HomeMy WebLinkAbout06/02/1998, 1E - GOLF COURSE FUND RATE REVIEW council M.V°°�(0-z-1 8
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CITY OF SAN LUIS OBISPO
FROM: lJ`Paul LeSage, Director of Parks and Recreation
SUBJECT: GOLF COURSE FUND RATE REVIEW
CAO RECOMMENDATION
Adopt a resolution with the following fees for Laguna Lake Golf Course effective July 1,
1998:
Senior/Youth Weekdays $5.25
General Weekdays $7.25
Weekends $8.00
Senior/Youth Weekend $6.00
10-Play Cards: Senior/Youth $47.50 for 10 Rounds of Golf
10-Play Cards: General $57.50 for 10 Rounds of Golf
DISCUSSION
Background:
Laguna Lake Golf Course (LLGC) is the only public golf facility in the City of San Luis
Obispo. The course is nine holes and classified as executive length. The players are typical of
this type of course, beginning golfers, youth, and seniors. Senior golfers account for half of
the rounds played. Golfers of Middle School and High School ages are using the course in
increasing numbers, primarily because of programs offered at the Course in cooperation with
the Parks and Recreation Department's Teens Section.
LLGC is a cost-effective operation. The course supervisor manages all operations. The 24-
acre course is maintained with two full-time workers. The 12-acres to one employee ratio is
similar to other maintenance operations in the City. All other staff is part time.
The course generates sufficient revenue ($319,000 for 1997-98) to cover operating expenses
($292,100 for 1997-98). However, there is not enough revenue to cover general government
costs. For that reason, a General Fund transfer was approved as part of the 1997-99 Budget
process.
RATE REVIEW OBJECTIVES
The objective of the rate review is to establish a fee schedule that maximizes revenue and will
accomplish the following:
Council Agenda Report - Golf Course Rate Review
Page 2
• Ensure continued operation of the course
• Establish a rate consistent with other facilities in the area
• Create an opportunity for more residents to enjoy golf
• Close the gap between overall expenditures and revenue
The key element of the 1998-99 rate structure is a modest fee increase of 25C per round.
LAGUNA LAKE GOLF COURSE FEES
Current: Pro sed:
Senior/Youth Weekday: $5.00 $5.25
General Weekday: $7.00 $7.25
Senior Youth Weekend: $5.75 $6.00
General Weekend $7.75 $8.00
Senior/Youth 10-Play Card: $45.00 $47.50
General 10-Play Card: $55.00 $57.50
The new rates will not exclude players and will help to reduce the expenditure revenue gap.
Other courses in the area, that are similar in length to Laguna Lake Golf Course, charge fees
that are almost identical. They will likely adjust their rates if the Laguna Lake Golf Course
rates change.
Staff anticipates that an annual rate increase in the 3% -4% range will be necessary in the next
three years to maintain a moderate revenue increase. Added revenue will be necessary as
several capital improvements are needed at the Course.
FISCAL IMPACT
The golf course is not generating sufficient revenue to operate as a full Enterprise Fund. To
remain as an Enterprise Fund meansit will likely continue to need a General Fund subsidy,
primarily to cover the general government portion of the Fund budget. No significant
operating changes or CIP projects are proposed for the 1998-99 Budget.
Based upon the current projection of 44,000 paid rounds per year, the fee increase would
generate sufficient funds to increase the revenue from this year's target of $319,500 to the
1998-99 level of$330,500.
As noted in the 1997-99 Financial Plan, the General Fund subsidy for the Golf Course is
projected at $61,600 for the 1998-99 Fiscal period.
The 1997-98 Golf Revenue is projected as being reduced by $15,000. The fee reduction is
because of weather conditions that reduced the green fees. No action is needed on the matter
because of the working capital brought forward from the 1996-97 Budget.
,
Council Agenda Report- Golf Course Fund Rate Review
Page 3
ALTERNATIVES
Change the status of the LLGC from Enterprise Fund to a General Fund program within the
operating budget of the Parks and Recreation Department.
As a Department program, the golf course would recover all of its direct costs and 80% of the
total City-wide cost of operation. The 80% recovery rate would be higher than any existing
department program.
There would not be a fiscal impact on the General Fund if LLGC 9s status was changed.
Again, course revenue exceeds operating costs. The General Fund supplement to the Golf
Course Fund is returned to the General Fund to cover general government costs.
Staff, particularly the Golf Course Supervisor and the Parks and Recreation Director, has been
reluctant to recommend this change. LLGC status as an Enterprise Fund creates a sense of
urgency among the staff members. Every expense is carefully considered before being
authorized.
However, there is a realization that the Course does not have the facilities to operate as a true
self-sustaining Enterprise.Fund. The major shortage is the lack of a full-size driving range. A
similar course in Ventura County generates over $200,000 in driving range revenue. LLGC
revenue from the "driving range" is $5,000 - $6,000 per year.
The Course revenue is not increasing at a level that covers the general government charges.
Additionally, Course Capital Improvement Projects and equipment replacement have been
deferred for several years. The Projects will likely be to repair/resurface the parking lot, roof
replacement for the pro shop, additional tree removals, and equipment replacement.
SUMMARY:
A modest raise in the current fee structure will increase greens revenue. Based upon recent
history (and discounting another El Nino winter), all golf course revenue will continue to
increase during the next two-year budget cycle. This increase will not be sufficient to allow
the course true Enterprise status.
ATTACEMEENT
1. Change in Fund Balance Sheet
2. Resolution
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ATU M EENT
RESOLUTION NO. (1998 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO
INCREASING THE FEE STRUCTURE FOR THE LAGUNA LAKE GOLF COURSE
AND RECINDING RESOLUTION NO. 8679 (1997 Series)
WHEREAS, it is the policy of the City of San Luis Obispo to review program fees on an
ongoing basis; and
WHEREAS, those fees are adjusted as required to ensure they remain equitable and
adequate to cover the cost of providing services; and
WHEREAS, a comprehensive analysis of the Golf Course Fund was performed for fiscal
year 1998-99.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Luis
Obispo as follows:
SECTION 1. Resolution No. 8679 (1997 Series) is hereby rescinded, effective July 1,
1998.
SECTION 2. The following green fees shall be as follows, effective July 1, 1998:
Senior/Youth weekdays $5.25
General Weekdays $7.25
Senior/Youth Weekends $6.00
General Weekends $8.00
Senior/Youth 10-Play Card $47.50
General 10-Play Card $57.50
SECTION 3. The fees for the driving range, wholesale goods, lessons, and other special
activities shall be set by the Parks and Recreation Director and the Golf Course Supervisor.
Upon motion of , seconded by , and
on the following roll call vote:
AYES:
NOES:
ABSENT:
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the foregoing resolution was adopted this day of , 1998.
Mayor Allen Settle
ATTEST:
Bonnie Gawf, City Clerk
APPROVED AS TO FORM:
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