characteristics which require the provision of services by formal and or informal service providers. just to briefly summarize the intent of the linkages program which we're also asking for your consideration is to prevent premature or inappropriate institutionalization of function lale impaired adults 18 and old are by providing intensive case management, care planning and monitoring and follow-up and comprehensive assistance and services. finally, the basis for the community fund living program is intended to reduce unnecessary institutionalization, providing older adults. untense dwriff case management and purchase of services to avoid institutionalization of seniors and adults with

disabilities. i'll now hold my report in advance and respond to questions the chair or members may have. >> thank you very much. let's hear from mr. rosen. >> mr. chairman, members of the committee, given that these agreements would begin july 1, i recommend that you amend for retroactivity and based on the r.f.p. process we recommend you approve as amended. >> very good. thank you, mr. rose. i just have one question, pretty simple one. that is i notice these contracts have different terms and what is the reasoning behind that? >> the reasoning behind sit under -- we do receive a level of state funding for linkages and case management. the maximum allowed by the grantor is a maximum of three-year term with a one-year option where we have more flexibility for a maximum five-year term for community living fund. >> that will go to 2015 with the extension. >> yes.

>> okay. we can open up this item for public comment. any member of the public who would like to comments on number one please come forward. seeing no one come forward, we'll close public comment. motion to approve from supervisor maxwell and we can take that without objection to the full board. >> the further amendment for retroactivity. >> we'll except the recommendation as we move forward as when. without objection, colleagues. we're done. mr. young, if you could please call item number two. >> item number two, resolution authorizing the, entering into agreement with the tournament players club of california for management of clubhouse and golf course at harding park and fleming park, excluding operations. >> good morning, supervisors.

this morning i have the pleasure of presenting to you a management agreement between the city and the tournament players club of california, a wholly owned subsidiary of pga golf courses for the operation of harding park club and golf house. the city and the pga tour have a master agreement which will bring a total of six international golf tournaments to harding including the amex cup in 2007, last year's president's cub and the shjuan cup later this fall. similar to the america's cup, each of these events has a significant impact on the city. the president's cup alone brought in $80 million in economic activity in to the city in 2009 on top of the 28 hours of international television coverage that displayed our city to 550 million households in 235 countries. events such as this would make harding one of the top three public golf courses in the country. right along with torrey pines

in san diego and beth page in new york. both of which have hosted the u.s. open. when we opened or the newly renovated harding we all thought we had a gem of a public golf course on our hands but i don't think we expected it too become the international tax breaks while it is. while kemper, our current manager of the golf course has done an excellent job managing the facility the past seven years we've learned some lessons along the way with the help of the board's budget analyst and several community members about -- that have helped us shape the agreement before you today. we think that the agreement that you have before you is in many ways a significant improvement over the existing agreement. and we've tried to actually learn and benefit from the golf course that we have which is one of the reasons that we decided not to extend a contractual option to continue kemper but rather to put the course out for bid to see how much better we could do. and we think we've done a lot

better. first and foremost in partnering with the tbc and pga golf courses we're hiferinge a manager that is synonymous with the name of golf. the added exposure will not only increase the harding park brand but generate additional revenues for local hotels and restaurants. as my staff will discuss, the ttc will receive no management fee but only an incentive fee, a savings of over $290,000 a year. it's important to note that the tbc and pga are so interested in becoming affiliated with harding they're willing to do so with no guarantee of receiving a penny of revenue. the tpc and the pga is not as economic. but it is rather inin sharing a grand brand and maintaining a course that has become an incredible treasured asset for the city and the game of golf. in parning with the tpc it is

reassuring to know we will be working with a manage deeply committed to public golf and as committed to keeping the golf course maintained by our own employees. in fact, even before the tpc was selected to manage the golf course, the pga had placed a renowned agronomist at the course to provide training and expertise and some leadership to our city staff on site in the -- some of the finer course of golf course agron onlyy and maintenance at no spence to the city. if you look at harding at the moment you'll find two things. the course has actually never looked better and we think staff morale has actually never been higher among our gathered first and maintenance staff. -- gardeners and maintenance staff. i was out there a couple of weeks ago and i was stopped repeatedly by my own staff who said how guide they were about what was happening at harding and how appreciative they were of the relationship we've cult

state vathed with the pga. we are doing quite well out there. i'm also very excited that tpc is committed to partnering with the first tee program. the first tee teaches children not only about the game of golf but promotes character development and leadership values. over the years at harding the first tee has worked with countless at-risk youth and given them the opportunity not only to participate in athletics but to learn more about themselves. so we're very excited about the agreement. nick kensgri my staff is here to walk you through the details and we will take questions you have, but i want to take a moment to thank, we're blessed to have sandy tatum in the crowd today who has worked tirelessly at harding over the last 10 years to create the harding park we know and love and i did want to single him out and thank him for being here today. i'll turn it over to nick kinsey who will walk us through the agreement.

>> good morning, supervisors, nick kinsey, the assistant manager of concessions, we do have a power point presentation here. >> you're a little tall. if you want to speak more directly into the mike. >> i'll try. but we'll need an extension. thank you, supervisors. as general manager ginsburg said the general manager before you is a management agreement between the city and tournament players club of california for the management of the harding park golf course. to give you a little bit of background, seven years ago the city signed an agreement with kemper management for the management of the facility and as general manager ginsburg said that agreement actually had a two-year extension which the department felt that we could put this out to bid and perhaps obtain better financial

terms for the city. so in february of this year we put out a request for qualifications soliciting bids to manage the golf course and we received five timely, responsive bids, ultimately the department and our commission selected the tournament players club of california as the highest ranked respondent and we have since negotiated the management agreement that's before you 3. to give you a little bit of background about the tpc they're a wholely owned subsidiary of the pga golf course properties, incorporated and they're focused on the tournament caliber golf courses. as the general manager said, that's their interest in managing harding. a property over the last decade or so has become one of the premier public golf courses in the nation and they're very interested in obviously managing such a course. nationwide they manage 30 premium golf courses including

a number of public premium golf courses and according to the pga estimates, affiliated with the network increases revenues at the course by 10% in addition to strengthening the course brand and they are very committed to retaining affordable local golf courses. the management agreement you have before you is a nine-year, three month contract which sounds a little bit odd but that would make the agreement coterminus with the master tournament agreement between the pga and the city of san francisco. and that would expire in december 31, 2019. similar to the existing agreement with kemper, all course maintenance would continue to be performed by city staff. this was an important point for the department. we have 30 gardeners and laborers on site and we wanted to make sure they were retained and that work continue to be provided by city staff.

the tpc would receive no annual management fee. this is in deference to the 192,000 dollars that kemper receives and i think that this is one of the things that we learned over the intervening years, really the value of this course and that we could solicit a partner to manage this course at a lower rate than what we had onlyly been receiving. a lot of that as general manager ginsburg said was because of the nature of this course that it is indeed one of the best public courses nationwide that people want to attach their brand to this course and that's something that we could frankly take advantage of. the tpc would receive incentive fees equal to 25% of all net operating revenues above the budget amount set forth in the approved budget. basically it should,, the revenues exceed the tpc's

budget by -- should the revenues exceed the tpc's budget for their portion of the course budget, they would receive 25% of that surplus with the department receiving the additional 75%. and then additionally there would be a second incentive fee that would be equal to any -- to 25% of any positive net operating revenue for the entire golf course budget and again, that the department would receive the other 75%. of the budget. i think this is one of the most important lessons we learned. currently, the incentive fee is calculated as kemper receives 6% of all operating revenues above $6 million. and so that's not necessarily tied to their performance, every time we would increase the fees for example which we have done on a few occasions over the last seven years, they reaped the benefit of that. so we thought by calculating the performance -- the incentive fee in this manner it

more closely tied their incentive fee with their performance. under the terms of the agreement the tpc will be responsible for supervision of all golf activities, collecting green fees, registering players, scheduling tee times, daily and tournament reservations, providing golf instructions, operating the the pro shop, clubhouse restaurant and bar and partnering with the first tee program to provide activities and programming fauria at-risk youth. that's something very important to the department to have a significant presence in the southeast section of the city and we're very excited about that, that they're reaching out to children throughout our city to try to teach them not only the game of golf but the leadership and positive values that they are. and then again it's important to note that the city's responsibilities will remain exactly the same. the course maintenance will be continue to be performed by our

30 gardeners and we are maintaining the same maintenance standards that are currently -- the city is currently maintains the course by. just to give you a brief financial comparison of the existing contract and the proposed tpc contract, in fiscal year 09-10 we paid $223,000 to kemper. under this contract had been in place in fiscal year 09-10 we actually would have paid no fee to kemper. in -- or to tpc would have paid no incentive fee. in 08-09 we paid $277,000 to kemper. if this contract were in place then, we would have paid no payment to tpc. then in 2007-2008, the total fee to kemper was $284,000. if the contract had been in place with tpc we would have paid $105,000 such that over

the last three years where we paid $786,000 to kemper if this contract were in place we would have paid $105,000 to tpc for a total savings to the city and rec-park of $681,000. projecting it forward the next three years, we would expect annual savings in 10-11 of $265 -- annual savings in 10-11 of $265,000 annual savings in 11-12 of $256,000 and annual savings in 12-13 of $232,000 for a total of $754,000 projected savings over the next three years versus if the existing contract were to continue to be in place versus implementing the tpc contract. the budget analysts i'm sure you'll hear from them in a second estimates over the

nine-year contract this could save versus the existing contract over $2.3 million. to the department. >> supervisor maxwell? >> could you give me an example in numbers on what the incentive would look live, the 25 -- the annual net operating cost? an example in numbers what that would look like. >> yes. one second, supervisor. okay. so for -- essentially for the harding course, the harding course budget we have two pots of money. we have a pot of money that is the -- that is the entire course budget, that includes the course maintenance as well

as -- the course maintenance performed by city workers and the pot of money that is expended by the tpc or currently kemper but hopefully in the future tpc on the city's behalf. so we have tied incentives to both of those pots of money. on the first case for the pot of money that's expended on the city's behalf by kemper if we were to budget -- i'm sorryry, currently by kemper, under the proposed contract by tpc, if they -- that current budget for fiscal year 10-11 is $3.287 million. if that were to go to let's say -- if they were to bring in $ 3.5 million of revenue this year, they would then keep 25% of the delta between the budgeted operating expenses and budgeting revenue and the actual. so in that instance, that would be a difference of

approximately $213,000, so we would keep just -- tpc would be given an incentive fee of just over $50,000 with the department receiving a 75% unexpected surprise of approximately $1245050,000. in each case they do receive -- $150,000. in each case, it's important to note we're still getting 75% of that unexpected amount of money for the fiscal year. the same could be said for the entire budget. this year that course for 10-11 the total revenue is $8.1 million. if we were to bring in $8.5 million in revenue, we would split that with tpc and they would receive an incentive payment approximately $100,000 with the department receiving approximately $300,000 in unexpected good knew, so to speak. >> thank you.

>> mr. kinsey, if you could continue. >> i was done. >> you're done. okay. let's hear it from mr. rose, the budget analyst. >> mr. chairman and members of the committee, you can see there was an r.f.p. process on page 2-3 of our report and pga tour or tpc had the highest score, 476 points. and as a department -- the department has stated under this proposed agreement there would be no management fee, there would just be the incentive fees and they are described on page 2-4 of our report and on page 2-5 based on data provided by the department, we have extrapolated over the 9.25

years and from a financial standpoint this looks like an excellent agreement for the city in that the rfpd would save about $2.3 million over the 9.25 years, when you compare it to kemper. so under the kemper -- if you look on that table two, kemper would have been paid about $2.9 million. the tpc would be paid about $644,000, $645,000, that's a savings of $2.3 million, a 78.3% savings. actually we only have one question on this agreement, and that is on page 6 of our report should their is a new arbitration and termination provision. interestingly, this provision is not in the existing tournament -- master agreement with the rpd and what this agreement effectively states is

that the city cannot reduce its maintenance expense at the golf course from one year to the next. and our take on that is we feel that this is unan unnecessary provision. we feel that if the city becomes more efficient, the city should benefit from that efficiency as the city has done in numerous cases. and we don't understand why there has to be a termination provision in this agreement unlike the existing agreement with kemper or unlike the existing agreement with the master agreement. however, we conclude on the bottom of age 2-7 that because it would be an overall savings of approximately $2.3 million which we estimate, so from that standpoint we consider this to be a policy matter. we're saying from a fiscal standpoint just on the savings this agreement is excellent and we have just the one question about the termination provision.

>> harvey? >> a couple questions for you. you made the point that the arbitration language is not in the tournament agreement. that said, the arbitration language is referring to maintenance standards. >> right. >> it's those maintenance standards that are in the tournament agreement. correct? >> supervisor, we totally concur that the city -- this is an outstanding golf course, that the city must maintain to the pga standards. so we're in agreement with that. >> and i guess the point i'm just trying to make these maintenance standards are not new. it's not as if the -- >> absolutely not. all that we're saying is if the city can maintain the standards up to the pga standards, and at the same time reduce their budget for whatever reason, they get new equipment for example, why shouldn't the city benefit in that efficiency? >> the question i have, current under the kemper contract, how

are we codifying the pga standards that we're trying to meet as a city? >> i'll defer to the department, mr. chair, but i can tell you there is no termination provision like this in that kemper agreement. >> now we have a dollar amount based on what the standards -- the dollar amount versus actually standards of how we're going to do the maintenance of the courses. >> that's my understanding. and our only point is that we agree that the city should be obligated to maintain the course up to the pga standards, but the city should not be penalized if they become more efficient. >> one other point we talked about yesterday. you said the city cannot drop below this number. but that's not accurate. if the city chose to, it absolutely could. what would happen is we could go to arbitration and the manager if they so chose could leave and we would just issue

an r.f.p. and find a new manager. when you say the city can't do this, that's not accurate. the city absolutely has every right to do it if they so choose. we just have to do it eyes open knowing we may have to go through at r.f.p. process and find another manager. >> supervisor, that is absolutely correct. our point is that it is in our judgment an unnecessary provision in the agreement and it does not -- it would be in the city's best interest if they could become more efficient to be able to reduce -- if they can reduce expenses by becoming more efficient there should not be this termination agreement but you are absolutely correct in that if the city did reduce expenses they have the right to terminate and as you say, we could go out for a new r.f.p. process. i totally agree. >> we all approve contracts, so -- with similar language that we're going to potentially back out of them if something is not

performed. that's something that can happen but it's not something we go in eyes wide open to do. so i feel somewhat uncomfortable with that. my question about the kemper standards, what are the standards right now we have in place for the city to -- to meet. how do we know we're meeting those standards under the kemper contract, and now we have a standard that seems to be different based on a dollar amount. >> with the kemper contract i don't believe that was specifically a provision of the agreement with kemper. there are maintenance standards in the master tour agreement but frankly, other than the pga making a decision not to hold tournaments at harding, there is no enforcement mechanism in the provision which is one of the reasons, this was a deal point frankly pushed by the pga. they are doing this on a nonprofit basis, even their incentive payments they're interested in giving that money to the first tee and various charities. >> they have other agreements related to harding about the fees that are paid there, that

are about meeting certain standards for the pga. and so it seems like another layer that's on top. i'm wondering if it's necessary. >> again, this was the product of a negotiation with the pga. and what this provision basically says, supervisor, is that if we -- we can become more efficient under this agreement. but we have an obligation to maintain the course standards. so if we decide -- we can reduce our staff, but if we reduce our staff and don't meet the tour standards, then the pga can basically put us on notice you've reduced your staff and we don't think you're meeting the course maintenance standards and if we disagree, then in arbitration provision is is what resolves this. it gives them an opportunity to say look, if you're not going to meet the course standards, we're not interested in managing the golf course for free. and by the way, it also gives us the ability to make a policy decision.

right now there has been a policy decision made by the city, by this board, by the mayor to -- to meet these maintenance standards so that we can have these first-class tournaments at harding. >> my concern is if we're reducing staff that's going to be what the standard is. and there's no other mention of what the standard is. the dollar amount and i guess it could be measured in staffing. and then that would be -- give tpc the ability to -- >> the tour -- we do have maintenance standards referenced in the agreement to the master tour agreement. it includes course maintenance standards. so what the provision is saying is that if we don't -- if we reduce our staff, and we don't meet the maintenance standards, then there is the ability to actually seek the dispute resolution process. >> mr. chairman, members of the committee, first of all the city doesn't have to reduce staff to become more efficient.

it doesn't have to be a reduction in staff. it can be, for example, equipment that is more economical. or a variety of things. so it's not necessarily staff. but let me read you the exact provision that's in the agreement. this is on page 2-6. if the annual r.p.d. course management budget is decreased by an amount less than 15% and the tpc, quote, reasonably determines -- in fact, that provision by itself raises a question, what does that mean? if the tpc reasonably determines, not the rpd. that the city cannot meet the master term maintenance standards, tpc can initiate a binding arbitration process which could result in tpc being given the right to terminate the proposed agreement with rpd if the arbitrator agrees with the tpc's determination that the city cannot meet the master

turnlt maintenance standards. and the second provision is if the annual course maintenance budget is decreased by 15% or more and the tpc, again, quote, reasonably determines, end of quote that the city cannot meet the master tournament maintenance standards, tpc has the right without arbitration to terminate the proposed agreement with rpd. this is a significant savings to the city if you approve this agreement. 78%. we acknowledge that. we just feel this provision is unnecessary and unwarranted. >> supervisor elsbernd. supervisor maxwell? >> it seems to me that this is something that can be managed. and -- because i, too, have a concern, it's almost like somebody is dictating to us what we need to do and not