City renews golf course contracts for restaurant and pro shop services
The City of Swift Current has renewed the contracts for the operation of the restaurant and pro shop services at the Chinook golf course for an extended term.
Councillors approved the new five-year contracts, which are two years longer than the existing agreements, at a regular council meeting, Oct. 22.
The current three-year contract with Ken Koster to operate the restaurant will expire Dec. 31 and the three-year contract with KK Golf Management Inc. to manage the pro shop concludes Oct. 31, 2019.
Koster has been operating the pro shop for the past eight years and he has been responsible for managing the restaurant for the past six years. The City amalgamated the operation of the restaurant and pro shop activities in 2013 as a way to increase service levels for restaurant and golf customers.
“What it's done is it has provided a lot of synergy between the restaurant and the pro shop,” City General Manager Community Services Dean Robson said after the meeting. “So providing the seamless transition between the restaurant staff and the pro shop operations is easier under one operator than it is under two. Having said that, most are run with two, unless they're semi-private organization. Then they just hire a manager that just oversees both, but in this instance we're pretty fortunate to have somebody who's been involved in both industries for over 30 years.”
During discussions between the City and Koster the two parties agreed to increase the length of the new contracts from three to five years and to end both agreements in the same year. According to Robson the longer term of the new contracts will provide stability for both parties.
Both contracts still provide the City with the right to terminate the agreements during this period if it feels there is just cause to do so. The financial terms for the new agreements are essentially the same as for the current contracts.
The terms of agreement for the new pro shop contract specifies that the City will pay an annual retainer fee of $70,000 plus GST to the operator. In addition, the City will pay 30 per cent of all revenue from tee off box and bench advertising to KK Golf Management and the City will also pay eight per cent of income from green fees, passes, driving range fees and rental fees to the operator.
“Now keep in mind he has to pay for all his staff, all his assistant pros, all his cashiers,” Robson said. “They're not City people.”
The new contract for the restaurant determines that the operator will pay a monthly flat rate of $4,300 plus GST for the months of April to October to the City. In the previous contract there was an increase of 2.38 per cent in the flat rate fee payment to the City, but there will be no increase in the new contract.
The City decided to keep these financial terms the same because the restaurant has experienced an increase in expenses without a proportional increase in revenue due to weather conditions.
The fee paid by the restaurant operator to the City was previously based on a percentage of revenue, which fluctuated from year to year. The flat rate provides greater certainty for both parties with regard to the budgeted amount.
“So they could budget appropriately and we could too,” Robson said. “When you hit a bad weather year, like we did this year, we're probably in a very good situation. If we hit another year, let's say next year is beautiful and we're golfing from April to October and have lots of nice weather, then the City is probably not making as much because it's not a percentage.”
The cost recovery rate for City facilities will differ by a wide margin. In the case of the Chinook golf course any capital costs will be covered through public funds, but the recovery rate for operational expenses over the past 20 years had usually been 100 percent, with the exception of about three years due to poor weather conditions.
“The last two we've been sitting in a terrible early weather pattern and this year was even worse than last year,” he said.
“April and May were probably our worst start for golf green fee players since 2013, where approximately we had 3,500 rounds through April and May and our next worst year in April and May was 2013, where we had 3,800.”
The new five-year contract for the pro shop will end on Oct. 31, 2023 and the fiveyear term for the operation of the restaurant will conclude on Dec. 31, 2023. There is an option to renew both contracts if the two parties can reach an agreement on the terms.