By Clint Brown
Pella — At last night's Pella City Council meeting a resolution was approved for a new ground lease with Warrior Golf Venture, L.L.C. for the Bos Landen Golf Course.
This resolution also cancels Warrior's existing ground lease (which was approved at the previous council meeting). On May 20, 2014, the City Council approved a ground lease assignment from R&R Management, L.L.C. to Warrior Golf Venture, L.L.C. As reported by The Chronicle, on May 22, 2014, the City of Pella acquired the pro-shop, restaurant, conference center, and maintenance buildings which are located on the Bos Landen Golf Course. The intent of the new ground lease is to include building facilities in the new ground lease as well as address other negotiated changes to the ground lease. Listed below is a summary of the key terms of the proposed ground lease:
Significant Ground Lease Terms
Term: The term of the lease is for 99 years commencing on June 3, 2014 and extending thru June 2, 2113. The annual payment for the lease is one dollar per year.
Property Included: The Bos Landen Golf Course and associated building facilities.
Requirements of the Lessee: Warrior Golf is required to operate a public golf course whose seasonal opening and closing dates will be similar to the Des Moines, Iowa Metropolitan Golf Courses. In addition, Warrior Golf will be responsible for the financial risk of loss at the Bos Landen Golf Furthermore, with the exception of the one-time capital improvements made by the City of Pella, Warrior Golf will be responsible for all maintenance and capital expenditures at the Bos Landen Golf Course.
One-time Facility Improvements by the City of Pella: The City of Pella will be responsible for making one-time structural improvements to the restaurant area and the facilities' two decks. The estimated cost to make these repairs is likely in the range of $100,000 to $350,000 and depends on the scope of the project. The repairs are proposed to be made on a mutually agreed time period by Warrior Golf and the City of Pella. It should also be noted, the public's access to the restaurant area and the deck facilities will be blocked until the structural improvements are completed. In addition, the agreement obligates the City to reimburse Warrior Golf up to $75,000 or the actual cost to construct a new cart barn, whichever is less. It is important to note, the cart barn will be considered a leasehold improvement and will be owned by the City of Pella.
One-time Grounds Maintenance Improvements: The City of Pella will be responsible for the following one-time capital improvements to the irrigation system:
The estimated cost for this improvement is between $300,000 to $350,000 and the City will make its best efforts to complete these improvements before the 2015 golf season.
Transition Subsidy: To help offset the lost revenue associated with the closure of the Bos Landen Golf Course, the ground lease obligates the City of Pella to continue to employ the golf course superintendent through December 31, 2014. In addition, the City of Pella would be obligated to a one-time operational subsidy of $90,000 for calendar year 2015. The estimated cost of these items is $130,000.
Grounds Maintenance Reimbursement: The proposed ground lease provides a reimbursement of the actual cost of chemicals, fertilizers, seed, and bunker sand to Warrior Golf. The maximum reimbursement is up to $95,000 annually for calendar years 2014 thru 2028. It should be noted, the reimbursements are subject to annual Council approval. In addition, this reimbursement is similar to the current ground lease which provided the Lessee potential reimbursements of $90,000 annually through the year 2029.
Default Cure Period: Under the terms of the ground lease, the period of time to cure a default is thirty days. In comparison the current ground lease provides ninety days to cure a default.
Resident Discount: Pella citizens shall be entitled to a twenty-five percent discount off Warrior Golf's published rate for play at the Bos Landen Golf Course
Financing of the Bos Landen Golf Course
The City's financial contributions to the Bos Landen Golf are proposed to be funded from the City's General Fund.
Other Factors to Consider
Warrior Golf is a national firm that has extensive experience in the golf industry. Warrior Golf owns 16 other golf courses spread across the nation and has experience with similar courses such as Bos Landen. Pella City Staff believes Warrior Golf's professional management team and experience would lend itself well to the Bos Landen Golf Course.
There is a significant amount of taxable valuations associated with the Bos Landen development, as it includes approximately 185 housing units and a hotel. If the Bos Landen Golf Course was not operational, Pella City Staff believes there would be some impact to the property values in the Bos Landen Development. Likewise, the Bos Landen Golf Course serves as a tourism draw for the community, and its closure would have an impact in this sector of the local economy. In addition, there also appears to be support from the community's major employers for continuation of the Bos Landen Golf Course.
Pella City Staff does not believe City employees could operate the Bos Landen Golf Course for less funding than the proposed agreement with Warrior Golf.
According to the City of Pella the course is believed to be open for play some time in mid-June.