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HomeMy WebLinkAboutresolution.council.095-04 Series of 2004 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO, APPROVING A CONTRACT FOR OPERATION OF THE ASPEN MUNICIPAL GOLF COURSE PRO SHOP, BETWEEN THE CITY OF ASPEN AND SSI VENTURE LLC, AND AUTHORIZING THE MAYOR OR CITY MANAGER TO EXECUTE SAID CONTRACT ON BEHALF OF THE CITY OF ASPEN, COLORADo. WHEREAS, there has been submitted to the City COuncil a Contract for services relating to the operation of the Aspen MUnicipal Golf Course Pro Shop, between the City of Aspen and SSI Venture, LLC, a Colorado Limited Liability Corporation, a true and accurate copy of which is attached hereto as Exhibit "A"; NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE cITY OF ASPEN, COLORADO: That the City Council of the City of Aspen hereby approves that Contract for services relating to the operation of the Aspen Municipal Golf Course Pro Shop, between the City of Aspen and SSI Venture, LLC, a copy of which is annexed hereto and incorporated herein, and does hereby authorize the Mayor or City Manager to execute said agreement on behalf of the City of Aspen. INTRODUCED, READ AND ADOPTED by the City Council of the City of Aspen on the J~ day of~~g4.2~304. ~ I, Kathryn S. Koch, duly appointed and acting City Clerk do certify that 'the foregoing is a true and accurate copy of that resolution adopted bY the City Council of the City of Aspen, Colorado, at a meeting held on the day .he~einabOve stated. Kathryn S. t~h, City Clerk TLO- saved: l 0/5/2004-269-G:\tara\Resos\Golf Pro Shop.doc LEASE AGREEMENT FOR ASPEN MUNICIPAL GOLF COURSE - PRO SHOP 2005-2009 Seasons THIS AGREEMENT entered into at Aspen, Colorado, this day of , 2004, by and between the City of Aspen, Colorado, a municipal corporation and home rule City ("City") and SSI Venture LLC, a Colorado Limited Liability Corporation ("Lease Holder"). WITNESSETH: WHEREAS, City is the owner of the Municipal Golf Course in Aspen, Colorado, and desires to enter into an agreement whereby certain services will be provided in relation to the operation of the Pro Shop; and WHEREAS, Lease Holder currently leases the Pro Shop space at the Municipal Golf Course in Aspen in accordance with the terms of a lease Agreement with the City dated March 16, 2000, which includes an option to renew for a period through 2007; and WHEREAS, the parties have renegotiated the term of the lease through the 2009 golf season by entering into this Lease Agreement; and WHEREAS, Lease Holder has submitted a proposal to the City wherein Lease Holder has described the services it intends to provide in connection with the operatiOn of the City's golf pro shop; and WHEREAS, the Aspen City Council, by Resolution, authorized the Mayor to enter into this Agreement on behalf of the City of Aspen, Colorado. NOW, THEREFORE, in consideration of the mutual terms and conditions herein, the parties agree as follows: I. TERM This Agreement shall be effective as of April 1, 2005, and terminate on October 31, 2009, provided, however, that the Lease Holder meets or exceeds performance measures to be developed by the City and the Lease Holder. The determination as to whether the Lease Holder has met or exceeded the performance measures shall be in the reasonable discretion of the City and subject to Lease Holder's notice and cure rights hereunder and subject further to the arbitration provision contained in Section X, below. If performance measures are not met City and Lease Holder agree to revise a plan to elevate the performance level to at a minimum "meets expectations". The performance measures shall be mutually agreed to by the parties hereto on or before February 28, 2005 and shall be appended to this lease agreement as an Exhibit and incorporated herein by this reference. For purposes of this Agreement, "golf season" shall mean the period from April 1st to October 31 of each year unless the end of the season is mutually Lease Agreement for Aspen Municipal Golf Course Page 1 determined to end before October 31 st of each year due to inclement weather and the closure of the Aspen Municipal Golf Course for the summer golf seasOnl II. DUTIES OF LEASE HOLDER During the Term, Lease Holder agrees: -A. To provide the golf pro shop services described herein for the 2005, 2006, 2007, 2008 and 2009 golf seasons. B. To hire, train, supervise and manage, at Lease Holder's sole expense, a staff in sufficient numbers (at Lease Holder's discretion) to enable Lease Holder to provide the services described in this Agreement. Notwithstanding the generalitY of the foregOing, Lease HOlder shall employ at least one full-time PGA Class A professional and at least two full-time PGA- certified assistants. These individuals shall be in addition to the other staff desCribed elsewhere in this Agreement. C. To colleCt fOr the exclusive benefit of the City alt green fees, tournament fees, pass sales, and any other fees Charged bY the City for the Use of the g°lf Course. D. To supervise the starting plaY of all persons, groups, outings and events. E. To install, operate and maintain, at its sole cost and expense, a handicap system that shall be updated in accordance with USGA guidelines and regulations. F. To administer all rUleS and regulations which may be mutually established by the City's representatives and the Lease'Holder in connection with the use of the golf course and all of its facilities and to do so in a manner which promotes the enjoyment of the golf course by members of the community. G. To direct the professional staff to devote a reasonable number of hours playing golf with patrons of the golf course. This service will be provided to all golfers regardless of ability and shall be gratis. Lease Holder shall provide a report each month to the City's Director of Golf indicating the time spent by its Staffin fulfilling this obligation, H. To assist the Men's and Women's Golf Associations, and as may be requested by each association, to assist in the organization, superviSion and COnduct assoCiation tournaments and special events. events. To provide sufficient power carts for daily use, tournaments, outings and special J. To prepare information sheets, rUles sheets and score cards for all tournaments, events and outings and to assist in score posting, rules deciSions and other services as may be Lease Agreement for ASpen MUnicipal Golf CoUrse Page 2 requested by the event organizers. Lease Holder will endeavor, in so far as possible, to apply USGA rules and policies to all events. K. To implement a speed of play program based on the "interval system or other type" as may be mutually agreed upon by the Director of Golf or other City Representative. L. To keep records of all transactions in the golf pro shoP relating to services provided under this Agreement and to provide to the City, by the 10TM day of each month, a report cutting out all receipts from the previous month and delineating the following revenue categories: Golf cart rental (power), cart rental (pull), range fees, retail sales, locker rental, equipment rental, lessons, club repair and mi scellaneous. City reserves the right, in its sole discretion, to add to and delete categories from this report. All of Lease Holder's books and records relating to the services to be provided hereunder shall, during all reasonable business hours, be available to inspection by the City or its duly authorized representatives. The information will become confidential between the City and Lease Holder if operation is up for bid. M. To provide a minimum of twenty (20) sets of rental golf clubs that shall include Callaway, Titlest, Ping, Ben Hogan or an equivalent. O. To provide an open catalog for special orders of shoes and golf clubs, in addition to in-stock selections. P. To have an inventory of One Hundred Fifty Thousand Dollars ($150,000.00) in the pro shop by the 15th day after the opening day of each season. The value based on actual retail value. Gift certificates from tournaments shall be redeemable in all retail stores operated by the Lease Holder. Lease Holder shall submit to the City evidence of its comPliance with this requirement. Q. To provide a full-.time, forty-eight. (48) hour turn-around club repair service on- site. In the event that Lease Holder has an established relationship with the manufacturer of golf clubs, Lease Holder shall assist customers with wan'anty issues by accepting defective golf clubs and returning them to the manufacturer for repairs or replacement consistent with the applicable warranties. R To provide bag drop service. This service shall be designed to improve the speed of check-in/check-out and will be provided from Memorial Day to Labor Day of each golf season, during peak periods. S. To provide sixty (60) electric carts which shall be equipped with sun roofs, and sand/seed dispensers. New golf carts shall be purchased and made available during the 2005 golf season. In addition, Upon implementation of a curbside bag drop facility Lease Holder shall provide a liability waiver form to be signed by all cart users. Said waiver form shall be approved by City Attorney. Lease Agreement for Aspen Municipal Golf Course Page 3 To ° Lease Holder shall provide, at its sole expense, carts for use in the ranger and starter program. o Lease Holder' shall provide a twenty-punch pass riding cart ticket for locals. Lease Holder shall provide ten (10) bag mounting racks free of charge upon request of players. 5. Lease Holder shall provide minimum forty (40) pull carts for daily use. To provide practice range services, which shall include the following: The range shall be open for use during the golf season on the following schedule, as established by the first tee time and weather as directed by the City or the Director of Golf. Lease Holder shall operate the practice range in such a manner so as to ensure that range balls are available to range patrons during all range hours as established by the Director of Golf. 2. All fees that are related to the Lease Holder services shall be agreed to by November 1 of each calendar year. Current Fees For Lease Holder Services: o 18 Holes 9 Holes Electric Cart Rental $35.00 $17.50 Rental Clubs $40.00 $20.00 Pull Cart $9.00 $5.00 Large Range Bucket Small Range Bucket 10 Punch Range Card 25 Punch Range Card 20 Punch Cart Pass $9.00 $6.00 $80.00 $195.00 $310.00 Lease Holder shall purchase and make available for use when needed one (1) back-up ball picker. Lease Holder shall also purchase each year of the term, 20,000 new range balls, all of which shall be purchased and on-site, and all in use, not later than May 15th of each golf season. The brand, color and identifying marking or logo shall be mutually agreed to no later than January 1 sT of any year. Lease Agreement for Aspen Municipal Golf Course Page 4 Lease Holder shall routinely perform the following maintenance services in connection with the practice range: ao The entire range area, including the lesson area, putting surface and bunker area shall be kept clear of trash and debris. bo Lease Holder shall provide, at its sole cost and expense, a minimum of six (6) scrubbers and not less than twelve (12) bag stands, both of a design and style to be determined by mutual agreement between The City and the Lease Holder. Co Lease Holder shall provide and maintain (clean daily and replhce with water) at least two water coolers on the practice tees. Lease Holder shall, as directed by the Golf Superintendent, each evening, move the ropes designating the hitting areas. U. To provide a golf instruction program which will include the following: One full time Class PGA and 2 Certified Assistants will be available for lessons 2. Mens and ladies golf clinics will be'provided at a reasonable cost. Lease Holder shall provide private lessons in the form of one hour or one~ half hour instruction. The rates shall be as follows for the year 2000, and be reviewed annually thereafter. A-1 pro $85.00/hr $45.00/½-hr All other instructors $75.00/hr $40.00/½-hr V. To provide a Ranger and Starter Program which shall include the following: At Lease Holder's sole cost and expense, Lease Holder shall employ sufficient staff to provide not less than one ranger and one starter during all hours of course operation during the period Memorial Day to Labor Day of each golf season. In the event that additional rangers or starters are required to achieve the City goals relating to speed of play, as these goals may be determined from time to time and in the reasonable discretion of the City, Lease Holder shall employ such staff as may be required. ° Lease Holder shall provide uniforms for its ranger and starter staff at Lease Holder's sole cost and expense. W. To provide a group and guest play sales program outlined in Exhibit A. X. To adhere to the Golf Shop Operations Performance Measures outlined in Exhibit Lease Agreement for Aspen Municipal Golf Course Page 5 Co III. DUTIES OF CITY During the term of this Agreement, City agrees: A. To permit Lease Holder to use, during the period from April 1 st to October 31 st of each year, the facility consisting of approximately 1,250 square feet of retail space located on the golf course property, commonly known as the Golf Pro Shop, for Lease Holder's sole use and occupancy with respect to its duties and privileges under this Agreement. B. To permit Lease Holder to use, year round, the facility commonly known as the Cart Storage Barn, for Lease Holder's sole use and occulSancy with respect to its duties and privileges under this Agreement. IV. PAYMENTS TO CITY A. Amount of Payment: The lease payments for each golf season shall be $100,000.00 per golf season (the "Minimum Rent") which Minimum Rent shall be adjusted after the first golf season for any increase in the consumer price index (CPI) as calculated ih Exhibit B a~ppended hereto. The Minimum Rent shall be payable in seven equal payments of $14,285.71 on or before the first day of each month of the golf season, commencing on April 1st of such season. In addition to the Minimum Rent, Lease Holder shall pay 16% of all gross retail sales revenues in excess of $625,000.00 net of PGA lessons per golf season. The parties hereto understand that the City may be performing some work on the golf courses' irrigation system, fairway replacement, and greens reconstruction during the period of the term of this Lease Agreement. If the City engages in the above referenced construction projects that cause Lease Holder's sales to decline 20%, or more, for any month compared to the same month of the previous golf season, rent for that month shall be paid at a flat percentage rate of 16% of all gross sales for that particular month. B. Inspection of Books and Records: Lease Holder shall keep such books and records as may be reasonably required by City at Lease Holder's Headquarters and City shall have the right, with not less than five (5) days prior written notice, during ordinary business hours, to inspect Lease Holder's books and records and to make copies thereof or extracts there from concerning the operation of the Premises. C. Late Payment: Any payments due hereunder which are not made on the date when due shall be assessed and shall accrue a late charge at the rate of two percent (2%) per month which amount shall immediately become due and owing. D. Bbyearly Report: Lease Holder shall deliver to the City on July 31 st (for the period of April 1 thru June 30) and November 30th for the period of July 1st thru November 1s) of each year a bi-yearly statement of all monies received and disbursed in connection with the operation of the Golf Pro Shop. This report shall be in a form and contain such information as the City may, in its reasonable discretion, require. Lease Agreement for Aspen Municipal Golf Course Page 6 E. Increases in Fees: Lease Holder may request an increase in any fee to be charged patrons for the pro shop services described herein; provided, however, any such proposed increase must first be submitted to City's Director of Golf. The proposed increase may be accepted or rejected by the Director of Golf, provided that in the event of rejection, Lease Holder may appeal to the City Council, whose decision granting or rejecting the requested increase shall be final. V. USE AND OCCUPATION OF PRO SHOP BUILDING AND GOLF CART STORAGE AREA In consideration of the duties to be performed by Lease Holder hereunder, City shall permit Lease Holder sole use and occupancy of the Golf Range, Golf Cart Storage Area and Golf Pro Shop buildings (hereinafter collectively referred to as "Premises"), upon the following terms and conditions: A. Space: Lease Holder shall use the golf cart storage area for the purpose of storing and maintaining power electric golf carts and related equipment. Lease Holder shall use the apProximately 1,250 square feet of space in the Golf Pro Shop building for the purpose of retail sales of golf equipment, clothing and supplies, for storage facilities, for business offices in connection with its duties and responsibilities under this agreement or other endeavors as Lease Holder is in business of doing in the community with the permission of the Director of Golf. Lease Holder shall not use the Premises for any other purposes without the City's prior written consent, not to be unreasonably withheld. Lease Holder's use and occupancy of the Premises shall comply with the rules, regulations and ordinances of any governmental authority having jurisdiction in the premises or the activities performed thereon. Additionally, Lease Holder shall not use the Premises in any mahner that will increase risks covered by insurance on the Premises and result in an increase in the rate of insurance or a cancellation of any insurance policy, even if such use may be in furtherance of Lease Holder's retail sales or operation of the range facilities. Lease Holder shall not keep, use or sell anything prohibited by any policy of fire insurance covering the Premises. B. Maintenance and Repairs: Lease Holder shall, at Lease Holder's sole expense, maintain the interior of the non-structural portion of the Premises in good condition and repair in accordance with good housekeeping practices. Maintenance of locker rooms and adjacent bathrooms shall be the responsibility of Lease Holder. City shall, at its own expense, maintain the exterior of the buildings and any structural items. City shall reimburse Lease Holder for the expense of any repairs to the building which Lease Holder may be required to make which are occasioned by the acts or neglect of City, its agents or employees, and Lease Holder shall reimburse City for the expense of any repairs which City may be required to make which are occasioned by the acts or neglects of Lease Holder, its agents or employees. C. Taxes: Lease Holder shall pay all personal property and other taxes lawfully assessed against the premises by reason of Lease Holder's use and occupancy thereof. D. Utilities and Security Systems: The City shall, at its own expense, provide all water, heat and electric utiliti es for the building. Additionally, the City shall pay for local Lease Agreement for Aspen Municipal Golf Course Page 7 telephone service and telephone calls with respect to the operation of the Pro Shop, but Lease Holder shall reimburse City for all long distance calls as may be reasonably determined by the City. A Centurian Security System has been installed at the expense of the City, but maintenance and service charges for the security system shall be paid by Lease Holder, if utilized. E. Insurance: Lease Holder shall save and hold City harmless from any liability or injury to any person or damage to property on or about the premises from any cause whatsoever. Lease Holder shall procure, at its own expense, personal property casualty insurance in an amount equal to the replacement cost of inventory, fixtures and equipment, and golf carts as well as public liability insurance with limits not less than those set forth in C.R.S. Section 24-10-114, as it may be amended from time to time. Lease Holder shall maintain such insurance in full force and effect during the term of this Agreement and shall annually furnish the city a certificate of insurance naming the City as an additional insured with respect to liability coverage. All insurance policies required pursuant to this paragraph shall contain the following endorsement: "It is hereby understood and agreed that this insurance policy may not be canceled nor the intention not to renew be stated by surety until thirty (30) days after receipt by City, by registered mail of the written notice of such intention to cancel or not to renew." F. Time of Occupancy, Acceptance and Surrender of the Premises: Lease Holder may use and occupy the golf cart storage facility during the entire term of this Agreement, as long as it has possession of golf power carts which must be stored and maintained. Lease Holder shall be entitled to use and occupy the Premises and shall surrender the use and occupancy of the Golf Pro Shop building on or before November 1 (or such later date if the golf season is extended) of each year this Agreement is in effect and the Lease Holder shall be entitle to reuse and occupy the Golf Pro Shop building on or before April 1 (or as weather permits) of any year this Agreement is in effect. Occupancy of the Premises by the Lease Holder shall be construed as recognition that the premises are in a good state of repair and in sanitary condition. Any personal property of Lease Holder, or anyone claiming under Lease Holder, which shall remain surrendered, shall be deemed to have been abandoned and may be retained by City as its property, or disposed of by City in such manner as City sees fit. The provisions herein for use and occupancy of the Premises may be varied only on written agreement of the parties. G. Signs: Lease Holder shall not place any signs upon the Premises or upon the buildings, except of such design and construction as may be permitted by City. Any sign permitted byCity shall at all times comply with applicable ordinances, rules and regulations. H. Access to Premises: City shall be entitled to enter upon the Premises at all reasonable hours for the purpose of inspecting the same, preventing waste or loss, or enforcing any of City's rights hereunder. Lease Agreement for Aspen Municipal Golf Course Page 8 I. Improvements: Lease Holder shall make no improvements, alterations or additions without the pr[or written consent of the City's Director of Golf. All alterations and additions shall remain as part of the premises. J. No encumbrances: Lease Holder shall not pledge, hypothecate or encumber the premises with any mortgage or lien indebtedness without City's prior consent. VI. FEES FOR USE OF GOLF COURSE All green fees and punch pass fees or any other fee paid for the use of the golf course, all payments of any kind by third parties for use,of any of the golf course or golf pro shop facilities or any other fee associated with the privilege and right of patrons to use the golf course shall be and remain the property of the City and shall be collected by Lease Holder. All revenue derived from collection of said fees shall be deposited as determined by the Director of Finance of the City of Aspen. All other revenues collected by Lease holder shall belong to Lease Holder including, but not limited to, cart revenue, range rentals, golf lessons, merchandise sales, and repair charges. Lease Holder shall not allow any person to play on the golf course without payment of the applicable fee required by the rules and regulations of the City for the operation of the course without the express approval of the Director of Golf. Lease Holder shall be entitled to receive ten (10) open season's passes without charge for such employees as are designated by Lease Holder. Lease Agreement for Aspen Municipal Golf Course Page 9 VII. PROPERTY DAMAGE OR INJURY, INDEMNITY Lease Holder agrees to pay all damages for personal injuries and/or damage or injury to - real or personal property arising out of any negligent act or deed or any omission or act of the Lease Holder or any servant, agent or employee. Lease Holder further covenants and agrees to indemnify, save and keep the City harmless against all liabilities, judgments, costs, damages, and expenses from any and all claims of any kind or nature whatsoever, including City's legal costs and fees, which may in any manner be claimed against the City for and on account of personal injuries and/or injury or damage to real or personal property or to the loss of any personal property caused or claimed to have been caused as a result of any negligent act or deed or failure to act of Lease Holder or its servants, agents or employees. VIII. NO PARTNERSHIP OR AGENCY This Agreement is not intended to create any relationship between Lease Holder and City other than Lease Holder acting as an independent leaseholder, and Lease Holder is neither the agent, partner, employee nor joint venturer of or with the City. Except as otherwise provided in this Agreement, Lease Holder shall not assume or create any financial or other obligation on behalf of the City. No act or assistance given by the City shall alter this relationship. IX. PERFORMANCE AND BREACH A. When Non-Performance Not Breach: Should either party hereto be unable to, or be delayed in, performing any provision of this contract by reason of fire, strikes, or labor dispute, accidents, acts of God or the public enemy, such non-performance or delay shall not constitute a breach hereof. B. Default by Lease Holder: Should Lease Holder, without cause, fail or refuse to perform or comply with any provisions of this Agreement within ten days after written notice of such failure to comply with the specific provision, should a voluntary or involuntary petition in bankruptcy be commenced, or an assignment for the benefit of Lease Holder's creditors be made, or should a receiver be appointed for all or a part of Lease Holder's business or assets, then City may, at its option, and in addition to any other remedies it may have in law or in equity, terminate this Agreement by giving Lease Holder seven (7) days' written notice of its intent to do so. C. Default by City: Should City, without cause, fail or refuse to comply with any provision of this Agreement, and if City does not remedy such default within seven t(7) days after receipt of a written notice from Lease Holder specifying the nature of such default and demanding its cure, Lease Holder may, at its option, and in addition to any other remedies which it may have at law or in equity, terminate this Agreement by giving City fifteen (15) days written notice of its intention to do so. Lease Agreement for Aspen Municipal Golf Course Page 10 D. Final Accounting: Should this Agreement be terminated by either party pursuant to the provisions of this section, a complete accounting shall be made by the parties within thirty (30) days after such termination. X. ARBITRATION OF DISPUTES Any and all disputes afl sing out of or in connection with the operation of the golf course shall be presented to the City Manager of the City of Aspen within five (5) days after the controversy arises. Thereafter, the City Manager will attempt to resolve such dispute, within the four corners of this agreement. If the City Manager does not resolve the dispute two weeks after the dispute is heard by the City Manager, the aggrieved party may take any legal action permitted by Colorado law. XI. GENERAL PROVISIONS A. Assignment of Agreement: Except in the event of thee sale of the majority of Lease Holder's assets to a third party, in which case this Agreement may be assigned to such third party, neither party to this Agreement may assign this Agreement or interest therein or subcontract for the provision of the services to be provided hereunder without the written consent of the other party in which consent shall not be unreasonably withheld or delayed and shall be deemed granted if the party whose consent is needed has not responded in writing within thirty (30) days of any request for consent. B. Controlling Law: 'The laws of the State of Colorado shall govern the construction and interpretation of this Agreement and the parties stipulate that venue shall be in the courts of Pitkin County, Colorado. C. Entire Agreement: This Agreement contains the entire agreement of the parties hereto in relation to the subject matter hereof, and may not be modified except by written agreement of the parties. D. Notice: All notices required hereunder shall be in writing and shall be deemed to have been given if either delivered personally or mailed by certified mail or registered mail to Lease Holder and to City, as the case may be, at their respective addresses as follows or to such other address as either party may designate by written instruction to the other: CITY: LEASE HOLDER: City Manager City of Aspen 130 S. Galena Street Aspen, CO 81611 SSI Venture LLC 233 Milwaukee Street Denver, CO E. Binding Effect: This Agreement shall be binding upon and shall inure to the benefit of Lease Holder and City and their respective successors and assigns. Lease Agreement for Aspen Municipal Golf Course Page 11 F. Description Headings: Descriptive headings contained herein are inserted for convenience and reference only and shall not in any way limit or amplify the terms and conditions contained herein. G. Attomey's Fees: If legal action is brought to enforce the provisions of this Agreement, the prevailing party shall be entitled to recover its costs and expenses, including reasonable attorney's fees and expert witness fees. H. Severability: If any of the provisions of this Agreement shall contravene or be invalid under the laws of the State of Colorado, such contravention or invalidity shall not invalidate the entire Agreement, but the Agreement shall be construed as if not containing the particular provision or provisions held to be invalid, and the rights and obligations of the Lease Holder and the City shall be enforced accordingly. 1N WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written. SSI VENTURE LLC: By: The Gatt Companies, Inc., Its Manager By: "~"] } ~ ~hom~s A.~"Gart,-President ATTEST: Kathryn S. K~/~, City~lerk' -- v x,,,. By: CITY OF ASPEN, COLORADO Stev-~ffB~ick, City Manager Lease Agreement for Aspen Municipal Golf Course Page 12 EXHIBIT B COST OF LIVING INCREASE CALCULATION a) "Price Index" shall mean the Consumer Price Index All Urban Consumers (CPI-U) - U.S. City Average - All Items, or a successor or substitute index published or authorized by the United States Department of Labor, Bureau of Labor Statistics. b) The following formula shall be used for determining the adjustment, if any, in the fixed minimum annual rent: Current Index Number Base Index Number "Price Index" for the first month = of next LeaseYear "Price Index for first month of of preceding Lease Year In no event shall the CPI figure be lower than 3% or higher than 6%. January shall be the month used to calculate the figure c) As promptly as practicable after the commencement of the first adjustment year, and thereafter as promptly as practicable after the first day of each succeeding adjustment year, Landlord shall compute the increase, if any, in the cost of living for the year immediately preceding said adjustment year. Such computation shall be made by use of current and base index numbers provided for each adjustment year as set forth in Paragraph c) above. d) In computing increases for each adjustment year the current index number shall be divided by the base index number. From the quotient thereof, there shall be subtracted the integer 1 and any resulting positive number shall be deemed to be the percentage of increase of cost of living. e) The percentage of increase in the cost of living shall be multiplied by the minimum annual rental including increases for the year preceding the adjustment year for which the increase is being computed. f) The City shall, within'a reasonable time after obtaining the appropriate data necessary for computing such increases, give the Lease Holder notice of any increase so determined, and the City's computation thereof shall be conclusive and binding but shall not preclude any adjustment of the index figures upon which the computation was based and Lease Holder shall, within sixty (60) days after receiving such notice, notify City of any claimed error therein; provided, however, nothing herein shall be construed to extend the time when rents, as determined by City, are due and payable by Lease Holder. Lease Agreement for Aspen Municipal Golf Course Page 13 g) Minimum annual rent for each adjustment year, together with increases calculated in accordance with Paragraphs b) through f) of this Section 11, shall be due and payable to City in equal monthly installments due on the first day of each calendar month of each adjustment year (retroactive payments then due being payable within thirty (30) days after giving notice thereof by City to Lease Holder). Maybe paragraph IV should reference this h) If publication of the pertinent Consumer Price Index shall be discontinued, the parties hereto shall thereafter accept comparable statistics on the cost of living for the average of all U.S. cities, all items, as the same shall be computed and published by an agency of the United States or by a responsible financial periodical of recognized authority then to be selected by the parties hereto. In the event of (1) use of comparable statistics in place of the Consumer Price Index as above mentioned, or (2) publication of the Index figures at other than bi-monthly intervals, there shall be made in the method of computation above provided revisions as the circumstances may require to carry out the.intent of this Article. JPW- saved: 10/5/2004-5350-G:\john\word\agr\proshop-lease-final.doc Lease Agreement for Aspen Municipal Golf Course Page 14