Agenda Packets - 1997/07/07 - Laserfiche WebLink

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• City of Mounds View Staff Report July 2, 1997 Page 2 obtain insurance on thegolf course as additional protection even if it contracted with a • private operator resulting in doubling the insurance cost. (Estimated additional cost- $2,500). • Depending upon how a contract was structured, it could result in the need to pay property taxes. (Estimated cost$20,000 to $30,000) • A private operator would have to have their own accounting system for payroll, financial reporting, etc. while removing this operation from the city would not directly reduce our costs. (Estimated additional cost$12,000). • A private operator would need to obtain their own health insurance and retirement coverage which would generally be more expensive for a small group. On the other side, fewer benefits (retirement) would need to be provided resulting in some offsetting savings. There are also some structural problems, including: • The course has been in operation for several years and as such, has acquired equipment to operate the course. If the City contracts for course operations, the city would have to sell the equipment, use the equipment at other locations, or enter into an arrangement with the operator to use/lease the equipment, which results in complications in the contract relating to maintenance on and the condition of the equipment. • The City has hired employees and if we now contract for the operation of the course, how will we deal with existing employees. While an arrangement taking into account all these factors could be structured, it still appeared • that the added cost from contracting out the management of the course would more than offset the advantage and as such, I am proposing a highbred approach under which we would enter into a management contract with the current superintendent. He would be paid a base salary ($40,000) and we would set the total payroll costs at a percentage of total revenues (proposed 44%). He would be given total control over the hiring, promotion and firing of all employees and setting of all salaries, subject to certain constraints such as following applicable federal and state policies and guidelines (Fair labor standards, ADA, veterans' preference, family medical leave act, etc.), and paying of required benefits such as retirement, social security, etc. For other benefits such as health insurance, vacation, sick leave, etc.,he would develop his own policies. The City would pay the employees and at the end of the year, an adjustment would be made to the superintendent's salary based upon the agreed percentage of total revenues, less golf course payroll costs. Gross revenues would exclude interest earnings. Rates for the subsequent year would be proposed by the golf course superintendent during the budget process. If a need to adjust the rates during the year arose, a process such as a committee comprising the superintendent, finance director and mayor and one councilor would meet to approve any rate revisions. Any discounts offered will be considered a reduction of gross revenues. Sales tax owed will be considered a reduction from gross revenues. Advertising will be considered an expense but must be included as a separate line item that must be approved by the City. The markup on merchandise must be • at least 30% while the markup on food and beverages must be at least 100%, provided that sales