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HomeMy WebLinkAboutMINUTES-07/03/1985-AdjournedADJOURNED MEETING OF THE COUNCIL OF THE CITY OF FORT COLLINS July 3, 1985 4:OU p.m. An adjourned meeting of the Council of the City of Fort Collins was held on Wednesday, July 3, 198b, in the Council Chambers of the New Municipal Building, 30U West LaPorte Avenue, Fort Collins, Colorado. Roll call was answered by the following Councilmembers: Clarke, Estrada, Horak, Knezovich, Uhlson, Rutstein, and Stoner. Staff Members Present: Arnold, Krajicek, Huisjen, Lewis, Shannon Resolution Authorizing the City Manager to Enter into an Agreement with Bucain for the Operation of SouthRidge Greens Public Golf Course, Adopted Following is the staff's memorandum on this item: "Executive Summary ' The City owns and has constructed a golf course on South Lemay Avenue pursuant to Resolution 82-121 of the City of Fort Collins. That Resolution provided for the execution of Agreement with the Bucain Corporation to construct, operate and maintain a City golf course located in the SouthRidge Subdivision. Because of financial difficulties experienced by the SouthRidge Corporation, Bucain Corporation and other individuals associated with the project, payments of rent and other assessments were not made to the City when due. The new Agreement is a restructuring of the relationship between the parties so that Bucain Corporation is the operator of the golf course, passing through net revenues to the City. Bucain Corporation also is obligated to pay revenues from the sale of each lot or unit in SouthRidge Greens Subdivision. Background A subcommittee of the City Council and the staff have looked at all the options available for a solution to the problem presented to provide revenues from the SouthRidge Subdivision and Golf Course, to pay for the debt incurred from the construction of the golf course. After extensive negotiations between all of the parties, an agreement has been drafted and presented for consideration by the City Council. Briefly, the elements of the Agreement are as follows: 1. The original agreements with the SouthRidge Greens Corporation, ' Bucain Corporation, Clifford J. Buckley and Bernard L. Cain, Jr., -341- July 3, 1985 are terminated. The substituted Agreement provides revenues from the SouthRidge Greens Subdivisions as sales of lots and units ' occur. 2. The City receives 5% and 7% of the gross sales of housing units and lots respectively, until January 1, 1988, when such fees shall be increased to 6% and 8%. 3. The Agreement requires Bucain Corporation to guarantee payment of $2,50U,000 on assessments from lots and units and golf course revenues produced by Bucain. Bucain further guarantees to the City a payment by September 1, 1986, sufficient to pay interest payments due during the calendar year of 1986 which are not otherwise available from reserve funds maintained for bond payments. 4. Buckley and Cain are required to guarantee the payment to the City of the sum of $2,500,000, personally paying any deficiency, if that sum is unpaid by the Bucain Corporation one year after all but 10 lots or units remain unsold in the SouthRidge Greens Subdivision or June 30, 1995, if earlier. After the City has received $75U,000 from the sale of lots and units the personal guarantee of Cain is applied only to the pledge of his Bucain stock and the recourse available therefrom, the sole recourse of the City against Cain shall be to realize on Cain's Bucain stock so pledged. 5. The City under the Agreement will receive all the net income from ' the Golf course with the City approving the golf course operating budget each year. 6. So long as Bucain is not in default of the operating agreement it will operate the course, and will be limited to granting concession agreements to those approved by the City. It has been nearly three years since the City contracted for the construction and leasing of the SouthRidge Greens Golf Course. Since that time the SouthRidge Greens Subdivision has experienced only limited success in the sale of the development. The golf course has been completed and the amount of play on the course has been reasonable under the circumstances. The new Agreement provides for a restructuring of the transaction to fit the circumstances'as presented today." Councilmember Knezovich made a motion, seconded by Councilmember Stoner, to adopt Resolution 85-112. City Attorney Huisjen read the Resolution in full. Councilmember Stoner noted the Council subcommittee and staff felt that after several months of negotiating, this agreement is the best position for the City to be in in the future. This agreement would tie the City's -342- July 3, 1985 income to Bucain's income and, in the event of bankruptcy, the City would be in a position to take over the corporation and control the operation. Councilmember Clarke pointed out the agreement allows the City to share in the revenue produced from the sale of the property surrounding the golf course. That money can be used to pay the debt service on the golf course. He felt the arrangement was fair and equitable. Councilmember Estrada felt that once a contract is made, it should be honored and viewed this proposal as negative since it changed the contractual provisions midway in the contract. He felt that the City should admit a mistake was made and bring closure to the issue rather than dragging it on to some future date. Councilmember Stoner noted that in the event of a permanent default, the restructuring of this agreement puts the City in a much better financial position than presently exists. By taking the security in the lots, the City becomes a secured creditor rather than an unsecured general creditor. Councilmember Knezovich asked Jim Harmon if he had had an opportunity to audit the $3 million advanced for the construction of the golf course. Finance Director Jim Harmon replied that the audit was not fully completed but so far nothing had been found that would indicate the money had been spent irregularly. Councilmember Knezovich asked that the audit be completed prior to the City Manager's signing of the agreement. He asked if it was necessary to amend the Resolution to insure the City Manager would not sign the agreement prior to the completion of the audit. City Attorney Huisjen replied that Council's comments were clear direction on how to proceed and no amendment was needed. Jim Harmon pointed out the City would be incurring two additional liabilities -- the payment of the 1984 real estate taxes on the golf course property (approximately $19,000) and the extension of South Lemay Avenue from where it terminates now at the entrance to the clubhouse to the south end of the golf course (approximately $20U,000). Councilmember Estrada asked what impact this new arrangement would have on the City's entire budget. Jim Harmon replied that if the pro forma information is correct, the City will be in good shape. If not, a decision will have to be make on whether to allocate resources to making the debt service payments. The impact will depend on all the variables in the agreement and how successfully the real estate can be sold and how profitably the golf course can be operated. Councilmember Horak asked the City Manager and City Attorney to put together an analysis or assessment of the whole issue, perhaps in a -343- July 3, 1985 retrospective format to determine why this particular public/private venture did not work. He felt it would be helpful in future endeavors. Councilmember Ohlson stated he felt the Council subcommittee had structured the best agreement possible but that he would still vote negatively on the Resolution. Mayor Rutstein noted she would reluctantly support this Resolution since it appeared to be the only way to protect the taxpayers' money. The vote on Councilmember Knezovich's motion to adopt Resolution 85-112 was as follows: Yeas: Councilmembers Clarke, Knezovich, Rutstein, and Stoner. Nays: Councilmembers Estrada, Horak, and Ohlson. THE MOTION CARRIED. Adjournment Councilmember Clarke made a motion, seconded by Councilmember Horak, to adjourn to 7:00 p.m. on July 9. Yeas: Councilmembers Clarke, Estrada, Horak, Knezovich, Ohlson, and Rutstein. Nays: Councilmember Stoner. The meeting adjourned at 5:00 p.m. ATTEST: � klv"�City C1 Assistant Mayor -344-