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2005-04-26 CITY OF ENCINITAS ENCINITAS RANCH GOLF AUTHORITY MINUTES OF REGULAR MEETING TUESDAY. APRIL 26, 2005 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 4:06 p.m. DIRECTORS PRESENT: Ed Kaiser, Kerry Miller, Peter Cota-Robles and Chris Hazeltine. DIRECTOR ABSENT: Cindy Jacob. ALSO PRESENT: Chris Calkins, Carltas Co.; John McNair, Rod Linville and Kent Graff, JC Resorts; John Nabors, Project Manager; Patrick Murphy, City's Planning and Building Director; Staff member Nancy Sullivan; Member of Public Ray McGarity, 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 22,2005. Mr. Calkins asked the Secretary to make a clarification change in the last sentence of page two and first paragraph of page 3, to read "He said that looking at it from that perspective he doesn't believe that they would object unless the Board chose to change its policy and adopt budgeting that would substantially reduce the projected revenues. On that basis they won't object at this time to the characterization of the cell tower revenues as capital." 1 Director Cota-Robles moved approval of the minutes of the meeting of March 22, 2005 as amended, seconded by Chairman Kaiser. Approved 4-0-1 (Jacob) 2. Review Summary of Revenues and ExpenditureslFinancial Statement/update on Capital Reserves for month of March, 2005. (Rod Linville/John McNair) Mr. Linville reviewed the March financial statement. Revenues for March were $400,875 compared to a budget of $406,548 or 99% of budget; Expenditures were $238,633 compared to a budget of $255,653 or 93% of budget; Net income before Cell Tower income was $161,342 compared to a budget of $149,861 or 108% of budget; Total rounds were 6,226 compared to a budget of 6,032 or 103% of budget. Year-to-date Net Income before Cell tower income was $963,425 compared to a budget of $1,135,179 or 85% of budget. Including Cell Tower income year-to-date was $1,412.358 compared to a budget of $1,180,179 or 120% of budget. Total rounds were 48,567 compared to a budget of 52,248 or 93% of budget. Capital reserve at March 31, 2005 was $52,318.80. Projected Capital Reserve at June 30, 2005 is $91,223.00 with a Capital Expense vs. Account Variance of$4l,223.00. Expenditures for Club House Expansion were $39,355.63; Club House Reserve at March 31,2005 was $394,278.18. Total All Reserves were $479,740.95. Mr. Linville handed out some draft budget options for consideration at the next Board meeting. 4. Update on Status of Clubhouse Improvements. (John McNair) Taken out of order. John Nabors, project manager for the Clubhouse improvements, reported that he had obtained approval from the Planning Commission for a temporary building with instructions to go back in seven years with a permanent building and then to make whatever argument they might have. He said that he thinks it will be, and the argument he finally got through to them, was that this is not a retail establishment where they can make money and go out and borrow money, build the expansion, make more money and pay off the loan. We don't have that ability. He said that no matter how much he told them that, they (the Commissioners) didn't seem to catch that until the very end. They approved the plans as submitted with no stucco panel - just a metal building. Chairman Kaiser said the Commission was under a misconception. One of the commissioners was under the impression that prefab stucco panels were going to be used, and according to the architect afterwards, that is not the intent at all. 2 Mr. McNair said he tried to explain to the commission the financing of the golf course and the concept of the "buckets" that have to be paid off each year. He said that JC Resorts is simply managing the golf course operations for ERGA. However, the commissioners still couldn't grasp the concept that ERGA still cannot borrow the money. Mr. Nabors said the approach was two-pronged: design review and change oftemporary to permanent. Chairman Kaiser asked if anyone could enlighten the Board on how the building was classified as a temporary structure initially. Mr. Murphy said that's the way it was sold initially, to put up a clubhouse with the dollars ERGA had and the Commission said fine, is the five year period OK where you can come back and upgrade to permanent and they were assured it was. He said that's where the irritation started with the Commission, even though most of the commissioners have been replaced, they still see it as an irritation. From their perspective it is no different than a developer promising to do something and not following through with the promise. Mr. Murphy said he has always been a proponent of getting rid of that condition, to just call it a permanent building. In other words to call it what it is and get out of the loop. He advised that he personally felt ERGA should appeal to the Council and get out ofthat loop - temporary versus permanent. Mr. Calkins said that he felt that in coming back at this point ERGA is responsive to one of the issues that were in front of the Commission; one of the reasons it was originally sold as a temporary building is that it was clearly undersized to provide tournament support etc. The other issue was the idea of having a metal building. How was that going to look? He said the argument that he made was that he felt the informality of the building with the water tower has, over time, proven to be a good fit for the course. He believes Mr. Murphy is right - ERGA has brought something back; it is an expanded full-sized facility that has design elements incorporated in it to do that. Director Miller said that circumstances change. He could see that when it was originally proposed there was probably a good faith expectation that it would ultimately have a large clubhouse. He said that from prior discussions of what they should do about the clubhouse, of whether they wanted to move in the direction of planning for a much more sophisticated permanent structure, the board had come to the conclusion that economically it didn't make a lot of sense. JC Resorts had presented evidence that those type of golf course operations tend to be losers so why would ERGA want to put the golf course in a situation where it had an element that was dragging its financial viability down and not creating a significant asset either to the course or to the community. So that was why the Board chose to go this route. Mr. Murphy said that if ERGA did appeal the Planning Commission's decision to the City Council it would be appealing the temporary versus permanent use and also the deletion of the seven year requirement to go back to the Commission which would basically be saying it was a permanent structure. It was also agreed that the stucco would be colored green to blend in with the landscaping. John Nabors, John McNair, Chris Hazeltine, Chris Calkins and Ed Kaiser will be the team to put the appeal together. It was agreed the appeal and presentation would be a different approach to that taken with the Planning Commission. 3 Chairman Kaiser moved, Director Hazeltine seconded, that the Board appeal the permanent nature of the club house and the design review, specifically the color scheme of the stucco, and that John Nabors file the appeal on behalf of ERGA. Approved 4-0-1 (Jacob) Patrick Murphy and John Nabors left the meeting. 3. Report on Course Enhancements (Kent Graff/Subcommittee) Mr. Graff reported on improvements being made to the golf course in preparation for the Bloom in America committee's visit May 6. Mr. McNair spoke about the new concept for aerating the greens. He said they aerate three times a year to keep the greens healthy. The challenge with that is that they lose a week or almost two weeks of revenue because golfers do not want to play on aerified greens because it affects their putting. So, they have come up with the concept where they will aerify half the green and for ten days keep the cup in the front half of the green and reverse the procedure and do it for the back half. They tried this on one of their other courses and it worked. There was not one complaint. The superintendent is on board with the idea and operationally thinks it's fantastic. They kept the momentum and revenues were up and they didn't lose any ground for those two weeks. It worked well and he wants to do it company- wide but before he did so he wanted to bring it to the ERGA Board to report on what they are doing. The Board was unanimous in its approval of the plan. 5. Update on Cell Tower Discussions. (John McNair) Mr. McNair said that he is still working with Nextel and hopes to have something to report at the next meeting. 6. Incidents and Accidents. (Rod Linville) Mr. Graff reported that about three weeks previously a gentleman on his crew was struck by a vehicle while he was in the parking lot cleaning up debris. He was sent to Scripts and released that day. He is on temporary disability and it is being handled by their Risk Manager. 7. 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.] None. 4 8. Next Meeting - Tuesday, May 24, 2005 at 4:00 p.m. 9. Adjournment Chairman Kaiser adjourned the meeting at 5: 17 p.m. Respectfully submitted, /---"'-,- I' , I~,t~ ~( (~~ J)(.i!/v/ Patricia Drew, Board Secretary ~$IO~ EdwarCl O. Kaiser, Chairman of the Board 5