HomeMy WebLinkAbout2011-12-06; City Council; 20752; APPROVAL GOLF COURSE 2012 BUDGET PLAYERS LOUNGECITY OF CARLSBAD CITY COUNCIL AND
CARLSBAD PUBLIC FINANCING AUTHORITY - AGENDA BILL
15
20,752AB#
MTG. "
DEPT. FIN
12/6/2011
APPROVAL OF THE CROSSINGS AT
CARLSBAD GOLF COURSE BUDGET
FOR 2012 AND APPROPRIATION OF
FUNDS FOR A PLAYER'S LOUNGE
DEPT. HEAD
CITY ATTY.
CITY MGR.u/-—
RECOMMENDED ACTION:
It is recommended that the Board of Directors of the Carlsbad Public Financing Authority
(Authority) adopt Resolution No. 57 approving the 2012 Operating and Capital
Budget for The Crossings at Carlsbad Golf Course (The Crossings), and appropriate funds for a
Player's Lounge.
It is recommended that the City Council of the City of Carlsbad (City) adopt Resolution No.
2011-278 approving a transfer from the General Fund for operations of The
Crossings municipal golf course.
ITEM EXPLANATION:
The Authority is the joint powers entity formed by the City of Carlsbad and Carlsbad Municipal
Water District to be responsible for the finance, construction, operation and maintenance of The
Crossings at Carlsbad Golf Course on behalf of the City of Carlsbad, which is the owner of the
property. On May 2, 2006, the Authority retained Kemper Sports Management, Inc. (KSM) to
manage and operate the golf course and associated improvements. The Crossings opened to
the public August 2007. For the Authority's consideration, KSM has prepared a 2012 calendar
year operating and capital budget for The Crossings. This Operating Budget for 2012 is an
estimate based on actual operating performance for calendar year 2011 and the experience of
KSM with other similar golf courses.
In addition, the 2012 operating budget includes the anticipated additional revenues and
expenditures associated with the addition of a player's lounge, to be located in part of the space
currently occupied by the pro shop.
In previous years, the golf industry as a whole, including The Crossings at Carlsbad, suffered
the effects of a sluggish economy. Players demanded fewer golf rounds and courses
decreased fees in an attempt to attract a diminishing population of golfers. While The
Crossings sold over 50,000 rounds of golf in calendar year 2008, rounds declined in 2009 and
2010 to 44,343 and 41,569, respectively. Despite a continued decline in the golf industry as a
whole, rounds at The Crossings for the current calendar year (CY 2011) are expected to reach
about 46,000, an 11 percent increase from 2010. The increase is due to greater sales of The
DEPARTMENT CONTACT: Chuck McBride 760-602-2430 chuck.mcbride@carlsbadca.gov
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
D
D
D
CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER -SEE MINUTES
D
D
D
D
Page 2
Crossings Club loyalty program memberships (974 versus 744 members, or an increase of 27
percent) in addition to successful marketing efforts. Operating results for the current year
(2011) are expected to come in about $170,000 better than originally anticipated. KSM has
considered these trends in developing the proposed budget for The Crossings for CY 2012.
Although the economic challenges continue, the gains from the prior year are encouraging and
are expected to continue, with a moderate 2 percent growth in total rounds anticipated in CY
2012.
The CY 2012 budget estimates that The Crossings will generate total operating revenues of
approximately $6.4 million, which is a 7 percent increase over the 2011 projections. Income
from course operations is expected to increase almost $195,000 in 2012 and income from food
and beverage sales are expected increase over $210,000, with only a slight increase in
expenses.
Expenses, including debt service and capital reserves, which are set aside to address capital
maintenance of facilities, are estimated at $7.3 million in 2012, a decrease of almost 3 percent
compared to the 2011 projections. Most of this decrease is due to the transfer of habitat
mitigation activities from KSM to the City's Parks and Recreation department. KSM was
responsible for the oversight during the critical grow-in period for the habitat areas.
As a result of the increasing revenues and decreasing expenses, operating income is expected
to increase by $453,000. The amount that will need to be funded by the General Fund is
$944,592, $640,000 less than the amount funded by the General Fund in 2011. Of that
$640,000 reduction, about $205,000 is due to the removal of the habitat budget and $146,000
is due to a reduction in legal fees. The remaining reduction to the General Fund Transfer
($289,000) is due to increased revenues.
The following chart summarizes the proposed 2012 budget for The Crossings and compares it
to the 2011 projections.
Page 3
Green Fees
Food and Beverage
Other
Projected Revenues
Cost of Sales
Payroll
Other Expenses
Minor Capital Outlay
Projected Expenses
Operating lncome/(Loss)
Less: Capital Reserve
Less: Payments on Debt
Less: Habitat Costs
Net Cash Flow (General Fund Contribution)
Paid Rounds
Average Fee per Paid Round
2012 Budget
$ 2,857,973
$ 2,887,927
$ 609,510
$ 6,355,410
$ 997,525
$ 2,398,813
$ 2,716,255
$ 11,000
$ 6,123,593
$ 231,817
$ 57,159
$ 1,119,250
$
$ (944,592)
46,812
$ 57.66
2011
Projections
$ 2,663,015
$ 2,675,294
$ 602,053
$ 5,940,362
$ 942,964
$ 2,424,633
$ 2,747,866
$ 46,413
$ 6,161,876
$ (221,514)
$ 53,260
$ 1,104,000
$ 205,554
$(1,584,328)
45,998
$ 55.42
$ Change
$ 194,958
$ 212,633
$ 7,457
$ 415,048
$ 54,561
$ (25,820)
$ (31,611)
$ (35,413)
$ (38,283)
$ 453,331
$ 3,899
$ 15,250
$ (205,554)
$ 639,736
814
$ 2.24
% Change
7.3%
7.9%
1.2%
7.0%
5.8%
-1.1%
-1.2%
-76.3%
-0.6%
-204.7%
7.3%
1.4%
-100.0%
-40.4%
1.8%
4.0%
(*) The projections for 2011 include $145,950 for legal fees.
Revenues - The majority of the revenues are generated from golf play rates and the food and
beverage operations. The golf revenue assumes that there will be approximately 46,800
rounds of golf played, an average of 3,900 per month.
Expenditures - The expenditures include the golf course, carts, pro shop, driving range, food
and beverage, marketing and administrative expenses. In addition, expenditures include KSM's
management fee and performance incentive fee. The management fee for 2012 is $156,891
and the incentive fee is estimated at $92,500. Compared to CY 2011, payroll expenses
decrease slightly, as KSM continues to look for ways to reduce expenses despite continuing
revenue growth.
Capital Reserve - Two percent of greens fee revenues will be set aside for a capital reserve.
The capital reserve contribution for 2012 is estimated to be approximately $57,159.
Payments on Debt - The Authority issued $18.5 million of tax exempt bonds to help finance
the construction of the golf course. The budget for debt service payments for 2012 is
$1,119,250.
Habitat Costs - The City of Carlsbad Parks and Recreation department has assumed the
ongoing responsibility for the habitat maintenance, thereby eliminating the budget for this
activity as a part of Golf Course operations.
2012 Capital Outlay - The KSM budget includes $11,000 for pavement maintenance of the
parking lot.
Page 4
Player's Lounge - At a workshop conducted on October 18, 2011, the City Council received a
report which outlined options for improving revenues and golfer customer satisfaction at The
Crossings. Councilmembers at the workshop supported the option which would locate a
player's lounge in a portion of the area currently occupied by the pro shop. This option has a
one-time cost of $127,000 with an expected payback of 4 to 5 years. If authorized, funding will
be appropriated from the Capital Reserve, thereby requiring no additional subsidy from the
General Fund of the city.
FISCAL IMPACT:
The proposed budget for CY 2012 projects an overall deficit of $945,000, a decrease of
approximately $640,000 compared to the prior year. This deficit is attributed to the debt service
($1,119,250). If approved, the deficit will be paid by the General Fund of the City in the form of
a transfer made from the General Fund balance.
The proposed budget does not contemplate more than a modest increase in demand for golf
course play or food and beverage sales. An increase in demand beyond what is projected
would result in greater revenues and a corresponding increase in expenses. Once again, staff
recommends that the Authority authorize the Executive Director the discretion to approve
additional expenditures above the 2012 Operating Budget, if there are additional revenues
generated. For example, if revenues are 105 percent of the budget, then the Executive Director
would have the discretion to approve additional expenditures up to the amount of the additional
revenue generated. In addition, due to the demand for food and beverage services, which are
generally independent from golf course operations, it is recommended that the Authority
authorize the Executive Director the discretion to approve additional expenditures with the 2012
Food and Beverage Operation, if there are additional revenues generated above the Food and
Beverage Operation revenue budget to cover the additional expenditures. For this purpose, the
Food and Beverage Operation will be considered separate from other golf course operations.
This will be especially needed if there is more demand for catered events than originally
budgeted.
ENVIRONMENTAL IMPACT:
On June 7, 2000 the Planning Commission adopted Resolution No. 4772 certifying the
Environmental Impact Report for the Carlsbad Municipal Golf Project, and the operation of the
golf course and maintenance and monitoring of habitat areas are within the scope of the EIR.
The operation, repair, maintenance, and leasing or minor alterations of existing facilities falls
within the categorical exemption specified in CEQA guidelines Section 15301, Class 1 and has
been determined not to have a significant effect on the environment and exempt from the
provisions of CEQA.
EXHIBITS:
1. Resolution No. 57 approving the 2012 Budget for The Crossings at Carlsbad
and Appropriation of Funds for a Player's Lounge.
2. Resolution No. ?nn-278 approving a transfer from the General Fund for
operations of The Crossings municipal golf course.
3. 2012 Summary Budget for The Crossings.
Exhibit 1
1 RESOLUTION NO. 57
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE CARLSBAD PUBLIC FINANCING AUTHORITY
3 APPROVING THE 2012 BUDGET FOR THE CROSSINGS
AT CARLSBAD AND APPROPRIATION OF FUNDS FOR A
PLAYER'S LOUNGE
5
6 WHEREAS, the Carlsbad Public Financing Authority, hereafter the "Authority," has
7 previously entered into a contract with Kemper Sports Management Incorporated for the
8 operation and maintenance of the Carlsbad City Golf Course, The Crossings at Carlsbad Golf
9 Course, hereafter referred to as "The Crossings;"
10 WHEREAS, Kemper Sports Management has developed a proposed 2012 Operating
11 and Capital Budget for The Crossings; and,
12 WHEREAS, at a workshop conducted on October 18, 2011, the Authority received a
13 report which outlined options for improving revenues and golfer customer satisfaction at The
14 Crossings by adding a player's lounge; and,
15 WHEREAS, the Authority directed staff to proceed with the option which would locate a
16 player's lounge in a portion of the area currently occupied by the pro shop, at a one-time cost of
$127,000 to be funded with Golf Course Capital Reserve funds;
18 NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad
Public Financing Authority (CPFA) of the City of Carlsbad, California, as follows:
20 1. That the above recitations are true and correct.
21
2. That the proposed 2012 Operating and Capital Budget for The Crossings is
22
approved as set forth in Exhibit 3.
23
3. That the Authority does hereby authorize the Finance Director to appropriate
24
$127,000 from the Golf Course Capital Reserve account, to pay for costs associated with the
25
addition of a Player's Lounge.
26
4. That the CPFA Executive Director at his/her discretion is authorized to approve
expenditures above the 2012 Operating Budget provided there are sufficient revenues
Zo
1 generated above the 2012 Operating Budget to cover these additional expenditures. In
2 addition, if the Food and Beverage Operation revenue is higher than the 2012 Food and
3 Beverage Budget, the CPFA Executive Director is authorized to approve expenditures
4 within the Food and Beverage Program up to that additional revenue generated over the
5
2012 Budget estimate.
6
7
8
9 ///
10 ///
11 ///
12 ///
13 ///
14 ///
15
16
17
18
19 '"
20 '"
21 ///
22 ///
23 ///
24 ///
25 ///
26
27
28 (f
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the
Carlsbad Public Financing Authority and the Carlsbad City Council, held on the 6th day
of December 2011, by the following vote:
AYES: Board Members Hall, Kulchin, Blackburn, Douglas, Packard.
NOES: None.
ABSENT: None.
MAT/T HALL, Chairman of the Board
ATTEST:
fRRAINE^M. WOOD, Secretary
(SEAL)
Exhibit 2
RESOLUTION NO. 2011-278
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, AUTHORIZING A
3 TRANSFER OF FUNDS FOR THE OPERATIONS OF THE
4 CROSSINGS MUNICIPAL GOLF COURSE
5 WHEREAS, the City Council of the City of Carlsbad, California has reviewed the
6
proposed final Budget for The Crossings municipal golf course operations for the
7
calendar year 2012 and approved the expenditures as set forth in Exhibit 3.8
9 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
11 1. That the above recitations are true and correct.
2. That the City Council authorizes the transfer of funds necessary to
1 ^
subsidize the operations of The Crossings municipal golf course for calendar year 2012
14
forward, without the necessity for repayment, since the accumulated advances with
15
interest from the General Fund to date have no realistic possibility of repayment in the
16
foreseeable future.
3. That the Finance Director is authorized to transfer $944,592 from the General
19 Fund balance to subsidize The Crossings.
20 ///
21 ///
22 ///
23 ///
24
25
26
27
28
1 PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the
2 Carlsbad City Council and Public Financing Authority, held on the 6th day of December
2011, by the following vote to wit:
4
5 AYES: Council Members Hall, Kulchin, Blackburn, Douglas, Packard.
6
NOES: None.
7
ABSENT: None.8
9
10 —!«.- - -7MAft HALL, Ivlayor
11
ATTEST:
12"
13
14 v tdRRAINE M. WOOD, City Clerk
15 (SEAL)
16
17
18
''''!** "A- * ^'
19 '''imn»»*v
20
21
22
23
24
25
26
27
28
EXHIBIT 3
Proposed Operating Budget
January 1, 2012 through December 31, 2012
REVENUES:
COURSE AND GROUNDS $ 2,857,973
CARTS $ 9,027
PRO SHOP $ 219,833
PRACTICE CENTER $ 2,887,927
FOOD & BEVERAGE $ 380,357
GENERAL AND ADMINISTRATIVE $ 293
TOTAL REVENUES $ 6,355,410
COST OF SALES:
PRO SHOP $ 214,506
FOOD & BEVERAGE _$ 783,019
TOTAL COST OF SALES $ 997,525
MERCHANDISE COGS % 65%
F & B COGS % 30%
PAYROLL
COURSE AND GROUNDS $ 534,241
CARTS $ 114,297
PRO SHOP $ 162,641
FOOD & BEVERAGE $ 747,643
MARKETING $ 177,304
GENERAL AND ADMINISTRATIVE $ 228,462
PAYROLL TAXES & BENEFITS _$ 434,225
TOTAL PAYROLL EXPENSE $ 2,398,813
OTHER EXPENSES:
COURSE AND GROUNDS $ 1,234,414
CARTS $ 234,764
PRO SHOP $ 53,314
PRACTICE CENTER $ 26,474
FOOD & BEVERAGE $ 286,098
MARKETING $ 110,966
GENERAL AND ADMINISTRATIVE $ 770,225
CAPITAL OUTLAY _$ 11,000
TOTAL OTHER EXPENSES $ 2,727,255
TOTAL EXPENSES $ 6,123,593
REVENUES LESS EXPENSES _$ 231,817
CAPITAL RESERVE $ 57,159
PAYMENTS ON DEBT $ 1,119,250
NET CASH FLOW $ (944,592)
BUDGETED ROUNDS - TOTAL 46,812
ID
Agenda Item #_
r* Am CD A n* For the members of the:CARLSBAD CITYCOUNCIL
Memorandum Date^j^Cfty ManagerJ
December 5, 2011
To: Lisa Hildabrand, City Manager
From: Chuck McBride, Finance Director '"^
Re: Correction to Exhibit 3 of Agenda Item for Carlsbad Public Financing Authority
Please distribute the attached "Exhibit 3" replacement page to the Carlsbad Public Financing
Authority proposed budget for calendar year 2012 agenda item, scheduled for the December
6th, 2011 Council Meeting. Two amounts in the "Revenue" section of the Proposed Operating
Budget were reversed - the amount shown for the Practice Center should be $380,357 and the
amount shown for the Food and Beverage should be $2,887,927.
hs
Finance Department
1635FaradayAve. i Carlsbad, CA 92008 I 760-602-2430 I 760-602-8553 fax I www.carlsbadca.gov
EXHIBIT 3
OsAT CARLSBAD
Proposed Operating Budget
January 1, 2012 through December 31, 2012
REVENUES:
COURSE AND GROUNDS $ 2,857,973
CARTS $ 9,027
PRO SHOP $ 219,833
PRACTICE CENTER $ 380,357
FOOD & BEVERAGE $ 2,887,927
GENERAL AND ADMINISTRATIVE $ 293
TOTAL REVENUES $ 6,355,410
COST OF SALES:
PRO SHOP $ 214,506
FOOD & BEVERAGE _$ 783,019
TOTAL COST OF SALES $ 997,525
MERCHANDISE COGS % 65%
F & B COGS % 30%
PAYROLL
COURSE AND GROUNDS $ 534,241
CARTS $ 114,297
PRO SHOP $ 162,641
FOOD & BEVERAGE $ 747,643
MARKETING $ 177,304
GENERAL AND ADMINISTRATIVE $ 228,462
PAYROLL TAXES & BENEFITS _$ 434,225
TOTAL PAYROLL EXPENSE $ 2,398,813
OTHER EXPENSES:
COURSE AND GROUNDS $ 1,234,414
CARTS $ 234,764
PRO SHOP $ 53,314
PRACTICE CENTER $ 26,474
FOOD & BEVERAGE $ 286,098
MARKETING $ 110,966
GENERAL AND ADMINISTRATIVE $ 770,225
CAPITAL OUTLAY _$ 11,000
TOTAL OTHER EXPENSES $ 2,727,255
TOTAL EXPENSES $ 6,123,593
REVENUES LESS EXPENSES _$ 231,817
CAPITAL RESERVE $ 57,159
PAYMENTS ON DEBT $ 1,119,250
NET CASH FLOW _$ (944,592)
BUDGETED ROUNDS - TOTAL 46,812
Proposed 2012Operating BudgetDecember 6, 2011
2011 AccomplishmentsThe golf course itself continues to mature and improve Named as a Top 100 Public Access Golf CourseHosted 2011 U.S. Putting Tour National ChampionshipCreated and hosted Wine Down Series
2011 AccomplishmentsGroup / Event Highlights63 Weddings in 2011 (up from 57 in 2010)27 Weddings currently booked in 2012Sales Focus & Growth: Business/Corporate meetings and eventsExpanded Holiday Brunch Programs• Easter Brunch• Mother’s & Father’s Day Brunch• Halloween Brunch with Costume Contest• Thanksgiving Brunch• Brunch with Santa• New Year’s Brunch
2011 AccomplishmentsGolf HighlightsRegional GolfSan Diego County golf rounds up 2% YTD in 2011The Crossings at Carlsbad golf rounds up 9% YTD in 2011Tournament Rounds Increased by 920 rounds vs. 2010 (9%)Tournament RevenueIncreased by $52,000 vs. 2010 (9%)The Crossings Club loyalty program grew by230 members (30%) Spending by Members is up $76K
2011 AccomplishmentsChampionship Golf EventsCarlsbad City Amateur ChampionshipCrossings Club ChampionshipSocial & Fun Golf Tournaments:Golf PartnershipsGet Golf Readywith the PGA of AmericaCity Parks & Recreation Junior Golf CampsHost Carlsbad High School Golf TeamParticipated in PGA’s Tee It ForwardProgram•Super Bowl of Golf•March Madness•Hot Golf / Cool Drinks•The Pumpkin
Proposed Budget2012 will build on 2011 fiscal performanceGolf rounds will gain in 2012Golf Revenues will grow in 2012Food & Beverage operations will continue to show revenue growth
2012 Capital ProjectsPlayers Lounge – modification to pro shop Estimated completion: March, 2012Funded with existing capital reserve Resealing of the parking lot Estimated completion: Spring, 2012Remodeling of the 18thGreenEstimated completion: May, 2012Previously funded
2012 Budget Summary
Recommended ActionsThe Board of Directors for the Carlsbad Public Finance Authority (CPFA)• Approve the Operating and Capital Budget for CY2012• Appropriate $127,000 for the addition of a Player’s LoungeThe City Council• Authorize a transfer of $944,592 from the General Fund