2006-04-25
CITY OF ENCINITAS
ENCINITAS RANCH GOLF AUTHORITY
MINUTES OF REGULAR MEETING
TUESDAY. APRIL 25, 2006 at 4:00 p.m.
Lilac Room, Civic Center
505 South Vulcan Avenue
CALL TO ORDER/ROLL CALL
Chairman Kaiser called the meeting to order at 4: 1 0 p.m.
DIRECTORS PRESENT:
Edward Kaiser, Kerry Miller and Peter Cota-Robles.
DIRECTORS ABSENT:
Cindy Jacob and Chris Hazeltine.
ALSO PRESENT:
John McNair, Rod Linville, Kent Graff of JC Resorts; John White,
Carltas Co.; Staff member 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 March 28,2006.
Director Miller moved approval of the minutes of the regular meeting of March 28,
2006, seconded by Director Cota-Robles. Approved 3-0-2 (Jacob and Hazeltine)
2. Review Summary of Revenues and ExpenditureslFinancial Statement/update on Capital
Reserves for March 2006. (Rod Linville/John McNair)
Mr. Linville reviewed the March financial statement.
Revenues for the month were $360,432 compared to a budget of $414,757 or 87% of
budget; Expenditures were $253,232 compared to a budget of $261,510 or 97% of budget;
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Net income was $107,200 compared to a budget of $152,214 or 70% of budget; Total
Rounds were 5,405 compared to a budget of$6,248 or 87% of budget.
Year to date Net Income was $1,138,017 compared to a budget of$1,031,316 or 110% of
budget; Total Rounds were 50,961 compared to a budget of5l,645 or 99% of budget.
Mr. McNair reviewed the Capital Reserves and Expenditures for March. Capital Reserves
at March 31 were $55,382.91; Club House purchases for the month were $6,992.49 leaving
a club house reserve balance of $369,562.39; Long Term Capital Reserve Balance was
$79,453.42 and Total All Reserves were $504,398.73.
3.
Approve FY 2006-2007 Budget.
(Rod Linville/John McNair)
Mr. Linville handed out schedules showing various budget scenarios and said that he
thought the board should consider whether it wants to overseed this year or not before
considering increasing rates. Mr. McNair said also that the board should think about the
costs for the club house and if the intent is to borrow from the operating account, how it is
going to be paid back.
Mr. White suggested that it might be prudent to increase the fees this year as opposed to
doing it after Carlsbad's course opens in 2007. Mr. McNair agreed that now would be the
time rather than when having a competing course opening up.
Scenarios:
.1) No changes in rates with no overseeding = cash flow after debt
2) No changes but with 'overseeding
Projected overseeding costs = $75,250
3) No green fee increase and no overseeding =" "
$2 cart fee increase (increases revenue by $120,000)
4) Increase green fees - $2 public, $2 SoCal, $2 cart fee -
don't overseed = cash flow after debt
5) Increase green fees - $2 public, $2 SoCal,
$1 JC, $2 cart fee - don't overseed -""
6) $2 Green fee increase across the board
No cart fee increase - don't overseed
7) Increase green fees -
$2 Public, $2 So. Cal, $1 Residents,
$1 JC, $2 Cart fee increase
"
"
"
"
$1,582.
(-$73,668)
"
"
$113,713
$147,939
"
"
$172,905
"
"
"
"
$161,402
- "
"
"
"
$188,219
Mr. Graff reviewed overseeding vs. no overseeding. He said that if he didn't overseed the
saving would be approximately $70,000; if he overseeds the real cost is going to be in the
seed and the water. He said they are still going to try to do their best to promote a Bermuda
base by using a more directive facility program and applying a higher level of calcium. Mr.
Graff cited the example of the Lomas Santa Fe Golf Course in Solana Beach. It does a
similar number of rounds to Encinitas Ranch and their members had no complaints at all
with one exception. This was their second year of not overseeding at all and the Bermuda
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base has increased quite substantially. The problem they had, which was by choice, was
that they didn't use the pre-emergence herbicide. From a playing standpoint, around the
greens where you have more of the delicate chip shots, the superintendent's
recommendation moving forward to the third year was to at least overseed around the
greens so as to have a more uniform playing condition in that area. He believes that would
be the logical approach to take in the rough at Encinitas. He said he feels it would be in the
best interest of the course to not overseed. Financially it would be an opportunity to apply
the resources to other areas for improvements. Mr. McNair said that he felt that if we are
going to do it then this year is the year to do it (not overseed). Director Cota-Robles said
that if the argument is that in the longer term it's the best thing in terms of the turf on the
course then he thinks that is a pretty compelling argument to not overseed the Bermuda
grass.
Director Miller said that going back to the budget, if they decide to not overseed and get the
cart fee increase, it would generate $113,000 or $172,000 if they increased the public,
SoCal and JC a $1.
Mr. McNair said his recommendation would be to raise the rates this year and not raise the
green fee rate next year.
Mr. Linville will work on the scenarios and bring back to the next meeting for final review.
4.
Report on Course Enhancements
(Kent Graff)
(a) Over-seeding
(Kent Graff)
It was agreed to make the decision on overseeding at the next meeting.
5.
Update on Status of Clubhouse Improvements.
(John McNair)
Mr. Graffpassed out copies ofa schedule showing the bid numbers and description of work
and/or cost that he had received from two contractors. Total estimated construction cost
from PCC is $974,523.00 and from MK $1,213,013.00. The bids do not include furniture,
wood cabinets and bar or kitchen equipment which would be an additional estimated cost of
$315,000.
Mr. McNair said that the Board is looking at a shortfall of $635,000 due to losing a cell site
for $255,000 and the cost of materials rising drastically. He sees a couple of options to
overcome the challenge. At September 30 the long term capital reserve will be at $100,000
and if we use that it leaves $535,000. Assuming they watch the costs and don't use all the
contingency amount of $129,200 but say, $80 or $90,000 of it that gets into the half million
dollar range. If they use the long term capital reserve, and still have approximately a
$90,000 contingency and they use the operating reserve of $500,000 that's how it can be
done. Another way would be to wait to do some of the hardscape outside. Maybe we could
start borrowing now and paying back by increasing the rate.
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Director Miller said that what he needs is a real good analysis of the financial conditions
and telms discussed by Ms. Sullivan (cash flows, reserves and buckets etc.). An analysis
that shows which of the budget scenarios that support an analysis that allows us to fund the
gap. Ms. Sullivan and Mr. McNair will work on such an analysis and bring back to the next
meeting.
6.
Update on Cell Tower Discussions.
(John McNair)
Mr. McNair said he had nothing new to report.
7.
Incidents and Accidents.
(Rod Linville)
Mr. Linville said he had no incidents to report.
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.]
No reports.
9. Next Meeting - Thursday, May 23, 2006 at 4:00 p.m.
Director Miller asked ifthe meeting could start at 3:00 p.m. He felt that given the subjects
for discussion the Board needed more time.
It was agreed to start the May 23 meeting at 3 :00 p.m.
The secretary asked if the analysis and budget scenarios could be received in time to go out
with the agenda package.
10. Adjournment
Chairman Kaiser adjourned the meeting at 5:30 p.m.
Respectfully submitted,
GL:uO-- ?l~
Patricia Drew, Board Secretary
~tJL
Edwa~'d O. Kaiser, Chairman ofthe Board
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