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BACKGROUND
<br /> In August 2001, the City solicited proposals from various golf course operators to
<br /> operate and maintain the proposed municipal golf course in the Happy Valley area
<br /> (Callippe Preserve). A total of ten (10) proposals were received and reviewed by a
<br /> screening committee comprised of Golf Committee members and City staff. Three (3)
<br /> firms were invited to make presentations to a selection subcommittee and, after a
<br /> careful review and visitations to several courses currently operated by the candidate
<br /> firm. Pleasanton Golf, LLC (CourseCo) was recommended as the proposed operator
<br /> for Callippe Preserve.
<br /> CourseCo, Inc. is a Petaluma based company that has been operating public golf
<br /> courses since 1989. These facilities include Riverside in Fresno, Deep Cliff in
<br /> Cupertino, Mather in Sacramento County, Crystal Springs in Burlingame, Green River in
<br /> Corona, Eureka Golf Course in Eureka, Napa Golf Course in Napa, Rancho del Pueblo
<br /> and Los Lagos in San Jose, Valley Oaks in Visalia, Pacific Grove Golf Links in Pacific
<br /> Grove, Petaluma Golf and Country Club in Petaluma, Sea Ranch in Gualala, StoneTree
<br /> in Novato, Foxtail Golf Club in Sonoma County, Metropolitan Golf Links in Oakland,
<br /> Boundary Oaks in Walnut Creek, Los Positas (maintenance only) in Livermore, Callippe
<br /> Preserve in Pleasanton, several courses in Washington State, and one course in Texas.
<br /> In 2004, the City of Pleasanton entered into two (2) separate agreements with
<br /> Pleasanton Golf, LLC (CourseCo) which is wholly owned by CourseCo, Inc., to prepare
<br /> Callippe Preserve Golf Course for public play, and to operate the course for the City
<br /> once it was opened. The Grow-In Agreement commenced after the construction
<br /> contractor (Ferma) completed initial grass seeding and watering of the golf area. The
<br /> Operator Agreement commenced prior to the opening of the golf course, to allow
<br /> sufficient time for Pleasanton Golf, LLC (CourseCo) to secure staff and equipment.
<br /> Under the agreement, Pleasanton Golf, LLC (CourseCo), has acted as the City's agent
<br /> in all matters related to golf course operations, including employment of all golf course
<br /> personnel.
<br /> In 2010, the City entered into a five (5) year Operator Agreement with Pleasanton Golf,
<br /> LLC (CourseCo) that is scheduled to end on June 30, 2015 (Attachment 2). In the first
<br /> year of the agreement, the combined fixed/incentive fee could not exceed $180,000.
<br /> The combined management fee (fixed and incentive) increased by a maximum of
<br /> $6,000 each year for the remaining four (4) years (approximately 4% each year). The
<br /> City has utilized revenues generated from golf course operations to pay for all operating
<br /> costs, and prior to the City paying off the golf course debt in June 2013, any excess
<br /> funding was used first to make annual debt service payments on the bonds sold to
<br /> finance the course construction and second, to pay back the General Fund.
<br /> When the original agreement was approved, there were some discussions regarding a
<br /> longer term agreement of 10 or more years. Because Callippe Preserve Golf Course
<br /> was partially funded through Certificates of Participation (COP) financing, the Internal
<br /> Revenue Service (IRS) sets limits on the length and payment options for management
<br /> contracts. The IRS rules are designed to ensure that a private operator does not unduly
<br /> benefit from the City's ability to issue tax-exempt, low-cost financing. There are three
<br /> term options that are allowed under the IRS rules; five (5), ten (10), and fifteen (15) year
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