HomeMy WebLinkAbout2007-12-11; Public Financing Authority; 32; Crossings at Carlsbad Golf Course Budget1
CARLSBAD PUBLIC FINANCING AUTHORITY - AGENDA BILL
AB# 32
MTG. 12/11/07
DEPT. FIN
APPROVAL OF THE CROSSINGS AT
CARLSBAD GOLF COURSE BUDGET
P/^0 O/1/1O A Am A /^/^COT" Bd/f^f/>AfO ff\FOR 2008 AND ACCEPT HEVISIONS TO
THE 2007 OPERATING BUDGET
DEPT. HEAD C^.
CITY ATTY. Iff
CITY MGR. V\jj^~
RECOMMENDED ACTION:
It is recommended the Board of Directors of the Carlsbad Public Financing Authority (Authority)
adopt Resolution No. 12 approving the 2008 Operating and Capital Budget for
The Crossings at Carlsbad Golf Course and approving revisions to the 2007 Operating Budget.
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 (The Crossings) 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. On April 24, 2007, the Carlsbad Public Financing Authority adopted Resolution
No. 33 approving the 2007 Operating Budget which covered the first five months of operation
from August through December of 2007. The Crossings opened to the public August 2007.
KSM has prepared a 2008 calendar year operating and capital budget for The Crossings for the
Authority's consideration. This operating budget for 2008 is an estimate based on four months
of actual operating performance and the experience of KSM with other similar golf courses.
The 2008 Budget estimates that The Crossings will generate operating revenues which nearly
cover golf course operating expenses, food and beverage service and debt service in addition
to setting aside funds for future capital needs. The annual operating loss is expected to be
approximately $118,000. In addition to the operating expenses, there are the habitat monitoring
and management costs which are estimated at approximately $700,000 per year. There is
approximately $175,000 remaining budget from the $1.5 million that was allocated during FY
2007 by the Authority for the start up of the habitat monitoring and maintenance activities.
When the remaining allocation of $175,000 is applied to the 2008 habitat budget, it is
anticipated that an additional $525,000 for the habitat budget will be needed. The $525,000
additional habitat budget and the $118,000 for the operating loss would need to be funded by
the General Fund. In addition, the Crossings also requires capital projects to continue to
improve the health and safety of the golf course as well as other projects that were not
anticipated when the construction budget was developed. The total amount requested for the
capital budget is $250,000.
DEPARTMENT CONTACT: Lisa Irvine 760-602-2430 lirvin@ci.carlsbad.ca.us
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
D
D
D
D
CONTINUED TO DATE SPECIFIC D
CONTINUED TO DATE UNKNOWN D
RETURNED TO STAFF D
OTHER - SEE MINUTES D
Page 2
The following chart summarizes the proposed 2008 budget for The Crossings.
Projected Revenues
Projected Expenses
Cost of Sales
Payroll
Other Expenses
Revenues Less Expenses
Less Capital Reserve
Less Payments on Debt
Net Income/ (Loss) from Operations
Habitat Costs
Remaining Habitat Budget from 2007
Capital Project Requests
Net Cash Flow (General Fund Estimated Contribution)
$6,657,773
$ 748,471
$2,498,596
$2,344,194
$1,066,512
$ 80,612
$1,104,000
($ 118,100)
$ 700,328
($ 175,000)
$ 250,000
($ 893,428)
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 59,000
rounds of golf or an average of 4,900 per month. There are no proposed changes to the greens
fees.
Expenditures - The expenditures include the golf course, carts, pro shop, driving range, food
and beverage, marketing and administrative expenses. In addition, the expenditures include
KSM's management fee and performance incentive fee. The management fee for 2008 is
$150,000 and the incentive fee is estimated at $108,000 or 5% of gross revenues over $4.5
million.
Additional golf carts and GPS units are being requested because the average rounds per day
are higher than originally anticipated. During 2007 it was anticipated that the golf course would
average 145 rounds per day. The golf course is currently reaching up to 250 rounds on heavy
usage days and this current trend is expected to continue for 2008. The budget includes a
request to increase the golf cart fleet from 80 to 90 golf carts. There is also a request to lease-
purchase 10 additional GPS (Global Positioning System) units to mount on these additional golf
carts. The cost to lease-purchase these additional golf carts and GPS units is approximately
$1,225 per month or $14,700 per year (for all 10). It is recommended that the Executive
Director for the Authority be authorized to either amend the existing financing agreements or
enter into new financing agreements for this additional equipment. The vendor quotes for the
additional carts and GPS units are attached as Exhibit 2.
Page3
Capital Reserve - 2% of greens fee revenues will be set aside for a capital reserve. The
capital reserve for 2008 is estimated to be approximately $81,000.
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 2008 is
$1,104,000 which is sufficient to cover the debt service requirements.
Habitat Costs - 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 become
established. It is estimated that the habitat costs may be $5 million over the five year period.
Costs are anticipated to 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 created is anticipated to require
no irrigation and a minimal level of monitoring and maintenance. Once the habitat areas are
established, it is expected that the golf course operating revenues would be sufficient to cover
all the costs of operation including habitat maintenance. The proposed 2008 budget assumes
$700,000 for habitat maintenance and monitoring.
Staff is in the process of soliciting proposals from various firms to provide the necessary
maintenance and monitoring for the required five year period. A recommendation for these
services will be brought back to the Authority at a later date. Depending on the costs for the
services, The Crossings budget may need to be revised.
2008 Capital Projects - The request is for several projects to help improve the public safety of
the golf course as well as improve the payability and conditions of the course and grounds.
The chart lists the projects requested for 2008.
2008 CIP
1.
2.
3.
4.
5.
6.
7.
Additional Split-rail fencing
Non-slip surface for tile around clubhouse
Gutters for clubhouse
Course drainage - all 18 holes
Additional cart paths for emergency access
(between 10 & 1 1 fairways)
Add fescue turf (Clubhouse, 1 5 green slope &
1 6 fairway slope)
Annual tree planting - 10 additional trees on
course
TOTAL
$
$
$
$
$
$
$
$
50,000
10,000
15,000
75,000
42,500
50,000
7,500
250,000
2007 Revised Budget - The original 2007 five-month budget approved by the Authority
included $2,259,200 in revenue and $2,217,205 in expenditures (excluding habitat) for a net
income of approximately $41,995. Now that the golf course is open and there is actual
Page 4
operating data, there is a need to revise the budget for 2007. The revised projected revenue is
$2,545,429 and projected expenditures (excluding habitat) are $2,584,910, for a net loss of
approximately $39,481. The revised revenue is approximately $286,229 or 12.7% higher than
budget and the revised expenditures are approximately $367,705 or 16.6% higher than budget.
The revenues are higher than budget primarily due to more golf rounds than anticipated and the
higher demand for food and beverage services. The increase in expenditures is primarily due
to higher expenditures in the Food & Beverage Program to support the higher demand for
catered events, as well as additional attorney fees that were not anticipated in the original
budget. The 2007 expenditure budget will need to be increased by $367,705.
2007 Revised Budget
Original Revised Increase /
(decrease)
Revenues $
Expenditures (*) $
2,259,200
2,217,205
$
$
2,545,429
2,584,910
$
$
286,229
367,705
Gross Income $ 41,995 $ (39,481) $ (81,476)
* excluding habitat
FISCAL IMPACT:
After paying the debt service and setting aside funding in a capital reserve, the golf course is
projected to have an operating net loss of $118,100 for calendar year 2008. In addition, habitat
costs are anticipated to require additional funding for 2008. In November 2006, the Authority
allocated $1.5 million towards the start-up of the habitat monitoring and maintenance costs.
Out of the $1.5 million, the majority of the funds will be expended in 2007, leaving
approximately $175,000 remaining for habitat monitoring in 2008. In addition, there is $250,000
requested for capital projects. The total requested from the General Fund for the 2008 budget
will be approximately $893,000. In April 2007, when the 2007 Operations Plan and preliminary
budget for 2008 were presented to the Authority, it was anticipated that The Crossings would
need approximately $830,000 from the General Fund for 2008.
In the golf course business, if demand for golf course services is higher than anticipated, then
corresponding revenues and expenditures may also be higher than anticipated. It is
recommended that the Authority authorize the Executive Director the discretion to approve
additional expenditures above the 2008 Operating Budget if there are additional revenues
generated above the revenue budget to cover the proposed expenditures. For example, if
revenues generated are 105% of the budget, then the Executive Director would have the
discretion to approve additional expenditures up to 105% of the additional revenue generated.
For the 2007 budget, an increase of $367,705 to the authorized expenditures is requested due
to the higher demand for golf course services and corresponding increase in costs as well as
unanticipated legal costs. If there are additional legal expenses authorized by the City Attorney,
then the budget would need to be increased accordingly. The majority of these additional
expenditures can be funded through additional revenue generated at The Crossings, however,
a portion of this request, approximately $81,476, would need to be funded from the General
Fund.
U
PageS
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.
EXHIBITS:
1) Resolution No. 1? approving the 2008 Budget for the Crossings and
approving the revisions to the 2007 Operating Budget.
2) Quotes for leasing 10 additional golf carts and GPS units.
3) 2008 Operating Budget for The Crossings.
Exhibit 1
1 RESOLUTION NO. 40
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE CARLSBAD PUBLIC FINANCING AUTHORITY
3 APPROVING THE 2008 BUDGET FOR THE CROSSINGS
4 AT CARLSBAD AND REVISING THE 2007 OPERATING
BUDGET.
5
6 WHEREAS, the Carlsbad Public Financing Authority, hereafter the "Authority",
7 has previously entered into a contract with Kemper Sports Management Incorporated
8 for the operation and maintenance of the Carlsbad City Golf Course, The Crossings at
9 Carlsbad Golf Course, hereafter referred to as "The Crossings";
10
WHEREAS, Kemper Sports Management has developed a proposed 2008
11
Operating and Capital Budget for The Crossings; and
12
WHEREAS, Kemper Sports Management has developed a revised 2007
Operating Budget for The Crossings.
15 NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
16 Carlsbad Public Financing Authority of the City of Carlsbad, California, as follows:
17 1. That the above recitations are true and correct.
18 2. That the proposed 2008 Operating and Capital Budget for the Crossings is
19
approved.
20
3. That the CPFA Executive Director is authorized to revise the current21
financing agreements or enter into new financing agreements for the lease/lease
23 purchase of 10 additional golf carts and GPS units subject to approval as to form by the
24 City Attorney. The cost for these golf carts and GPS units is in the proposed 2008
25 Operating Budget.
26
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3
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4. That the Authority does hereby grant the Finance Director, at the direction
of the CPFA Executive Director, to provide advances as needed from the General Fund
for anticipated operating losses and capital costs for The Crossings.
5. That the CPFA Executive Director at his/her discretion is authorized to
approve expenditures above the 2008 Operating Budget if there are sufficient revenues
generated above the 2008 Operating Budget to cover these additional expenditures.
6. That the 2007 Operating Budget for The Crossings is increased by
$367,705.
PASSED, APPROVED AND ADOPTED at a Special Meeting of the Board of
Directors of the Carlsbad Public Financing Authority on the 11th day of December,
2007, by the following vote to wit:
AYES: Board Members Lewis, Kulchin, Hall and Nygaard
NOES: Board Member Packard
ABSENT: None
/( / '
IS, Chairman of the Board
ATTEST:
LORRAINE M. WOOD, Secretary
<SEAL>
Exhibit 2
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Exhibit 2
Kemper Fleet Golf Car Price Sheet
Prices Effective: August 1S, 2007
The Crossings at Carlsbad
Date: 8/14/2007
All models feature reverse warning Indicator, console with tee, ball and 4 cup drink holder, center basket, and 18 x 8.50 x 8" Carlisle
Links 1 tires, DuraShield thermoplastic elastomer body with automotive paint finish.
Electric & POS models feature 36 volt electrical system, solid state speed controller, Powerwise charger, six S-volt 220 amp/hr rated
batteries. PDS models also feature on-board diagnostics, regenerative braking motor & an over-ride switch for towing & maintenance.
Gasoline models feature QuietOrive powertraln - twin cylinder, overhead cam, 4 cycle engine, electronic ignition, 12 volt electrical
system & CVT transmission.
TXT PDS (all terrain, mild hill, steep hill)
Choice of Body Color: Hunler Green or Champagne
Choice of Seat Color Oyster or Tan
OPTIONS
TOP ASSEMBLY • SUN PROTECTION
Choice of Top Color Whit* or Tan
SAND BOTTLE • (EACH)
NUMBER DECALS - 2 ea
BALL WASHERS AND CLUB CLEANER
T-125 HEAVY DUTY TROJAN BATTERIES
ICE CHEST W/MOUNTING BRKT
TOTAL
CORPORATE ACCOUNT DISCOUNT
FREIGHT - BASED ON DELIVERY LOCATION
PURCHASE PRICE
UNIT PRICE
TFC OPERATING LEASE - based on an interest rate of 5,7% as of 08/14/07 and subject to change
48 payments - 361 ,45 per car / per month
$4,15236
$115.64
Quantity
10
10
541,523.60
$1,156.40
$1697
S4.65
$45,00
S24200
$47.74
S246.00
20
10
10
10
10
10
f
$339.40
$46.50
$450.00
$2,420.00
$477.40
$46,413.30
28%
$33,417.58
$2,460.00illllii.illinll.iiil.illljl ...I. ..[.I _f 1T||| ^ •— •
I $35,877.58 1|
$3,587.76
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The Crossings at The Crossings at CarlsbadCarlsbadOperations PlanOperations Plan2007 Update2007 Update20082008
Top 10 New CoursesTop 10 New Courses
2008 Financial Summary2008 Financial SummaryDescriptionDescription2008 Projection2008 Projection2008 Budget2008 BudgetREVENUESREVENUESCourse & GroundsCourse & Grounds$ 4,000,863$ 4,000,863$ 4,030,623$ 4,030,623CartsCarts3,0003,0003,0003,000Pro ShopPro Shop571,750571,750479,150479,150Practice CenterPractice Center264,100264,100336,350336,350Food & BeverageFood & Beverage1,543,7461,543,7461,794,2501,794,250TOTAL REVENUESTOTAL REVENUES$ 6,383,459$ 6,383,459$ 6,657,773$ 6,657,773TOTAL COST OF SALESTOTAL COST OF SALES705,198705,198748,471748,471TOTAL PAYROLL EXPENSETOTAL PAYROLL EXPENSE2,339,1292,339,1292,498,5962,498,596TOTAL OTHER EXPENSESTOTAL OTHER EXPENSES2,185,4432,185,4432,344,1942,344,194TOTAL EXPENSESTOTAL EXPENSES$ 5,229,771$ 5,229,771$ 5,591,260$ 5,591,260EBITDAEBITDA$ 1,153,688$ 1,153,688$ 1,066,513$ 1,066,513(continued)(continued)
2008 Financial Summary2008 Financial Summary(continued)(continued)DescriptionDescription2008 2008 ProjectionProjection2008 Budget2008 BudgetCAPITAL RESERVECAPITAL RESERVE$ 80,017$ 80,017$ 80,612$ 80,612PAYMENT ON DEBTPAYMENT ON DEBT1,064,0001,064,0001,104,0001,104,000DEPRECIATIONDEPRECIATION______________00______________00NET INCOME/(LOSS) FROMNET INCOME/(LOSS) FROMOPERATIONSOPERATIONS$ 9,671$ 9,671$(118,100)$(118,100)HABITAT COSTSHABITAT COSTS(841,200)(841,200)(700,328)(700,328)Remaining Habitat offsetRemaining Habitat offsetCIP BudgetCIP BudgetN/AN/AN/AN/A175,000175,000(250,000)(250,000)NET CASH FLOWNET CASH FLOW$ (831,529)$ (831,529)$ (893,428)$ (893,428)BUDGETED ROUNDS BUDGETED ROUNDS ––TOTALTOTAL58,60058,60059,22559,225
2007 Financial Summary2007 Financial SummaryDescriptionDescription2007 Budget2007 Budget2007 Revised2007 RevisedREVENUESREVENUESCourse & GroundsCourse & Grounds$ 1,431,432$ 1,431,432$ 1,489,753$ 1,489,753CartsCarts1,2501,2502,2102,210Pro ShopPro Shop240,500240,500228,720228,720Practice CenterPractice Center92,75092,750106,247106,247Food & BeverageFood & Beverage493,268493,268716,184716,184TOTAL REVENUESTOTAL REVENUES$ 2,259,200$ 2,259,200$ 2,545,429$ 2,545,429TOTAL COST OF SALESTOTAL COST OF SALES265,904265,904308,674308,674TOTAL PAYROLL EXPENSETOTAL PAYROLL EXPENSE956,198956,1981,075,8121,075,812TOTAL OTHER EXPENSESTOTAL OTHER EXPENSES952,763952,7631,170,6291,170,629TOTAL EXPENSESTOTAL EXPENSES$ 2,174,865$ 2,174,865$ 2,555,115$ 2,555,115EBITDAEBITDA$ 84,335$ 84,335__ $ (9,686)__ $ (9,686)(continued)(continued)
2007 Financial Summary2007 Financial Summary(continued)(continued)DescriptionDescription2007 Budget2007 Budget2007 Revised2007 RevisedCAPITAL RESERVECAPITAL RESERVE$ 42,340$ 42,340$ 29,795$ 29,795PAYMENT ON DEBTPAYMENT ON DEBT0000DEPRECIATIONDEPRECIATION_____0_____0______________00NET INCOME/LOSS FROMNET INCOME/LOSS FROMOPERATIONSOPERATIONS$ 41,995$ 41,995$ (39,481)$ (39,481)HABITAT COSTSHABITAT COSTS(581,485)(581,485)(598,624)(598,624)NET CASH FLOWNET CASH FLOW$(539,490)$(539,490)$ (638,105)$ (638,105)BUDGETED ROUNDS BUDGETED ROUNDS ––TOTALTOTAL20,95020,95022,22722,227
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
2008 CIP Budget2008 CIP BudgetSplitSplit--rail fencing rail fencing $ 50,000.00 $ 50,000.00 NonNon--slip surface for tile around slip surface for tile around clubhouse clubhouse $ 10,000.00 $ 10,000.00 Gutters for clubhouse Gutters for clubhouse $ 15,000.00 $ 15,000.00 Course drainage Course drainage --all 18 holes all 18 holes $ 75,000.00 $ 75,000.00 Additional cart paths for emergency Additional cart paths for emergency access (between 10 & 11 fairways) access (between 10 & 11 fairways) $ 42,500.00 $ 42,500.00 Add fescue turf (Clubhouse, 15 Add fescue turf (Clubhouse, 15 green slope & 16 fairway slope) green slope & 16 fairway slope) $ 50,000.00 $ 50,000.00 Annual tree planting Annual tree planting --10 additional 10 additional trees on course trees on course $ 7,500.00 $ 7,500.00
2008 CIP Budget2008 CIP BudgetSplitSplit--rail fencing rail fencing $ 50,000.00 $ 50,000.00 NonNon--slip surface for tile around slip surface for tile around clubhouse clubhouse Gutters for clubhouse Gutters for clubhouse Course drainage Course drainage --all 18 holes all 18 holes Additional cart paths for emergency Additional cart paths for emergency access (between 10 & 11 fairways) access (between 10 & 11 fairways) Add fescue turf (Clubhouse, 15 green Add fescue turf (Clubhouse, 15 green slope & 16 fairway slope) slope & 16 fairway slope) Annual tree planting Annual tree planting --10 additional trees 10 additional trees on course on course TOTALTOTAL$ 10,000.00 $ 10,000.00 $ 15,000.00 $ 15,000.00 $ 75,000.00 $ 75,000.00 $ 42,500.00 $ 42,500.00 $ 50,000.00 $ 50,000.00 $ 7,500.00 $ 7,500.00 $ 250,000$ 250,000