HomeMy WebLinkAbout2010-11-30; Public Financing Authority; 43; APPROVAL CROSSINGS AT CARLSBAD BUDGET 2011CARLSBAD PUBLIC FINANCING AUTHORITY - AGENDA BILL
AB#
MTG.
DEPT.
43
11/30/10
FIN
APPROVAL OF THE CROSSINGS AT
CARLSBAD GOLF COURSE BUDGET
FOR 2011
DEPT. HEAD C^
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. 55 approving the 2011 Operating and Capital
Budget for The Crossings at Carlsbad 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 (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. The Crossings opened to the public August 2007. For the Authority's
consideration, KSM has prepared a 2011 calendar year operating and capital budget for The
Crossings. This Operating Budget for 2011 is an estimate based on actual operating
performance for calendar year 2010 and the experience of KSM with other similar golf courses.
The golf industry as a whole, including The Crossings at Carlsbad, has suffered the effects of a
sluggish economy, as players demand fewer golf rounds and courses decrease fees in an
attempt to attract a diminishing population of golfers. The Crossings sold over 50,000 rounds of
golf in calendar year 2008, while rounds projected for the current calendar year (CY 2010) will
be less than 43,000, a drop of over 16 percent in play. KSM has considered these factors in
developing the proposed budget for The Crossings for CY 2011. Despite continuing economic
challenges, income from course operations is expected to increase by over $70,000 in 2011, as
growth in revenues modestly outpaces increases in expenses.
The CY 2011 budget estimates that The Crossings will generate total operating revenues of
approximately $5.8 million, which is a three percent increase over the 2010 projections.
Revenues are derived primarily from golf operations and food and beverage sales. A modest
increase of three percent is expected from golf operations revenues, based on changes in The
Crossings Club program. Changes in the pricing and structure of this loyalty program were
effected following a review of course operations by a third party consultant, Sunrise Golf. Food
DEPARTMENT CONTACT: Chuck McBride 760-602-2430 chuck.mcbrided Jcarlsbadca.gov
? CITY CLERKS USE ONLY.
JNCIL ACTION: APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
D
D
D
CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER -SEE MINUTES
a
D
Da
Page 2
and beverage sales, likewise, are expected to increase by approximately three percent, as
banquet and group events continue to thrive.
Expenses, including debt service and capital reserves, which are set aside to address capital
maintenance of facilities, are estimated at $7.2 million or approximately 1.4 percent greater than
the 2010 projections. In addition to the operating expenses, there are the habitat maintenance
and monitoring costs which are estimated at approximately $334,769. The operating loss
combined with the habitat and capital budget represent the amount that would need to be
funded by the General Fund, or $1,736,370.
The following chart summarizes the proposed 2011 budget for The Crossings and compares it
to the 2010 projections.
Green Fees
Food and Beverage
Other
Projected Revenues
Cost of Sales
Payroll
Other Expenses
Projected Expenses
Revenues Less Expenses
Less: Capital Reserve
Less: Payments on Debt
Net lncome/(Loss) from Operations
Less: Habitat Costs
Less: Capital Project Requests
Net Cash Flow (General Fund Contribution)
Paid Rounds
Average Fee per Paid Round
2011
Budget
$ 2,522,180
$ 2,696,158
$ 549,667
$ 5,768,005
$ 922,365
$ 2,401,485
$ 2,691,312
$ 6,015,162
$ (247,157)
$ 50,444
$ 1,104,000
$ (1,401,601)
$ 334,769
$
$ (1,736,370)
44,000
$ 57.32
2010
Projections
$ 2,447,491
$ 2,607,453
$ 544,066
$ 5,599,010
$ 894,335
$ 2,405,672
$ 2,616,493
$ 5,916,500
$ (317,490)
$ 48,472
$ 1,104,000
$ (1,469,962)
$ 393,212
$ 18,151
$ (1,881,325)
42,308
$ 57.85
Difference
$ 74,689
$ 88,705
$ 5,601
$ 168,995
$ 28,030
$ (4,187)
$ 74,819
$ 98,662
$ 70,333
$ 1,972
$
$ 68,361
$ (58,443)
$ (18,151)
$ 144,955
1,692
$ (0.53)
(*) The projections for 2010 include $119,689 for legal fees paid through October 2010.
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 44,000
rounds played of golf or an average of 3,667 per month.
PageS
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 2011 is
$156,000 and the incentive fee is estimated at $63,400. Compared to CY 2010, payroll
expenses decrease modestly, as staffing has been reduced in non-critical service areas.
Capital Reserve - Two percent of greens fee revenues will be set aside for a capital reserve.
The capital reserve for 2011 is estimated to be approximately $50,444.
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 2011 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 five years, or until the habitat is established. Habitat
costs are expected to decline over the next few years and will cease completely once the
habitat areas are established. The proposed 2011 budget assumes $334,769 for habitat
maintenance and monitoring.
2011 Capital Projects -At a workshop conducted on November 17, the City Council received
a report from Sunrise Golf, a third party consultant, which outlined options for improving The
Crossings course and facilities. KSM and the city are currently reviewing these
recommendations in order to ascertain the cost of certain capital improvements and the
corresponding increase in revenues. The recommended capital improvements would serve to
improve course payability and modify facilities to better serve golf customers. Although there
are no capital requests reflected in the proposed 2011 budget, KSM and city staff will be
returning at a later date with capital construction options for the board to consider.
FISCAL IMPACT:
The proposed budget for CY 2011 projects an overall deficit of $1.7 million, a decrease of
approximately $150,000 compared to the prior year. This deficit includes expenses related to
debt service ($1,104,000), habitat management ($334,769) and a contribution to the capital
reserve ($50,444). While debt service and capital reserve contributions will continue at current
levels in the long term, costs for habitat management are forecast to decrease in future years
and cease in CY 2015, as discussed above.
The proposed budget provides a forecast of the future, which does not contemplate more than
a modest increase in demand for golf course play or food and beverage sales. If an increase in
demand were to occur, it 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 2011 Operating Budget, if there are
additional revenues generated to cover these additional expenditures. For example, if
revenues generated 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 2011 Food and
Beverage Program, if there are additional revenues generated above the Food and Beverage
Program revenue budget to cover the additional expenditures. For this purpose, the Food and
Page 4
Beverage Program 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. 55 approving the 2011 Budget for The Crossings.
2. 2011 Summary Budget for The Crossings.
Exhibit 1
1 RESOLUTION NO. 55
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE CARLSBAD PUBLIC FINANCING AUTHORITY
3 APPROVING THE 2011 BUDGET FOR THE CROSSINGS
4 AT CARLSBAD
5
WHEREAS, the Carlsbad Public Financing Authority, hereafter the "Authority," has
6
previously entered into a contract with Kemper Sports Management Incorporated for the
7
operation and maintenance of the Carlsbad City Golf Course, The Crossings at Carlsbad Golf
8
Course, hereafter referred to as "The Crossings;"
9
WHEREAS, Kemper Sports Management has developed a proposed 2011 Operating
10
and Capital Budget for The Crossings.
11
WHEREAS, NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
12
Carlsbad Public Financing Authority (CPFA) of the City of Carlsbad, California, as follows:
13
1. That the above recitations are true and correct.
14
2. That the proposed 2011 Operating and Capital Budget for the Crossings is
16 approved as summarized in Exhibit 2.
17 3. That the Authority does hereby grant the Finance Director, at the direction of the
18 CPFA Executive Director, to provide advances as needed from the General Fund Reserve for
19 anticipated operating losses and capital costs for The Crossings, not to exceed $1,736,370.
20 4. That the CPFA Executive Director at his/her discretion is authorized to approve
21 expenditures above the 2011 Operating Budget if there are sufficient revenues generated above
22 the 2011 Operating Budget to cover these additional expenditures. In addition, if the Food and
23 Beverage Program revenue is higher than the 2011 Food and Beverage Budget, then the CPFA
24 Executive Director is authorized to approve expenditures within the Food and Beverage
25 Program up to that additional revenue generated over the 2011 Budget estimate.
26
27
28
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 30th day of November, 2010, by the following
vote to wit:
AYES:
NOES:
ABSENT:
Board Members Lewis, Kulchin, Hall, Packard and Blackburn.
None.
None.
A/VIS, Chairman of ihe Board
ATTEST:
LORRAINE M. WOOD/6e6refary
(SEAL) (J
Exhibit 2
Proposed Operating Budget
January 1, 2011 through December 31, 2011
REVENUES:
COURSE AND GROUNDS
CARTS
PRO SHOP
PRACTICE CENTER
FOOD & BEVERAGE
GENERAL AND ADMINISTRATIVE
TOTAL REVENUES
COST OF SALES:
PRO SHOP
FOOD & BEVERAGE
TOTAL COST OF SALES
MERCHANDISE COGS %
F & B COGS %
PAYROLL
COURSE AND GROUNDS
CARTS
PRO SHOP
FOOD & BEVERAGE
MARKETING
GENERAL AND ADMINISTRATIVE
PAYROLL TAXES & BENEFITS
TOTAL PAYROLL EXPENSE
OTHER EXPENSES:
COURSE AND GROUNDS
CARTS
PRO SHOP
PRACTICE CENTER
FOOD & BEVERAGE
MARKETING
GENERAL AND ADMINISTRATIVE
TOTAL OTHER EXPENSES
TOTAL EXPENSES
EBITDA
CAPITAL RESERVE
PAYMENTS ON DEBT
CAPITAL EXPENDITURES
NET INCOME/(LOSS) FROM OPERATIONS
HABITAT COSTS
NET CASH FLOW
BUDGETED ROUNDS - TOTAL
$$$$$$$
$$$
$$$$$$
$$
$$$$
$$$$
$
$
$
$
$
$
$
$
2,522,180
4,875
329,692
214,500
2,696,158
600
5,768,005
170,180
752,185
922,365
67%
31%
485,953
117,189
230,988
746,439
155,964
244,010
420,943
2,401,485
1,174,406
245,424
45,220
16,500
396,311
105,067
708,384
2,691,312
6,015,163
(247,158)
50,444
1,104,000
-
(1,401,601)
(334,769)
(1,736,370)
44,000
AT' CARLSBAD
2011 GOLF HATES
RATES
General Public
San Diego County
Carlsbad
Senior (55+)
San Diego County Senior
Carlsbad Senior
MEMBER RATES
Crossings Club
Crossings Club Senior (§5+)
MOH-THUR fRI&SUN SAT & HOLIDAY
$90 $95 $110
$75 $80 $95
$60 $65 $80
$79
$59
$49
$55
$45
$95
$80
$65
$60
$55
$110
$95
$80
$65
$60
Reservations available up to 30 days in advance.
Call the golf shop or book online at
www.TheCrossingsAtCarlsbad.com/TeeTiie
•———.—
JOIN THE 2011 CROSSINGS CLUB TODAY!
The Crossings Club is the best way to get the most out
of your golf experience with savings every time you play.
Now, the more you play the more you save. See the Golf Shop
for more information and benefits of The Crossings Club.
Annual Club Fee $179 senior $159
Carlsbad Residents $149 senior $129
Book online at www.TheCrossingsAtCarlsbad.com/TeeTime
Please note: Golf cart included in fees.
Rates subject to change at anytime and without notice,
760.444.1800x2 I KempeiSports"
CROSSING*
AT CARLSBAD
2011 GOLF RATES
TWILIGHT RATES*
Monday-Thursday $45
Friday & Sunday $55
Saturday & Holiday $65
Crossings Club Members receive $5 off & rates starts 1 hour earlier
LATE RATES*
Monday-Thursday $35
Friday & Sunday $40
Saturday & Holiday $45
Crossings Club Members receive $5 off & rates starts 1 hour earlier
MILITARY (MILITARY I.D. REQUIRED) $65
JUNIOR (15 & UNDER WITH PAID ADULT) $30
RIDER FEE $25
MORNING 9 HOLE PLAY (UP TO 7 DAYS IN ADVANCE)
Monday-Thursday $29
Friday & Sunday $39
Saturday & Holiday $44
Carlsbad residents receive $2 off above rate
RANGE BALLS
Warm-up 25 balls $4
Medium 50 balls $7
Large 100 balls $10
General CrossingsRANGE CARDS Public CM
$20 value $19 $18
$50 value $45 $40
$100 value $85 $75
Please note: Golf cart included in fees.
Rates subject to change at anytime and without notice.
"Twilight & late rate times change with the seasons. Please call the golf shop
for details or visit www,TbeCrossingsAtCarlsbad.coin/&reenFees