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HomeMy WebLinkAbout05/21/2002, 2D - GOLF COURSE FUND RATE REVIEW Council Mlng Date 5-2121-02 j ac Enda REpoat '2D C I TY OF SAN L U IS O B I S P 0 FROM: "Paul LeSage,Director of Parks and Recreation SUBJECT: GOLF COURSE FUND RATE REVIEW CAO RECOMMENDATION 1. Adopt a resolution setting fees for Laguna Lake Golf Course effective July 1, 2002. 2. Authorize an additional General Fund transfer of$16,300 for 2001-02 and $216,300 in 2002- 03 for general government costs and capital improvements. 3. Direct staff to pursue a telecommunications facility lease at Laguna Lake Golf Course as an additional source of revenue. DISCUSSION Overview: The proposed Resolution(Attachment 1) increases the cost per round by$.25 cents. This modest rate increase will help defray additional General Fund support costs of$216,300 in 2002-03. Based on past experience, a larger rate increase is likely to reduce play resulting in lower overall revenues. 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 — beginner, youth, and senior golfers. Senior golfers account for half of all the rounds played at LLGC. Middle and high school age golfers are using the course in increasing numbers, primarily because of programs offered at LLGC in cooperation with the Parks and Recreation Department's Teen section. LLGC is a cost-effective operation. The course supervisor manages all program 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 revenue is targeted to cover operating expenses per the City's fiscal policy. However, due to recent declines in green fee revenue the Golf Course Enterprise Fund is not in compliance with this policy. Additionally, there is not enough revenue to offset general 2D-1 i Council Agenda Report-Golf Course Fund Rate Review 2002 Page 2 government and capital improvement costs. While these deficiencies will be addressed during the 2003-05 Financial Plan, the Golf Fund currently requires, an additional General Fund transfer of$16,300 for a total of$189,100 for 2001-02. The lack of a full-size 300 yard + driving range (ours is a 100 yard cage style driving range) and rental golf carts affects the course's ability to generate revenue. For example, a similar course in Simi Valley brings in $240,000 from Driving Range Revenue. Rate Review Objectives: The objective of the Rate Review is to establish a fee schedule that maximizes revenue and will accomplish the following: • 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. • Generate sufficient revenue to cover direct operating expenses. General Fund Subsidy Current Budget Proposed Variance 2001-02 $172,800 $189,100 $16,300 2002-03 $187,800 $216,300 $28,500 Total: $360,600 $405,400 $44,800 The key element of the 2002-03 rate structure is a modest fee increase of 25¢ per round of golf. LAGUNA LAKE GOLF COURSE FEES Current: Proposed: Senior/Youth Weekdays: $6.00 $6.25 General Weekdays: $8.00 $8.25 Senior Youth Weekends: $6.75 $7.00 General Weekends $8.75 $9.00 Senior/Youth 10-Play Card: $55.00 $5750 General 10-Play Card: $65.00 $67.50 The new rates will not exclude players and will help to reduce the expenditure/revenue gap. Other executive courses in the area, charge fees that are similar to LLGC (Attachment 2). They will likely adjust their rates if LLGC rates change. FISCAL IMPACT LLGC is not generating sufficient revenue to operate as a full Enterprise Fund. City Fiscal Policy states that at a minimum, the Enterprise Fund needs to generate sufficient revenue to cover direct operating expenses. Current projections for 2001-02 indicate a revenue shortfall of $40,500 to cover the operating expenses. A review of this policy and the noncompliance of the 2D-2 G:IDelarnet1cWgmda Prep FlloICA2'OO:GolljCo=eFundRate.d" Council Agenda Report—Golf Course Fund Rate Review 2002 Page 3 Golf Fund to generate sufficient revenue to cover operating expenses will be addressed during the 2003-05 Financial Plan. The General Fund subsidy for LLGC is projected at $189,100 ($172,800 approved during Mid-Year Review) for the 2001-02 fiscal period. It should also be noted that the General Fund continues to subsidize capital improvements and course overhead. In the 2000-2001 Golf Course Fund Rate Review, total Golf Course Revenue for 2002-2003 was projected to be $341,500. This Rate Review reduces the number by $22,800 to $318,700 (Attachment 3). This is primarily due to a proliferation of golf courses in the area. The same number of golf rounds are being played in the County, but are spread over more courses. Previously, LLGC competed with Pismo State Beach Golf Course and Sea Pines Golf Resort in Los Osos for golfers desiring to play on shorter executive length courses. Two new courses, Eagle Creek in Atascadero and Sunset Ridge in Santa Maria are both executive length and offer golfers more places to play. The Atascadero course in particular, has significantly reduced the number of North County golfers who use LLGC. Telecommunications companies wanting to locate a facility at LLGC have contacted staff. They would propose replacing two of the driving range cage support poles with cellular antennas. There is a clear need for more course revenue, staff recommends that these leases be for cash as opposed to in-lieu capital improvements as is being considered at Santa Rosa Park. Based on estimates, projected revenue could potentially be $40,000 per year. Any lease would be contingent on the cellular service provider's ability to successfully complete the City's approval process. ATTACHMENT 1. Resolution 2. Fee Analysis from local area golf courses 3. Changes in Working Capital 2D-3 GADelamctteUgeeda Prep File tCAR2002GaoVow cFaadRate.doc RESOLUTION NO. (2002 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 RESCINDING RESOLUTION NO. 9051 (2001 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 2002-03. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Luis Obispo as follows: SECTION 1. Resolution No. 9051 (2001 Series) is hereby rescinded, effective July 1, 2002. SECTION 2. The following green fees shall be as follows, effective July 1, 2002: Senior/Youth Weekdays $ 6.25 General Weekdays $ 8.25 Senior/Youth Weekends $ 7.00 General Weekends $ 9.00 Senior/Youth 10-Play Card $57.50 General 10-Play Card $67.50 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. 2D-4 ATTACHMENTS Upon motion of seconded by , and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of , 2002. Mayor Allen Settle ATTEST: Lee Price, City Clerk APPROVED AS TO FORM: of Jo e 'n, ,' y Attorney 0:I UORPnVES1007GOLFCOUKW"TEINCR.DOC 2D-5 Fee Analysis AiTACNMEM 2 Local Area Golf Courses SEA PINES GOLF RESORT—LOS OSOS (Phone: 528-1788) Weekdays (Mon.-Thu.) Weekends (Fri.-Sun.) REGULAR RATES $10.50 9 holes $11.50 9 holes $17.00 18 holes $20.00 18 holes TWILIGHT RATE (4:00 p.m. to close) $6.50 9 holes $8.50 9 holes STUDENTS (with a college ID) $7.00 9 holes $4.00 with a membership SENIOR RATE $9.50 9 hole $12.50 9 hole $16.00 18 hole $19.00 18 hole No Children's Rate PISMO STATE BEACH GOLF COURSE—GROVER BEACH (Phone: 481-5215) Weekdays Weekends REGULAR RATES (9 holes) $7.50 $8.50 TWILIGHT RATE (2:00 p.m. to close) $7.50 $8.50 SENIOR(62 and over) $5.50 $6.50 CHILDREN(12 and under) $5.50 $6.50 ZACA CREEK GOLF COURSE—BUELLTON (Phone: 688-2575) Weekdays Weekends REGULAR RATES (9 holes) $10.00 $11.50 REGULAR RATES (18 holes) $15.00 $16.50 TWILIGHT RATE (1:00 p.m. to close) $8.50 $10.00 2D-6 1 i 1 Fee Analysis arracxMotr.= Local Area Golf Courses ZACA CREEK GOLF COURSE—BUELLTON (Phone: 688-2575) Continued Weekdays Weekends SENIORS (62 and over) $9.00 9 holes $10.50 $14.00 18 holes $16.50 CHILDREN (16 and under) $6.00 9 holes $6.00 9 holes $11.00 18 holes $11.00 18holes SUNSET RIDGE—SANTA MARIA (Phone: 347-1070) Weekdays Weekends REGULAR RATES (9 Hole) $7.00 $8.00 REGULAR RATES (18 Hole) $10.00 $12.00 SENIORS & CHILDREN (9 Hole) $5.00 $7.00 SENIORS & CHILDREN(18 Hole) $8.00 $10.00 EAGLE CREEK—ATASCADERO (Phone: 461-7500) Weekdays Weekend REGULAR RATES (9 Hole) $5.00 $7.00 REGULAR RATES (18 Hole) $10.00 $14.00 MONDAY RATES (Unlimited) $9.00 TUESDAY RATES (Women's Day) $4.00 THURSDAY RATES (Men's Day) $4.00 FRIDAY RATES (1S2 9 Holes, 2"d 9 Free) $5.00 SATURDAY RATES Buy Breakfast play golf for free G\:CAOMS\CAR2001 GOUP ATESCOMPARISON 2D- C y O 0000 - 00000 O O _. > O O OgchM@nt3 i ti O C O O P 0 0 0 0 0 O O fA 0 0 on wM o vi V 00 a N a M N M M M N N W 00 O 0 0 0 0 O O O O O O O O O O .fl C? y C 0 0 0 0 0 0 0 0 0 O O 64 R O O 00 O N O O N N O N N N OCL O N l� N O N N 00 00 N L S M M M W) in O 0 0 0 0 0 0 0 0 O O O O O O O O fA Mcj O O O .N+ Q\ N N �o N 00 N 00 00 N L N M M •--r �' V1 .-• .r 0. en 10 O OO O O O O O O O O O O O O O Oi O O O O O O O O O O O O O Vf N U O O O 1� [� b •-" n O n Mm O lz •-� �i �O �O 00 00 N a N N en ~ R iNf1 N v N N O O O O O O O O O O O O O O O O Q C o0 N N N .M-. � M O\ O+ 01 00 00 �o MW).+ �o �O N 00 00 N N z en LL W O (p O O O O O O O O O O O Oi 7 O O O O O O O O O O O O O O O R C O �O v1 .-. ti r r b u Oi r- N W) V O O 00 00 r- 00 N v'� N O O ..a .� N N ♦♦ kA N N ul LL J O J Q I-- a Q V � E o C7 U y LR+ v R Y ; U v 00 a O g d H a 0, ani R d c u i .7 c G. 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