HomeMy WebLinkAboutGolf Course Ground Lease
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GOLF COURSE GROUND LEASE
PARTIES:
LANDLORD.
CITY OF BEND, an Oregon municipal corporation
P.O. Box 431
Bend, OR 97709
TENANT.
SRL, Inc.
9494 East Redfield Road, Suite 1008
Scottsdale, AZ 85260
LANDLORD leases to TENANT real property located at the Bend Municipal Wastewater
Treatment Plant site in Deschutes County, Oregon which is described on Exhibit A to this
Lease. The property described on Exhibit A is the leased premises for purposes of this Lease.
In addition to the leased premises, TENANT shall be entitled to use the publicly owned
roadways at the Bend Municipal Wastewater Treatment Plant site, subject to the terms and
conditions of this Lease.
SECTION 1. OCCUPANCY
1.1 Term. The term of this Lease is 25 years, and shall commence as of September 3,
1997, and terminate on June 30,2023.
1.2 Rent. Rent shall be payable on the fITst day of each fiscal year (Julyl) in advance at
such place as may be designated by LANDLORD. TENANT shall pay LANDLORD
as rent each year the sum of $100. If the term of this Lease commences after the first
day of the fiscal year, then rent shall be pro-rated through the end of the fiscal year,
and the pro-rated rent shall be paid upon execution of this Lease. TENANT may elect
to prepay rent through June 30, 2023 in the amount of $2,000 upon the execution of
the Lease.
1.3 Rent Adjustment.
(a) If TENANT exercises its options to renew this L~ase in accordance with the
Renewal Option(s), rent shall be adjusted to the greater of either 5 percent of
the annual gross receipts or 30 percent of annual net receipts upon the effective
date of the renewal, payable monthly. Gross or net receipts shall not include
merchandise, food and beverage, or service fees.
(b) Monthly rent will be due and payable within 30 days after the end of each
month. TENANT will submit to LANDLORD a statement signed by TENANT
or a person authorized by TENANT showing in reasonable detail the amount of
Page 1 of 11 - Golf Course Lease
11- I
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gross receipts, operating expenditures, and net receipts and the percentage rent
generated by each for each month, and a remittance, if necessary, of the amount
of percentage rent owing. In addition, TENANT shall submit to LANDLORD
within 60 days following the end of each fiscal year (June 30), or portion
thereof in the fmal year of the Lease, a statement signed by TENANT or a
person authorized by TENANT showing in reasonable detail the amount of
gross receipts, operating expenditures, and net receipts and the percentage rent
generated by each. In the event that the cumulative amount of percentage rent
paid in monthly installments for any lease year or portion thereof exceeds the
amount of percentage rent actually due under the formula provided in this
Lease, TENANT shall receive a credit equivalent to such excess and that credit
may be deducted by TENANT from its next percentage rent payment, if any,
due under this Lease. In the event that the cumulative amount of percentage rent
paid in monthly installments for any Lease year or portion thereof is deficient of
the amount of percentage rent actually due under the formula provided in this
Lease, TENANT shall remit the amount of the deficiency with its next
percentage rent payment, if any, due under this Lease.
(d) For purposes of calculating percentage rent, gross receipts shall mean all money
received by TENANT as a result of the sales of golf, range and putting course
fees on the leased premises, but shall not include: (1) Merchandise, food and
beverage, or service fees, (2) cash refunds or credits allowed on returns by
customers; (3) sales taxes, excise taxes, gross receipts taxes, and other similar
taxes now or later imposed upon the sale of food, beverages, merchandise or
services and paid by TENANT to the appropriate taxing authority, whether
added to or included in the selling price; ( 4) the sales of machinery, vehicles,
trade fixtures, or personal property used in connection with TENANT's
operation of the leased premises. Net receipts shall be gross receipts less all
operating expenditures, excluding expenditures associated with excluded
receipts.
1.4 Additional Rent. As additional rent, TENANT shall pay the following amounts:
(a) All real and personal property taxes on the premises, and any other charges,
assessments or fees suffered or permitted by TENANT.
(b) All charges for heat, light, power, telephone and other services, utilities and
benefits used by TENANT on the premises.
(c) The cost of all insurance for which TENANT is required to pay.
(d) All amounts which TENANT is required to reimburse LANDLORD for
expenses incurred by LANDLORD in discharging TENANT's obligations.
Page 2 of 11 - Golf Course Lease
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(e) All other amounts which TENANT, is required to pay by any other provi~ion of
this Lease.
Page 3 of 11 - Golf Course Lease
1.5 Use of Wgst~water Tenant shall purchase and use wastewater from LANDLORD's
sewer treatment plant for golf course irrigation. Tenant's purchase and use of the
wastewater shall be as contemplated in that Wastewater Sale and Easement Agreement
between LANDLORD and Deschutes County dated February 13, 1991 (which is
attached to this Lease as Exhibit C, and is hereinafter called "Wastewater
Agreement"), subject to the following conditions:
(a) Deschutes County shall assign its interest in the Wastewater Agreement to
Tenant, and Deschutes County shall be released from all liability pursuant to the
Wastewater Agreement. (Assignment of Wastewater Sale and Easement
Agreement is attached to this lease as Exhibit D)
(b) Tenant shall assume and perform all of the obligations of Deschutes County
pursuant to the Wastewater Agreement as well as those contemplated in the
Wastewater Agreement for the golf course developer.
(c) The term of the Wastewater Agreement shall be the same as this Lease
(including the renewal options in this Lease).
(d) The easement provisions of the Wastewater Agreement are deleted; and the
delivery of the wastewater from the sewer treatment plant to the leased premises
shall be accomplished at TENANT's expense by pipelines and related facilities
which shall be installed in locations, and to standards, approved by
LANDLORD.
(e) The Wastewater Agreement, and TENANT's use of the Wastewater Agreement,
shall be subject to all of the terms and conditions of this Lease; and, in the
event of any conflict, this Lease shall prevail. Any default in the performance
of either the Wastewater Agreement or this Lease shall constitute a default for
both the Wastewater Agreement and this Lease; and LANDLORD may proceed
as provided in this Lease.
SECTION 2. USE OF THE PREMISES
Use of the Premises. In connection with use of the premises, TENANT shall:
2.1 Develop and use the leased premises as a municipal golf course in accordance with the
terms and conditions of the Golf Course Development and Management Agreement
(GCDMA) attached as Exhibit B, and made a part of this Lease, and for no other
purpose. If this use is prohibited by law or governmental regulations, this Lease shall
terminate.
Page 4 of 11 - Golf Course Lease
2.2 Develop and register an assumed business name, including golf course name and logo,
acceptable to LANDLORD. Golf course name and logo to remain the property of the
LANDLORD upon the expiration or termination of this Lease.
2.3 Conform to all applicable laws and regulations of any public authority affecting the
premises and the use, including but not limited to the Federal Environmental Protection
Agency, the State Department of Environmental Quality, the Federal Aviation
Administration and the Oregon State Board of Aeronautics, and all rules promulgated
by LANDLORD (including, but not limited to, LANDLORD's requirements regarding
maintenance of improvements on the leased premises, color scheme of the
improvements, maintenance of landscaping and the like).
2.4 Refrain from any use which would be reasonably offensive to the LANDLORD, other
tenants, or which would tend to create a nuisance or interfere with the LANDLORD's
operation of the LANDLORD's municipal wastewater treatment facility. Nothing
within this clause shall be construed to prohibit normal golf course activities, the
operation of maintenance equipment, or other activities necessary to utilize the property
for any permitted use.
2.5 Keep and maintain the leased premises and any improvements, structures, equipment or
other materials placed on the leased premises in a safe, clean and orderly manner. This
shall include, but not be limited to, the use, handling, cleaning up, removal and
remediation of any h.azardous substances or petroleum products in accordance with
applicable law, rules and regulation of federal and state environmental authorities.
2.6 Operate in accordance with the obligations of the LANDLORD to the Federal
government under the terms and restrictions contained in LANDLORD's deed to part
of the treatment plant property from the U .5. Government.
2.7 Refrain from making any unlawful or offensive use of said property or to suffer or
permit any waste or strip thereof.
2.8 LANDLORD reserves the right to take any action it considers necessary to protect the
aerial approaches of the Bend Municipal Airport, located to the south of the leased
premises, against obstruction, together with the right to prevent the TENANT from
erecting, or permitting to be erected, any building, other structures, or other
improvements on the leased premises which, in the opinion of the LANDLORD, would
limit the usefulness of the airport or constitute a hazard to aircraft.
2.9 LANDLORD reserves the right to develop or improve the wastewater treatment plant
and! or the airport as it sees fit, without interference or hindrance on the part of the
TENANT.
Page 5 of 11 - Golf Course Lease
SECTION.3. REPAIRS, MAINTENANCE AND ALTERATIONS
3.1 Tenam's Obligations. TENANT shall have the total responsibility for all repairs and
maintenance required to keep the leased premises in good repair in accordance with the
GCDMA. LANDLORD shall not have any responsibility for repair and maintenance
of the leased premises.
3.2 Inspection pf fremises, LANDLORD shall have the right to inspect the leased
premises at any reasonable time or times to determine the necessity of repair, or
compliance with the provisions of this Lease. LANDLORD shall provide TENANT 48
hours notice prior to inspection.
3.3 Improy~ments, TENANT shall develop the leased premises into municipal golf
course(s) in accordance with the GCDMA.
3.4 Alterations. TENANT shall make no other improvements or alterations on the leased
premises of any kind, except as provided in the GCDMA, without the prior written
consent of the LANDLORD.
SECTION 4. INSURANCE
TENANT shall keep the leased premises and all improvements thereon insured at TENANT's
expense against fire and other risks covered by a standard fire insurance policy with an
endorsement for extended coverage. Insurance shall be on a replacement cost basis to the full
insurable value of the improvement. TENANT's insurance policy shall provide that the
insurance proceeds shall be payable to LANDLORD and TENANT, as their interests may
appear .
SECTION 5. DAMAGE, DESTRUCTION AND CONDEMNATION
If the structures, improvements, trade fixtures or personal property on the leased premises are
destroyed or damaged such that the cost of repair does not exceed 49 percent of the value of
the damaged property before the damage, then TENANT shall repair and restore damage to
substantially the same condition as prior to the damage or destruction. The repair and
restoration work shall be commenced as soon as reasonably possible, and thereafter shall
proceed without interruption except for work stoppages beyond TENANT's reasonable
control. Any insurance proceeds payable in connection with the damage or destruction shall
be used to pay the cost of repair and restoration. If the structures, improvements, trade
fixtures or personal property are destroyed or damaged such that the cost of repair is 50
percent or more of the value of the property before the damage, then TENANT shall, at
LANDLORD's election, repair and restore the damaged property in the same manner to the
extent of any insurance proceeds available. In the event LANDLORD does not require
TENANT to repair or restore the damaged property to the extent of the insurance proceeds,
Page 6 of 11 - Golf Course Lease
then TENANT may elect to repair or restore the damaged property using any insurance
proceeds and TENANT's funds if the insurance proceeds are inadequate. If neither
LANDLORD or TENANT elect to repair or restore the property, then LANDLORD may
elect to terminate this Lease, and any insurance proceeds shall be fIrst used to remove
whatever structures, improvements, trade fixtures or personal property LANDLORD directs
shall be removed, and clean up any debris or other condition of the leased premises as
LANDLORD directs. Any insurance proceeds remaining after termination of the Lease in this
manner shall belong to TENANT.
SECTION 6. LIABILITY TO TIllRD PERSONS
6.1 Liens.
(a) TENANT shall pay as due all claims for work done on and for services
rendered or material furnished to the leased premises and shall keep the
premises free from any liens. If TENANT fails to pay any such claims or to
discharge any lien, LANDLORD may do so and collect the cost as additional
rents. Any amount so added shall bear interest at the rate of ten percent per
annum and shall be payable on demand.
(b) If a lien is filed as a result of nonpayment, TENANT shall, within 30 days after
knowledge of the filing, secure the discharge of the lien or deposit with
LANDLORD cash or sufficient corporate surety bond or other surety
satisfactory to LANDLORD in an amount sufficient to discharge the lien plus
any costs, attorney fees and other charges that could accrue as a result of a
foreclosure or sale under a lien.
6.2 Indemnification. TENANT shall indemnify and defend LANDLORD, its officers,
employees and agents, from any claim,. loss or liability arising out of or related to any
activity of TENANT on the leased premises or any condition of the leased premises in
the possession or under the control of the TENANT, including any such claim, loss or
liability which may be caused or contributed to in whole or in part by LANDLORD's
own negligence or failure to effect any repair or maintenance required by this Lease.
6.3 Liability Insurance. TENANT shall obtain and continue in good standing during the
term of this Lease, liability insurance covering all risks arising directly or indirectly
out of TENANT's activities on or any condition of the leased premises. The policy
limits of TENANT's liability insurance coverage shall be at least $1,000,000 combined
single limit (or a bodily injury limit of $1,000,000 and property damage limit of
$1,000,000); or LANDLORD's statutory tort liability limits if these limits are more
than $1,000,000 combined single limit. The insurer providing insurance coverage shall
be acceptable to LANDLORD. TENANT's insurance policy shall name LANDLORD
and LANDLORD's officers, employees and agents as additional named insureds.
TENANT shall cause the insurer to forthwith provide LANDLORD with a certificate
of insurance evidencing the required coverage; and an agreement by the insurer to
provide LANDLORD with at least 60 days written notice of any termination of the
insurance coverage.
Page 7 of 11 - Golf Course Lease
SECTION 7. QUIET ENJOYMENT
Landlord's Warranty. LANDLORD warrants that it is in lawful possession of the
leased premises and has the right to lease them. LANDLORD will defend TENANT's right to
quiet enjoyment of the leased premises from the lawful claims of all persons during the lease
term.
SECTION 8. DEFAULT
The following shall be events of default:
8.1 Failure of TENANT to pay any rent or other charge within ten days after it is due and
written notice is given by LANDLORD to TENANT.
8.2 Failure of TENANT to comply with any term or condition or fulfill any obligation of
this Lease (other than the payment of rent or other charges) within 60 days after written
notice by LANDLORD specifying the nature of the default with reasonable
particularity. If the default is in such a nature that it cannot be completely remedied
within the 60-day period, this provision shall be complied with if TENANT begins
correction of the default within the 60-day period and thereafter proceeds with
reasonable diligence and in good faith to effect the remedy as soon as practicable.
8.3 Insolvency of TENANT; assignment by TENANT for the benefit of creditors; filing by
TENANT of a voluntary petition in bankruptcy; adjudication that TENANT is
bankrupt or the appointment of a receiver of the properties of TENANT; failure of
TENANT to secure dismissal of an involuntary petition of bankruptcy within 30 days
after filing; and attachment of or levying of execution on the leasehold interest of
TENANT.
8.4 Failure of TENANT for 15 days or more to occupy the property for the purposes
permitted under .this Lease.
8.5 Failure of TENANT to perform any of the terms and conditions of the GCDMA.
SECTION 9. REMEDIES ON DEFAULT
9.1 Termination, In the event of a default, this Lease may be terminated at the option of
LANDLORD by notice in writing to TENANT. Termination of this Lease shall also
terminate the GCDMA, or any part thereof, at LANDLORD's election. The notice
may be given before or within 30 days after the running of the grace period for default.
If the property is abandoned by TENANT in connection with a default, the Lease may
be terminated immediately at LANDLORD's election.
9.2 Damages WithQJlt T~rmination. LANDLORD shall be entitled to recover damages
from TENANT for default whether LANDLORD elects to terminate the Lease or not.
Page 8 of 11 - Golf Course Lease
9.3 Re-~ntry After Jermination. If the Lease is terminated for any reason, TENANT's
liability to LANDLORD for daIllages shall survive such termination. TENANT shall
vacate the property immediately, remove any property that the TENANT is directed to
remove by the LANDLORD, perform any cleanup, alterations or other work required
to leave the property in the condition required at the end of the term and deliver all
keys to the LANDLORD. LANDLORD may re-enter, take possession of the premises
and remove any persons or property by legal action or by self-help with the use of
reasonable force and without liability for damages.
9.4 Releuing. Following re-entry or abandonment, LANDLORD may relet the premises.
9.5 Damages. In the event of termination for default, LANDLORD shall be entitled to
recover immediately, without waiting until the due date of any future rent or until the
date fixed for expiration of the Lease term, any damages provided by law and the
reasonable costs of re-entry and reletting, including cleanup, refurbishing, removal of
TENANT's property and fixtures, court costs, broker commissions and advertising
costs .
The foregoing remedies shall be in addition to and shall not exclude any other remedy
available to LANDLORD under applicable law.
SECTION 10. SURRENDER AT EXPIRATION OR TERMINATION
AND MISCELLANEOUS
10.1 Ownership of Alterations and Fixtures.
(a) All structures, improvements, trade fixtures and personal property placed upon
the leased premises during the term shall remain with the leased premises except
as provided herein.
(b) Upon expiration of this Lease or of the final renewal option of this Lease, or
upon the termination of this Lease, all structures, improvements, trade fixtures
and personal property shall become the property of the LANDLORD.
(c) Upon termination of this Lease, the TENANT shall remove, within a reasonable
time; all structures, improvements, trade fixtures or personal property that
LANDLORD directs removed.
(d) All non-fIXed property will be purchased, leased or returned to TENANT. Non-
fixed propety shall include furniture, art work, computers, golf merchandise
and clothing and video equipment.
Page 9 of 11 - Golf Course Lease
10.2 Conditipn of Premises, Upon expiration of this Lease or earlier termination of this
Lease on account of default, TENANT shall return the leased premises to
, LANDLORD in good condition, reasonable wear and tear excepted.
10.3 HoldQver. If TENANT does not vacate the premises at the time required,
LANDLORD shall have the option to treat TENANT as a TENANT from month to
month, subject to all provisions of this Lease except those relating to term.
10.4 NO{1waiver. Waiver by either party of strict performance of any provision of this
Lease shall not be a waiver of or prejudice the party's right to require strict
performance of the same provision in the future or of any other provision.
10.5 Assignment and Subl~ase. No part of the leased property may be assigned, mortgaged,
subleased, or transferred in any manner; nor may a right of use of any portion of the
property be conferred on any third person by any other means,' without the prior
written consent of LANDLORD. LANDLORD's prior written consent shall also be
required for any transfer of a majority of the TENANT's shares or ownership during
the term of this Lease.
10.6 Time of Essence. Time is of the essence in the performance of each of TENANT's
and LANDLORD's obligations under this Lease.
10.7 Interest pn Rent ilnp Other Ch~ges. Any rent or other payment required of TENANT
by this Lease shall, if not paid within ten days after it is due, bear interest at the rate of
ten percent per year (but not in any event exceeding a rate greater than the maximum
rate of interest permitted by law) from the due date until paid. In addition, if
TEN ANT fails to make any rent or other payment required by this Lease to be paid to
LANDLORD within 30 days after it is due, LANDLORD may elect to impose a late
charge of 5 cents per dollar of the overdue payment to reimburse LANDLORD for the
cost of collecting the overdue payment. TENANT shall pay the late charge upon
demand by LANDLORD.
10.8 Governing Law. This Lease shall be construed in accordance with and governed by the
laws of the State of Oregon.
10.9 Entir~ Agreement This Lease is intended as the full expression of the representations,
promises, and covenants of the parties. Representations, promises, and covenants not
expressed in this Lease are of no force and effect.
Page 10 of 11 - Golf Course Lease
SECTION 11. RENEWAL OPTIONS
TENANT shall have two ten year renewal options which may be exercised only upon the
following terms and conditions: .
11.1 This LEASE must be current and in good standing in every respect before
either of the options may be exercised.
11.2 TENANT must give LANDLORD notice in writing at least twelve months prior
to the expiration of the current term that TENANT intends to exercise
TENANT's option to renew.
11.3 The terms and conditions of any renewal option term shall be the same as the
terms and conditions of this Lease, except the renewal options shall not be
increased.
SECTION 12. NOTICES
Any notice required or permitted under this Lease shall be given when actually
delivered or when deposited in United States mail as certified mail, addressed to the parties as
indicated below their signature, or to such other address as may be specified from time to time
by either of the parties to the other in writing.
LANDLORD:
CITY OF BEND
DATE: ~/,?-?Z
541-388-5505
541-388-5519
Page 11 of 11 - Golf Course Lease
TENANT:
By:---dUM
Gregory Little, President
SRL, Inc.,
9494 East Redfield Road, Suite 1008
Scottsdale, AZ 85260
Phone number
Fax phone number
DATE: 9-11-- 97
,
602-314-5228
602-314-5227
(q:\finance\golfcourse\golf course lease)
printed: 08-29-97
Page 11 of 11 - Golf Course Lease
EXIllBIT B
GOLF COURSE DEVELOPMENT AND MANAGEMENT AGREEMENT
The City of Bend, an Oregon municipal corporation ("LANDLORD") and SRL, Inc., an
Arizona corporation, ("TENANT"), agree as follows:
SECTION 1. DEVELOPMENT SERVICES; DESCRIPTION OF PROJECT
1.1 General Description of Development Service
TENANT agrees to act as developer in connection with the design, fmancing,
construction, and operation of the Project. Specifically, TENANT agrees at its sole
cost and expense to design, engineer, construct, operate and maintain the Project, all in
accordance with the terms and conditions of this Agreement. TENANT's duties under
this Agreement shall include, but not be limited to, the following:
1.1.1 Feasibility Study
TENANT shall submit to LANDLORD for its approval a feasibility study
("Feasibility Study"). The Feasibility Study Analysis prepared by NGF
Consulting for Golf Services Group dated June of 1992, shall be considered an
adequate Feasibility Study for the purpose of LANDLORD's consideration.
1.1.2 Development Plan
(a) Within 60 days of the Effective Date of this Agreement, TENANT shall
promptly prepare and provide to LANDLORD a Development Plan. The
Development Plan shall include a Development Budget which shall set forth all
of the "hard costs" and "soft costs" involved in the Project, including the costs
of providing financing for the Project. The Development Budget shall
encompass all items customarily and routinely included in the development of a
municipal golf course and shall be prepared in accordance with customary
industry practices. The accounting methods utilized in preparing such
Development Budget shall be those generally applicable to golf co~rse
developments. The Development Plan also shall include all preliminary plans
and outline specifications for the improvements described in Section 1.2 of this
Agreement, together with proposed schedules of fees and other charges and the
proposed initial rules and regulations and the minimum maintenance standards
of the Project. LANDLORD shall review the Development Plan within 30 days
and shall not unreasonably withhold its approval.
Pagel of 12 - Exhibit B, Golf Course Development and Management Agreement
(b) The parties anticipate that during the development, construction and operation
of the Project there may be a need to make revisions to the Development Plan.
If either party desires a revision, it shall propose the recommended change in
writing to the other as soon as reasonably possible following the review or
discovery of such facts which suggest the need for a revision. LANDLORD
agrees not to unreasonably withhold its consent to any such change provided
that the change does not require any material change in its duties and
responsibilities under this Agreement and is consistent with the original
objectives and parameters of the LANDLORD for the construction and
operation of the Project. Under no circumstances shall LANDLORD be
required to consent to a proposed revision if it would require LANDLORD to
pay, incur, guarantee, or be at risk of paying, incurring or guaranteeing any
expense, liability or indebtedness.
1.1.3 Permits
Following approval of the Development Plan by both parties, TENANT shall
obtain all Permits required in connection with the Project at TENANT's
expense.
1.1.4 Financing
TENANT shall be solely responsible for securing the necessary financing to
complete the Project. TENANT shall demonstrate to LANDLORD that
TENANT has secured adequate fmancing to complete the Project before
commencing any construction activity on the Project. The LANDLORD shall
not have any responsibility for either securing or repaying any debt issued to
fmance the Project or have any. responsibility to shareholders or others
providing fmancing for the Project. If the TENANT is unable to secure
adequate fmancing prior to the expiration of the conditional use permit granted
County, including extensions, the TENANT may withdraw from Project.
1. 1.5 General Contractor
If TENANT desires to hire a general contractor to perform the construction of
the golf course and related on-site improvements, including support structures
such as clubhouse, maintenance building, shelter(s), parking, paving, etc.,
excluding off-site infrastructure and/or require off-site improvements,
LANDLORD's approval of the general contractor shall be required.
LANDLORD shall not unreasonably withhold its approval.
Page2 of 12 - Exhibit B, Golf Course Development and Management Agreement
1.1.6 Service Agreements
If TENANT utilizes a general contractor and/or major subcontractor,
TENANT shall be responsible for pre-qualifying and eliciting bids from the
General Contractor and major subcontractors for the construction of the Project
and entering into Service Agreements with the General Contractor and any
subcontractors that are to perform work on the Project.
1.1. 7 Development Oversight
TENANT shall be responsible for overseeing the performance of the contractors
and/or the subcontractors to assure that they are performing the Service
Agreements according to their terms. TENANT shall periodically prepare and
submit to LANDLORD timetables showing projected dates of completion of
each of the Service Agreements and the projected dates of completion of the
Project. TENANT and LANDLORD shall use their best efforts to ensure that
such timetables are met. As part of the Development Oversight, LANDLORD
may, at TENANT's expense, retain a qualified golf course architect or engineer
(called LANDLORD's Inspector) for the purpose of periodically inspecting
construction activities, not to exceed five inspections, relating to the Project to
ensure that the Project meets United States Golf Association standards.
1.1.8 Project Administration
TENANT shall be responsible for all administrative matters relating to the
Project including keeping accurate accounting records for all transactions
related to the Project.
1.2 Description of the Project
The project shall be constructed and operated by TENANT on the leased premises at
its sole cost and expense pursuant to the terms of this Agreement. The Project shall be
constructed in a manner that is consistent with the Development Plan. The Project shall
include the following:
(a) A regulation, championship quality 18-hole golf course;
(b) Paved parking sufficient to meet site-plan approval requirements;
(c) Enclosed golf cart storage adequate to store any and all golf carts located
at the Property.
Page3 of 12 - Exhibit B, Golf Course Development and Management Agreement
(d) A maximum 4,000 square foot clubhouse with pro shop, snack bar,
restrooms and appropriate office and storage areas;
(e) Driving range that includes adequate tee area to insure good grass
surfaces throughout the golf season, to include covered teeing areas for
winter practice;
(f) Practice putting green with a minimum size of 8,000 square feet, to
include green putting course (18 holes);
(g) Maintenance building(s) adequate to store all equipment inside, to be
away from pro shop;
(h) Paved cart paths near greens and tee boxes adequate to protect such
areas, paths in these areas.to include curbs green and tee side;
(i) Full grass course automatic irrigation;
G) Design and development sufficient to gain recognition as an Audubon
Signature Status golf course.
Further, to the extent that the site permits expansion, the Project shall be
planned in manner to permit potential expansion to include an additiona118 hole
regulation course, a three to nine hole practice course, and expansion of the
driving range and practice putting green(s).
1.3 Contingency
TENANT's obligations hereunder are expressly contingent upon securing satisfactory
financing arrangements acceptable to the TENANT. TENANT agrees to use its best
efforts to raise and obtain such fmancing. Provided, however, if TENANT is unable to
secure satisfactory fmancing prior to the expiration of the conditional use permit,
includfu.g allowed extensions, this Agreement will be of no further force or effect.
SECTION 2. CONSTRUCTION OF PROJECT
2.1 Commencement of Construction
Within 60 days from the last to occur of; (i) the date LANDLORD gives its written
approval to the Development Plan, (ii) the date all Permits of a material nature have
been obtained, and (iii) the date of securing the financing, construction of the Project
Page4 of 12 - Exhibit B, Golf Course Development and Management Agreement
shall be commenced in accordance with the terms of this Agreement and shall proceed
with due diligence until completed.
2.2 Construction
All construction performed by TENANT under this Agreement shall conform to the
Development Plan (as it may be revised from time to time). LANDLORD's Inspector
shall assist the LANDLORD in its review of the plans and specifications and with
inspections of the construction work as it is carried on and completed. The reasonable
costs of the review and inspections, up to but not more than $10,000, shall be paid by
TENANT. In case of a disagreement with respect to compliance with the Development
Plan, LANDLORD shall advise TENANT in writing of any claimed deficiency. In the
event a deficiency is found, TENANT shall commence to remedy the deficiency within
a 30 day period and shall proceed to correct the same with due diligence. In the event
of a disagreement with respect to compliance with the Development Plan, the decision
of LANDLORD's Inspector shall control and be fully binding and nonappealable by the
parties.
2.3 Adjacent Property
TENANT shall take proper means to protect the adjacent or adjoining property or
properties which might be injured or seriously affected by any process of construction
to be undertaken under this Agreement from any damage or injury by reason of said
process of construction, and TENANT shall be liable for any and all claims for such
damage on account of its failure to fully protect all adjoining property. TENANT
agrees to indemnify, save and hold LANDLORD, its agents, officers and employees
harmless from and against any claim or claims for damages due to any loss or injury
arising or growing out of the performance of this Agreement.
SECTION 3. OPERATION OF GOLF COURSE
3.1 The golf course and all related facilities of the Project shall be managed and operated
during the term of the Golf .Course Lease by the TENANT.
3.2 The Project shall be operated pursuant to rules and regulations agreed to between
TENANT and LANDLORD. The initial rules and regulations for the golf course are
set forth as Attachment A to this Agreement. TENANT may request revisions to the
rules and regulations from time to time and either party shall not unreasonably
withhold its consent.
PageS of 12 - Exhibit B, Golf Course Development and Management Agreement
3.3 Maintenance of the Project
The TENANT shall maintain in good order, repair and condition the Project, including
the golf course, improvements, equipment, furniture and fixtures (ordinary wear and
tear accepted). TENANT shall make such reasonable and necessary replacements,
improvements, additions and substitutions to ensure that the Project is at all times
maintained and adequately furnished as a quality, championship public golf course
facility. TENANT and LANDLORD shall mutually agree on minimum maintenance
standards for the Project ("Maintenance Standards"). The initial Maintenance Standards
are set forth as Attachment B to this Agreement. The Maintenance Standards may be
amended from time to time on mutual agreement of the parties and each party agrees to
not unreasonably withhold. its consent. In addition, the golf course will be certified and
managed in conformance with the U.S. Golf Association-Audubon Society's
Cooperative Sanctuary Program in order to ensure that the golf course is managed in an
environmentally-sensitive manner.
3.4 Golf Fees
(a) LANDLORD and TENANT agree that the purpose of the LANDLORD
agreeing to allow TENANT to develop and operate the Project is to provide all
Deschutes County residents the opportunity to play relatively low cost golf at a
quality facility without financial risk to the LANDLORD. To ensure that golf
fees are maintained at a level that allows the TENANT to provide relatively low
cost golf opportunities and a reasonable return on their investment the golf fee
for a County resident for an 18 hole round of golf at the Project shall not
exceed $26 in 1996 dollars and the golf fee for a 9 hole round of golf may not
exceed $13 in 1996 dollars. These rates may increase annually by no more than
the Consumer Price Index, Pacific Cities, Size Class C (population 50,000 to
330,000), (CPI) or replacement index without the prior written approval of the
LANDLORD, except as provided in 3.4(c). Non-resident rates shall not exceed
the resident rate by more than 40 percent.
(b) TENANT shall provide LANDLORD with adequate financial and operational
information to justify any rate increase beyond what otherwise is allowed in this
Agreement.
(c) TENANT shall maintain records that indicate the number of r.ounds of golf
played by local and non-local residents by 18 hole and 9 hole rounds and,the
total and average golf fees collected for each. TENANT shall provide the
LANDLORD with an annual report of such activity within 60 days of the
calendar year end.
Page6 of 12 - Exhibit B, Golf Course Development and Management Agreement
(d) Other fees at the Project shall be reasonable and reflect local market conditions.
3.5 Golf Programs
TENANT agrees to develop various golf programs to promote the game of golf
including but not limited to youth, seniors, women and junior programs.
SECTION 4. CONTRACT RELATIONSIDPS
4.1 Independent Contractor
Nothing contained in this Agreement shall be deemed. or construed to create a
partnership or joint venture, to create the relationships of an employer-employee or
principal-agent, or to otherwise create any liability for LANDLORD whatsoever with
respect to the indebtedness, liabilities, and obligations of TENANT. TENANT shall be
solely responsible for (the LANDLORD shall have no obligation with respect to)
payment of all federal income, F.I.C.A., and other taxes owed or claimed to be owed
by TENANT, arising out of the performance of this Agreement, and TENANT shall
indemnify and hold LANDLORD, their officers, agents and employees harmless from
,and against, and shall defend LANDLORD, their officers, agents and employees
against, any and all losses, damages, claims,. costs, penalties, liabilities, and expenses
howsoever arising or incurred because of, incident to, or otherwise with respect to any
such taxes.
4.2 Subcontracts
TENANT may subcontract for the performance of any of its responsibilities to provide
services pursuant to this Agreement only with the express written approval of the
LANDLORD and such approval shall not relieve TENANT of any obligations of this
Agreement. Any subcontract shall be subject to the terms of this Ag~eement and any
other agreement entered into by TENANT with LANDLORD.
SECTION 5. ADDITIONAL COVENANTS OF THE TENANT
5.1 Cooperation with the LANDLORD
In the operation and maintenance of the Project, TENANT shall cooperate with and
assist LANDLORD in the fulfillment of the TENANT's duties and covenants with
respect to the Project.
Page? of 12 - Exhibit B, Golf Course Development and Management Agreement
5.2 Books and Records
TENANT shall ensure that full and adequate books of account and other records are
kept reflecting the results of operations of the Project on an accrual basis, all in
accordance with generally accepted accounting principles and as required by the
provisions of this Agreement. The books of account and all other records relating to,
or reflecting the operations of the Project, shall be maintained at a location in the State
of Oregon designated by the TENANT and reasonably accessible to the LANDLORD.
The TENANT shall notify the LANDLORD of the location and any changes in the
location of such books and records. The books and records shall be available to
LANDLORD and its representatives at any reasonable time for examination, audit,
inspection, and transcription. If such books and records are allowed by LANDLORD
to be maintained in a location other than the State of Oregon, TENANT agrees that
TENANT will bear all expenses associated with providing LANDLORD reasonable
access to such books and records, including but limited to travel and time expenses.
All such books and records, including, without limitation, books of account, at all
times shall be the property of LANDLORD. Upon termination or expiration of this
Agreement, all such books and records forthwith shall be turned over to LANDLORD,
so as to assure the orderly continuance of the operation of the Project, but such books
and records, shall thereafter be available to TENANT at all reasonable times for
examination, audit, inspection, and transcription.
5.2.1 TENANT shall cause to be delivered to the LANDLORD within 30 days after
the end of each calendar month a statement of profit and loss balance sheet,
statement of cash flow, and operational statistics report showing the results of
the operation of the Project for the immediately preceding accounting period
and the fiscal year-to-date.
5.2.2 If required by LANDLORD, within 90 days after the end of TENANT's year-
end, TENANT shall have delivered to LANDLORD a statement of profit and
loss, audited by an independent certified public accountant acceptable to
LANDLORD, showing the results of operations of the Project during such
business year. Any disputes as to the content of such statement of any
accounting matter hereunder shall be determined by the independent certified
public accountant whose decision shall be [mal and conclusive on TENANT and
LANDLORD. The cost of such audit, if required, shall be borne by
LANDLORD .
5.3 Maintenance of Corporate Existence and Business
TENANT shall at all times maintain its corporate existence and authority to transact
business and good standing in its jurisdiction of incorporation and the State of Oregon.
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Page8 of 12 - Exhibit B, Golf Course Development and Management Agreement
TENANT shall maintain all licenses, permits, and franchises necessary for its
businesses where the failure to so maintain might have a material adverse effect on
TENANT's ability to perform its obligations under this Agreement.
5.4 Non-Discrimination
TENANT shall at all times provide the services contemplated hereunder in compliance
with all laws with respect to discrimination in hiring, promotion, or pay of employees.
Non individual will be subjected to discrimination on the grounds of race, color,
religion, or post in a conspicuous place, available to employees and job applicants,
notice of such nondiscrimination.
5.5 Access to the Project
LANDLORD and any of its authorized agents or representatives shall, subject to
security and safety requirements, have access at all times to all areas of the Project. A
48 hour notice to TENANT will be required unless released by TENANT.
5.6 Right to Audit
LANDLORD and its designees shall have the right to examine all records of TENANT
related to the Project including, without limitation, all fffiancial books and records,
maintenance records, employee records generated by the operator, its subcontractors9
or any other" related parties in connection with performance of this Agreement.
LANDLORD must request time and date to TENANT and TENANT shall not
unreasonably withhold or delay access to records.
5.7 Monitoring by LANDLORD
LANDLORD shall, in its discretion, devise its own check list or lists for monitoring
the quality of TENANT's performance of this Agreement, and TENANT shall
cooperate fully with LANDLORD in obtaining the requisite information needed to
complete such checklist and to assess the quality of TENANT's performance. Such
monitoring by LANDLORD shall not relieve in any way TENANT of its obligations
under this Agreement. LANDLORD shall submit checklist to TENANT prior to
monitoring.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 Representations of the TENANT
TENANT represents and warrants to and for th~ benefit of LANDLORD, with the
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Page9 of 12 - Exhibit B, Golf Course Development and Management Agreement
intent that LANDLORD will rely thereon for purposes of entering into this Agreement
as follows:
6.1.1 Organization and Qualification
TENANT has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Arizona with power and authority
to own its properties and conduct its business as presently conducted.
6.1.2 Authorization
This Agreement has been duly authorized, executed, and delivered by the
TENANT and, assuming due execution and delivery by LANDLORD,
constitutes a legal, valid and binding agreement enforceable against TENANT
in accordance with its terms.
6.1.3 No Violation of Agreements, Articles of Incorporation or Bylaws
The consummation of the transactions contemplated by this Agreement and
fulfillment of the terms hereof will not conflict with, or result in a breach of any
of the terms and provisions of, or constitute a default under any indenture,
mortgage, deed of trust, lease, loan agreement or instrument to which TENANT
is a party or by which its properties are bound, or result in a breach of any of
the terms and provisions of, or constitute a default under, the Articles of
Incorporation (or other corresponding charter documents) or Bylaws of
TENANT.
6.1. 4 No Defaults Under Agreements
TENANT is not in default, nor is there any event in existence which, with
notice or the passage of time or both, would constitute a default by the
TENANT, under any indenture, mortgage, deed of trust, lease, loan agre~ment,
license, security agreement, contr~ct, governmental license, or permit, or other
agreement or instrument to which it is a party or by which any of its properties
are bound and which default would- materially and adversely affect the
TENANT's ability to perform its obligations under this Agreement.
6.1.5 Compliance with Laws
Neither TENANT nor its officers and directors purporting to act on behalf of
TENANT have been advised that the TENANT or such officers and directors
have not been conducting business in compliance with all applicable laws, rules
and regulations of the jurisdictions in which the TENANT is conducting
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PagelO of 12 - Exhibit B, Golf Course Development and Management Agreement
business, and TENANT and such other person have no reason to believe that
TENANT is not in compliance with all laws.
6.1.6 No Litigatio.n
Except as previously disclosed in writing to LANDLORD, there is not now
pending or, to the knowledge of TENANT, threatened, any action, suit or
proceeding to which TENANT is a part, before or by any court or
governmental agency or body, including any such action, suit or proceeding
related to environmental or civil rights matters which might result in any
material adverse change in TENANT's ability to perform its obligations under
this Agreement; and no labor disturbance by the employees of TENANT exists
or is imminent which might be expected to materially and adversely affect
TENANT's ability to perform its obligations under this Agreement.
6.1.7 Taxes
TENANT has filed all necessary federal, state, and foreign income and
franchise tax returns and has paid all taxes as shown to be due thereon; and
TENANT has no knowledge of any tax deficiency which has been or might be
asserted against TENANT which would materially and adversely affect
TENANT's ability to perform its obligatio~s under this Agreement.
6. 1.8 Disclosure
There is no material fact which materially and adversely affects or in the future
will (so far as TENANT can now reasonably foresee) materially and adversely
affect TENANT's ability to perform its obligations under this Agreement which
has not been acc\lrately set forth in this Agreement or otherwise accurately
disclosed in writing to LANDLORD by TENANT prior to the date hereof.
6.2 Representations of LANDLORD
LANDLORD represents and warrants to and for the benefit of TENANT with the
intent that TENANT will rely thereon for purposes of entering into this Agreement that
LANDLORD has the requisite power to enter into this Agreement and perform its
obligations hereunder and by proper action has duly authorized the execution, delivery,
and performance hereof.
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Page 11 of 12 - Exhibit B, Golf Course Development and Management Agreement
SECTION 7. MISCELLANEOUS
7.1 Notice
Any notice required or permitted under this Agreement shall be in writing and shall be
deemed given when actually delivered in person or forty-eight hours after having been
deposited in the United States mail as certified or registered mail addressed as follows:
To LANDLORD:
City of Bend
PO Box 431
Bend OR 97709
Attention: City Manager
To TENANT:
SRL, Inc.,
9494 East Redfield Road, Suite 1008
Scottsdale, AZ 85260
Attention: Gregory Little
or to such other addresses as may be specified from time to time by either of the parties
in the manner above provided for the giving of notice.
CITY OF BEND, an Oregon Muni ·
Corporation
SRL, Inc., an Arizona Corporation
B~ ~/ 9- //-9;
Gregory Little, President
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Page12 of 12 - Exhibit B, Golf Course Development and Management Agreement