2002-02-28
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CITY OF ENCI N IT AS
ENCINITAS RANCH GOLF AUTHORITY
MINUTES OF REGULAR MEETING
Lilac Room, Civic Center
505 South Vulcan Avenue
THURSDAY, FEBRUARY 28,2002 AT 3:00 P.M.
CALL TO ORDER/ROLL CALL
ChairmEill Kaiser called the meeting to order at 3: 12 p.m.
DIRECTORS PRESENT:
Edward Kaiser, Alan Archibald and David Wigginton.
DIRECTORS ABSENT:
Susan Lamson and Kerry Miller (Director Miller joined the meeting
at 4:06 p.m.
ALSO PRESENT:
John McNair and Mark Warren of JC Resorts; Staff Leslie Suelter
and Nancy Sullivan; Recording Secretary Pat Drew. Ms. Lizbeth
Ecke of Carltas Co. joined the meeting at 3:33 p.m.
ORAL COMMUNICATION [3 minutes for each speaker. Maximum 15 minutes for
oral communication.]
None.
AGENDIZED BUSINESS ITEMS
1.
Approve Minutes of Special Meeting of January 30, 2002.
Director Wigginton moved, seconded by Director Kaiser, to approve the minutes of
January 30, 2002. Approved 3-0-2 (Lamson and Miller)
2.
Review Summary of January 2002 Revenues and Expenditures/Financial Statement.
(Rod Linville/John McNair)
Mr. McNair reviewed the Summary of the January 2002 financial statement stating
that the month ended up by being a good one.
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Revenues for the month were $319,102 or 94% of a budget of $338,432;
Expenditures were $224,860 or 91 % of a budget of $247,049; Net income was
$92,006 or 103% of a budget of $89,717; Total rounds were 5002 or 96% of a
budget of 5,186.
Year to date revenues were $2,629,139 or 99% of a budget of $2,654,191;
Expenditures were $1,731,707 or 94% of a budget of $1,836,569; Year to date Net
Income was $888,908 or 110% of a budget of $805, 956; total rounds for year to
date were 40,062 or 98% of a budget of 40,701.
3.
Quail Gardens Drive Bridge Status Report.
Uohn McNair)
Mr. McNair reviewed a construction schedule prepared by Hazard Construction
Company. Completion of the bridge is estimated for mid-May.
In addition, Mr. McNair reviewed the cash flow situation; Hazard feels the final
paymentwill be in May. The bridge is being financed through the $240,000 operating
revenue and there is $120,000 which will come out of the Capital Reserve Fund.
A question was raised as to John Nabors' connection to Carltas Co., and who was
paying him for his services on the bridge project. Mr. McNair will research this issue.
Mr. McNair handed out a Summary of Capital Reserve and Expenditures as of January
31, 2002. At the beginning of January there was $193,365.65 in the Capital Reserve
Account, plus addition of $12,467.45 from 4% of golf revenue, minus purchases of
$62,828.43 for signage and deposit on restroom facilities for a capital reserve total of
$143,004.67 at January 31,2002. Estimated future Capital Reserves of $78,911.40
and already approved expenditures of $283,500.00 indicate a negative balance of
($61,583.93) at the year's end of June 30, 2002. Purchases include $120,000.00 for
the bridge and the balance on the restrooms of $89,000.00.
Mr. McNair recommended to the Board that another $60,000 be pulled out of the
Operating Expense to be paid back by the end of the year 2003 with $5000 payments
each month to reimburse the Capital Reserve Fund.
Chairman Kaiser said that he would like to see the cash flow proceed on an as needed
basis to the end of the fiscal year without pulling down any monies from the
Operating Expense account at this time. Mr. McNair said he would report back to the
Board each month to advise exactly where they stand with the available cash.
Ms. Lizbeth Ecke of the Carltas Co. joined the meeting at 3:33 p.m.
Ms. Suelter said that the Board had originally talked about financing the bridge and
the restrooms from bond proceeds - and then the bonds didn't happen. She advised
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that the marketplace is a little bit better at this time and she feels that if bonds were
issued today the savings would be a little better than they were back in October. She
suggested that it might be a time for the Board to agendize this issue again to give the
Finance team some direction. Maybe a subcommittee could be formed to sit down
and discuss the subject, because if the Board does start wanting to look at it again it
would be good to have some more discussion about bond financing, whether or not
new money is got out of it or not. She felt that what Mr. McNair was saying was that
things are tight and everything is going to have to line up. They feel that it might be
time for the Board to start thinking again about the saving targets when earlier looking
at refunding the bonds.
Chairman Kaiser said that he would like to agendize the subject for the next Board
meeting and in the meantime a sub-committee of himself, David Wigginton, John
McNair, John White and the Finance team of Leslie Suelter, Tom Johnsen and Bill
Huck should meet to discuss. The Board Secretary was asked to poll the members
and set up a meeting in the next week or two.
4.
Restrooms Status Report.
Uohn McNair)
Mr. McNair advised that the restrooms are in production.
Mark Warren said that from the utilities aspect the restroom on holes 14/15 really
couldn't have any potable water hooked up until the bridge is completed because the
bridge is the catalyst for the water. They will have to put a stall on delivery. The
manufacturer would not want to make two separate deliveries.
5.
Management Agreement with JC Resorts.
Uohn McNair)
Mr. McNair distributed copies of the proposed Management Agreement saying that JC
Resorts would be interested in renewing their contract and in his opinion there are
two options if the Board elects to go forward with it.
On page one under" Management Contract Safe Harbors" as established by the
Internal Revenue Service for a bond financed facility, there are three different options:
11) a 15 year term and 95% periodic fixed fee; 2) 1 0 year term and 80% periodic fixed
fee; and 3) 5 year term (which is currently in place) and 50% periodic fixed fee;
contract may be terminable by governmental entity without penalty or cause at the
end of the th i rd year.
Mr. McNair advised that as requested by the Board, he and Ms. Suelter had checked
with the attorneys for the bonds to determine whether an RFP has to be issued. They
have advised it does not. Ms. Suelter advised that there is no problem with the bond
structure for doing a longer term.
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Mr. McNair reviewed the two plans/options they had put together, one for years
ended June 30, 2006 and one for years ended June 30, 2011. They ran a pro forma
for ten years using this year's budget going forward with 3 % growth, expenses
continuing at the same rate and where it would end up as far as net cash flow. It
shows that if ERGA did a ten-year management contract it would well exceed net cash
flow. They also did a pro forma on a five-year agreement scenario. The five-year
plan mirrors the one presently in place.
Director Wigginton asked if ERGA could do a ten-year agreement. Mr. McNair
responded that when the original agreement was put together the IRS did not allow a
ten-year agreement but now there is no problem with doing a longer term.
Mr. McNair said he has talked to Paul Reed, JC Resorts' president, about the contract
several times and they agree they would like to go with a ten-year contract. If ERGA
goes with a ten-year contract it would save $40,000 in the first five years. Chairman
Kaiser said he would be willing to go with a ten-year contract so they don't have to go
through a renewal every five years.
Ms. Suelter said she will look at the numbers and review with Nancy Sullivan and
Rick Silverman, JC Resorts' accounting person, and have ERGA's Counsel, Glen
Sabine, review the language.
Chairman Kaiser asked for the contract to be agendized for next month's meeting of
the Board, with a ten-year vs. five-year agreement. Mr. McNair was asked to get a
copy of the agreement to the Directors prior to the meeting.
6.
Incidents and Accidents.
(Rod Linville)
Mark Warren reported that so far as the course itself is concerned there had been a
couple of minor incidences - a little cart damage but no broken windshields or
anything like that. However, they did have two attempted break-ins, one was
successful. The first was an attempted break-in on the shed behind the pro-shop
where they keep rental clubs etc. They had just got delivery of some Callaway rental
clubs. The would-be thieves were not successful because the alarm went off and
succeeded in scaring them away. They were able to pull some fingerprints and are
awaiting a report back from the Sheriff's Office. The second attempt occurred the
night prior to the Board meeting, when they were successful in breaking into the Golf
School. They tore the panel off the unit and took mostly golf clubs and some of John
Mason's personal items such as his golf clubs and laptop computer. But they didn't
touch the most expensive stuff - the cameras and photography equipment.
Director Miller joined the meeting at 4:06 p.m.
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Mr. McNair discussed security at the golf courses they operate. It was suggested he
try Rancho Santa Fe Security and Liz Ecke suggested he try the company they use at
the flower mart, Carlsbad Security.
7.
Potential Course Enhancements/Discussion/Direction Concerning Course Operations,
Conditions Needing Change.
Director Archibald asked if the monument sign had been started yet and was told it
had been completed and looks good.
8.
Directors and/or Manager Reports
[For 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.]
l\Jone.
9.
Next Meeting - Thursday, March 28, 2002 at 3:00 p.m.
10.
Adjournment
Chairman Kaiser adjourned the meeting at 4:17 p.m.
Respectfully submitted,
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Patricia Drew
Reporting Secretary
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Edward Kaiser
Chairman of the Board
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