HomeMy WebLinkAbout05/31/2007, BUS 1 - LAGUNA LAKE GOLF COURSE FUND RATE REVIEW r�
council
j acEnaa Report
C I TY OF SAN L U IS O B I S P O
FROM: Betsy Kiser,Parks & Recreation Directo
Prepared By: Linda Fitzgerald,Recreation Manager
SUBJECT: LAGUNA LAKE GOLF COURSE RATE REVIEW
CAO RECOMMENDATION
As recommended by the Parks&Recreation Commission:
1) Review and discuss the 2006-07 annual golf fund financial and rate review
2) Conceptually approve the proposed operating program changes and capital improvement
plan requests contained in the 2007-09 Financial Plan, pending final review and adoption on
June 19, 2007
3) Authorize General Fund operating transfer for $414,400 for 2007-08 and $271,700 for
2008-09
4) Adopt a resolution approving the following fee increase, effective July 1, 2007: Add Friday
to the weekend rate, therefore increasing the first nine-hole rate for Fridays by$1.00.
DISCUSSION
Assumptions
The Golf Fund financial and rate review (see Attachment 1) is based on the following assumptions:
1. Golf play throughout the Central Coast remains belownormal, yet Laguna Lake Golf
Course (LLGC) remains one of the few locations where rounds played continue to increase
as shown in the chart below:
Fiscal Year Rounds Played Percentage Increase
04-05 40,700
05-06 42,600 4.46%
06-07 (projected) 45,100 5.54%
07-08 (projected) 46,500 3%
08-09 (projected) 147,800 3%
Growth can be attributed to the excellent conditions of the greens and fairways, golf cart
availability, and expanded marketing. The First Tee program continues to be a focal point
in bringing a new generation of golfers to the course.
Council Agenda Report—Laguna Lake Golf Course Fund Rate Review Page 2
2. Infrastructure needs over the past two years have increased the cost of operating the course,
and have included the following:
a. Two wells, which are relied upon to reduce the amount of potable city water used,
had both pumps fail over the past year, which contributed to an unexpected increase
in utility costs (city water) and associated repairs.
b. The pro shop furnace needed replacement after extended years of service.
C. Severe frost this past winter caused the destruction of a major and costly cla valve
(to reduce water pressure), which subsequently had to be replaced-
d.
eplacedd. The irrigation system controls are over 20 years old and in need of replacement.
Staff continues to spend a great deal of time making repairs and working with older
equipment.
e. A leak found under the men's restroom resulted in re-piping the building.
3. Costs for most daily operations remain stable and are expected to increase by 3% annually.
Significant increases for utilities: water, sewer,electric—will range between 4% - 15% more
in operating costs.
4. The golf cart fleet, all of which are older, donated units, will be replaced with 8 new leased
vehicles. Annual costs are expected to be approximately $6,500 with a related offset in
revenue as two additional carts will be available for rentals.
5. The anticipated Cingular cell tower lease is not expected to occur until 2008 at the earliest.
Revenue projections for the second lease will begin in 2008-09.
6. A 3% increase in green fee revenue is projected for 2007-08 and 2008-09, based upon the
assumption that there will be continued growth in the number of rounds played in those
years.
Rate Review Objectives
The objective of the rate review is to establish a fee schedule that maximizes revenue and ensures
the continued operation of a safe, attractive and reasonably priced course with an emphasis on
senior and youth services. Keeping in mind that fees were increased last fiscal year, staff looked for
a means of enhancing revenues without having a significant impact on the community, especially
for seniors and youth.
Golf program fees and rates should fully cover direct operating costs. Because of the nine-hole
nature of the golf course and with its focus on youth and seniors, subsidies from the General Fund to
cover indirect costs and capital improvements may be considered by the Council as a part of the
Financial Plan process, along with the need to possibly subsidize direct operation costs as well.
As reflected below, the only proposed change is to reclassify Fridays to the higher weekend rates for
the first 9 holes. Staff reviewed use data for the course and found that each year over 6,000 rounds
are played on Fridays, with approximately 60% of the rounds played on that day paid for at the per
round rate. In reviewing best practices, staff found that at most courses Friday green fees are
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Council Agenda Report—Laguna Lake Golf Course Fund Rate Review Page 3
considered as weekend rates. By extending the LLGC weekend to cover Friday, Saturday and
Sunday, the course could generate an additional $3,600 annually without raising rates for the other
levels of play. The recommended fees are as follows:
LAGUNA LAKE GOLF COURSE FEES 2007
(changes identified in bold)
Current Rate Current
2°d 9-holes
Senior/Youth/Student/Weekdays $6.75 $4.50
(Monday through Thursday)
General Weekdays $8.75 $4.50
(Monday through Thursday)
Senior/Youth/Student Weekend $7.75 $4.50
(Friday through Sunday)
General Weekend $9.75 $4.50
(Friday through Sunday)
Senior/Youth/Student 10 Play $60.00
Card
General 10 Play Card $75.00
Twilight Rate $6.00
Rates will remain comparable to the 9-hole Pismo Beach Golf Course and below those at Sea Pines
Resort in Los Osos.
Significant 0ratinProgram Changes and Capital Improvement Plan(CIP)Protects
Significant Operating Program Changes:
1. Replacing two greens mowers will cost $9,000/each in 2007-08. Replacing one greens
mower will cost$9,000 and a dethatcher will cost$5,000 in 2008-09.
2. Leasing eight golf carts will cost$6,500 annually.
Supporting documentation for these requests is provided in Appendix A of the Preliminary
Financial Plan.
CIP Projects:
1. Replacing the Laguna Lake Golf Course pro shop roof will cost$35,000 in 2007-08.
2. Purchasing a central controller, satellite stations and software for irrigation repairs and
upgrades at Laguna Lake Golf Course will cost$66,000 in 2007-08.
3. Replacing one utility cart and attachments in 2007-08 will cost$38,300.
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Council Agenda Report—Laguna Lake Golf Course Fund Rate Review Page 4
Supporting Documentation for these requests is provided in Appendix B of the Preliminary
Financial Plan.
Note: no capital projects are proposed for 2008-09.
Special Comment From the CAO
Government owned golf courses are often expected to be self-supporting. This is because, unlike
other publicly supported recreation programs, golf courses are often viewed as serving a narrow
population of higher income persons. However, this is not the case with respect to Laguna Lake
Golf Course.
Our course serves a population that is largely comprised of senior citizens, children, college
students and others who would not, or could not, routinely use more sophisticated and "pricey"
golf courses. In addition, our course provides a unique "island of green" in an urban setting. In
this respect, the course serves as an amenity for the entire community, as well as a recreation
venue for many who could not afford golf recreation elsewhere. Therefore, the General Fund
transfers are reasonable, and consistent with our recreation program cost recovery policies.
The recommended transfers are fairly substantial, particularly in 2007-08. However, for many
years, the golf course has been maintained on a "shoe string" augmented by the extraordinary
commitment of golf course staff — staff that has even purchased equipment from their own
personal resources to support the course. The proposed central controller, for example, is long
overdue. The irrigation system "rain setting" presently works like this: The Golf Course
Supervisor assesses the weather forecast daily and, if needed, manually recalibrates the irrigation
plan by visiting 15 different irrigation controllers — including driving into work on weekends
(from several miles away), if there is a change in the weather.
CONCURRENCES
The Parks &Recreation Commission reviewed the Laguna Lake Golf Course Fund Rate Review on
May 7, 2007 and concurred with the assumptions and projections (see Attachment 2 — Draft
minutes).
FISCAL UVIPACT
The following are the proposed operating transfers from the General Fund for 2007-08 and 2008-
09:
Year Proposed
2007-2008 $414,400
2008-2009 $_271,700
The projected operating transfers for 2007-08 reflect the cost of critically needed capital
improvement projects to the golf course, as identified above, and the increased cost of utilities.
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Council Agenda Report—Laguna Lake Golf Course Fund Rate Review Page 5
With no capital improvement projects proposed for 2008-09, projected operating transfers are
expected to decrease significantly.
ATTACHMENTS
1. Changes in Working Capital: Golf Course Fund
2. Parks and Recreation Commission Draft Minutes —May 7, 2007
3. Resolution adopting fee increase
GAADMIMCouncil Agenda Reports\Golf ItemsTces and Rates\CAR-golf fund rate review 06-07.doc
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ATRCHMENT.�.
Parks and Recreation Commission—Minutes
May 7, 2007
Page 2 of 5
Martin stated park rangers would be given the key to the course although SLO Throwers will pr de
someone for this task,as well as for general maintenance.
Martin mentioned the benefits of having increased(heahhful) activity in a park that at times shady
characters. He reiterated the careful consideration given to hole placement around dog park and
Playground.
No baskets will be placed within 50 feet of the barbecue pavilion. A 4'x8' tee with sign and bench
will be placed each hole. Keeping these items grouped within a 20' circle alio s for ease in maintenance
(Le. for mowing).
Commissioner Wolf commented on his love for this fast growing spo and his appreciation for both the
physical and mental skill required of the game, which is also a ow impact, inexpensive&mily sport
as well. Commissioner Wolf noted the potential for increased c at the lake. Wolf also described the
secure metal donation boxes used at various disc golf courses d suggested that we consider using such a
system to generate maintenance and replacement funds.
Commissioner Dollar noted dog park users concerns questioned placement of Holes#9 and#18 near
the dog park and the memorial grove, respectively a requested that activity be watched at Hole#9. He
also asked if it was possible to use lower ' materials for the pads than concrete. Martin indicated
that most other choices are either more exp a or not as stabile. He discussed the need for a pad that.
provides adequate traction for safely the disc, and that if the course was eventually used as a
tournament course, concrete would material of choice. Director Kiser noted the requirement for the
concrete pad to be flush with the and for ease of maintenance and so as not to be a tripping hazard.
The pad is typically 4"to 6"in clmess and therefore would not be difficult to remove if necessary in the
future.
Commissioners May Lemieux both expressed their appreciation of the SLO Throwers as a group and
their well thought o work
MOTI (WoWKincaid)Approve the conceptual design for the Laguna Lake Park Disc Golf Course.
Ap ed 5 Yes: 0 No: 0 Absent
4. Laguna Lake Golf Course Fund Rate Review—Kiser
Director Kiser presented the golf course fund rate review. Kiser explained that it is the financial policy of
the Council that the golf course be subsidized each year by the General Fund due to its inability to
generate revenues sufficient for both operations and capital improvements. Kiser reviewed the
assumptions for the review including: rounds will increase by 3% annually, costs for daily operations will
increase by 3% annually, except for utilities; the golf cart fleet will be replaced with 8 new leased carts
with offsetting revenue, greens fee revenues are expected to increase by3% annually; and the second cell
tower lease is expected to be delayed until 2008 due to AT&T's purchase of Cingular wireless(expected
revenue of$25,000/year)
Commissioners discussed limitations of the 9-hole course being self-supporting without afull-sized driving
range, but that we shill have a good product for the price and good customer base. The golf course is a
welcoming place to both experienced and beginner players, seniors and youth with approximately 45,000
rounds of eolf olaved oer vear. The Commissioners discussed raising the Fridav rates and the cost of
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f ) �� ATTACHMENT----Q1—
Parks
TTACHMENTParks and Recreation Commission—Minutes
May 7, 2007
Page 3 of 5
playing a 2 'round. Also discussed by Commissioners and Supervisor Todd Bunte was the consideration
of purchasing an electric utility can, and engineered netting designs for the driving range.
MOTION: (Kmcmd/Dollar)
1. Review and discuss the 2006-07 annual golf fund financial and rate review, including proposed
operating program changes and capital improvement project requests contained in the 2007-09
Financial Plan, pending final review and adoption on June 19, 2007.
2. Recommend to the City Council
a) to authorize a General Fund operating transfer of$414,400 for 2007-08 and $271,700 for
2008.09: and
b) adopt a resolution approving the following fee increase, effective July 1, 2007: Add Friday to
the weekend rate,therefore increasing the daily use rate for Fridays by$1.00.
Approved 5 Yes: 0 No: 0 Absent
5. tafl Reports
Golf arse Supervisor Todd Bunte gave the Commissioners a history of the issues surrounding Hole#3.
During time when revenues were hoped to increase by encouraging Cal Poly use through student
discounts twilight rates, an increase in strong players came with it. Since then, golf balls increasingly
end up in area causing damage and raising neighbor concerns for safety. The situation is further
enhanced by winds, with Hole #3 being of the most concern. Supervisor Bunte discussed
various options being ed by an architect for hole re-positioning,which would provide optimal buffer
zones.
Commissioner May offered ons including the use of a bunker on the back of the green which
would cause golfers to lighten up on eir swings.
6. Director's Report
Director Kiser briefed the Commission on the folio ' g projects:
• May 5 was the SLOCAPRA Commissioner T i i meeting at Hearst Castle.
• The dedication for the Perpetual Hope public art pi orated in Mitchell Park was May 3 at
12:30 pm and included attendance by the parents of El ' Macedo, the child who was the
original inspiration for this piece.
• September 20, 2007 from 5:00 p.m. to 8:30 p.m. is the City A 'sory Body Training. The
Chair is asked to recommend topics, however, any Commission is welcome to email
Director Kiser with ideas.
• Council continues to interview for Commissioners. Next week David H Inger will be
recommended to the PRC at which point we will only need to fill one more posih
• A response from the Jack House Committee is still needed regarding the Park Tow. th
the PRC, the.JUC noted their particular interest in visiting El Chorro and Stockton fields as
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ATTACHMENT
RESOLUTION NO. (2007 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO
RESCINDING RESOLUTION NO. 9798 (2006 SERIES) AND ADJUSTING THE FEE
STRUCTURE FOR THE LAGUNA LAKE GOLF COURSE
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, an analysis of the Golf Course Fund was performed for FY 2007-08.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Luis
Obispo as follows:
SECTION 1. Resolution No. 9798 (2006 Series) is hereby rescinded, effective July 1,
2007.
SECTION 2. The green fees shall be as follows, effective July 1, 2007:
LAGUNA LAKE GOLF COURSE FEES
I't 9-holes 2nd 9-holes
Senior/Youth/Student Weekdays: $6.75 $4.50
-(Monday through Thursday)
General Weekdays: $8.75 $4.50
(Monday through Thursday)
Senior/Youth/Student Weekends: $7.75 $4.50
(Friday through Sunday)
General Weekends: $9.75 $4.50
-(Friday through Sunday)
Senior/Youth/Student $60.00
_10-Play Card:
General 10-Play Card: $75.00
Twilight Rate: $6.00
SECTION 3. The fees for the driving range, wholesale goods, lessons, and other special
activities and promotions shall be set by the Director of Parks and Recreation and the Golf
Course Supervisor.
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J ATTACHMENT
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Upon motion of seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted this 31s`day of May 2007.
Mayor Dave F. Romero
ATTEST:
Audrey Hooper, City Clerk
APPROVED AS TO FORM:
Jonathan P. Lowell, City Attorney
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