HomeMy WebLinkAbout2012-12-04; City Council; 21066; Approval Golf Course BudgetCITY OF CARLSBAD CITY COUNCIL AND
CARLSBAD PUBLIC FINANCING AUTHORITY - AGENDA BILL
AB# 21,066 APPROVAL OF THE CROSSINGS AT
CARLSBAD GOLF COURSE BUDGET
JANUARY 1, 2013 THROUGH JUNE 30,
2013
DEPT. HEAD
MTG. 12/4/12
APPROVAL OF THE CROSSINGS AT
CARLSBAD GOLF COURSE BUDGET
JANUARY 1, 2013 THROUGH JUNE 30,
2013
CITY ATTY. rfnj
DEPT. FIN
APPROVAL OF THE CROSSINGS AT
CARLSBAD GOLF COURSE BUDGET
JANUARY 1, 2013 THROUGH JUNE 30,
2013 CITY MGR. 1/
RECOMMENDED ACTION:
That the Board of Directors of the Carlsbad Public Financing Authority (Authority) adopt
Resolution No. 59 approving the January 1, 2013 through June 30, 2013
Operating Budget for The Crossings at Carlsbad Golf Course (The Crossings).
That the City Council of the City of Carlsbad (City) adopt Resolution No. 2012-266
approving a transfer fronn 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.
Since the opening of the course, the Board has approved Calendar Year budgets for the golf
course. In order to increase financial reporting and budgeting efficiencies, the budget for the
golf course will align with the rest of the City's budget beginning July 1, 2013, and be on a
Fiscal Year budgeting cycle going fon/vard. Therefore, for the Authority's consideration, KSM
has prepared a sjx month budget to reflect estimated revenues and expenditures from January
1, 2013 through June 30, 2013. This Operating Budget is an estimate based on actual
operating performance for calendar year 2012 and the experience of KSM with other similar golf
courses.
The six month budget estimates that The Crossings will generate total operating revenues of
approximately $3.0 million, which is $114,000, or a 4 percent increase over the 2012 actuals.
Income from green fees is expected to increase almost $65,000 in the first six months of 2013
and income from food and beverage sales are expected increase over $42,000. Along with the
increased revenues, total expenses are estimated to increase $56,000 during that period. As a
result, when compared to the previous year, the net operating income is anticipated to be
DEPARTMENT CONTACT: Chuck McBride 760-602-2430 chuck.mcbride@carlsbadca.gov
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED K CONTINUED TO DATE SPECIFIC •
DENIED • CONTINUED TO DATE UNKNOWN •
CONTINUED • RETURNED TO STAFF •
WITHDRAWN • OTHER-SEE MINUTES •
AMENDED •
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$58,000 higher. The amount that will need to be funded by the General Fund is $252,000
$65,000 iess than the amount funded by the General Fund for the January through June of
2012.
The calendar year 2012 budget approved by the Board projected a General Fund transfer in the
amount of $944,592. Current estimates for the year show that the final transfer amount will be
at or even lower than the original estimate.
In order to provide a comparison for the proposed six month 2013 budget for The Crossings,
the following table provides the actual revenues and expenditures that occurred in the same six
month period of 2012.
2013
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2012 $ Change % Change
Green Fees $ 1,383,199 $ 1,318,404 $ 64,795 4.9%
Food and Beverage $ 1,263,600 $ 1,221,611 $ 41,989 3.4%
Other $ 342,009 $ 334,938 $ 7,071 2.1%
Projected Revenues $ 2,988,808 $ 2,874,953 $ 113,855 4.0%
Cost of Sales $ 460,598 $ 482,800 $ (22,202) -4.6%
Payroll $ 1,230,558 $ 1,162,533 $ 68,025 5.9%
Other Expenses $ 1,139,709 $ 1,129,723 $ 9,986 0.9%
Projected Expenses $ 2,830,865 $ 2,775,056 $ 55,809 2.0%
Operating lncome/(Loss) $ 157,943 $ 99,897 $ 58,046 58.1%
Less: Capital Reserve $ 27,040 $ 26,527 $ 513 1.9%
Less: Payments on Debt $ 381,975 $ 389,625 $ (7,650) -2.0%
Net Cash Flow (Generai Fund Contribution) $ (251,072) $ (316,255) $ 65,183 -20.6%
Paid Rounds 29,615 24,558 5,057 20.6%
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 29,615
rounds of golf played, an average of 4,936 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.
Capital Reserve - Two percent of greens fee revenues will be set aside for a capital reserve.
The capital resen/e contribution for the six month period is estimated to be approximately
$29,615.
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 the six month
period is $381,975.
C9N
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FISCAL IMPACT:
The proposed budget for January 1, 2013 through June 30, 2013 projects an overall deficit of
$251,072, a decrease of approximately $65,000 compared to the prior year for the same period.
This deficit is attributed to the debt service ($381,975). 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.
Once again, staff recommends that the Authority authorize the Executive Director the discretion
to approve additional expenditures above the 2013 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 2013 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 ofthe 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. 59 approving the January 1, 2013 through June 30, 2013
Budget for The Crossings at Carlsbad.
2. Resolution No. 2012-266 approving a transfer from the General Fund for
operations of The Crossings municipal golf course.
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Exhibit 1
1 RESOLUTION NO. 59
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE CARLSBAD PUBLIC FINANCING AUTHORITY
^ APPROVING THE JANUARY 1, 2013 THROUGH JUNE 30,
2013 BUDGET FOR THE CROSSINGS AT CARLSBAD
WHEREAS, the Carlsbad Public Financing Authority, hereafter the "Authority," has
previously entered into a contract with Kemper Sports Management Incorporated for the
operation and maintenance of the Carlsbad City Golf Course, The Crossings at Carlsbad Golf
Course, hereafter referred to as "The Crossings;"
WHEREAS, Kemper Sports Management has developed a proposed six month
Operating Budget for The Crossings to fund operations from January 1, 2013 through June 30,
2013; and,
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:
1. That the above recitations are true and correct.
2. That the proposed January 1, 2013 through June 30, 2013 Operating Budget for
The Crossings is approved as set forth in Exhibit A attached to this Resolution.
lg 3. That the CPFA Executive Director is authorized to approve expenditures above
19 the January 1, 2013 through June 30, 2013 Operating Budget provided there are sufficient
20 revenues generated above the January 1, 2013 through June 30, 2013 Operating Budget to
21 cover these additional expenditures. In addition, if the Food and Beverage Operation revenue is
22 higher than the January 1, 2013 through June 30, 2013 Food and Beverage Budget, then the
23 CPFA Executive Director is authorized to approve expenditures within the Food and Beverage
24 Program up to that additional revenue generated over the January 1, 2013 through June 30,
25 2013 Budget estimate.
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AYES: Board Members Hall, Kulchin, Blackburn, Douglas and Packard.
NOES: None.
1 PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the Board
2 of Directors of the Carlsbad Public Financing Authority and the Carlsbad City Council on
3 the 4*^ day of December, 2012, by the following vote to wit:
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ABSENT: None.
ATTEST:
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EXHIBIT A
REVENUES:
COURSE AND GROUNDS 1,387,382$
PRO SHOP 200,828$
PRACTICE CENTER 136,934$
FOOD & BEVERAGE 1,263,600$
GENERAL AND ADMINISTRATIVE 64$
TOTAL REVENUES 2,988,808$
COST OF SALES:
PRO SHOP 116,551$
FOOD & BEVERAGE 344,047$
TOTAL COST OF SALES 460,598$
MERCHANDISE COGS % 66%
F & B COGS % 29%
PAYROLL
COURSE AND GROUNDS 336,690$
PRO SHOP 79,903$
FOOD & BEVERAGE 370,419$
MARKETING 73,210$
GENERAL AND ADMINISTRATIVE 107,225$
PAYROLL TAXES & BENEFITS 263,111$
TOTAL PAYROLL EXPENSE 1,230,558$
OTHER EXPENSES:
COURSE AND GROUNDS 639,032$
PRO SHOP 27,471$
PRACTICE CENTER 12,152$
FOOD & BEVERAGE 123,715$
MARKETING 53,144$
GENERAL AND ADMINISTRATIVE 284,195$
CAPITAL OUTLAY -$
TOTAL OTHER EXPENSES 1,139,709$
TOTAL EXPENSES 2,830,865$
REVENUES LESS EXPENSES 157,943$
CAPITAL RESERVE 27,040$
PAYMENTS ON DEBT (INTEREST ONLY) 381,975$
NET CASH FLOW (251,072)$
BUDGETED ROUNDS - TOTAL 29,615
Proposed Operating Budget
January 1, 2013 through June 30, 2013
Exhibit 2
1 RESOLUTION NO. 2012-266
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
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WHEREAS, the City Council ofthe City of Carlsbad, California has reviewed the
proposed final Budget for The Crossings municipal golf course operations for the first
six months of calendar year 2013 (January 1, 2013 through June 30, 2013) and
approved the expenditures as set forth in Exhibit A attached to this Resolution.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
11 Carlsbad, California, as follows:
12 1. That the above recitations are true and correct
2. That the City Council authorizes the transfer of funds necessary to support
the operations of The Crossings municipal golf course for the first six months of
calendar year 2013, without the necessity for repayment, since the accumulated
advances with interest from the General Fund to date have no realistic possibility of
repayment in the foreseeable future.
19 3. That the Finance Director is authorized to transfer $251,072 from the General
20 Fund balance to subsidize The Crossings.
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PASSED, APPROVED AND ADOPTED at a Joint Special Meeting ofthe
Carlsbad City Council and the Board of Directors of the Carlsbad Public Financing
Authority on the 4*^ day of December, 2012, by the following vote to wit:
AYES:
NOES:
Council Members Hall, Kulchin, Blackburn, Douglas and Packard.
None.
ABSENT: None.
(SEAL)
EXHIBIT A
REVENUES:
COURSE AND GROUNDS 1,387,382$
PRO SHOP 200,828$
PRACTICE CENTER 136,934$
FOOD & BEVERAGE 1,263,600$
GENERAL AND ADMINISTRATIVE 64$
TOTAL REVENUES 2,988,808$
COST OF SALES:
PRO SHOP 116,551$
FOOD & BEVERAGE 344,047$
TOTAL COST OF SALES 460,598$
MERCHANDISE COGS % 66%
F & B COGS % 29%
PAYROLL
COURSE AND GROUNDS 336,690$
PRO SHOP 79,903$
FOOD & BEVERAGE 370,419$
MARKETING 73,210$
GENERAL AND ADMINISTRATIVE 107,225$
PAYROLL TAXES & BENEFITS 263,111$
TOTAL PAYROLL EXPENSE 1,230,558$
OTHER EXPENSES:
COURSE AND GROUNDS 639,032$
PRO SHOP 27,471$
PRACTICE CENTER 12,152$
FOOD & BEVERAGE 123,715$
MARKETING 53,144$
GENERAL AND ADMINISTRATIVE 284,195$
CAPITAL OUTLAY -$
TOTAL OTHER EXPENSES 1,139,709$
TOTAL EXPENSES 2,830,865$
REVENUES LESS EXPENSES 157,943$
CAPITAL RESERVE 27,040$
PAYMENTS ON DEBT (INTEREST ONLY) 381,975$
NET CASH FLOW (251,072)$
BUDGETED ROUNDS - TOTAL 29,615
Proposed Operating Budget
January 1, 2013 through June 30, 2013
Proposed 2013 Operating Budget
December 4, 2012
The Crossings at Carlsbad
2012 Accomplishments
Forecasting to meet 2012 Budget
Completed creation of new Players Lounge
Completed re-design of the 18th Green
Projecting to exceed Prior Year revenue by $100k
Projecting to exceed Prior Year EBITDA by $250k
Completed Level 2 of Green to a Tee
(Proprietary Environmental Friendly Program)
2012 Highlights
FOOD & BEVERAGE
59 Weddings in 2012 (projected)
36 Weddings already booked
for 2013
Voted “Best Mother’s Day Brunch”
in Carlsbad by Carlsbad Patch
Launched new weekly events
‘Wine Lover Wednesdays’
(40 events in 2012)
New Player’s Lounge averaging
$17,000 per month
GOLF
Projected to exceed Prior Year
Green Fee revenue by $120K
Crossing Club Loyalty Program
grew by 15% to 1,124 Members
Spend by Crossings Club
Members is up 20% ($73K)
from Prior Year
Launched new local golf
industry employee benefit
program adding 567 additional
Crossings Club Members
2013 Proposed Budget & High Level Goals
High Level Goals
Expand Hotel Partnerships
Further our relationships with
local Golf Industry Corporations
Implement new “Ready Golf”
program to enhance the
on-course golf experience
(Pace of Play)
Enhance new designed website
with an on-line gift shop and
Members Only page
Expand Rewards Points Program
to Crossings Club Members
Proposed Budget
2013 Will build on 2012 fiscal
performance.
Golf Rounds will gain in 2013
Golf Revenues will grow in 2013
Golf Industry Membership
program will be expanded further
Food & Beverage operations will
continue to show revenue growth
Calendar Year 2013 Operating Budget
Description 2012 Projections 2013 Proposed
REVENUES
Green Fees $2,795,090 $ 2,905,534
Food & Beverage
Other
$2,731,707
$661,326
$2,812,690
$671,268
TOTAL REVENUES $6,188,123 $6,389,492
TOTAL EXPENSES $ 5,945,223 $6,117,261
Revenues Less Expenses
$242,900
$ 272,231
PAID ROUNDS – TOTAL 47,912 48,500
General Fund Transfer $945,000 $910,000
Six Month 2013 Operating Budget
Description 2012 Actual 2013 Proposed
REVENUES
Green Fees $1,318,404 $ 1,383,199
Food & Beverage
Other
$1,221,611
$334,938
$1,263,600
$342,009
TOTAL REVENUES $2,874,953 $2,988,808
TOTAL EXPENSES $ 2,775,056 $2,830,865
Revenues Less Expenses
$99,897
$ 157,943
PAID ROUNDS – TOTAL 24,558 29,615
General Fund Transfer $316,000 $251,000
QUESTIONS?
Recommended Actions
The Board of Directors for the Carlsbad Public
Finance Authority (CPFA)
•Adopt Resolution No. 59 approving the January 1,
2013 through June 30, 2013 Operating Budget for The
Crossings at Carlsbad Golf Course for $2,830,865
The City Council
•Adopt Resolution No. 2012-266 approving a transfer
from the General Fund for $251,072