09/03/1980 - Laserfiche WebLink

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CITY COUNCIL MIWJfES - September 3, 1980 E. SPECIAL ORDERS: 1. Adobe Creek Country Club Contract of Sale Mayor Nystrom stated that the Council would now review the agreement previously entered into with David Bellucci, Sr. concerning the acquisition of the Adobe Creek Country Club property. On Decenher 5, 1979, the Council had entered into the agreement which required, anong other things, that a California non-profit corporation be formed by January 18, 1980, and the initial Board of Directors appointed. This requirement had been complied with and Adobe Creek Recreational Facilities, Inc. formed. An initial Board of Directors consisting of three persons was appointed. The escrow for payment of the purchase price was provided to be closed within thirty days after the receipt of proceeds from the sale of bonds, or within one hundred and twenty days of the initial offering for sale of bonds, or September 5, 1980, whichever first occurred. The Town Administrative Staff and its attorneys had been studying the proposal to finance the purchase of the property by the assignment of the agreenent to the non- profit corporation and the offering by the con -profit corporation for public sale of the revenue type bonds. Specifically, there had been studied whetter tax exenpt revenue type bonds may in fact be offered for sale and issued for the type of oper- ation proposed. The second important question was whether, in view of the present financial market, it would be possible to sell the Lends. A parallel study hal been conducted to ascertain whether in fact sufficient incone could be generated frcm the operation of a tennis facility to service the bond debt and pay the oasts of operation. The ability to issue and sell bonds hal been the subject of a study by the firm of Rutan & Tucker. Stanley Wolcott III, representing the firm of Rutan & Tucker, presented their findings to the Council. He oannented briefly on the Lend market conditions; the intrinsic financial difficulty in the enterprise itself, and the question "was this really a public purpose type of facility?" Mr. Wolcott concluded his statement with the following: "It is our overall conclusion .that the financing of the project, as it is new contemplated, is not feasible by reason of the failure thereof to qualify as a tax exempt financing." (Rutan & Tucker's opinion letter dated May 29, 1980 is on file at Town Hall.) The City Manager gave a summation of the reports the City had received frau the firm of Harris, Kerr, Forster and Company, whrn had been retained by the City for financial consultant services. In their report on Market Demand for Facilities at Adobe Creek Country Club, the City Manager noted the following conclusion: "We are of the opinion that the Adobe Creek Country Club, located in los Altos Hills, California, is well suited for the operation of a private recreational club." In Harris, Kerr, Forster & Company's Statement of Estimated Inane and Expenses for the Adobe Creek Country Club, the concluding evaluation was as follows: "The activity level needed for Adobe Creek to break-even in its early years is likely to be too high to coexist with the Club. The high volume of persons and functions would tie up the Club's facilities and make them generally net available for the members. Our research indicated that this was a common oauuplaint of many former members against the management and operation of the Club prior to its closing." -3-