Consideration and Approval of Contract:   Approval of Lease Agreement for Red Gap Ranch Grazing.  (A lease for grazing sheep on Red Gap Ranch).

Accept the bid and approve the Lease Agreement with Manterola Sheep Co., Inc.  Leasing this space will provide a multi-use opportunity for the City's Red Gap Ranch, discourage vandalism by having the ranch occupied, and maintain property infrastructure relating to wildlife and the chosen livestock.

Subsidiary Decisions Points: 

None.

The City will receive compensation at the rate of $5,150 annually to help offset the City's costs for its lease with the Arizona State Land Department (ASLD).

1) Repair, Replace, Maintain infrastructure maintain fencing & animal watering infrastructure.

The City Council approved Manterola Sheep Co., Inc., for a 5-year greasing lease in 2007 and for a renewal in 2012 that ended when the City's 10-year lease with the ASLD ended on December 30, 2013.  The City now has a new 10-year lease with the ASLD that started on December 31, 2013, and ends on December 30, 2023.  This allows the City to once again sublease the Red Gap Ranch property with the inclusion of the ASLD property, allowing legal access to the City's property. 

1.  Accept the bid and approve the Lease Agreement as presented.
2.  Reject the bid and provide staff guidance.
3.  Reject all bids.

The City maintains two leases on the Red Gap Ranch.  One is a grazing lease with the ASLD allowing the City access to adjoining ASLD properties.  ASLD staff have indicated that if full use, in this case grazing use, is not utilized on their land and charged to the City, they may select another lessee who is willing to pay for full use of their lands. The City could then have difficulty accessing the Ranch property.  The second lease the City has is with its customer.  The City's previous grazing lease with Manterola Sheep Co., Inc., from February 20, 2007, to February 20, 2014, had an annual rental fee of $4,887 when the maximum number of animals were placed on the land. Fewer animals grazing resulted in a lower fee as it was based on a fixed rate per animal. This fee was due November 1 each year.  The years the Ranch was not used, payment from Manterola Sheep Co., Inc., was not collected per the lease agreement. The new agreement has a fixed fee of $5,150 and no refund is given when the site is not used or when the number of animals placed on the property is less than the maximum amount in the agreement. This fee can assist in covering the City's cost of about $3,900 annually to lease the land from the ASLD and to maintain the infrastructure including, but not limited to, signage, staff time, pumps, water tanks and livestock water usage.

The grazing agreement the city has with the ASLD allows the City to lease to its own customer the ASLD property adjoining the City's Red Gap Ranch.  This site can be leased for other activities during the term of the lease with Manterola Sheep Co., Inc.  This lease would permit Manterola Sheep Co., Inc., to place livestock on the property from May 1 to November 1 each year to reduce any overgrazing and subsequent damage to the lands.  The quantity of sheep is limited per the agreement the City has with the ASLD for the parcels they own adjacent to City property.  This ASLD agreement allows travel across their property to the City property at Red Gap Ranch.

An Invitation for Bids (IFB) Number 2014-71 was issued on June 15, 2014.  One (1) responsive and responsible bid was received by the due date and time.  The IFB instructions indicated that an annual bid minimum was to be met of $4,200.  The one (1) bidder has exceeded this bid minimum.  The Lease Agreement provides for "Year Terms" meaning the period of time from May 1 to November 1 of any given calendar year.  The term of this Lease Agreement shall be for an abbreviated pro-rated period from September 9, 2014 to November 1, 2014, and then a one (1) Year Term from May 1, 2015 to November 1, 2015 with an option for a five (5) year extension (five one Year Terms through November 1, 2020) upon mutual agreement of both parties.  The Lease Agreement does include an escalation section. 

This site will have multi-use opportunities by accepting this grazing lease.

Inform

1. Accept the bid and approve the Lease Agreement as presented.
2. Reject the bid and provide staff guidance.
3. Reject all bids.