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1998-05-21 CITY OF ENCINITAS ENCINi.TAS RANCH ENCINITAS RANCH GOLF AUTHORITY MINUTES OF REGULAR MEETING THURSDAY, May 21, 19.98 at 3:00 p.m. CALL TO ORDER/ROLL CALL Chairman Kaiser called the meeting to order a't 3:02 p.m. Directors Present: Ed Kaiser, Alan Archibald, Lauren Wasserman, David Wigginton Director Absent: Kathy Riggins Also Present: Chris Calkins of Carltas Company; Scott Bentley, John Mason and Rob Powell of J.e. Resorts; Manager Jim Benson, Secretary Pat Drew; ERGA Contract Accountant Nancy Sullivan. Public Present: Bill Pultz, Mickey Scoffin, Jim Hagen and John Conover of the Encinitas Ranch Men's Golf Club; New Golf Professional Rob Powell was introduced to the Board. 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 16, 1998. Director Wasserman requested that the motion for item 8, page 1-6, be amended to read: "Chairman Kaiser moved that the board approve comp times for this event for those from the City involved in hosting the Mayors and Managers Luncheon Meeting. Director Riggins seconded. Approved 3-0-2 (Directors Wasserman and Wigginton Abstained) Director Kaiser moved approval of the minutes as amended, seconded by Director Wigginton. Approved 4-0-1. 1 3. Men's Club Request/Proposal for Six Weekend Tournaments. (B i II Pu Itz, Pres.) Taken out of order due to time constraints of Club President Bill Pultz. Mr. Pultz referred the Board members to his letter of May 4, 1998 outlining the Men's Club's proposal for six weekend tournaments during the year which was in response to the Board's request and direction at the April Board meeting. Four of the six events would be one-day and two would be two-day events. He indicated that they may have been a I ittle premature in requesting tournaments for 144 players since their Poinsettia tournament to be played the coming weekend had only drawn 64 players. Believes this is due to several reasons: 1) it is a holiday weekend, 2) it is a 2-day event, and 3) many members are young and immature players - some are just getting into golf and/or learning to play. Of the 530 current members more than 300 of them do not have handicaps. It may take a while to build up the club for tournament play. Therefore, this would indicate that the weekend events may take a few years before they grow to the anticipated level. Reviewed the proposed schedule. Because of the anticipated fewer players the time required will be reduced. Starting time would be about 7:00 a.m. and through by 9:00 a.m. JC Resorts indicated that they had no problem with the schedule. Director Archibald also said he had no problem with the requests so long as the numbers were confirmed to the Clubhouse ten days ahead of time so that the tee time manager would know what and how many times were. being released. Director Archibald also said he would like to be sure speed of play is monitored. Jim Hagen indicated that one of the things that slows play is having to keep carts on the paths. An alternative would be to permit walking (i.e. no mandatory carts). Director Wasserman said he was concerned that since it is a public course some members of the public would be locked out during the weekend. Would like to look at the issue again in a year. It was pointed out that members of the Men's Club are primarily Encinitas residents. Chairman Kaiser moved to accept the schedule that had been submitted, subject to the Club giving the Pro Shop ten days advance notice of the final count, and that the speed of play be monitored and reported back to the Board, particularly as it relates to the Match Play Club Championship. Director Archibald seconded. Approved 4-0-1. Chairman Kaiser suggested that the Men's Club work with J.e. Resorts for 1999 tournament dates and bring them back in November for Board approval. The directors agreed. Item 4 taken out of order. 2 4. Review of Board Target for Annual Number of Rounds and Consideration of Reducing Number of Rounds Being Played. (Manager Benson) Manager Benson reminded. the Board that the reason for keeping the number of annual rounds down to 60-65,000 is in order to protect the new course and to allow it to mature. Because of the success and popularity of the course, the rounds are now at 80-85,000 for the year. While the drainage of the course is excellent, nevertheless he believes that the Board needs to seriously consider rolling back the number of rounds to get them more in line to where the rates were set. One suggestion would be to change starting times intervals from eight minutes to ten minutes. This would a/so help play because it spreads people out more and also help speed of play. Asked the Board to consider this and direct J.e. Resorts to reduce the number of rounds through a change of starting times from eight minutes to ten minutes intervals. Director Wasserman asked Golf Professional Rob Powell what this would mean in number of rounds for the year. He responded that a ten minutes interval would reduce the number of rounds by 13,000 for the year for the Monday through Friday period; on Saturday and Sunday play from 6:00 a.m. to 3:00 p.m., the difference would be approximately 6000 rounds for a total of about 19,000 rounds. This would bring the total rounds more in line with the original numbers. There was general consensus that the course is suffering from too much play. Operating at 65-70,000 rounds still remains within the cushion for the bond payments and would also allow the Board to do some optional projects for improvements. For example, additional monies could be set aside for funding a permanent clubhouse. Rates were calculated and justified by income and expenses at 60-65,000 rounds. Manager Benson said he would feel uncomfortable at the amount of revenue that would be generated based on the expenses on the original pro forma. Everything has been based on holding the rounds at 60,000. If we run 80,000 + rounds, that is a 33% increase in revenue but expenses have not increased correspondingly. JC Resorts is currently keeping within the operational budget. There are some pending increases but nothing that would be close to the additional revenue from the increased number of rounds. This could result in a two-way problem: an embarrassment caused by too much revenue if we don't reduce the rates to the public, and a beat-up course. Once the course has matured it could withstand increased usage. Chris Calkins said from his observations he would strongly support giving the course a chance to mature and making adjustments to reduce the wear and tear. This is too big an asset for the City to run the risk of damaging the course. . Director Wigginton agreed, indicating that he has a number of issues of concern that need to be corrected. They are dealing with the problem areas on a daily basis. They are trying to measure up to the expectations everyone has of what the course is ultimately going to be. To do this they need windows of time and windows of recovery to plant material. 3 Director Wasserman moved that at the earliest opportunity the starting times be switched from eight minutes to ten minutes; and for J.e. Resorts to keep the Board apprised of how the course is working out so the issue can be re-evaluated if necessary. Seconded by Director Kaiser. Approved 4-0-1. 5. Review Form and Content of Draft Single Page Monthly Summary of Course Finances. Manager Benson reviewed the format of the proposed single page summary of monthly revenue and expenditures covering major categories in the budget, current month year-to-date and a cumulative column in terms of the budget. The purpose is to make it easy to read and give people a "snap shot" of where the course is going based on the previous month's operations. Manager Benson asked for some feedback as to what Board members would like to see included. Chris Calkins left the meeting at 3:32 p.m. Mr. Benson also explained that because there is difficulty in producing the reports in time for distribution with the ERGA monthly agenda, he would like to suggest that the Board consider changing the meeting date from the third Thursday of the month to the fourth Thursday. Two of the directors indicated they do have a problem with the third Thursday and would welcome a change. Directors agreed they liked the format of the summary but would still wish to receive the full monthly financial report. 7. Review FY '96/97 Audit. (Nancy Sullivan/Jim Benson) Taken out of order. Manager Benson apologized that it was an oversight the Board had not received the audit report earlier. There was little activity during the period but since ERGA did exist we needed to do an audit. The audit firm of Fitzpatrick & Gonzales was selected by the Board some time ago. Invited questions and if none requested Board to accept the audit. It will then be passed on to the City Council. Director Wasserman moved that the '96/97 Audit report be accepted, seconded by Director Archibald. Approved 4-0-1. Scott Bentley arrived at 3:40 p.m. 8. Potential Course Enhancements/Prioritized Wish List. Director Archibald pointed out that the two items on the Wish List - Patio covers and Trellis over the Snack Bar - are one and the same thing. Since an estimate to do the work was not available could not consider the item. However, he felt that since we 4 I are getting into the warm period consideration should be given to going ahead with the patio covers. '\ ) Manager Benson recommended that the Board give authority to David Wigginton to spend up to $10,000 on the patio covers and to proceed with the project. Director Wasserman moved that David Wigginton be given the authority to proceed with the Patio Cover on the South Side of the Clubhouse, the design to be determined. Director Kaiser seconded. Approved 4-0-1 Director Wigginton said he had another issue for consideration by the Board. The area on the course where the irrigation pumps and fertilization injection system is located is currently enclosed by a chainlink fence. Recommends that this be enclosed. There is a lot of valuable equipment in there that is currently exposed to theft and the elements. The Board authorized Director Wigginton to bring his recommendations to the next Board meeting. Item to be placed on the Wish List. Next item taken out of order 2. Request by Cary Bickler, Course Architect, to Consider Dropping Mandatory Carts on Weekends and Changing Course Hole Rotation. Chairman Kaiser asked Scott Bentley to address the issue in Mr. Bickler's absence. Mr. Bentley explained that Ron Whitten is on the rating committee of Golf Digest magazine and rates all the new courses each year. Basically they have two categories: "Affordable Public Golf" and "Upscale Public Course." In the "Affordable Golf" category the course cannot have its fees higher than $50; anything over $50 goes into the "Upscale Public Course" category. Because carts are mandatory at the weekend they look at our course as having a maximum fee of $60, so we fall into the high-end category. Ron Whitten enjoyed playing the course, thought it was remarkable and would highly recommend that it should be in the top ten for new courses in the "Affordable Public Golf" category. This would mean we would have to eliminate the mandatory carts on the weekend in order to qualify. From a promotional standpoint this would be an extremely valuable award. We could use it in all our future promotional materials and advertising. In the long-range plan see it fitting in to help create a national awareness level to where we could charge higher green fees to travelling golfers. With reference to the mandatory cart usage, Mr. Bentley said he had done a study of April cart usage. For all players, at the weekend usage was at 77%, and during the week. when carts are not mandatory, usage was at 77.1 %. At 77% this is about 5% higher than budgeted. 5 Director Archibald moved that mandatory carts be eliminated at the weekend, to start as soon as can be implemented, and to be monitored through the end of the year and re-considered in January 1999. Director Kaiser seconded. Approved 4- 0-1 This new policy does not affect tournaments where carts are mandatory. With respect to the suggestion to change the routing plan rotation of holes, this was not an issue with Ron Whitten of Golf Digest. The original design plan of the course presented by Cary Bickler had a different rotation, but for operating reasons it was changed to the current routing. Mr. Bentley sees no reason to change it. The suggested rotation would create much more congestion around the clubhouse and also slow up play at the snack bar. In addition, it would create longer walking paths for the players, and it would be a tremendous expense to change all the tee signs. There would not be any benefit to either the golf course or the players by changing the rotation. Director Wasserman suggested that it would be helpful if Scott Bentley would prepare a draft response to Cary Bickler for Chairman Kaiser's signature, explaining the operational reasons why the routing is as it is. Feels it would be very helpful for all concerned to have this explanation in the form of a letter. 6. First Review of J.e. Resort's Proposed July '98/June '99 Operating Budget. Taken out of order awaiting Mr. Bentley's arrival. Scott Bentley reviewed the proposed July '98/June '99 Operating Budget stating that no rate changes are included and the budget was calculated on 67,000 rounds based on the current stronK demand. Would anticipate ending up with a net cash flow after debt of $248,000. Want to keep rounds down in order to let the course mature. At 62,000 rounds would break even. Director Wigginton suggested adding $50,000 to the maintenance budget for over seeding. Director Wigginton questioned why the insurance costs were down from $53,000 on the opening budget, to $25,000 for the coming year. Scott Bentley explained that this was because of significant savings but will recheck numbers. Director Wigginton also requested that the annual lease costs be increased to agree with his documents. Director Wasserman asked what kind of insurance coverage is in effect. Mr. Bentley responded that J.e. Resorts carries $50 million liability and also has protection against theft. ERGA and the City are additionally insured. Asked about people being hit by flying balls, he said there have been very few claims or suits against their courses or company. If there is a serious injury then the injured party tends to get the lawyers involved and they go after everybody. J.e. Resorts has had no problem in defending itself in such instances. 6 Director Archibald asked if the City would be liable if hikers illegally walking on the cart paths, were hit by a ball. It was noted that such people are doing so at their own risk since they were, in effect, trespassing. Once the trails project is complete, trespassers and non-golfers will have no excuse for being on the cart paths. Mr. Bentley advised that it is their policy to explain to walkers, when they see them, that they are not to be on the course, that it is a safety and liability issue. It was recommended that a line item be added to -the budget for Operating Improvement Contingencies in the amount of $24,000. Director Wasserman said he would like to aI/ocate a portion of surplus, on a percentage basis or flat amount, towards acquiring funds for a permanent clubhouse. He asked Manager Benson to bring back a recommendation to the next meeting. Chairman Kaiser asked that an agenda item be added for the next meeting for "discussion of a future proposed clubhouse, design concept and financing aspects." Chairman Kaiser asked that a revised draft budget be brought back to the June meeting. 9. Discussion/Direction Concerning Course Operations, Conditions Needing Change. Director Archibald said that in one of their operational meetings they had identified . areas on the course where they need to add additional concrete to turn around paths. Director Wigginton is working with J.e. Resorts on this. Director Wigginton said he and Parks Superintendent Phil Cotton have good communication with J.e. Resorts and course staff. Everything is proceeding smoothly relative to maintenance and improvements. Plan to get the rain gutters around the clubhouse installed before next winter's rains. Chairman Kaiser asked about the hazards at the 15th hole. Manager Benson said they have had discussions with the course architect, Cary Bickler, and they are working on the problem. Chairman Kaiser asked if the course had been rated. John Mason responded that it had been rated from the black tees for the men and from the whites for the women. 10. Report and Review of Maintenance Issues. Issues covered in earlier discussion. 11. Report from J.e. Resorts on Options for Distribution of a Portion of Inaugural Tournament Proceeds to a Junior Golf Program. Uohn Mason) 7 John Mason explained that the money from the tournament would go to the juniors at Encinitas Ranch and would be separate and in addition to the program that J.e. Resorts has at all the courses they operate. Their programs primarily provide low cost golffees to the juniors, provide them with clinics, b~y clubs for kids who can't afford them, and give an annual $500 scholarship to one of their deserving juniors. Scott Bentley said they would probably have to use the money up front to get a program started and established. Maybe on a yearly basis they could do some small fundraisers and get other people to contribute directly to the Encinitas Ranch Junior Golf to give the kids an ongoing program. Tom Hagen of the Men's Club said they would be pleased to set up a committee to work with J.e. Resorts on a proposed program. Manager Benson and Director Archibald said they had done some recalculation of Director Riggins' figures and come up with approximately $9,300 for the junior program. Scott Bentley and John Mason will come back to the next meeting with a detailed plan/proposal for the Board's approval. Director Wigginton left the meeting at 4:30 p.m. 12. Proposal for Premium Rate for Advanced Tee Times for Hotels. (Scott Bentley) Mr. Bentley advised that J.e. Resorts had been approached by several area hotels requesting access to the golf course for their guests. Because the course has been so busy it is difficult for them to get the tee times. Hotel players are affluent and are going to be willing to pay a premium in order to get tee time reservations. His proposal is to put a $15 premium per player on a reservation for four tee times per day (16 players). This would generate another $87,000 a year in revenue for the same tee time. There would also be additional food and beverage income since these players are known to spend more than the average player. Since we know that tee- time brokers will find a way to obtain tee-times at our course to sell to guests at a premium, why should they make the money and not the course. Directors agreed that under the proposal residents would not be displaced and agreed that a premium charge of $20 would be in order. Manager Benson asked if the Board would consider putting the additional revenue into the fund for the clubhouse. This would make it easier to justify to the public. Director Archibald moved that the Board authorize a premium charge of $20 per player with a maximum of four tee times a day spread out through the day. Seconded by Chairman Kaiser. Approved 2-1-2 (Wasserman against, Riggins and Wigginton absent). t} HI Director Wasserman moved that the additional revenue from the premium charges be earmarked for a future clubhouse. Seconded by Director Archibald. Approved 3-0-2 13. 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.] Manager Benson reported that there had been considerable damage to the driving range from the previous week's rain. Enough of the topsoil and hydroseeding went down into the drains to plug the drains and cause a drainage problem. Environmental Golf has agreed to do the repair work. We have officially changed the contact point on the golf course from Alan Archibald to David Wigginton and Community Services. He advised that Scott Bentley is to draft a statement to be posted at the clubhouse advising the ERGA Board's new policy of reducing the number of rounds to allow the course to mature. The purpose of this is to let players know it is a Board policy and not J.e. Resort's. The draft policy will come to the Board for approval at the June meeting. 14. Consider Changing Date of June Meeting Due to Conflict with City's Mayors/Managers Luncheon Meeting and Afternoon Golf. Directors agreed to change the June meeting to the 11th. Consideration of changing the. regular meeting to the fourth Thursday will be placed on the June agenda. 15. Next Meeting - Thursday, June 18, 1998 at 3:00 p.m. Meeting date changed to June 11, 1998 at 3:00 p.m. 16. Items for Future Agendas: a. Consider Changing Regular Meeting Date to Fourth Thursday. b. Policy Statement re Reduction in Number of Rounds. c. Notice of Completion of Golf Course. d. Discuss Status of Liquor License. 9 e. Discuss Future Clubhouse Design and Concept. 17. Adjournment Chairman Kaiser adjourned the meeting at 4:47 p.m. Respectfully submitted, /) . ~~ byp~ )(;/~.~, /"fUAMv " Edward Kaiser Chai rman Patricia Drew Recording Secretary 10