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Home My WebLink About05/29/2001, 5 - GOLF COURSE FUND RATE REVIEW i council M.fiv Mt. j ac Enba Repoin Ue^Num6cr CITY O F SAN LUIS O B I S P O FROM: Paul LeSage, Director of Parks and Recreation SUBJECT: GOLF COURSE FUND RATE REVIEW CAO RECOMMENDATION 1. Adopt a resolution setting the following fees for Laguna Lake Golf Course effective July 1, 2001 and 2002: July 1, 2001 July 1, 2002 Senior/Youth Weekdays $6.00 $6.50 General Weekdays 8.00 8.50 Senior/Youth Weekends 6.75 7.25 General Weekends 8.75 9.25 10-Play Cards: Senior/Youth 55.00 60.00 10-Play Cards: General 65.00 70.00 2. Approve General Fund transfers of$165,400 in 2001-02 and $167,000 in 2002-03 to offset general government and capital improvement plan (CIP) costs. 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 age are using the course in increasing numbers, primarily because of programs offered at the course in cooperation with the Parks and Recreation Department's Teen 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. Course revenues are targeted to cover direct operating costs. However, there is not enough revenue to offset general government and CIP costs. For that reason, in accordance with Financial Plan policies, General Fund transfers of$165,400 in 2001-02 and $167,000 in 2002-03 are recommended. Council Agenda Report—Golf Course Fund Rate Review Page 2. Basis for Course Subsidy As noted above, LLGC mostly serves youth and seniors. For this reason, the City's Financial Plan policies allow for less than full cost recovery. In placing this enterprise operation in perspective: 1. Fees cover about 97% of direct costs in 2001-03; and 68%of total costs. 2. This compares with an overall cost recovery of about 40% for other recreation programs. 3. And a cost recovery goal of 0% to 30% for senior and teen services; and 30% to 60% for most youth sports. In this context, even though course fees do not fully recover all costs, it performs better than other recreation programs as a whole; and it is a much higher cost recovery than other recreation activities targeted towards these same age groups. Rate Review Objectives The objective of the rate review is to establish a fee schedule that maximizes revenue and will accomplish the following: 1. Ensure continued operation of the course. 2. Establish a rate consistent with other facilities in the area. 3. Create an opportunity for more residents to enjoy golf, especially youth and seniors. 4. Generate sufficient revenue to cover direct operating expenses. 5. Be consistent with Financial Plan policies for user fee cost recovery. The key elements of the 2001-03 rate structure are modest fee increases of 25 cents per round in 2001-02 and 50 cents per round in 2002-03: Laguna Lake Golf Course Fees Proposed: Proposed: Current 2001-02 2002-03 Senior/Youth Weekdays $5.75 $6.00 $6.50 General Weekdays $7.75 $8.00 $8.50 Senior/Youth Weekends $6.50 $6.75 $7.25 General Weekends $8.50 $8.75 $9.25 Senior/Youth 10-Play Card $52.50 $55.00 $60.00 General 1 O-Plgy Card $62.50 $65.00 $70.00 The new rates will not exclude players and will help to reduce the expenditure/revenue gap. As reflected above, the fees are recommended to increase at slightly greater rate in 2002-03 (50 cents rather 25 cents) in order to phase-in higher cost recovery in the second year while still retaining competitive rates. These increases will raise about $11,000 in added revenues in 2001-02 and $23,000 in 2000-03. �~z Council Agenda Report-Golf Course Fund Rate Review Page 3 As summarized below, the proposed fees for 2001-02 are in between those currently charged by similar nine-hole courses in the area (although they are the lower end, with rates slightly higher but most similar to Pismo State Beach): Proposed LLGC Fees with Current Fees at Similar Area Courses:Nine Holes LLGC Proposed for Pismo State 2001-02 Beach Sea Pines Zaca Creek Weekdays General $8.00 $7.50 $10.50 $10.00 Senior 6.00 5.50 10.50 $9.00 Youth(See Note) 6.00 5.50 10.50 6.00 College Students(with ID) 6.00 7.50 7.00 10.00 College Students(membership) N/A N/A 4.00 N/A Twilight 8.00 7.50 6.50 8.50 Weekends General 8.75 8.50 11.50 11.50 Senior 6.75 6.50 11.50 10.50 Youth(See Note) 6.75 6.50 1L50 6.00 Twilight 8.75 8.50 8.50 10.00 Special Passes Senior/Youth 10-Play Card 55.00 N/A N/A N/A $5.50/round General 10-Play Card 65.00 N/A N/A N/A 6.50/round Youth defined as 16 and under at LLGC and Zaca Creek; 12 and under at Pismo Beach Why not increase rates to be more like Sea Pines and Zaca Creek? Based on our past experience, significant rate increases can actually result in lower revenues based on lower play. We believe the proposed two-year rate increase for 2001-03 is a reasonable balance between City cost recovery goals and the likely revenue results from increased fees. Financial Highlights for 2001-03 There are no significant changes in course operations. As detailed on pages 365 to 376 of Appendix B, CIP projects for the next four years include: 2001-02 i2004-05 Prefumo Creek Bridge Repair 15,000 Tree Removal and Replacement 20,000 20,000 Pro-Shop Roof Replacement 25,000 Vehicle and Equipment Replacements Utility Truck 25,000 Pickup Truck 21,000 Fairway Mower 20,000 Tractor30 000 Total 35 000 5 000 66 000 0 000 S,3 � I Council Agenda Report—Golf Course Fund Rate Review Page 4 FISCAL IMPACT The golf course is not generating sufficient revenue to operate as a full Enterprise Fund. The City's Financial Plan policy states that the course revenues should at least cover direct operating costs, while general government and CIP costs may be subsidized by the General Fund. Based upon the current level of play, the proposed fee increases should generate sufficient funds to cover most of the direct operating costs in 2001-02 (about 94%), with increasing cost recovery (to essentially all direct costs) in the second year. The General Fund subsidy for the Golf Course is projected at $165,400 for 2001-02 and $167,000 for 2002-03. Note: Projected course revenues for 2001-03 are slightly greater than shown in the Preliminary Financial Plan ($2,800 in 2001-02 and $14,500 in 2002-03); and General Fund transfers are correspondingly less by these amounts. ATTACHMENTS 1. Resolution 2. Changes in Working Capital: Golf Course Fund G:Budget Folders/2001-03 Financial Plan/Enterprise Fund Rate Reviews/Golf Fund Rate Review i RESOLUTION NO. (2001 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO SETTING FEES FOR THE LAGUNA LAKE GOLF COURSE AND RESCINDING RESOLUTION NO. 9051 (2000 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 as part of the 2001-03 Financial Plan process. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Luis Obispo as follows: SECTION 1. Resolution No. 9051 (2000 Series) is hereby rescinded, effective July 1, 2001. SECTION 2. The following green fees shall be as follows, effective July 1, 2001 and July 1, 2002: July 1 2001 July 1 2002 Senior/Youth Weekdays $6.00 $6.50 General Weekdays $8.00 $8.50 Senior/Youth Weekends $6.75 $7.25 General Weekends $8.75 $9.25 Senior/Youth 10-Play Card $55.00 $60.00 General 10-P1a Card $65.00 $70.00 SECTION 3. The fees for the driving range, wholesale goods, lessons, and other special activities shall be set by the Director of Parks and Recreation and the Golf Course Supervisor. s-s Upon motion of , seconded by , and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of ) 2001. Mayor Allen Settle ATTEST: Lee Price, City Clerk APPROVED AS TO FORM: QA4j - f Jo en Attorney 6 i O O O O O O O O O O O O O O O O tn O wO O O O O O O O O O O 0 = EM V O �o 7 7 N � H 00 O W) O N 00 0 O C- N h. 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