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2005-05-24 CITY OF ENCINITAS ENCINITAS RANCH GOLF AUTHORITY MINUTES of REGULAR MEETING Lilac Room, Civic Center 505 South Vulcan Avenue TUESDAY. May 24, 2005 at 4:00 p.m. CALL TO ORDER/ROLL CALL Chairman Kaiser called the meeting to order at 4:07 p.m. DIRECTORS PRESENT: Edward Kaiser, Peter Cota-Robles, Chris Hazeltine, and Kerry Miller DIRECTOR ABSENT: Cindy Jacob ALSO PRESENT: John McNair and Kent Graff, JC Resorts; 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 April 26, 2005. Director Miller moved approval of the minutes of the April 26, 2005 meeting, seconded by Director Cota-Robles. Approved 4-0-1 (Jacob) 2. Review Summary of Revenues and ExpenditureslFinancial Statement/update on Capital Reserves for April, 2005. (Rod Linville/John McNair) Mr. McNair reviewed the financial statement for April, 2005. Revenues for the month were $446,133 compared to a budget of $417,465 or 107% of budget; Expenditures were $243,573 compared to a budget of $263,901 or 92% of budget. 1 Net income before cell tower income was $201,817, compared to a budget of $152,530 or 132% of budget; Net Income after Cell Tower income was $201,817 compared to a budget of $157,530 or 128% of budget. Total rounds for the month were 6,507 compared to a budget of6,123 or 106% of budget. Year to Date Net Income before cell tower revenue was $1,180,542 compared to a budget of$1,302,709 or 91 % of budget. Total rounds were 55,074 compared to a budget of 58,371 or 94% of budget. Capital Reserves at April 30, 2005 were $65,378 and projected Capital Reserve at June 30, 2005 is $91,856 with a Capital Expense vs. Account Variance of$4l,856. 3. Review Budget Proposals for FlY 2005-2006 (Rod Linville/John McNair) Mr. McNair presented three scenarios, one for zero green fee increase, one for $1 green fee increase and one for $2 green fee increase and discussed the numbers. Director Miller said he had no questions but just wanted to say that he favors some kind of incremental increase since that is what they have done the past couple of years but he would prefer to see a more modest increase and is attracted towards the $1 increase scenario, it keeps ERGA moving forward in the right direction. For the benefit of Director Hazeltine Mr. McNair reviewed the Board's actions at budget time during the past three years. He said the increases are for green fees and not the range fees which were increased last year. Director Cota-Robles said he brought up the subject of the clubhouse because he saw a linkage into the budget issue. He said that one of the things he had reviewed in the Planning Commission's minutes was the fact that the Commission had actually raised some good questions about ERGA's long term plans relative to the clubhouse. They asked if the clubhouse was temporary and if so then what is the long term plan, and if permanent then just say it's permanent and we'll go that way. Director Cota-Robles said that does seem like a legitimate question. Director Miller said that to him it sounded as though the Commission wants a first-class clubhouse facility. They think the quality of the course is such that it deserves that and the community deserves that. They don't see what is there now as being that kind of clubhouse so what they want to do is keep ERGA's feet to the fire so that there is an incentive for ERGA to some day build that kind of facility. Of course, he said we know that the economics will not support that in the near future but he thinks that if ERGA could represent, particularly on appeal to the City Council, that while we are requesting that it be designated as a permanent facility that that does not preclude our willingness to seek out the opportunity for a nice clubhouse project at some point in the future if the economics support it. Director Cota-Robles said that his thought relative to the budget was just that if down the road the Board thinks there might be an inclination to provide a new clubhouse then that's more of an incentive to try to keep the rates going up but still keep them affordable. He said 2 that if the Board was never going to do that then his inclination would be more just to keep the rates as affordable as they can be kept because there wouldn't be as much incentive to increase them for any particular reason. Chairman Kaiser said that it maybe over simplification, but it looked to him that the Board should look at how much should be budgeted to pay the look-back. Ms. Sullivan said that once the look-back is gone in 2007 or 2008, then we payoff the sales tax which is about $800,000. The current look-back total amount due is $921,760. Director Miller moved that the Board approve the budget with a $1 increase in green fees across the board subject to meeting the requirements of the Indenture, seconded by Director Hazeltine. Approved 4-0-1 (Jacob) Mr. McNair handed out his proposed list of Capital Expense for 2005-2006 showing a total of $142,000. He said most of the items are carryovers from 2004-2005. Projected Capital Reserve at June 30, 2006 is $188,217 with a Capital Expense vs. Account Variance of $44,217. Budgeted Capital Reserve additions are at 3.0%. Mr. McNair pointed out that one item on the list that they went higher with is the cart path concrete work. Initially, when they were running tight near the end of building the course and had some over-fUllS on construction, the cart paths were reduced in size. This created a situation where carts on tight turns would go off onto the dirt. He feels this is one area on the golf course where improvements are needed. Mr. McNair suggested that the next Board meeting be held at the golf course and directors drive the course looking at the cart paths. Mr. Graffreviewed some ofthe other items on the 2005-2006 Capital Expense list and Mr. McNair described the advantage of having a POS connection at the starter booth. Director Cota-Robles said he would like to see the item "Bunker Sand at $16,000" in the OperationaVCourse Improvements transferred to the P&L as a line item. Mr. McNair agreed to do this. 4. Report on Course Enhancements. (Kent Graff/Subcommittee) Most issues were covered in item 3 above. Kent Graff said they have had nothing but favorable comments about their new aerification process (as discussed at previous meeting) and how it is of value to the golfer. Chairman Kaiser agreed. 5. Update on Status of Clubhouse Improvements. (John McNair) Mr. McNair advised that they will be appearing before the City Council on June 15 to appeal the Planning Commission's actions. He handed out a copy ofthe explanation ofthe flow of funds that will be included in their report to the Council for their information. 3 Director Miller said that in the appeal he thought it would be good in the presentation to express an understanding of the concerns expressed by the Planning Commission and that what we are proposing on appeal does not preclude the opportunity to build a larger, nicer facility in the future as the course's finances allow. The Council would not be precluding that by upholding our appeal. In the meantime, he said the Board wants the structure to look as nice and be as functional as it can be and not to be going through the process every five or seven years that we need an extension on the temporary status. The Board just wants to make the structure look more presentable and complementary to the quality of the course. Chairman Kaiser and Director Cota-Robles said they would also be at the Council meeting along with Project Manager John Nabors and John McNair. (Attached for Directors' review is a copy of the City Council actions on ERGA's appeal heard at the June 15 Council meeting.) 6. Update on Cell Tower Discussions. (John McNair) Mr. McNair advised that he had Cingular and Nextel sign an agreement that they would have to co-locate to be able to do anything. He is planning on putting both cell towers in the barn loft and hopes to have some paper work for next month's meeting. 7. Incidents and Accidents. (Rod Linville) Mr. Graff said they had two incidents with flying balls. One went into the parking lot and one went to Leucadia Boulevard. No injuries. 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.] Nothing to report. 9. Next Meeting - Tuesday, June 28, 2005 at 4:00 p.m. at the Golf Course Clubhouse. Directors to meet at 3:00 p.m. on the driving range and then take a tour of the course before the meeting starts. 10. Adjournment Chairman Kaiser adjourned the meeting at 5:20 p.m. Respectfull~ submitted, h 'e/L ~&L4V ~ Patricia Drew, Board Secretary Edward O. Kaiser, Chairman ofthe Board 4