Loading...
HomeMy WebLinkAbout2007-04-24; Public Financing Authority; 25; Golf Course opperations plan approval1 CARLSBAD PUBLIC FINANCING AUTHORITY - AGENDA BILL AB# 25 MTG. 4/24/07 DEPT. CM APPROVAL OF 2007 OPERATIONS PLAN FOR THE CARLSBAD MUNICIPAL GOLF COURSE PROJECT NO. 39721 DEPT. HEAD ^ CITYATTY. //^ CITY MGR. / (/A-^ RECOMMENDED ACTION: • It is recommended the Carlsbad Public Financing Authority (Authority) ADOPT RESOLUTION NO. 33 , approving the 2007 Operations Plan for The Crossings at Carlsbad and approving the operating budget and play rates for the periods of August 1, 2007 through December 31, 2007. • Direct staff regarding the first tournament after the grand opening at the Crossings at Carlsbad. ITEM EXPLANATION: The Authority is the controlling entity responsible for the finance, management, operation, and maintenance of the municipal 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. It is anticipated that the golf course will be ready for operation and open to the public in August, 2007. Staff and KSM have prepared an operating plan for the period beginning in August through the remainder of 2007. The plan includes recommendations for greens fees, the budgeted revenue and expenses for the golf operations, food & beverage service, habitat maintenance/monitoring that is required as part of the construction permitting process and information on sales, marketing and other aspects of the operations. Included in the plan is a projection for calendar year 2008 which is provided for information only. Staff and KSM will reevaluate the 2008 projections in October/November 2007 and present a budget to the Board for adoption prior to the beginning of the 2008 year. An Executive Summary of the 2007 Operations Plan is attached as Exhibit 2. The 2007 Plan estimates that the golf course project will generate sufficient revenues to cover golf course operations, food and beverage service and debt service as well as setting aside funds for future capital needs. Revenues - The majority of the revenues will come from golf play rates and the food & beverage operation. It is anticipated that the play rate schedule will be competitive with other top tier golf courses in the area. The food & beverage revenue will be generated from golfers, non-golfers dining at the clubhouse, catered events, and business meetings. It is anticipated that with the location, size, and quality of the clubhouse that the food & beverage operation will be competitive with similar venues. There is an opportunity to grow the revenues once the golf course becomes established as a quality experience for both golf and dining. KSM has researched and reviewed play rates for high-end daily fee public golf courses in the Southern California area and has will recommended rates of play per person which include golf cart and GPS yardage system that are competitive with other courses in the market area. These are shown in detail in the Executive Summary in Exhibit 2. FOR CITY CLERK'S USE ONL Y. BOARD ACTION: APPROVED 3T DENIED D CONTINUED D WITHDRAWN D AMENDED D CONTINUED TO DATE SPECIFIC D CONTINUED TO DATE UNKNOWN D RETURNED TO STAFF D OTHER-SEE MINUTES D DEPARTMENT CONTACT: Lisa Irvine 760-602-2430 lirvi@ci.carlsbad.ca.us or Skip Hammann 760-434-2856 shamm@ci.carlsbad.ca.us Page 2 Expenditures - The expenditures are summarized in the Executive Summary and include estimated costs for all golf operations including the driving range, food and beverage expenses and the costs of marketing and managing the operations. Expenditures also include provisions for establishing a capital reserve at 2% of the greens fees and for making the required payments on the outstanding bonded debt. Initial Habitat Maintenance/Monitoring - The development permits on the golf course require the restoration and maintenance of large areas of habitat for 5 years or as long as it takes the habitat to get established. Funds in the amount of $1.5 million were previously appropriated in the construction budget for these costs. Now that the requirements for the habitat are better defined, it is estimated that the costs over that 5 year period may be closer to $5 million. Costs will be higher in the initial years and then will decline as the Coastal Sage Scrub and other native plants and animals are better established. One of the more significant costs during this time period is water. The mitigation areas require watering until the plants are well established. Once established and accepted, the habitat areas created will require no irrigation and a minimal level of monitoring and maintenance. The costs for the habitat maintenance and monitoring will be paid first from the $1.5 million set aside funds, then from any net income from the golf course. Finally, if those funds are not sufficient, any remaining costs will need to be advanced from the General fund. Based on current projections, it is anticipated that the General fund may have to advance up to $840,000 in 2008 depending on the needs. These costs should start to decline in the following year. Once the habitat areas are established, it is expected that the golf course revenues will be sufficient to cover all costs of operations including habitat maintenance. Staff is proposing to solicit proposals from various firms to provide the necessary maintenance and monitoring for the required five year period. It should be noted that this is a minimum period and until accepted by the resource agencies maintenance, monitoring and perhaps additional mitigation may be required. A recommendation for these services will be brought back to the Board at a later date with the revised estimates for the start-up cost for the habitat restoration work. First Tournament - The golf course is scheduled to be opened to the public the first week of August. The City Council (sitting as the Authority) has received a letter from the Carlsbad Chamber of Commerce requesting that they be allowed to offer the first tournament after the grand opening (Exhibit 3). If the Authority supports this request, it is recommended that the Chamber of Commerce work directly with Kemper Sports Management regarding the specific date and rates for the tournament. Staff recommends that the Board accept the 2007 Operations Plan and adopt the 2007 operating budget and play rates for The Crossings at Carlsbad golf course. ENVIRONMENTAL IMPACT: On June 7, 2000 the Planning Commission adopted Resolution No. 4772 certifying the Environmental Impact Report for the Carlsbad Municipal Golf Course Project, and the operation of the golf course and maintenance and monitoring of habitat areas are within the scope of the EIR. FISCAL IMPACT: After paying the debt service and setting aside funding in a capital reserve, the golf course is estimated to have an operating net income of $42,000 for the first 5 months of operation and break even in the following calendar year. Habitat costs, however, are anticipated to require additional funding in 2008. The Board allocated $1.5 million toward the start-up costs for habitat monitoring and maintenance costs when the budget was updated November 21, 2006, and these funds will be allocated for that purpose. It is expected that those funds will be drawn down by mid 2008 and the remaining costs that year (estimated at $840,000) will need to be advanced from the General fund if the golf course revenues are not sufficient. Additional advances may also need to take place for working capital advances to allow adequate cash flow as the golf course begins operations. Page3 EXHIBITS: 1. Resolution No. 33 of the Board of Directors of the Carlsbad Public Financing Authority approving the 2007 Operations Plan and approving the Operating Budget and Play Rates for the Period August 1, 2007 through December 31, 2007 for the Carlsbad Municipal Golf Course, Project No. 39721. 2. Executive Summary of the 2007 Operations Plan for the Crossings at Carlsbad golf course. 3. Letter dated December 13, 2006 from the Carlsbad Chamber of Commerce. 1 EXHIBIT 1 2 RESOLUTION NO. 33 3 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE 4 CARLSBAD PUBLIC FINANCING AUTHORITY APPROVING THE 2007 OPERATIONS PLAN AND APPROVING THE OPERATING 5 BUDGET AND PLAY RATES FOR THE PERIOD AUGUST 1, 2007 THROUGH DECEMBER 31, 2007 FOR CARLSBAD MUNICIPAL 6 GOLF COURSE. PROJECT NO. 39721. 7 8 WHEREAS, in December, 2003, the Board of Directors of the Carlsbad Public Financing 9 Authority ("CPFA") did approve proceeding with the development of the Carlsbad Municipal Golf Course 1 Q Proj ect ("Proj ect"); and ,. 1 WHEREAS, it is anticipated that the Carlsbad Municipal Golf Course will be open to the public in August 2007; and WHEREAS, Kemper Sports, Inc. is recommending play rates for the project that are competitive 13 and comparable to similar daily fee municipal golf courses in the San Diego County area; and 14 NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Public 15 Financing Authority of the City of Carlsbad, California, as follows: 16 1. That the above recitations are true and correct. 2. That the 2007 Operations Plan for the Crossings at Carlsbad is approved. 18 3. That the operating budget for the period of August 1, 2007 through December 31, 2007 is 19 hereby approved. 20 4. That the play rates for the period of August 1, 2007 through December 31, 2007 are hereby 21 approved. 22 5. That the Board does hereby grant the CPFA Executive Director and the Finance Director 23 authority to advance to project funds to cover estimated operation losses as well as provide working capital 24 advances to allow for the adequate cash flow as to begin operations. 25 HI 26 ll! 27 '" III 28 n, 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 Special Meeting of the Carlsbad Public Financing Authority held on the 24th day of April, 2007, by the following vote to wit: AYES: Board Members Lewis, Kulchin, Hall, Packard and Nygaard NOES: None ABSENT: None , Chairman of the Board ATTEST: LORRAINE M. WOOD, Secretary (SEAL)V = Q/c The Crossings at Carlsbad 5800 Hidden Valley Road Carlsbad, California 92008 Qo (760) 476-9933 main AT CARLSBAD ^ (760)431-2430 fax EXHIBIT 2 2007 Operations Plan Executive Summary Date: April 18, 2007 To: Carlsbad Public Financing Authority From: Jeff Perry General Manager Course: The Crossings at Carlsbad Summary Overview KemperSports in conjunction with the Carlsbad Public Financing Authority eagerly anticipates the opening of The Crossings at Carlsbad in August 2007. These numbers are KemperSports' best attempt to project the financial results based on the information we have available. Forecasting the financial performance of any business is always a difficult task - and it is even more difficult doing it for an entity that has yet to establish any history by which to base these projections. Because The Crossings at Carlsbad will be reporting its financial results on a calendar year-end basis, KemperSports has been asked to give a 5-month stub budget for the remainder of 2007 (August 1st though December 31st) and a 12-month projection for the calendar year 2008. Typically a 12-month forecast is standard and to go beyond that length of time, especially for a new start-up entity without history, variance is to be expected the farther out the projection. Therefore, in October 2007 - which is typically the month the following year's budget will be discussed and approved - KemperSports and the Carlsbad Public Financing Authority will again readdress 2008 year-end's projections when history will be available to help with projections on a go-forward basis. Finally, KemperSports believes that The Crossings at Carlsbad, like any new property, will need two to three years of history to evaluate its performance and accurately forecast financial performance. For a new property, KemperSports believes the initial projections for 2007 & 2008 are aggressive. However, KemperSports also believes The Crossings at Carlsbad is positioned correctly and will be supported by the local market due to the surrounding demographics and its proximity to so many people who meet the criteria defined for the facility's target audience. KemperSports anticipates fluctuations in demand and supply as well as varying service models before stability will be reached and a niche established within the market. It will take time to determine whether the surrounding community and its guests will accept the initial programming and pricing model by which the financial projections are based. Ultimately the goal, of course, is to be able to tailor service, pricing and expectations based on consumer feedback and to project forward to how this translates in revenue and profit maximization coupled with customer satisfaction. 2007 & 2008 Financial Summary Description REVENUES: COURSE AND GROUNDS CARTS PRO SHOP PRACTICE CENTER FOOD & BEVERAGE TOTAL REVENUES TOTAL COST OF SALES TOTAL PAYROLL EXPENSE TOTAL OTHER EXPENSES TOTAL EXPENSES EBITDA CAPITAL RESERVE PAYMENT ON DEBT DEPRECIATION NET INCOME/(LOSS) FROM OPERATIONS HABITAT COSTS NET CASH FLOW BUDGETED ROUNDS - TOTAL 5 Months: 8.1 -12.31 2007 Budget 84,335 2008 Projection 1,431,432 1,250 240,500 92,750 493,268 2,259,200 265,904 956,198 952,763 2,174,865 4,000,863 3,000 571,750 264,100 1,543,746 6,383,459 705,198 2,339,129 2,185,443 5,229,771 1,153,688 42,340 0 0 41,995 0 41,995 20,950 80,017 1,064,000 0 9,671 (841,200) (831,529) 58,600 Sales & Marketing Summary Property Vision The Crossings at Carlsbad provides golfers with a premium golf experience incomparable in the San Diego area. The over 6,800-yard layout offers rugged canyons, sweeping emerald fairways and memorable Pacific Ocean views. All is encompassed by its natural surrounding coastal habitat which is protected by five distinctive 'crossing' bridges laid throughout its unique design. This 18-hole public golf destination will be a "must play for local residents, visitors and tourists alike. The clubhouse will become a place of community and spirit for Carlsbad residents and businesses to gather with friends and family. The golf shop will be stocked with quality merchandise and the lighted practice facility will allow for guests to unwind even during evening hours. All staff members at The Crossings at Carlsbad will provide a clean, attentive, warm and friendly atmosphere that will make both golfers and non-golfers want to return time and time again. KemperSports will leverage its relationships with media and golf associations to promote The Crossings at Carlsbad. KemperSports goals are to ultimately get the property to receive major awards and recognition from local, regional and national golf publications. Local Golf Market Analysis According to the 2004 Pellucid report, the local marketing analysis reflects that there are 647,634 households within a 45-minute drive of the property. This represents a population base of 1,777,312. • Page 2 Based on a California state golf participation rate of 8.4%, there are approximately 149,294 golfers in the local market. Currently the local and traveling golfer base is producing just over 3,529,625 rounds annually. Public Premium golf courses in the same local area are producing between 50,000 and 67,000 rounds annually. In 2005, San Diego County had 27.1 million total visitors (includes overnight and day visitors), Based on traveling golf participation rates of 3%, this equates to another 813,000 traveling golfers entering the local market on an annual basis. Sales & Marketing Objectives • Successfully brand and establish The Crossings at Carlsbad as a "must play" golf experience. • Cultivate relationships with hospitality industry, chamber of commerce and corporate businesses to make The Crossings at Carlsbad the golf choice in San Diego County. • Develop programming and products that will generate frequency from local residents. Acquire players from other facilities. • Ensure The Crossings at Carlsbad receives top rankings and awards with local, regional and national publications. • Capture the majority of the major outings currently playing at local competitors. • Successfully promote the golf experience to members of the SCGA. (Southern California Golf Association) • Build an extensive customer database for broadcast marketing. Capture a minimum of 7,000 e-mail addresses in FY 07/08. • Position the restaurant as an option for dining out for the residents and local businesses. Make the clubhouse the place to "hang-out" for local residents. Marketing Policies Regarding Requests for Donations All requests for donations of rounds of golf or other promotional items should be referred to KemperSports. Requests will be fulfilled for marketing and promotional purposes only. Public employees will not be eligible. Donations of rounds of golf will be limited to weekdays and will be based on availability. Golf donations to charitable groups will be limited to no more than one foursome of golf per year. Competitive Market Analysis Resorts Citv Distance Holes Weekday Weekend Rate Rate GF/CF GF/CF The Crossings at Carlsbad Four Seasons Aviara La Costa Resort and Spa Torrey Pines Maderas Barona Creek Carlsbad, CA Carlsbad, CA Carlsbad, CA San Diego, CA Poway, CA Lakeside, CA . 2.5 mi 5.5 mi 21 mi 24 mi 46.7 mi 18 18 36 36 18 18 $90 $195 $190 $130 South $80 North $155 $100 $110 $215 $200 $163 South $100 North $195 $150 > Page 3 Talega Golf Club Steele Canyon Rancho Bernardo Mt. Woodson Encinitas Ranch Arrowood The Vineyard San Clemente, CA Jamul, CA Rancho Bernardo, CA Ramona, CA Encinitas, CA Oceanside, CA Escondido, CA 33 mi 46.9 mi 21 mi 33 mi 7 mi 14.75 mi 18 mi 18 27 18 18 18 18 18 $97 $84 $90 $72 $75 $80 $49 $125 $124 $115 $82/$97 $80/$95 $110 $65 Rate Structure & Facility Pricing Green Fees Weekday (Mon - Thur) 7 days reservations permitted Standard Resident (City of Carlsbad) San Diego County Senior Non-Resident (60 or over) Senior Resident (60 or over - City of Carlsbad) Twilight Non-Resident Twilight Resident (City of Carlsbad) Junior (17 or younger) Advanced (8-30 days reservations-Everyone) Friday 7 days reservations permitted Standard Resident (City of Carlsbad) San Diego County Twilight - Everyone Junior (17 or younger) Advanced (8-30 days reservations-Everyone) Sat/Sun/ Holidays 7 days reservations permitted Standard Resident (City of Carlsbad) San Diego County Twilight - Everyone Junior (17 or younger) Advanced (8-30 days reservations-Everyone) $90 $60 $75 $59 $49 $45 $40 $30-With Paying Adult $100 $95 $65 $80 $55 $30-With Paying Adult $105 $110 $80 $95 $65 $30-With Paying Adult $120 These rates posted above would include the use of golf cart and state of the art GPS yardage system. We recommend that management of the golf course be given the authority to implement promotional rates, negotiate the inclusive price of tournament rounds, and establish a special rate applicable to hotels for the express purpose of designing stay and play packages. These rates will typically be higher than resident rates, though we may recommend promotional values that may be lower when those rates are applicable to residents of the City of Carlsbad. We recommend that tournament outing groups be granted booking privileges up to 18 months in advance with appropriate deposits, while hotels and our other partners be granted booking privileges up to 60 days in advance. ' Page 4 <\ We recommend that tournament outing groups be granted booking privileges up to 18 months in advance with appropriate deposits, while hotels and our other partners be granted booking privileges up to 60 days in advance. KemperSports will continue to work in conjunction with the Carlsbad Public Financing Authority to set and approve rates based on The Crossings at Carlsbad's position in the local competitive market with the goal of maximizing revenues and profitability. Standard, advanced and resident rates will be set through the recommended rates above and will require the approval of the Carlsbad Public Financing Authority for any changes. Unlike the rates above, all tournament and promotional rates will be based off the approved rate structure above but will be offered at the discretion of the operator based, again, on course utilization and profit maximization Practice Center Fees Open until 9:00pm every night, KemperSports anticipates the Practice Center to be a vibrant community gathering place where the team at The Crossings at Carlsbad can promote the game of golf through personalized attention. Tokens or cards will be sold exclusively out of the golf shop and will offer pricing discounts - or added value - for the higher priced cards; for example, $100 value cards can be sold at $80, or a $20 savings. The machines assign a dollar value for each ball dispensed (for example $0.15 a ball) and deduct the total dispensed on each card after each use in the machine. Pricing will be competitive with local competition and KemperSports recommends that management of the golf course be given the authority to implement and set the pricing for the Practice Center. Menu Pricing at the Canyons restaurant The Canyons restaurant will be comprised of three distinct business units: the golf operations component, the comfortable dining component and the special events component, and the performance of each of these business units will be tracked individually. Pricing, too, will be distinct for all three areas defined. In order to address the changing expectations and feedback of our guests - which will come with a new property - we recommend that the management of the golf course be given the authority to implement the pricing for all food & beverage pricing. Breakfast and lunch at the restaurant will deliver to a diverse clientele. Understanding and meeting the individual needs of the two separate and distinct groups of people who will frequent the Canyons restaurant, the person who came to play golf versus the person who only came to eat at the restaurant, is paramount in building our pathway to success. The golfer has separate and distinct needs that are significantly different than that of a non-golf lunch guest. A golfer's demands are convenience driven. Factors such as speed of service, the ability to grab and go, and rapid delivery of food are the primary needs of the golfer. Pricing will be moderate and in-line with similar 'snack' items at other local courses. The Crossings has a huge advantage in meeting these needs through the use of the 'half-way house' which will provide limited culinary opportunity that will yet satisfy the golfers' primal needs for dining. The needs of the transient guest are much different then that of the golfer. Specifically, they are a market that demands personal/professional service, ambience, value for price paid, and increasingly higher standards within the culinary product. For the patron who visits solely for the dining experience at the Canyons restaurant pricing will be in-line with a comfortable yet relaxed dining theme, with individual items ranging from $9 - $17. The menu will feature an eclectic mix of traditional and modern dishes. It will be flexible and offer high value through food portions and presentation relative to price. Signature items (a specific menu item) and restaurant specialty's (a general item such as wines or beers) will help distinguish the Canyons brand and separate the restaurant at The Crossings from its competition and leave a 10 lasting impression with its guests. Attentive, personal and friendly service will be our primary focus; to bring a lively, communal, social, and intimate approach to the overall dining experience. Banquet and event pricing, however, is anticipated to be much higher and is expected to compete with the local 'high-end/high-dollar' competition capitalizing on the beautiful clubhouse and its proximity to the Pacific Ocean. Pricing will either be based on a per person charge or on room minimums depending on the day of week and relative demand. These prices will be available as the facility approaches its grand opening. Revenue Summary Course & Grounds For the last 5 months in 2007, KemperSports is forecasting $1,431,432 in green fee revenue and 20,950 rounds or an average green fee of $68.33; in calendar year 2008, KemperSports is forecasting $4,000,863 in green fee revenue and 58,600 rounds or and average green fee of $68.27. The forecast for both years assumes higher utilization in the beginning months resulting from the much anticipated opening and a tapering off once towards the end of 2007 and the traditionally slower winter season. However, due to the booking window for corporate events and individual tournaments, KemperSports also is taking into account a 'ramp-up' period for larger group events that traditionally help with course utilization, average green fee and demand. As a result, average green fee for individual play will be higher at opening and taper off as the excitement winds down and supply is more available but will get a boost as tournament and group play increase due to KemperSports sales efforts. The dynamics of these two trends result in an almost identical average green fee for 2007 & 2008 but the round distribution will be much different. It is important to note that groups will not only help maintain the average green fee, but also they will drive the overall average green fee for individual play by reducing the supply available to the rest of the market and distributing demand to available times - thus reducing the need to discount to meet the available supply. While aggressive for a start-up property, the green fee revenue and total rounds are in-line with other local competitors who will be in the same proposed price range. Food & Beverage Food & beverage revenue is a combination of revenue from golf patrons, lunch service to the community at-large and banquets/events. Revenue totals for both 2007 & 2008 were based on like properties within KemperSports portfolio for a start-up operation with amenities similar to those at The Crossings at Carlsbad. Similar to the golf events, KemperSports has taken a 'ramp-up' approach with the food & beverage operation. Similar to any new dining establishment, KemperSports took a conservative approach on the initial profitability of the Canyons restaurant. 2007 is basically a breakeven proposition as the food & beverage team tailor their service and product to the needs and expectations of our guests. Unlike golf, banquets and events have a traditionally longer booking window. Aside from the December holiday parties KemperSports is not forecasting high dollar and high margin events until the beginning of 2008. As a result, food & beverage should show dramatically higher profits and margins with the execution of banquets and events. • Page 6 ti Expenditure Summary Course & Grounds: Golf Shop, Carts and Practice Center The following positions are budgeted in course & grounds: • Director of Golf • Tournament Coordinator • 1st Assistant Golf Professional • Director of Instruction • Assistant Golf Professionals • Merchandiser • Outside Service Professionals • Volunteer Coordinator and Volunteers Course and grounds is responsible for delivering the service model defined by KemperSports to enhance the guest experience and exceed guest expectations in all areas relating to golf at The Crossings at Carlsbad. Guests will experience 'member for a day1 service and will be attended to throughout the property; specifically, curb service when the guests arrive, professional, friendly and attentive service throughout the clubhouse, helpful guidance around the clubhouse, practice center and on the course and, finally, welcoming service upon the completion of a guests round. At the Practice Center, guests will experience a well maintained practice area where they can either practice on their own or receive professional teaching instruction from certified PGA 'Class A' professionals. The Crossings at Carlsbad will also offer group lessons to grow and enhance the game of golf and promote a golfer friendly atmosphere within the Carlsbad community. Food & Beverage The following positions are budgeted in food & beverage: • Director of Food & Beverage • Executive Chef • Sous Chef • Cooks & Kitchen Help • Servers & Bartenders • Banquet Servers • Refreshment Car Hosts Separately branded, the Canyons restaurant will offer an exceptional dining experience for all dining guests. Service will be offered throughout the day to guests who visit The Crossings to either play golf or to visit the facility for a comfortable dining experience. The Canyons restaurant will be a community amenity beyond the scope of golf offering breakfast and lunch service daily. Food & beverage service will also be offered out on the golf course through the use of 2 refreshment cars. Expenditures with the food & beverage department are consistent with those of any stand alone dining establishment - with the high dollar items being laundry and lines service, equipment maintenance and restaurant supplies. Total food & beverage costs of approximately 32% are also standard and in-line for the industry. Maintenance The following positions are budgeted in maintenance: • Superintendent • Assistant Superintendent • Mechanic • Irrigator • Machine Operators • Grounds Keepers Every expense needed to maintain the golf course and facility grounds are located in maintenance expenditures. These expenditures include, but are not limited to: sod, sand, seed, landscape expense, equipment lease, equipment maintenance, supplies, building maintenance and repair, water, and power. Marketing The following positions are budgeted in food & beverage: • Director of Sales & Marketing • Event Coordinator All sales & marketing efforts are coordinated through the marketing department. This includes a potpourri of activity ranging from developing the sales & marketing plan, competitive market analysis, ad design and placement, web site presence, e-commerce, brochures and collateral, wholesaler and partnership development, and booking tournament and special events. General & Administrative The following positions are budgeted in general & administrative: • General Manager • Controller All administrative and facility expenditures are run through G&A. This, too, encompasses a wide range of expenses from property insurance, office expenses, management fees and all clubhouse utilities. Habitat The following position is budgeted in general habitat: • Assistant Superintendent The habitat costs are necessary and required costs to meet the approval and permitting requirements mandated by several federal and state agencies for the use of the land on which the course is built. They are 'start-up' in nature and designed to decrease over the next 5 to 7 years as the natural habitat is reestablished. Once established and approved, the costs to monitor and maintain the habitat will no longer be necessary as the program is designed to get the land back to its natural state - a state in which the established habitat will thrive on its own on a year-round basis within the environmental zone in which the course is located. 13 EXHIBIT 3 A M.xJ CHAMBER OF COMMERCE December 13, 2006 Mayor Bud Lewis Carlsbad City Council Members 1200 Carlsbad Village Dr. Carlsbad, CA 92008 Dear Mayor he City Council: I am writing to ask yoiMo consider allowing the Carlsbad Chamber of Commerce and two other non profits to host the first golf tournament at the Crossings at Carisbad Municipal Golf Course next summer. I realize that you will have countless letters asking to be the FIRST golf tournament to be held at the course. The importance of being the FIRST to hold a tournament allows for more money to be made by the organizations involved. We have not invited the other two charities yet. Our goal is to partner with Kids are Worth a Million and the Boys & Girls Club or perhaps the Wounded Warriors Center at Camp Pendleton. If we are successful in our request we will proceed to join forces with two partners. The expenses of the event will be shared three ways as well as the revenue. The mission besides raising funds for the three groups is to generate the highest level of players by virtue of our memberships which showcases the course and brings media coverage which promotes the course. I realize that the Kemper Companies are the contractor chosen to manage the course and would have to become a partner with us in this effort. I firmly believe that many requests are on your desks but I believe our group will attract the highest level of attendance. ! look forward to hearing from you soon so that we may proceed with the formation of an alliance and begin planning. Thank you for your time and consideration to our request. Sincerely, Ted OweX President/QJEO 04/23/2007 18:23 FAX 7607294928 AGOSTI April 23.2007 Bud Lewis Ann Kulchin Matt Hall Mark Packard Julie Nygaard Subject: Golf Rate Analysis for The Crossings at Carlsbad AGENDA ITEM # c: Mayor City Council City Manager City Attorney City Clerk Sfct c=i<./> *-A-j I read the analysis that went into determining the golf rates for The Crossings at Carlsbad but I believe Kempsports has not considered all the local courses that are comparable. While Kempsports included the high priced, semi-private courses in Carlsbad and several public courses that require a long drive, they did not consider some of the other local courses that would compete for local golfer's business. I called all of the courses listed in the table below to verify their current rates and have played all of these courses many times. F want to support The Crossings at Carlsbad but based on these proposed golf fees, I will be unable to do so when other local courses offer a better value. I'm sure other local golfers feel the same way when it comes to spending affordable income. Kempersports should include these rates in their evaluation and eliminate the semi-private and distant courses (i.e. La Costa Spa and Resort, Four Seasons Aviara) and Barona, which is 4 miles from Carlsbad. Greg'Agosfl 4730 EdirtWirgh Drive Carlsbad, CA 92010 OTHER PUBLIC GOLF COURSES IN THE CARLBAD AREA NOT INCLUDED FN THE EVALUATION OF RATES. SCGA- Temecula Weekday Weekend Oceanside Municipal Weekday Weekend Twin Oaks - San Marcos Weekday Weekend San Luis Rey Downs - Bonsall Weekday Weekend Castle Creek - Escondido Weekday Weekend Meadowlake - Escondido Weekday Weekend Fall Brook Municipal Weekday Weekend San Clemente Municipal Weekday Weekend Golf Rates with Cart $65,00 S80.00 $38.50 $47.00 $60.00 $80.00 $44.00 $64.00 $48.00 $64.00 $48.00 $64.00 $40.00 $55.00 $42.00 $50.00 The Crossings at The Crossings at CarlsbadCarlsbad2007 Operations Plan2007 Operations Plan Green FeesGreen FeesWeekday(Mon. – Thur.)FridaySaturday, Sundayand HolidaysStandard$ 90$ 95$110Resident(City of Carlsbad)$ 60$ 65$ 80San Diego County$ 75$ 80$ 95Senior Non-Resident (60+)$ 59N/AN/ASenior Resident (60+)$ 49N/AN/ATwilight Non-Resident $ 45 $ 55 (everyone) $ 65 (everyone)Twilight Resident$ 40 $ 55 (everyone) $ 65 (everyone)Junior (17 or younger)$ 30(with paying adult)$ 30(with paying adult)$ 30(with paying adult)Advanced (8-30 days) $100 (everyone) $105 (everyone) $120 (everyone) Competitive Market AnalysisCompetitive Market AnalysisResortResortDistanceDistanceHolesHolesWeekdayWeekdayWeekendWeekendThe VineyardThe VineyardEscondido, CAEscondido, CA18 mi.18 mi.1818$49$49$65$65Encinitas RanchEncinitas RanchEncinitas, CAEncinitas, CA7 mi.7 mi.3636$75$75$80 / $95$80 / $95Mt. WoodsonMt. WoodsonRamona, CARamona, CA33 mi.33 mi.1818$72$72$82 / $97$82 / $97ArrowoodArrowoodOceanside, CAOceanside, CA14.7 mi.14.7 mi.1818$80$80$90 / $110$90 / $110The Crossings at CarlsbadThe Crossings at CarlsbadCarlsbad, CACarlsbad, CA1818$90$90$110$110Rancho BernardoRancho BernardoRancho Bernardo, CARancho Bernardo, CA21 mi.21 mi.1818$90$90$115$115Steele CanyonSteele CanyonJamul, CAJamul, CA46.9 mi.46.9 mi.2727$84$84$124$124Talega Golf ClubTalega Golf ClubSan Clemente, CASan Clemente, CA33 mi.33 mi.1818$97$97$125$125 Competitive Market AnalysisCompetitive Market Analysis(continued)(continued)ResortResortDistanceDistanceHolesHolesWeekdayWeekdayWeekendWeekendBarona CreekBarona CreekLakeside, CALakeside, CA46.7 mi.46.7 mi.1818$100$100$150$150Torrey PinesTorrey PinesSan Diego, CASan Diego, CA21 mi.21 mi.3636$130 South$130 South$80 North$80 North$163 South$163 South$100 North$100 NorthMaderasMaderasPoway, CAPoway, CA24 mi.24 mi.1818$155$155$195$195La Costa Resort & SpaLa Costa Resort & SpaCarlsbad, CACarlsbad, CA5.5 mi.5.5 mi.3636$190$190$200$200Four Seasons AviaraFour Seasons AviaraCarlsbad, CACarlsbad, CA2.5 mi.2.5 mi.1818$195$195$215$215 2007 & 2008 Financial Summary2007 & 2008 Financial SummaryDescriptionDescription2007 Budget2007 Budget2008 Projection2008 ProjectionREVENUESREVENUESCourse & GroundsCourse & Grounds$ 1,431,432$ 1,431,432$ 4,000,863$ 4,000,863CartsCarts1,2501,2503,0003,000Pro ShopPro Shop240,500240,500571,750571,750Practice CenterPractice Center92,75092,750264,100264,100Food & BeverageFood & Beverage493,268493,2681,543,7461,543,746TOTAL REVENUESTOTAL REVENUES$ 2,259,200$ 2,259,200$ 6,383,459$ 6,383,459TOTAL COST OF SALESTOTAL COST OF SALES265,904265,904705,198705,198TOTAL PAYROLL EXPENSETOTAL PAYROLL EXPENSE956,198956,1982,339,1292,339,129TOTAL OTHER EXPENSESTOTAL OTHER EXPENSES952,763952,7632,185,4432,185,443TOTAL EXPENSESTOTAL EXPENSES$ 2,174,865$ 2,174,865$ 5,229,771$ 5,229,771EBITDAEBITDA$ 84,335$ 84,335$ 1,153,688$ 1,153,688(continued)(continued) 2007 & 2008 Financial Summary2007 & 2008 Financial Summary(continued)(continued)DescriptionDescription2007 Budget2007 Budget2008 Projection2008 ProjectionCAPITAL RESERVECAPITAL RESERVE$ 42,340$ 42,340$ 80,017$ 80,017PAYMENT ON DEBTPAYMENT ON DEBT001,064,0001,064,000DEPRECIATIONDEPRECIATION_____0_____0______________00NET INCOME/LOSS FROMNET INCOME/LOSS FROMOPERATIONSOPERATIONS$ 41,995$ 41,995$ 9,671$ 9,671HABITAT COSTSHABITAT COSTS_____0_____0(841,200)(841,200)NET CASH FLOWNET CASH FLOW$ 41,995$ 41,995$ (831,529)$ (831,529)BUDGETED ROUNDS BUDGETED ROUNDS ––TOTALTOTAL20,95020,95058,60058,600 The Crossings at CarlsbadGrand Opening ActivitiesMonday7/23Tuesday7/24Wednesday 7/25Thursday 7/26Friday7/27Saturday7/28Soft Opening for Club HouseSoft Opening for Club House“Ribbon Cutting Celebration & Tours”Monday7/30Tuesday 7/31Wednesday8/1Thursday 8/2Friday8/3Saturday8/4“Golf Course & Clubhouse Tours”“Golf Course & Clubhouse Tours”“Plaque Dedication Ceremony”“Marketing & Promotional Day”“Marketing & Promotional Day”“Golf CourseOpen to Public”