HomeMy WebLinkAboutRes 2015-82 - 5yr Xtnsn - GCM 441 to Desert Willow Golf Resort 520Resolution No. 2015-82
CITY OF PALM DESERT
FINANCE DEPARTMENT
Staff Report
REQUEST: ADOPT RESOLUTION 2015- 82 AUTHORIZING A FIVE-YEAR
EXTENSION OF THE REPAYMENT OF THE $500,000 LOAN TO
DESERT WILLOW GOLF RESORT.
SUBMITTED BY: PAUL S. GIBSON, FINANCE DIRECTOR
MARTIN ALVAREZ, ECONOMIC DEVELOPMENT DIRECTOR
DATE: SEPTEMBER 24, 2015
CONTENTS: RESOLUTION 2015- 82
Recommendation
By Minute Motion, approve Resolution 2015- 82 authorizing a five-year
extension of the repayment of the $500,000 loan to Desert Willow Golf
Resort.
Discussion
On July 8, 2010 the City Council approved Resolution No. 2010-61 authorizing a loan
up to $500,000 to the Desert Willow Golf Resort to assist with the impact on the cash
flow related directly to the expansion of the Lakeview Terrace and the Desert Willow
Clubhouse. The current loan matures on September 30, 2015.
Desert Willow management has requested a 5-year extension to pay the principal
portion of the loan. City staff and Kemper representatives discussed Kemper's request
for a 5-year extension at the monthly Desert Willow meeting, and agreed to recommend
City Council approval of the 5-year extension.
Resolution No. 2015-82
Staff Report
Adopt Resolution authorizing a five-year extension of Desert Willow loan repayment
September 24, 2015
Page 2 of 2
Fiscal Analysis
Desert Willow pays 4% annually on the $500,000 which has generated $100,000 for Fund
441 in the last 5 years. The interest rate will remain the same for the next 5 years, which
will generate $20,000 annually.
Submitted by:
Paul S. Gibson, Finance Director
Approval:
v
Martin Alvarez, Economic Development Director
ohn M. Wohlmuth, City Manager
G \FINANCE\NIAMH ORTEGA\STAFF REPORTS\DESERT WILLOW\SR-DW FUND $500000 LOAN EXTENSION DOC
RESOLUTION NO. 2015- 82
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT,
CALIFORNIA, AUTHORIZING A 5-YEAR EXTENSION ON THE $500,000 LOAN
FROM THE GOLF COURSE MAINTENANCE FUND 441 FUND TO THE DESERT
WILLOW GOLF RESORT OPERATING 520 FUND
WHEREAS, the City Council had authorized the construction of Desert Willow Terrace and
the Kitchen Renovation projects to accommodate anticipated increased demands on Golf Resort
Outing and Banquet services; and
WHEREAS, the current management agreement requires Kemper Sports Management
Company to maintain a daily cash balance of $500,000 in the operating account; and
WHEREAS, the City Council had determined it is desirable to proceed at that time with
improvements to the Kitchen and clubhouse and to loan the necessary funds from the golf resort
maintenance fund 441, subject to repayment in 5 years due September 30, 2015; and
WHEREAS, the City Council has determined to approve a 5-year extension on the
repayment of the original loan, as described below.
NOW, THEREFORE, the City Council of the City of Palm Desert, California, DOES HEREBY
DETERMINE, ORDER AND RESOLVE, as follows:
The City Council herby authorizes a five-year extension on the $500,000 loan from the golf
course maintenance 441 fund to the Desert Willow Golf Resort Operating 520 Fund. The loan will
continue to be subject to simple interest on the unpaid principal balance thereof, computed at a per
annum rate of four percent 4% from the date of payment to the date of repayment. The principal on
the loan will be repaid to the golf course maintenance fund on September 30, 2020. Interest on the
outstanding principal will be paid annually on September 30.
PASSED, APPROVED and ADOPTED this 24 day of5eptembei2015, by the following vote
to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
RACHELLE D. KLASSEN, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA
Susan Marie Weber, Mayor
July 21, 2015
Mr. John Wohlmuth
CC: Paul Gibson, Rudy Acosta, Martin Alvarez
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Mr. Wohlmuth,
RE: Deferral of the City Loan Repayment
The management at Desert Willow Golf Resort requests the repayment of the City's Loan in the amount
$500,000 be deferred from the September 2015 due date. This loan was given to supplement cash for
lost revenue during the renovation in 2010/2011. We have not had sufficient returns as of yet to satisfy
the full principal amount and repayment this fall would put substantial stress on th-e cash position of the
resort.
We request an extension of the existing terms for 5 years allowing management to increase the cash
reserves for both operations and capital replacement funds through positive operational results. Please
let me know if you have any questions.
Respectfully,
Derek White
General Manager
33 995 Drum Willow Drive � Palm Desert, California 42260 Telephone 760.346.0015 Fax 760346-7444
Wcbsttc: it'wii dese?twillow.corn 1 mail: info(a)desertivillow.com