In a letter dated January 12, SG Golf Management informed the City of Devine of its intention to terminate the contract between the entities effective February 28.
The letter is reproduced in full at the end of this article.
The move comes on the heels of a 3-2 City Council decision in December 2021 rejecting proposed contract amendments that would have limited the scope of the financial statements that SG Golf is required to turn over to the City (see “Council votes down changes to SG Golf contract 3-2” in the Dec. 22, 2021 edition of The Devine News). District 2 Councilwoman Angela Pichardo, District 3 Councilman David Espinosa, and District 4 Councilwoman Kathy Lawler voted against the amendments, while District 1 Councilman Rufino “Flipper” Vega and District 5 Councilwoman Debbie Randall voted for it.
According to the contract, the agreement can be terminated by mutual agreement. The contract states, “Upon proper termination of this Agreement, SG Golf Management shall vacate the Golf Course and transfer all contracts, licenses, unearned accounts receivable, furniture, fixtures, and equipment to the City and assist in the orderly transfer of the operation to the City or the City’s contractor for management.”
SG Golf Management took over day-to-day operations of the City-owned golf course on January 1, 2020, following Council’s 3-2 decision in Dec. 2019 to approve the contract and enter into a management agreement. Espinosa and former District 2 Councilman Steve Lopez voted against the contract, while Randall and former District 4 Councilwoman Jennifer Schott voted for it. With former District 1 Councilman David Valdez absent, Mayor Cory Thompson cast the tiebreaking vote in favor of the contract. Thompson and SG Management’s Scott Grego signed the contract on Dec. 13, 2019.
The contract calls for the City to pay SG Golf Management $32,536 a month for six months, or until the turnkey renovation of the clubhouse is complete. The cost of that renovation, which has a certificate of substation completion but is not yet turnkey, has exceeded the $450,000 tax note Council approved in order to pay for it.
As of Jan. 10, the City has paid SG Golf Management $813,400. SG Golf Management has also kept all of the revenue generated since assuming daily operations of the course.
In return, SG Golf Management is required to provide financial statements to the City, including its employers quarterly report, Texas Workforce Commission quarterly report, Federal unemployment tax report, and income tax returns; monthly statements, within 20 calendar days after the close of each calendar month, showing the course’s financial activities for the preceding calendar month and the calendar year to date; and annual statements, within 60 calendar days after the close of each calendar year, showing the course’s financial activities for the calendar year then ended.
The contract also calls for SG Golf Management to “maintain a complete set of all financial, vendor, employee and operating records relating to the Golf Course,” and that the City “shall have the right, to inspect the books, records, invoices, deposits, canceled checks, or other financial data or transactions of the Golf Course” during normal business hours and at reasonable times during the term of the agreement. Additionally, SG Golf Management “will promptly turn over all such records or copies of such records to the City” in the event of the contract’s expiration or termination.
The City also has the right “to engage an independent auditor to audit the financial activities of the Golf Course.”
Questions about SG Golf Management’s compliance regarding financial statements were raised during the June 2021 Council meeting. Grego refused to turn over the required financial statements and instead requested contract amendments limiting those requirements. Council voted 4-1 to consider amending the contract (see “Grego refuses to comply with City golf course contract; no audit ordered on how half-million dollars was spent” in the June 23, 2021 ed. of the News).
Council then rejected proposed changes in Dec. 2021.
The contract between the City and SG Golf Management can be viewed on the News website at devinenews.com/devine-golf-course-contract/.
The Regular Council meeting scheduled for Jan. 18 was canceled at the request of the City’s health authority, Dr. Richard Neel, due to COVID-19 cases (see separate story). It had not been rescheduled as of press night.
The next Regular meeting is scheduled for February 15.
Letter from SG Golf Management
“January 12, 2022
“City of Devine,
This letter is the inform the city that, with deep sorrow, SG Golf Management will be resigning from the management agreement we have with the city of Devine to run the Devine Golf Course. Because of the current political climate, we don’t believe that the City of Devine will be able to abide by the agreement and will agree to a Mutual Termination as per the terms of the Agreement.
“We will vacate the golf course by February 28, 2022. Keys will be delivered to city hall by end of business day Monday February 28, 2022. We will continue to run and maintain the golf course to the best of our abilities as we have for the last 2 years until that date.
“We will work with the city as to switching all the accounts back into the cities name. We will be removing everything purchased by SG Golf Management and leave everything that was left by the city of Devine when we assumed the property January 1, 2020. Enclosed is the check for $2200 given to SG Golf Management for the purchase of glassware.
“We would like to thank Mayor Thompson, Councilwoman Randall, and Councilman Vega along with many of the citizens of Devine for their trust and support during this veture.
“Sincerely, Scott Grego, Shirl Grego, SG Golf Management”
By Marly Davis