City to negotiate lease extension with Golf Center
Posted April 16, 2014
ROYAL OAK — The City Commission unanimously authorized city staff April 7 to begin negotiating a contract extension with Golf Village of Royal Oak LLC, the company that runs the driving range and miniature golf course known as Royal Oak Golf Center along Coolidge Highway, just north of 13 Mile Road.
Ed Doyle and Brian Ashley, owners of the golf center, requested a 15-year lease be added to the end of its current 18-year lease, which is due to expire in 2018.
A new contract, which the commission would have to approve, would place Golf Village in charge of the recreational facility through 2033.
In return, the company says it will reinvest about $700,000 into the facility by the year 2018.
The projects include expanding the number of sheltered tee lines, which will make the driving range more of an all-season destination. Further, Golf Village says it will put $30,000 toward the repair of the Golf Center parking lot, as long as the city puts up the rest of the money.
Doyle said the company has invested more than $1 million into the facility.
“When we first got involved in the property, it needed a lot of investment,” he said. “Really, the gist of our proposal is that we want to continue to do that.”
Currently, Royal Oak annually receives a minimum of $40,000 per year or 12 percent of the gross revenue, whichever is greater, from the Golf Center, said Greg Rassel, the city’s Department of Public Service director.
During the last 13 years, the deal has netted the city $1.4 million in rent.
Commissioner Kyle DuBuc called the potential upgrades “exciting,” but he said that during the renegotiation process, both the city and Golf Village should keep in mind that the city could have gone out to other vendors to run the property who might be willing to give the city a higher percentage.
“If we’re going to stick with you instead of going out with (a request for proposals), I think that’s important to keep in mind,” DuBuc said.
Doyle said that if the investment brings in more people, it will provide more money for the city.
“If we’re right about that and we’re right about the demand, the city will benefit because we’re going to generate more revenue,” he said.
That led some commissioners to ask why Golf Village believes demand for their driving range will grow while the number of holes played at the city’s two municipal courses have decreased.
Doyle said that the Golf Center is different because people don’t have to dedicate a large amount of time to visit a driving range, and they have not experienced the decline that the golf courses have experienced.
“We have not really seen that,” Doyle said.
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