HomeMy WebLinkAbout01 - CC-5 - Five Year Extension of Tennis Center Op. - 4/20/2010CITY COUNCIL AGENDA REPORT
MEETING DATE: APRIL 20, 2010 ITEM NUMBER:
SUBJECT: FIVE YEAR EXTENSION OF TENNIS CENTER OPERATING AGREEMENT
DATE: APRIL 8, 2010
FROM: ADMINISTRATIVE SERVICES/RECREATION DIVISION
PRESENTATION JANA RANSOM, RECREATION MANAGER
BY:
FOR FURTHER INFORMATION CONTACT: Donna Theriault, Management Analyst 714-754-5636
RECOMMENDATION:
Approve an Amendment to the Agreement for the second of two, 5 -year extensions with
HML Tennis, LLC for the operation of the Costa Mesa Tennis Center (Attachment 1), and
authorize the Mayor to sign.
BACKGROUND:
In February 1998, the City entered into an agreement for the operation of the Costa
Mesa Tennis Center with Hank Lloyd's Orange County Tennis (HLOCT). At that time,
HLOCT was selected over several other candidates as a result of an extensive Request
for Proposal process.
The term of the 1998 Agreement was 5 years, with two 5 -year renewal options (15 total
years). The initial 5 -year contract period expired in February 2003 and HLOCT
operated on a month-to-month basis until 2005, with City consent. The reason for the
month-to-month rental was that the planning of the Skate Park was in process and the
City wanted to assess the impact of the Skate Park on Tennis Center operations. In
2005, staff determined the Skate Park would have no impact on the Tennis Center
operation and Council approved the first of two, 5 -year extensions from April 2005 to
April 2010.
In 2009, the operator of the Tennis Center, Hank Lloyd, changed the name of his
company from Hank Lloyd's Orange County Tennis to HML Tennis, LLC and the
Agreement was amended to reflect the name change.
ANALYSIS:
HML Tennis, LLC has notified the City of its desire to extend the contract for the second
of the 5 -year extension options (Attachment 2). Under the direction of Hank Lloyd
Tennis, LLC (Operator), the Costa Mesa Tennis Center has done well. The Operator
has successfully completed the capital improvements as required in the initial
agreement which included resurfacing and re -striping of all 12 courts, replacing all
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windscreens, replacing all nets, replacing pro -shop doors and installing an alarm
system. The Operator has maintained the Tennis Center to a high standard and in
2001 received the "Best Public Tennis Facility" award by the Orange County Tennis
Association. In 2009, the United States Professional Tennis Association (USPTA)
honored Hank Lloyd as the "2009 Tennis Director of the Year" for the California
Division.
Throughout the term of the Agreement, the Operator has been very active in the
community with tournaments, classes and junior events. Each year the Tennis Center
hosts the Pro Classic Men's Professional Tennis Tournament attracting upcoming
professional tennis players. Overall, the Operator makes a strong effort to help the
community learn and play the sport of tennis.
ALTERNATIVES CONSIDERED:
No alternatives to the extension of the Agreement are available. Unless justification can
be found to terminate the subject Agreement under other provisions of the Agreement,
Lessee has the option to extend the Agreement and has met all the conditions required
to do so.
FISCAL REVIEW:
The existing Agreement specifies payment of rental on a monthly basis. Currently HML
Tennis pays the greater of $1,000/month or 10 percent of the gross amount received from
court rental plus 5% of the gross amount received from pro shop sales. HML Tennis has
consistently paid greater than the minimum, with annual rent payments to the City
averaging $30,000. Annual revenue received by the City for the Tennis Center operation
for the last five fiscal years is:
FY 04-05
$27,638
FY 05-06
$30,346
FY 06-07
$30,321
FY 07-08
$32,518
FY 08-09
$28,576
LEGAL REVIEW:
The City Attorney's Office has reviewed and approved the attached Amendment to the
Agreement as to form.
CONCLUSION:
HML Tennis has provided quality tennis programming to the community during the initial
and extended contract term. The Operator has met all of the contractual obligations of
the Agreement, including the required capital improvements, and staff has been
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satisfied with the Operator's performance. It is recommended that the City Council
extend the Costa Mesa Tennis Center Operation Agreement for the second of two, 5 -year
terms and authorize the Mayor to sign the Agreement Amendment.
JANA RANSOM
Recreation Manager
COLLEEN O'DONOGHUE
Assistant Finance Director
DISTRIBUTION: City Manager
STEPHEN MANDOKI
Director of Administrative Services
City Attorney
Assistant Finance Director
City Clerk
Staff
ATTACHMENTS: 1 Amendment to the Tennis Center Agreement
2
File Name Tennis Center Extension
Letter from HML Tennis. LLC
Date April 5, 2010
Time 3:00 pm
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ATTACHMENT 1
AMENDMENT TWO TO AGREEMENT FOR OPERATION
OF THE CITY OF COSTA MESA TENNIS CENTER
This Extension and Amendment ("Amendment") is made and entered into this 1St day of
May, 2010, by and between the City of Costa Mesa ("City"), a California municipal corporation
and HML Tennis, LLC, a limited liability corporation ("Lessee").
RECITALS
WHEREAS, City and Lessee, then known as Hank Lloyd's Orange County Tennis, Inc.
entered into an agreement dated February 9, 1998 in which City agreed to lease to Lessee certain
City park property located at TeWinkle Park in Costa Mesa, California (the "Agreement"); and
WHEREAS, in April, 2009, all of the rights and obligations under the Agreement of
February 9, 1998 as well as the Extension and Amendment to Lessee were transferred to HML
Tennis, LLC; and
WHEREAS, the term of the original Agreement was a five year period; and
WHEREAS, Section 2.03 of the Agreement allows Lessee to extend the term of the
Agreement for two additional five-year periods; and
WHEREAS, the expiration of the original term of the Agreement was February 8, 2003;
and
WHEREAS, on April 19, 2005, the term of the Agreement was extended, which
extension expires on April 30, 2010; and
WHEREAS, City has received written notice of Lessee's exercise of the option to extend
the term of the Agreement for an additional five-year period; and
WHEREAS, City and Lessee wish to amend the Agreement in order to extend the term of
the Agreement; and
NOW, THEREFOR, for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
1. Unless terminated under other provisions of the Agreement, the term of the
Agreement shall be extended effective May 1, 2010, for one additional five-year period, ending
on April 30, 2015.
2. All terms not herein defined shall have the same meaning and use as set forth in
the Agreement.
3. All other terms, conditions, and provisions of the Agreement, the Extension and
Amendment of April, 2005 as well as the Assignment and Assumption Agreement of April,
2009, not in conflict with this Amendment, shall remain in full force and effect.
ATTACHMENT 1
IN WITNESS WHEREOF, the Parties hereto have set their hand by their duly authorized
representatives as of the day and year first above written.
CITY OF COSTA MESA,
A municipal corporation
Date:
Mayor of the City of Costa Mesa
HML TENNIS, LLC
Date:
S ignature
Name and Title
Social Security or Taxpayer ID Number
APPROVED AS TO FORM:
4 Date: 3� a? --7 410
City Attorney
ATTEST:
City Clerk and ex -officio Clerk
of the City of Costa Mesa
2 HMLTennis, LLC
ATTACHMENT 2
1
TAN I
CIY�TLR March 24, 2010
CITY OF COSTA MESA
880 Junipero Drive • Costa Mesa • CA 92626 • Tel (714) 557-0211 • Fax (714) 708-0733 • httcm@sbcglobal.net
Donna Theriault
Management Analyst
Administrative Services Department
Recreation Division
P.O. Box 1200
Costa Mesa, Ca 92628
Dear Donna,
Please take this as notice of my wish to exercise the five year
extension option on the Costa Mesa Tennis Center. I look forward
to improve and make Costa Mesa Tennis Center as active and
prosperous as ever.
Sincerely,/
Hank Lloyd
HMLTennis, LLC