CC MEETING: September 10, 2024
DATE: September 5, 2024
TO: Erin Rinehart, City Manager
FROM: Scott Whitaker, Director of Parks and Recreation
Chrystal Davis, Assistant City Manager
Title
Consider A Resolution Authorizing The City Manager To Amend The Contract With Orion Management Solutions For Management Of Indian Creek Golf Course By Revising The Revenue Share Formula And Authorizing A Management Fee In Certain Circumstances.
Body
BACKGROUND:
Indian Creek Golf Club (ICGC) is a 36-hole municipal golf course that has been operated by a golf management company, Orion Management Solutions since January 2017. The contract is a shared revenue model, in which the contractor manages all operations of golf, and both the City and contractor receive a percentage of total revenue. This allows for both the city and contractor to share in the risk and reward.
Since Orion has operated Indian Creek Golf Club the facility has been through a flood event in 2018, a renovation in 2019, where one course was closed for a year, COVID, which caused the entire property to close for five weeks and restrictions on use for an additional three months, and a drought in 2022. Most recently straight-line winds and flooding required all thirty-six holes to be shut down for a month. Staff has work diligently with Orion during these acts of nature and amended the management contract to allow both parties to keep the facility up and running at a high level when open to the public.
Despite all the unexpected challenges over the past seven years Orion has provided consistent professional management of ICGC. The city has gone from having to support the golf club by contributing tens of thousands of dollars annually from the general fund to currently having a reserve of approximately $1.7 million. In 2023 the city’s portion of the revenue exceeded $900,000.00. Unfortunately, Orion lost money last year due to expenses in several areas such as food prices, salaries, new golf car fleet, and other supplies.
To keep ICGC competitive and at the customer service level the golfing community enjoys, staff is requesting an adjustment to the management contract. Moving the average annual percentage from eighteen percent to sixteen percent which would continue to cover the city’s operating expenses and allow Orion to maintain the facility at a level appropriate to the value customers receive.
FINANCIAL IMPLICATIONS:
The goal of the revenue share model is for the operator/contractor to generate sufficient funds to sustain golf operations with no subsidy from the general fund. Staff believes this update allows for the city to completely pay for golf operations while allowing the contractor to make a profit.
STAFF RECOMMENDATION/ACTION DESIRED:
Staff recommends the City Council approve the Resolution authorizing the City Manager to amend the contract with Orion Management Solutions relative to the revenue share model and authorizing a management fee in certain circumstances.