1997-12-02
CITY OF ENCINITAS
ENCINITAS RANCH GOLF AUTHORITY
MINUTES of SPECIAL MEETING
TUESDAY, DECEMBER 2, 1997
CALL TO ORDER/ROLL CALL
Chairman Kaiser called the meeting to order at 3:02 p.m.
Members present: Directors Ed Kaiser, Kathy Riggins, Alan Archibald, Lauren
Wasserman, and David Wigginton
Also present: John White of Carltas Co.; Paul Reed, Scott Bentley and John Mason of
J.e. Resorts; Manager Jim Benson, Recording Secretary Pat Drew
Public Present:: James Bond, Art Beardsley, Chris Bartsch, Paul Amwurst, J.Mickey
Scoffin, Gene Mee, Matt Chess, Rolland Crosby, Peter Johnson, John Guidero, Virginia
/ Denson, Shirley Reeve
ORAL COMMUNICATION
None
REGULAR AGENDA
1. Approve Minutes of Regular Meeting of November 20, 1997
Minutes held over to next meeting; Director Archibald had not read them.
2. Approve Rate Structure.
For the benefit of the members of the public who were present, Manager Benson gave
a refresher briefing on the rate structure beginning with an historical overview of the
origins and composition of ERGA; the sale of revenue bonds in the amount of about
$10,760,000 to pay for course construction including issuance and overhead costs,
and design costs; selection of J.e. Resorts to operate the golf course; ERGA activities
to date and planned for the future.
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Manager Benson explained that the rate structure is driven by revenue and the JC
Resorts operating budget. This budget is very close to the pro forma put together in
the Official Statement that went out with the offer on the revenue bond. He reviewed
the current projected rate schedule and explained in detail how the budget and
revenue influence the setting of the rates.
On a question from Director Wasserman regarding other courses' rates and
anticipated 1998 increases, Manager Benson stated that J.e. Resorts had polled a
number of County courses and determined that the majority anticipated increasing
their rates. This information was taken into consideration when preparing projected
costs and revenue to support the proposed rate structure for the Encinitas Ranch Golf
Course. Scott Bentley compared 1995 rates with the information on the 1998
proposed rates that he had acquired. On average, week day rates for the
approximately 20 area courses will rise 25% over 1995 rates; weekend rates are
expected to go up 18% from the same period.
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Christine Barsch, 4902 Loma Laguna Drive, Carlsbad, asked why there was a special
Encinitas Resident's rate if City taxes have not been used for the construction of the
course. Manager Benson explained that during the initial negotiations on the
development agreement for the golf course, direction had been given by the City
Council that there was to be no subsidization of a small segment of the community
(the golfers) from the City's general fund/tax base. All expenses for operating the golf
course, including City staff time for working on the project, are to be paid by ERGA.
It is standard for a municipal golf course, and a city, to give preferential rates to city
residents. It was the prerogative of the Board to give preferential rates for residents
and the members chose to do so.
Gene Mee, 283 Village Run East, Encinitas, said he wanted to bring to the attention of
the Board that while budgets are very important, he has found that sales are
sometimes more important. Almost any problem can be solved if there are enough
sales. As a senior, he is concerned that there are no senior rates. Believes that in a
couple of months we will realize that we need more people playing golf every day.
Scott Bentley reviewed the revised pro formas for the rate structure concentrating on
the bottom line, with additional input from Manager Benson. In the previous pro
forma, using the rates of $35 for weekdays, $40 on Fridays, and $49 on weekends,
with a $7 discount for residents Monday - Thursday, and $5 on Fridays and
Weekends, the net income indicated a loss of $19,800 for the first full year. At the
last Board meeting he had been asked to prepare a pro forma where the week day
rates stay the same at $35 and $28 (for resident$), Fridays increased to $41 ($34 for
residents), and weekends increased to $50 and $43 (for residents). This would
increase the net income to $230,000 for first four months, and in the first full year the
loss is reduced to $11,000. These rates and revenue are based on carts being
mandatory on weekends until the late rate, optional during the week; all tournaments
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and groups that are prebooked, would be using carts as well. Mandatory carts on
the weekend ensures speed of play and also produces an increase in income of
$30,000. In the pro forma the JCR Club rates were adjusted to the same as the
resident rates. Preferential tee times are seven days for the general public, JCR Club
eight days, and Encinitas residents nine days.
Director Archibald asked if there might be some affect on the financial viability of the
course by having preferential tee times for residents ahead of the general public. J.e.
Resorts Club members typically have an eight day advance and the general public has
seven days advance. Wonders whether City residents should have an eight or nine
day advance reservation to enable residents to get a tee time ahead of the general
public. Would like an opinion from J.e. Resorts as to whether this could affect the
pro forma for the revenue stream on the golf course, particularly with respect to the
weekends. Could this affect the rate structure?
Scott Bentley responded that this is something to be concerned with; however, they
have not studied it. They do have in the pro formas numbers they would expect to
see from the JC Resorts Club and from the residents, but at this time, of course, do not
really know the demand from either residents or JC Resorts Club members. It's hard
to comment on what the effect wi II be.
Director Archibald said he would also be interested in knowing what affect there
would be on the pro forma if we were to do preferential tee times for the Men's Club
and Ladies' Club. Mr. Bentley responded that they would expect most of the
members of the Clubs to be either residents or J.e. Resorts Club members, therefore
they would receive the advance tee times through one of those two avenues. This
has been their experience at other clubs.
Director Wasserman said he would like to follow up on Director Archibald's line of
thought and would like this issue discussed at a future meeting. It was agreed to
discuss preferential tee times at the January board meeting.
Director Wigginton moved, Director Riggins seconded, approval of the following
rate structure:
Weekdays - $35/$28 (residents/JCResorts Club),
Fridays - $41/$34 (residents/JCResorts Club),
Weekends - $50/$43 (residents/JCResorts Club),
late/twilight $18, Junior $10;
late/twilight $22, Junior $12;
latelTwilight $28, Junior $15
Approved 5-0
3. Approve Lease with e.J. Resorts for Food and Beverage Concession at Golf Course.
Manager Benson handed out a redlined copy of the pages related to the changes in
the lease and Concession Agreement that had been discussed at an earlier meeting
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and sent back for revision. The agreement was the result of the Alcoholic Beverage
Control Board's decision to restrict the issuance of a liquor permit to the operator of
the golf course, J.e. Resorts. ERGA's agreement with J.e. Resorts was revised in
order to accommodate this requirement.
The revisions and language regarding amortization of equipment came as a result of
consultation with General Counsel Krauel. J.e. Resorts have agreed to go with a
seven year amortization schedule. If J.e. Resorts is not selected to continue the
operations of the golf course at the end of five years, then ERGA's buy-out of the
equipment would be 30%. At that time the equipment and lease would be turned
over to the new operator of the concession. Mr. Benson said he felt that the way they
have structured the agreement is in the best interests of ERGA.
The other issue that had been of concern to General Counsel Krauel, related to a
provision in number 11. Taxes and Assessments. An amendment has been made to
indicate Tenant to pay taxes and assessments, rather than Landlord. An additional
item 11.b, on property taxes, was added to the lease. This is a requirement of State
Codes because a potentiality exists for a possessory interest to be created by the
concession agreement. This should not be a large amount of money since it is based
on half of the building and its cost.
Director Wasserman moved, Director Riggins seconded, approval of the lease
Agreement as presented. Approved 5-0
4. Men's and Ladies' Clubs Update
Christine Barsch, 4902 Loma Laguna Drive, Carlsbad said she spoke on behalf of
some ladies who have expressed some concerns relative to the operations of the
Ladies'/Women's Club.
Art Beardsley, 672 Crest Drive, Encinitas, President of the Encinitas Golf Association,
expressed his concerns and disagreement with the way the Golf Course and Clubs are
being set up.
Director Archibald asked Mr. Bentley to give a breakdown on the way the fees will be
distributed. He advised that of the $85 fee for a non-resident member of the Men's
Club, $25 would go to the SCGA, $5 for administrative fees, and the remaining $55
would go into the Club's treasury for the Board to spend as they see fit on benefits for
the members. Most clubs spend that money subsidizing tournament purses.
Chairman Kaiser suggested that while the ERGA Board had determined they did not
want to become involved in the operation of the Clubs, given some of the issues that
were surfacing he felt that maybe it would be prudent for the Board to nominate a
sub-committee of a couple of board members, including Manager Benson, to
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periodically meet with Scott Bentley and John Mason of J.e. Resorts, to give some
direction when and where necessary. Chairman Kaiser said he had made a note of
the various questions brought to their .attention and would plan to follow up on some
of them in a sub-committee meeting.
5. Golf Course Dedication/Tournament
John Guidero, 545 Oceanview Avenue, Encinitas, asked whether there would be a
refund if, after purchasing a tournament ticket a person was unable to play.
Chairman Kaiser said the issue would be discussed at the January Board meeting.
Director Riggins reviewed the plans for the dedication of the golf course and golf
tournament on Saturday, February 28, 1998.
6. Major Hole Sponsor Program
Director Riggins advised that she and John Mason have been working on a list of
potential sponsors who would pay $5000 for a 3-year sponsorship of a hole.
7.
Potential Course Enhancements.
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Director Archibald said that while there is a pad for public restrooms adjacent to the
maintenance yard on the south nine holes, there is no building nor any funding. This
is one potential use of money raised for course enhancements. Portables will be used
in the short run.
8.
Directors and/or Manager Reports
Director Archibald advised that John Mason had measured the course and it came in
just over 6800 yards at 6819 yards.
9. Next Meeting - Thursday, January 15, 1997 at 3:00 p.m.
10. Adjournment
Chairman Kaiser adjourned the meeting at 4:40 p.m.
Respectfully submitted,
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Patricia Drew, Secretary
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Edward Kaiser, Chairman
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