City Puts Gannon Lease out to Bid: 5-year Lease Term Designed to Garner More Bidders, Better Rent

August 27, 2013
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According to Assistant City Solicitor James Lamanna, the city’s bid process for management and operation of Gannon Golf Course was designed to elicit a greater number of potential operators and increase the rent that can be paid to the city over the proposed five-year lease arrangement.

“We debated the merits of a three-year versus a five-year lease term, but our thought is that a five-year lease would encourage more bidders and hopefully result in larger rents.”

In order for the city to enter into a lease for anything more than five-years, a vote of the city council would be needed.

Lamanna noted that if a new company does win the bid to manage the club, there could potentially be a large start-up cost, in terms of buying or leasing the appropriate maintenance equipment and supplies.

“The five-year lease term would give an operator the ability to spread that cost out over five-years and provide some extra comfort that they’d be able to earn five-years’ worth of profits, instead of just three years, before they’d have to re-bid it,” added Lamanna.

The city’s request for proposals (rfp) period closes on October 14, at which time a three-member review committee will be appointed to review all responses and grade them based on a set of criteria that are outlined in the bid.

Once the proposals are graded, it will be up to Mayor Judith Flanagabn Kennedy and the Board of Park Commissioners to make a final determination about who will manage the city’s golf course for the next five years.

Among the items that Lamanna said the review committee will be considering is the proposers’ business plan, marketing plan and offer to provide rent payments to the city.

Gannon Building Association has been managing the course under contract with the city for more than ten years and last year operated the course on a one-year lease, for a rent payment of $400,000.

“We are hopeful that the city will be able to get more than the $400,000 that we earned in our agreement last year,” he noted.

Lamanna also noted that all bidders will have access to Gannon’s books for the last year, including revenues from rounds sold, memberships, restaurant and bar sales and pro shop sales.

“One thing that will be different going forward is that last year, the GBA didn’t have access to the golf cart rentals and the revenues that provides, because the carts were under a different contract,” said Lamanna. “In the new contract, the carts will be included as part of the operations, so that opens up potentially a large revenue source that we hope will make the lease more attractive to bidders and result in higher rents for the city.”

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