2004-02-26
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CITY OF EN CINIT AS
ENCINITAS RANCH GOLF AUTHORITY
MINUTES of REGULAR MEETING
Lilac Room, Civic Center
505 South Vulcan Avenue
THURSDAY. FEBRUARY 26, 2004 at 3:00 p.m.
CALL TO ORDER/ROLL CALL
Chainnan Kaiser called the meeting to order at 3:05 p.m.
DIRECTORS PRESENT:
Edward Kaiser, Cindy Jacob and Phil Cotton.
DIRECTORS ABSENT:
Kerry Miller and Peter Cota-Robles.
ALSO PRESENT:
Tom Johnsen, Financial Consultant; John White, Carltas Co.; John
McNair, Bob Dobeck, Rod Linville and Mark Warren, JC Resorts;
City Staff Leslie Browder, Jay Lembach and Nancy Sullivan; and
Board Secretary Pat Drew.
ORAL COMMUNICATION [3 minutes for each speaker. Maximum 15 minutes for
oral communication.]
None.
AGENDIZED BUSINESS ITEMS
1.
Approve Minutes of Regular Meeting of January 22,2004.
Mr. Linville said he would like to add a phrase to the sentence in Item 8, Potential Course
Enhancements, to read "The only thing he can do is adjust the score card to add another set
of tee markers and get re-rated by the SCGA."
Director Cotton moved, seconded by Director Jacob, to approve the minutes of the
January 22, 2004 meeting as amended. Approved 3-0-2 (Miller and Cota-Robles)
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2.
Infonnational Update on the Potential Refinancing of the ERGA Revenue Bonds.
(Leslie Browder/Jay Lembach)
Mr. Tom Johnsen reported on his negotiations with Alliance Capital regarding restructuring
the 1996 golf course revenue bonds following the Board's parameters set at an earlier
meeting. They basically turned down the offer. They believe interest rates are going to go
up over the next several years, to such a point that if they hold the bonds until September of
2006 the interest rates will go up high enough that what they could invest the bonds for, the
proceeds of a refunding in September of 2006, would exceed the seven basic points split.
Mr. Johnsen said that currently the bonds are non-rated. The longer the golf course is
perfonning and perfonning successfully, there is the possibility that perhaps refunding
bonds could be rated by S&P or Moody's. If the bonds can go from non-rated to rated
there is a significant difference in the face amount. One of the ideas that they could present
is that occasionally rating agency analysts are coming down to San Diego and what they
would like to do is, as time goes by, to communicate with rating agency people and invite
them to the golf course. Get them familiar with the course and at the same time let them
know that at some point in time we are going to come to them and try to get the bonds rated.
It might be September of 2006 or it could be before then.
Mr. Johnsen said that he believes that ERGA has a good golf course operation and should
be paying a lower interest rate. Either ERGA will get to that point in September '06 or if
he can report back on an occasional basis where they think the market is they will come
back when they think ERGA is more in line with its goals. They will continue to monitor
the market. Chainnan Kaiser asked him to stay on top of the situation.
3.
Review Summary of January 2004 Revenues and ExpenditureslFinancial Statement/update
on Capital Reserves. (Rod Linville/John McNair)
Mr. Linville reviewed the summary of the January Financial Statement. He advised that the
cell tower income was reported under revenues.
Revenues for the month were $351,906 compared to a budget of $340,856 or 103% of
budget; Expenditures were $227,294 compared to a budget of $250,432 or 91% of budget;
Net Income was $123,861 compared to a budget of $89,391 or 139% of budget; Total
Rounds were 5,363 compared to a budget of 5,464 or 98% of budget.
Year to date net income was $907,369 compared to a budget of $761,718 or 119% of
budget; Total rounds were 40,687 compared to a budget of 40,723 or 100% of budget.
Capital Reserve Account Balance at January 31,2004 was $80,561.56.
Report on Tree Enhancement/ !Markers
(Subcommittee)
Director Cotton said they don't have a report but he just wanted to say that Mark Warren
and Bob Dobeck have worked on the trees at hole 9 and have done a good job. Mark
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Warren said they should have completion of 9 and holes 2 and 4 shortly, and will come
back to the Board to see what they want to tackle next.
5.
Clubhouse Improvements.
(John McNair)
Mr. McNair handed out new plans for the proposed modifications to the clubhouse as
discussed at the previous month's meeting.
Plan #1 - a 30 ft. extension on the existing food preparation and dining area to include 650
sq.ft. for food preparation area and a total capacity of 97 in dininglbanquet area plus some
outdoor patio seating.
Plan #2 - a 45 ft. extension to include additional outside restrooms, 650 sq.ft. for food
preparation area, and an inside dininglbanquet area to seat 78 with a second area separated
by a movable partition to seat 45. Total occupancy for the two areas = 123.
Plan #3 - 45 ft. extension to include additional restrooms outside, 740 sq. ft. for food
preparation area, dininglbanquet area of 1237 sq. ft. seating 83, and an additional area
separated by a movable partition of 812 sq. ft. seating 54. Total seating for the area, with
the partition open, would be 137. In addition there would be patio seating around the two
sides of the dining area.
Mr. McNair said that at the last Board meeting he was challenged to come up with a design
where they could have functions using the bathrooms and still service the golfers.
Option #1: He went back to plan #1 and did some minor adjustments. Working with the
architect he moved the food preparation area 30 ft. instead of 25 ft. the reason being they
added outside course bathrooms on the back end. That way they could still service the
snack bar window and golfers could eat on the patio on those days when there is a function
inside and use the outside bathrooms. There would be a glass door and glass wall leading
to the golf shop and nana wall/doors leading to the patio and additional seating. This seats
97 people inside plus the patio area.
Option #2: Could screen off the area for the golfers and still have a private function, or
could open up the two areas and seat 123 persons, with a nana wall system opening onto the
patio eating area for golfers. If the area was partitioned off they could have 78 on one side
and 48 on the other. Also, could add outside bathrooms by extending the food preparation
area an additional 5 ft. but maintain the same amount of space in the preparation area.
Option #3: Plan #3 is the one that Director Cota-Robles suggested to move everything back
so there wouldn't be a long hallway in area B. Have the snack bar and extra bathrooms in
back part of building. This way could still do a snack bar outside and golfers could eat
outdoors or inside, and still hold a function inside in area A for 83 people. Or, in theory,
could open up the two areas and serve 137 people, and still serve golfers at the outside
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snack bar. Mr. McNair said that if the Board went with Plan #3 he would recommend
centering the doors a bit differently and putting the nana doors on both sides.
Dollar-wise they are back on track and expect to get some cash-out from the cell phone
company. This could pay anywhere for Plan #1 to 70% of Plan #3. Mr. McNair said he
estimates the costs at $120,000 for Plan #1, $135,000 for Plan #2 and $170,000 for Plan #3.
The question is what is the Board's goal? Is it somewhere we want to have outside catering,
lOr a place where someone in the city wants to have a place to meet and have lunch, or
primarily for golfers? Chainnan Kaiser responded that it should be primarily for golfers.
Directors Cotton and Jacob agreed with this goal.
Chainnan Kaiser asked Mr. Linville if they get groups of 80 or 100 people for sit down
dinners do they need extra space, in addition to Area A (Plan #1). He responded that the
largest of their events would sit inside with 97 occupancy, and maybe a couple of times in
two years they would need more seating in which case they could open up the patio and rent
heaters.
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Director Cotton said that his thoughts were that big is better. If we build it they will come.
If we build something based on what's going on right now he thinks we would be building
it too small. Looking at the price tag the difference is insignificant. He doesn't think that
Plan #3 could be built for $170,000 (he's built too many buildings) but he would be more
inclined to look at Plan #3. He doesn't care for the movable wall but does like the idea of
the additional restrooms and having the snack bar outside.
Mr. Linville said they have had large functions using the cart barn but this is very labor
intensive. The carts have to be moved outside and then back in again at the end of the
evening which needs the staff to be there when the banquet is finished in order to put the
carts back in again. This is all in addition to the food and beverage catering staff
There was concern expressed about the large expanse of space if the partition is removed.
Mr. McNair said he could break this up by placing plants in strategic positions around the
room. Director Cotton said he doesn't feel that 2000 sq.ft. in a club house as being very
large.
Chainnan Kaiser asked what would happen if they "flip-flopped" the floor plan - i.e. switch
th(~ golf shop with the dininglbanquet room, which would give more room to expand and a
better view for the diners. He asked Mr. Linville about drawbacks for doing a flip-flop
from the point of view of running the golf course. Mr. Linville responded that customers
coming in from the driving range would have further to walk. They would have to consider
expanding the area where the carts come up and turn at the snack bar which is the current
staging area for check in. Other than that he doesn't see any drawback. He agreed that the
best view is from the Pro Shop.
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Mr. White agreed that the current snack bar is too small and by enlarging the club house it
will increase revenue from food and beverage. If Carlsbad comes on line in a couple of
years with their new golf course/club house, it is going to represent some fonnidable
competition to service so he feels it is a good idea to do the ERGA clubhouse bigger.
Mr. McNair suggested that the Board meet at the club house in March and he will prepare
some new drawings according to the discussion. Chainnan Kaiser asked the Secretary to
make detailed notes of the discussion and get them and the diagrams to Directors Miller and
Cota-Robles for review before the next meeting.
6.
Update on Cell Towers.
(John McNair)
Mr. McNair reported that Nextel is doing a site test next week. He asked the Board if they
were willing to put a windmill next to the water tower. Director Cotton said he was not so
keen on this idea - he felt it would start to look like a miniature golf course. He would
rather see a flag pole placed so that it looked like it was designed that way, and make Nextel
responsible for the flag and pole and lights.
7.
Consider Changing Start Time of Board Meetings.
(Kerry Miller)
Since Director Miller was not present the item was held over to the next meeting.
8.
hlcidents and Accidents.
(Rod Linville)
Mr. Linville reported on an incident of a cart going through the railing at the 1 ih tee and the
cart went down the bank about 20 feet. The two riders had bailed out before it went down.
9.
Potential Course Enhancements.
Mr. McNair said he had two items to discuss from the Capital Expenditures list.
1. #18 green which has been a problem child. Eighteen months ago they tried to repair the
drainage etc. but the water is just not going down. So they are looking at making a change
by putting the green back up higher where the water is not sitting and the grass can grow.
2. The golf cart lease. Lease comes up in May. There are two major companies - E-Z-
GO and Club Car. They presently have a lease with E-Z-GO. Mr. McNair explained the
differences between the two companies' leases and said his recommendation would be that
they go with E-Z-GO again.
Director Cotton moved, Director Jacob seconded, that the Board authorize the
Chairman to sign a new four year lease with E-Z-GO, negotiable after three years.
Approved 3-0-2 (Miller and Cota-Robles)
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Mr. Linville said he had one thing to report on discussion that was had at last month's
meeting relative to fe-rating of the course. They are redoing the score card and are just
waiting on SCGA to get them the yardages so they can give us a rating. He said that once
all the trees are planted on two and four and nine then he will go back and ask them to come
out and re-rate the course. Normally this is done every seven years and we are just coming
up on SIX years now.
Mark Warren said that players have been teeing off rotating between holes one and ten -
five days a week off #1 and two days from #10. He asked if the Board had any feelings
about them adjusting that to three days on one and four days on the other. From a noise
stand point if he could tee off from # 10 on Mondays, Wednesdays and Fridays when he is
mowing tees, fairways and approaches, he could eliminate a noise issue by getting to hole
#2 right away because there are no homes out there.
Chainnan Kaiser said he felt that as long as they were consistent with the days people
would understand.
10.
DiscussionlDirection Concerning Course Operations, Conditions Needing Change.
Nothing.
11.
Directors and/or Manager Reports
[}'/or reported topics not described on this agenda, State law prohibits Board
discussion, responses, and action. A Boardmember may ask questions, but only to
clarify what the speaker is reporting.]
Nothing.
12.
Info Only - Fitzpatrick & Gonzales' Audited Financial Statements for Years Ended June
30, 2003 and 2002.
N,mcy Sullivan advised that the audited financial statements were included for the Board's
in1i>nnation; there were no instances noted that were deemed to constitute a reportable
condition.
Next Meeting - Thursday, March 25, 2004 at 3:00 p.m.
The next meeting will be at the golf course.
Adjournment
Chainnan Kaiser adjourned the meeting at 4:50 p.m.
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Respectfully submitted,
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Patricia Drew, Board Secretary
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EdwardO. Kaiser, Chainnan of the Board
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