The City will retain ownership, giving management to Spirit Golf, LLC. The City was given the golf course about three years ago. It staved off financial losses the first year by selling the liquor license for $300,000, but lost about that much in the second and third years.
Spirit Golf LLC partners Todd Barranger and Richard Holcomb were the only respondents to a request for proposals in September. They purchased Las Cruces golf facility Picacho Hills Country Club during the six-month negotiation with the City. It will share membership benefits with the City’s public facility, sweetening the scope of play and sociability between the clubs.
The Elephant Butte City Council and Spirt Golf signed a 19-page management contract sometime between Feb. 12—when the parties came to an agreement, and Feb. 19—when the contract was made public.
According to City Councilman Michael Williams, the contract wasn’t signed until inventory and other matters were completed.
Spirit Golf will be on a fairly short string, being responsible for all operating costs laid out in an “operating plan and budget,” to be approved by the City Council.
The initial version of the budget/plan has been accepted and a final version is due a week before the contract takes effect on March 15. Spirit Golf needed the City’s inventory before presenting a final budget/plan.
Spirit Golf can’t expend more than $2,500 on anything not in the budget/plan without owner approval, according to the contract.
Spirit Golf specializes in running and marketing golf courses and the marketing plan is an important component of the operating plan/budget. The City will receive a license for use of the “Point of Service” marketing computer system upon termination of the agreement.
Because of their expertise in maintaining and repairing golf-course land forms, marketing and management, “key employees” are named in the contract who are collectively to spend 40 hours a week at Sierra Del Rio. They are Spirit Golf partners Todd Barranger and Richard Holcomb, as well as Janine Sjostrom, Bob Crane, Ron MacHaffey and Mike Dixon.
Spirit Golf’s operating costs are offset by management fees over the five-year contract, which may be renewed one time for another five years. The first year Spirt Golf will get $243,333, the second year $219,000, the third year $182,500, the fourth year $146,000 and the fifth year $121,666 in management fees and $121,666 every year thereafter if a second term is renewed.
The management’s operating costs are also lessened by acquiring the use of the City’s Governmental Liquor License as well as use of the City’s water rights to irrigate the grounds. Spirit Golf will use the liquor license for free for the first three years and then begin paying license “operating costs” up to $1,000 a month. Electricity and other utility costs incurred to water the grounds will be paid by Spirit Golf.
The City doesn’t expect any part of the profits in the first two years, but in the third year it gets 5 percent, the fourth year 7 percent, the fifth year 10 percent and in subsequent years 20 percent of the profits.
The City employees working at Sierra Del Rio will be terminated by March 18, and must be hired by Spirit Golf to keep their jobs. Spirit Golf must have the facility staffed by March 18.
The facility includes the golf course, club house, restaurant, bar and maintenance facility.
The City can terminate the contract in the first three months without cause, in writing, giving 30-days’ notice, but must pay Spirit Golf a $9,000 termination fee. After the first three months no termination fee is required and the “owner at any time, with reasonable notice,” may terminate the agreement if it decides to sell the facility.
Spirit Golf can terminate the agreement if the City applies for or consents to the appointment of a receiver, or admits to insolvency.