2006-06-06
CITY OF ENCINITAS
ENCINITAS RANCH GOLF AUTHORITY
MINUTES OF SPECIAL MEETING
Lilac Room, Civic Center
505 South Vulcan Avenue
TUESDAY. JUNE 6, 2006 at 3:00 p.m.
CALL TO ORDER/ROLL CALL
Chairman Kaiser called the meeting to order at 3 :07 p.m.
DIRECTORS PRESENT:
Edward Kaiser, Cindy Jacob, Kerry Miller, Chris Hazeltine and
Peter Cota-Robles (at 3:15 p.m.) being all of the directors.
ALSO PRESENT:
Chris Calkins, Carltas Co; John McNair and Kent Graff, JC Resorts;
City staff Jennifer Smith 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 April 25, 2006.
Item delayed until Director Cota-Robles joins the meeting.
2. Review Summary of Revenues and ExpenditureslFinancial Statement/update on Capital
Reserves for April, 2006. (Rod Linville/John McNair)
Mr. McNair reviewed the financial statement advising that the rounds were down for the
month because they aerified the course during the month.
Revenue for the month was $419,349 compared to a budget of $462,266 or 91 % of budget;
Expenditures were $234,766 compared to a budget of $276,876 or 85% of budget; Net
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Income was $184,583 compared to a budget of$184,357 or 100% of budget; Rounds were
6,098 compared to a budget of6,776 or 90% of budget.
Year to date revenues were $3,924,146 compared to a budget of $3,973,703 or 99% of
budget; Net Income was $1,322,600 compared to a budget of $1,215,673 or 109% of
budget; Total rounds were 57,059 compared to a budget of58,42l or 98% of budget.
Capital Reserves at April 30 were $67,613.38; Club House Expansion reserves were
$369,397.81; Total All Reserves were $520,541.44.
Chris Calkins joined the meeting at 3:10 p.m. and Peter Cota-Robles at 3:15 p.m.
1. Taken out of order awaiting arrival of Director Cota-Robles who was in a meeting.
Approve minutes of Regulaf Meeting of April 25, 2006.
Director Cota-Robles moved approval of the minutes of the April 25, 2006 meeting,
seconded by Director Miller. Approved 3-2-0 (Jacob and Hazeltine)
3.
Report on Course Enhancements
(Kent Graff)
a)
Discussion and Decision on Course Overseeding.
(Kent Graff)
Mr. Graff reviewed his comments from the previous meeting for the benefit of directors
who were absent. He explained that the logic for not overseeding is for the health of the
Bermuda grass and the course and added that overseeding around the greens would be
beneficial to stabilize the area and better playing conditions.
Mr. McNair re-emphasized that if they were not going to overseed, then this was the year to
do it before the Carlsbad course comes on line. This would be the year to do the trial.
It was agreed that it was worth trying not overseeding this year to see what happens.
Director Hazeltine moved that the Board approve not overseeding this year on a one-
year trial basis for the purpose of promoting the long-term health of the Bermuda
grass and course. Approved 5-0.
4.
Approve FY 2006-2007 Budget.
(John McNair, Rod Linville, Nancy Sullivan)
Mr. McNair handed out the revised budget scenarios showing the numbers excluding the
cost of overseeding. He said he would recommend raising the rates this year and not next
year when Carlsbad will be opening up. If we are going to raise the rates this year is the
year to do it.
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Director Cota-Robles moved that the Board follow Mr. McNair's recommendation of
a $3 rate increase for the public and Southern California players and $2 increase for
residents and JC Club players. Director Hazeltine seconded the motion. Approved
5-0.
Rate schedule at July 1, 2006:
M-TH
FRI
WKEND
Residents
JC Club
So. Cal.
Public
$52
$55
$70
$75
$58
$61
$75
$80
$67
$70
$90
$95
Rates include cart fee.
Director Cota-Robles left the board meeting to return to his other meeting.
Item 6 taken out of order.
6.
Update on Cell Tower Discussions.
(John McNair)
Mr. McNair reviewed the status of his discussions with the phone company. They agreed to
go back to the engineers and they have come back with the plan to keep the range pole
identical to the other ones, height-wise etc., as the board has already approved. They will
just enlarge the area where the driving range ball machine is located by about 2 ft. in
diameter. Mr. McNair said he had hoped to get their drawing by today's meeting but since
he didn't have it he would request the Board to authorize either Chairman Kaiser or
Director Hazeltine to review and approve the current drawings to be sure they are
acceptable to the Board and so that they can move forward. Mr. McNair said he can sell
the lease 30 days after the cell site is up and running. The Board agreed with his
recommendation.
Mr. Calkins asked if it was possible to get a provision in the lease which would permit the
golf course to relocate the site if ultimately the hay loft is built for an additional site. Mr.
McNair responded that they do have such a provision.
5.
Update on Status of Clubhouse Improvements.
(John McNair)
Mr. McNair distributed a schedule of the capital expenditures for 2005-2006 and sources
and uses for the clubhouse. The budget is $1,345,664.10, paid to date $71,733.29, with a
remaining balance of $1,273,930.81. Total capital sources equal $906,976 which leaves a
projected shortfall of$366,954.81.
One option to cover the shortfall would be to borrow from the operating fund reserves. This
was done in the past to build the bridge.
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In response to a question Mr. Graff reviewed the schedule of work to be performed on the
clubhouse with descriptions of line items under building construction.
Mr. McNair was asked about the cost per square foot for the 3000 sq.ft. improvement and
said he didn't have it but would bring it to the next board meeting.
Mr. McNair said that another option to cover the shortfall came to him yesterday. What if
we did a four or five or seven year lease on the items ofthe wood furnishings ofthe interior,
the kitchen equipment, the modules and furnishings as well as other things, using the same
company we have used for the maintenance equipment. He distributed a copy of the
Leasing Company's proposal. The equipment would be owned by the golf course at the end
of the term.
Mr. Calkins said that if the clubhouse is going to generate increased revenue then he doesn't
have a problem with what is being proposed. Comparing the rental income of the
Community Center with the Clubhouse it is anticipated that at least an additional $50,000 in
revenue would be in order. He congratulated Mr. McNair for a very creative solution and
said that if the agreement was structured under the lines discussed they would not have any
objections.
Mr. McNair said he will work with his accounting team as well and will maximize the first
year's payment to reduce future years' payments.
Director Miller said he felt that the Board was comfortable and in agreement with the
concept and it was just a matter of working out the details.
Mr. McNair said that: 1) he will work on a cash forecast for the year, and 2) make sure that
the leasing company will do an agreement.
Mr. Calkins said this would be terrific if it could be pulled off given that the last thing that
Carlsbad did was to increase the cost of their golf course by $10 million, which was the cost
of ours. They are up over $65 million now. He said the Board could approve, and has
already approved conceptually, within the criteria of the approximate gap of $371,000, with
the specific terms that it come back for review and approval of the final lease agreement.
Director Miller moved that Mr. McNair move forward with negotiating a lease
agreement in line with the outline Mr. Calkins made. Seconded by Director Hazeltine
and approved 4-0-1 (Cota-Robles)
7. Informational: Professional services contract for auditing services with Diehl, Evans &
Company LLP. (Nancy Sullivan)
Ms. Sullivan advised that the City of Encinitas had included ERGA in its request for a bid
on services and had accepted the bid from Diehl, Evans & Company LLP.
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Chairman Kaiser moved that the Board confirm the appointment of Diehl, Evans &
Company LLP as ERGA's auditor, seconded by Director Hazeltine. Approved 4-0-1
(Cota-Robles)
8.
Incidents and Accidents.
(Rod Linville)
Mr. McNair repOlied that there was one incident during the month of a gentleman having
his car broken into.
9. 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.]
Director Jacob reported that an employee, James Horton, was the entertainment for her fund
raiser tournament.
Mr. Graff advised that the course went a full year without any workmen's compensation
claims.
10. Next Meeting - Tuesday, July 25,2006 at 4:00 p.m.
11. Adjournment
Chairman Kaiser adjourned the meeting at 4:30 p.m.
Respectfully submitted,
e~~1}€M/
~otL--
Edward O. Kaiser
Chairman of the Board
Patricia Drew
Board Secretary
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