demolition and construction. Since there will be no indoor facilities available to provide consumption services, the City is proposing to lease a catering coach or trailer , provide limited outdoor facilities (tables and chairs), and lease a refresher cart to provide service on the golf course. With these limited offerings, it is anticipated that the concessionaire will experience a significant drop in business which will affect the revenue to R&M Concessions, Inc. as well as the City.
R&M Concessions, Inc. has notified the City that they desire to enter into a month to month lease that will allow them to continue performing services in accordance with their original agreement until such time as the demolition of the clubhouse commences which is projected to be September, 2007. The current restaurant, community room and bar operated by R&M Concessions, Inc. provides important food and beverage services for golfers or those who visit for dining purposes alone. R&M Concessions, Inc. have met the terms and conditions of their agreement.
Once the demolition begins, the City is proposing to lease a 26 foot catering truck/trailer which has an oven, freezer, refrigerator, and sink from Luis Lara, dba, Command Performance, a Burbank based business. The City shall pay the sum of $3,000 per month plus tax commencing on September 1, 2007, or at such time as the clubhouse is no longer operational, for the term of one year with the option to convert to a month to month lease if necessary. R&M Concessions, Inc. has expressed a willingness to continue providing food and beverage service to our patrons by managing the catering truck and refresher cart. The catering truck would be positioned in the DeBell Golf Course Driving Range parking lot. The Concessionaire will provide and maintain the necessary inventory of concession merchandise required to meet the needs of the public. The term of the interim[C2] agreement shall be for a period of up to eighteen months (based upon construction schedule),[C3] commencing on September 1, 2007 or at such time as the clubhouse is no longer operational, if necessary, may be renewed for one additional year on a month to month basis.
The City currently leases a fleet of 80 golf carts from Jacobsen E-Z Go Textron. Through this company, staff received a proposal to lease a refresher cart featuring a 345 can capacity, 4 cold storage bins, 2 liter beverage dispensers, cup dispensers and a trash container. Many other golf courses commonly utilize this type of vehicle. R&M Concessions, Inc. will be responsible for providing staff to operate the vehicle on a daily basis while the golf course is open. The cost for the operating lease for a 48 month term is $339.01 per month. Upon approval to enter into this lease agreement and upon receipt of the refresher cart, R&M Concessions, Inc. would also stock and operate this vehicle to help enhance the food and beverage service. Additionally, it is felt that this amenity will provide a much needed service to our golfing patrons.
Upon the completion of the new clubhouse, staff is recommending that the City enter into a new five year agreement with R&M Concessions, Inc. The City acknowledges the fact that during the past five year period, the facilities at the clubhouse have not been up to standards. Staff did not want to invest significant funds into a building that was going to be ultimately demolished. This created a hardship on the concessionaire; however, they understood the logic. They are also willing to provide concessionaire service at a temporary facility with limited resources while the new clubhouse is being built. In turn, it is staff�s desire to enter into a new five year contract at the current terms of our agreement: the City receives 10% of past monthly gross receipts for all food and refreshment sales (including refresher cart sales), and 12% of past monthly gross receipts received from liquor sales including beer and wine. If there are vending machines, the City will receive 50% of net revenue. Lastly, the City will receive 3% of past monthly gross receipts derived from food, refreshments, liquor, beer, wine, and vending machine sales to be placed in a Capital Improvement Fund. In addition, R&M Concessions, Inc. will pay one half of the cost for the beverage cart, or $169.50 per month, for the remaining period of time on the 48 month lease.
During the fourth year of this new agreement an extensive customer satisfaction survey will be conducted. The results of this instrument will provide direction as to whether the concession agreement would be extended or a new Request for Qualifications and Request for Proposal will be distributed. This is a format that has been utilized in the past.
R&M Concessions, Inc. have been part of the team that has been responsible for the planning of the new clubhouse. Their input has been vital in the development of the food concessionaire facilities, including the kitchen amenities, the restaurant and bar area, the storage area, and the serving areas.
FISCAL IMPACT
The month-to-month lease agreement requires R&M Concessions, Inc. to continue to pay 10% of their food and 12% of their alcoholic beverage sales to the City on a monthly basis. There is no change in the existing terms and conditions of the contractual obligations until the demolition of the Clubhouse commences in September 2007. Revenues generated to the City from the food and beverage concession operation on a monthly basis has been approximately $5,000 per month.
With the onset of the interim [C4]Concession Agreement which would take effect once the Clubhouse demolition begins in September 2007, R&M Concessions, Inc. would be obligated to provide employees required to render good service and to promote food and beverage consumption at the DeBell Golf Course. R&M Concessions, Inc. will provide and maintain the necessary inventory of merchandise required meeting the needs of the public and providing all maintenance, repair, and service required on all equipment, used in their concession operation. Additionally, the Concession Agreement will require R&M Concessions, Inc. to stock, supply and operate the Refresher Cart service to our golfing patrons on DeBell Golf Course during its normal operating hours. It is the desire of the City to continue to offer food and beverage services to the public during the demolition and construction period of the new Clubhouse. However, it is anticipated that such service demands will drop significantly given the temporary facilities with only limited outdoor seating areas. The costs associated with the services will also drop, but will remain substantial. To insure that the food and beverage services continue at an acceptable level, the interim agreement which will be in place during demolition and construction will waive the payments to the City of 10% of gross receipts from food and 12% from alcohol sales if annual sales do not exceed $250,000. If the annual sales exceed $250,000 annual payments will be made to the City at the interim agreement rate (10% of food and sales and 12% of alcohol sales).
Additionally, the City of Burbank will incur $3,000/month plus tax to lease the catering truck/trailer for a term of one year commencing in September 2007, with the ability to extend the lease on a month-to-month basis. The Golf Course Enterprise Fund has monies set aside in its total project budget to cover the cost for temporary operations to offset this expenditure.
The Refresher Cart lease will also be absorbed by the Golf Course Enterprise Fund set aside at a monthly rate of $339.01 per month during the construction period.
RECOMMENDATION;
Staff recommends that the City Council approve the following resolutions:
1) A Resolution to allow the City of Burbank to enter into an Interim Concession Agreement with R&M Concessions, Inc. to provide food and beverage service during the demolition/construction period of DeBell Clubhouse commencing at the start of project for a minimum of twelve months and month-to-month thereafter until project completion.
2) A resolution to allow the City of Burbank to enter into a lease Agreement with Luis Lara, dba, Command Performance for a completely furnished 26 foot catering truck/trailer which includes an oven, freezer, refrigerator, and sink at a cost of $3,000/month for a one year term with the option to continue the agreement with a conversion to month to month.
3) A resolution to allow the City of Burbank to enter into a lease Agreement with Jacobsen EZ-Go Textron to lease a food and beverage Refresher cart for a 48 month time period at a monthly cost of $339.01.
4) A resolution to allow the City of Burbank to enter into a concession agreement with R&M Concessions, Inc. to provide food and beverage service for a five (5) year period commencing with the opening of the new DeBell Clubhouse. During year four (4), an extensive customer service survey will be conducted to serve as an evaluation tool for future negotiations.
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