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2000-11-09 RA~rCII CITY OF ENCINITAS ENCI N IT AS RANCH GOLF AUTHORITY MINUTES OF SPECIAL MEETING Carnation Room, Civic Center 505 South Vulcan Avenue THURSDAY. November 9,2000 at 3:00 p.m. CALL TO ORDER/ROLL CALL Chairman Kaiser called the meeting to order at 3:05 p.m. Directors Present: Director Absent: Also Present: Edward Kaiser, Susan Lamson, Alan Archibald Kerry Miller joined meeting at 3:09 p.m. David Wigginton John White, Carltas Co.; John McNair, Rod Linville, Mark Warren, JC Resorts; Ray Paul, Senior Resident; David Balser, Golfer; Burton Swaim, ER Men's Club JY1ember/Senior Citizen; David Tokoro, ER Men's Club; Bob McClendon, Resident; Hal Boston, Resident; Phil Cotton, Supt. City's Parks Dept.; Nancy Sullivan, Leslie Suelter, City's Finance Dept; Pat Drew, Recording Secretary ORAL COMMUNICATION [3 minutes for each speaker. Maximum 15 minutes for oral communication.] None AGENDIZED BUSINESS ITEMS 1. Approve Minutes of Special Meeting of October 5, 2000. Director Archibald moved approval of the October 5, 2000 minutes, seconded by Chairman Kaiser. Approved 3-0-2 (Wigginton and Miller absent) Taken out of Order 14. Discussion regarding Golf Course Rates, Charges and Operations Policies. 1 Several citizens were present and requested time to speak to the agenda item. David Balser led off by saying that they had had a public meeting on October 9, 2000 and at that meeting they had decided to go to the ERGA board to express their concerns, in particular about the golf course rates, and a number of other items that were of concern to the citizens. The number one issue, however, is rates. Director Miller joined the meeting at this point (3:09 p.m.). Mr. Balser reviewed a list of questions he had brought from his meeting with the golfing people. These included: . Cost shifting of rates . How does JC Resorts get paid. . Is this a "public" or "municipal" golf course? . Bond structure? Are they tax-free municipals? Total debt? Debt Service? Is debt service being paid? Will bonds be refinanced? . Can there be an "active" golfer on the ERGA Board? . There are numerous situations between JC Resorts staff and the general public. How can these issues be resolved so the "customers" feel they are being treated fairly? Mr. Balser stated that in 1994 when the peQple voted for Prop K approving the Encinitas Ranch development, they felt they were being promised extremely low golf rates and benefits better than people other than residents of the City. The citizens don't feel they are getting what they thought they were going to get. For the most part they are getting some benefits, but most citizens feel the rates are not where they want them to be, including discounts for seniors, and they are angry that jC Resorts Club members get the same rate as the residents. The bottom line is that people want lower rates. There was discussion as to whether this is a municipal or public golf course. Because they voted on the proposition they feel this is a municipal golf course. He noted that in Mr. Bond's recent campaign flyer he referred to it as a municipal golf course. Mr. Balser reviewed some schedules of current and proposed rates that he had prepared together with some proposed cost shifting to give Encinitas residents better rates, and asked the Board to consider them. His assumption is that if the rates were changed as he is proposing the public participation may decrease by about 5%; the residents' participation may increase by 10%; and jC Club memberships would increase by 5% because people will see the benefit of being a member. Mr. Balser handed out a sheet that summarized what would happen with the numbers with the increase in participation and shift in rates. Mr. White commented that in response to a statement by Mr. Balser, taxpayers are not paying for this golf course. He felt that this concept would dramatically increase the number of rounds and as a consequence this would have an increase in 2 maintenance costs with a corresponding adverse affect on the greens. Mr. McNair agreed and said that even now they are looking at possibly having to temporarily close one of the holes for a couple of days because of over-play. He also noted that he is not certain that the percentages are going to change as Mr. Balser is predicting unless, of course, they all open at the same time - i.e. no two day advance tee time reservations for residents. Right now they don't have a problem getting a tee time but the public does. Mr. Linville noted that on a Saturday they can have anywhere from 60 - 80 people on a waiting list. The nine-day tee time advance reservation is a big benefit for the residents. They can pretty well be assured of a tee time when they want it. This was one of the benefits that were considered when setting the original rates. Directors Archibald and Miller both asked Mr. Balser if the residents would be happy with the proposed dollar difference between residents and JC Club of $2 during the week, $3 on Friday, and $2 at the weekend. He responded that it was more the principle that they were concerned about. Of course, they would like to have much lower rates but they know that is not reasonable. Mr. Balser said that the other five items on his list of questions could be gone through quite quickly. . Who gets the JC Club membership Fee? Mr. McNair explained that from the $299 up to $29 of it goes to the golf course selling the membership and range balls. The remainder goes to the golf course when they play their five coupon rounds of golf. It does not go to JC Resorts. 100 \ ?--\IL\" ZD . How does jC Resorts get paid? Who gets the money from the driving range, pro shop, lessons? Mr. McNair's response: All the money goes to the Encinitas Ranch Golf Course. JC Resorts is paid a management fee; a base fee and also a bonus based upon perforJTI~nc~. .J.- fvI~ &1>~l s.+",1R.pL-fitrit 1\ People feel the golf course is overcrowded. Because of the eight minute tee times starters have many players waiting at the first tee. May have as many as eight golf carts waiting. People feel that the more people JC Resorts pushes onto the course the more money they are going to make. Even though the course is run on a managemerit fee at the end of the year there is a bonu's to be paid based on numbers. Director Archibald responded that there is a cap on the bonus. . Mr. Balser: If this were truly a municipal golf course, like a recreation facility, is it the City's job to make a big profit off a recreational facility, as opposed to jC Resorts which is in the business of making a profit? I know ERGA feels they have a great responsibility to payoff the bonds but people feel that this is being run as a profit making facility and they.see jC Resorts as making this big profit. I think people will be comfortable knowing that they are on a management fee, but if this golf course were paid for would ERGA be looking at it in a different light? Would this be another recreational facility that we were promised in the Proposition? 3 Director Miller said he could answer that question having managed a City that had a municipal golf course. It would not be run as a recreational facility, it would be run as an enterprise fund, which under governmental accounting it would basically be a profit center. One would attempt to generate revenue above and beyond expenses but that money would go back into the course for course improvements, enhancements, etc. No, it would not be a break-even type proposition where we would be making just enough money to cover administration and operation of the course. We would be developing a capital fund to enhance the golf course. This is essentially what we are doing now except that it is basically a privatization model as opposed to a public model. Instead of the City being the operator of the golf course we contract with a private provider. We do this with a number of City services. Mr. Balser: I think people would be much happier if this were a municipal golf course and we didn't have a big bond/debt service. But people feel as if the price structure/rates are market driven. \~\\~~ ~9 ~ Director Archibald: When the structure of the finances was set up we had a bond for the golf course and construction costs went over by about a million dollars. We also have a bond for the road improvements around the golf course. The revenue . from the golf course has to pay for both these bonds. ~ rcasen th~e-45 ill.s(;).-(l> tt: -bond p~illgJor the roaas-1-s-- ooEatise the Eckes-tkdieated-the 17f; aC..f<Qs-et--lamJ...f-er- v 21,4- }oo ~. ..Qtherwise. we WOI.Id-J;wwe.- paid for toc J.and witl. a bOfKL_Eilh('r WClY-r We 1 yiJ have approximately $14 million of debt for the construction of the golf course? (approx. $10 million) plus the roads and a portion of Leucadia Boulevard (approx. $4 million). The debt service is $948,000/year (for the golf course) and the course is not currently earning enough reyel1ue to fully reimburse the CFD for the roads. G(.~.J"'.(!/~ obi, ~ffv.. 111uftlapafL It is not a .4ax fn~e....munidpaJ bond. It's a golf course revenue bond issued by The Encinitas Ranch Golf Authority, a public entity, and owned by a single institutional investor. The bonds were set up in such a manner to protect the City and taxpayers so they are not at risk should the golf course fail. ERGA owns the land. . Can there be an "active" golfer on the ERGA Board? The citizens feel that the Board members of ERGA are not golfers. They would like to see someone from the golf course be on the board, an active golfer and a resident. . Situations between jC Resorts staff and the General Public. At the meeting numerous people raised issues about jC Resorts and the general public; some people feel they are not being treated as customers. Each and every issue was different and he didn't want to be involved in trying to resolve them. People want to feel welcome when they walk into the clubhouse. Mr. Balser said that he had personally always felt welcome and people knew him by name. An example of the complaints would be that there have been occasions where people have broken a rule and instead of staff dealing with the issue and saying this is 4 resolved, they have fingers pointed at them saying "you're still the rule breaker." People feel that they're not going to be a number one customer. Mr. Linville stated that other than maybe the gentlemen at the meeting, no one else has come to him with any problem issue. He is always available, no one has ever been turned away. People are more than welcome to go in and talk about any employee or a situation. For issues of customer service, he has had an all- staff meeting and they reviewed customer service, watched videos, did training and will continue to do that on a periodic basis. He also reminded the board that there are over 200 residents of the City who are also JC Club members and who appreciate being able to play at five courses. Director Miller said he would like to summarize his understanding of what he is hearing are the priorities. Basically, number one is the concern about the lack of a rate differential between residents and JC Club non-resident members. This is in large-part a matter of principle, not so much an economic issue. More than anything it's the sense that the resident is not receiving some special recognition. Secondly, it is having some kind of resident-golfer representation on the board that would at least bring that voice to the table on an official type basis. Those are the two issues that he takes from the meeting that are being raised as representing the group's primary concerns. This is not including the customer service issues which can be worked out. Mr. Balser agreed with the summary. Burton Swaim said that his family moved to Encinitas in 1925 and he retired a year ago so has time now to take up issues. His main concern is that seniors have no recognition either in rates, discounts for lessons, etc. As a citizen, a senior, and an active member of AARP, he asked the Board to consider the seniors. Maybe there are times in some slow mornings when seniors could receive a rate break. For him personally the key points are that something should be done about a senior rate, both for lessons and tee times. Feels that any aware group should be looking at services to seniors as a portion of their program. Director Archibald commented that the Board had looked at senior rates during the past three rate setting sessions and elected to defer it until such time as the financial stability of the course is more known. Dave Tokoro said that being a senior, he also would like to see some senior rates. He believes there would be more participation in this group as a result. Bob McClendon said that he had expressed his concerns about the course in a letter and had had discussions with john McNair. He feels that john McNair now has a handle on what he is/was concerned about. Mr. Balser asked about ERGA's tournament policy. directions from the Board. Mr. Linville explained his I \. ' 5 Chairman Kaiser advised that he will put the issue of rate adjustments, senior rates, tee times, jC Club on the next agenda and asked John McNair and Rod Linville to come back with a few scenarios. The Men's Club members and citizens left the meeting at 4: 1 0 p.m. 2. Report from the Investigating Sub-Committee on the Charges Against Andrew King. (Directors Kaiser and Lamson) Director Lamson reported that as the subcommittee she and Chairman Kaiser are investigating the disciplinary action taken against Andrew King. What they would like to do after meeting with Andrew and his parents, is to call a special meeting of the board. The Secretary was asked to poll the directors to arrange a mutually convenient time for a meeting. 3. Review Summary of September, 2000/Financial Statement; Summary of Capital Reserve and Expenditures. (Rod Linville/John McNair) Mr. Linville reviewed the financial results for September. Total revenue was $380,273 compared to budget of $361,812 for 105% of budget. Expenses were $233,761 compared to a budget of $227,398 or 103% of budget. Net income was $143,620 compared to a budget of $132,130 or 109% of budget. Total rounds were 5,727 compared to a budget of 5,990 and came in at 96% of budget, due to aeration and closing for one day to do striping on the parking lot, team building exercises, some work in the pro shop and a lot of work out on the golf course. Year to date net income is $595,098 compared to a budgeted amount of $484,280 for 123% of budget. Rounds were 20,975 compared to a budget of 20,170 or 104% of budget. 3a. New Golf Collateral. Uohn McNair) Mr. McNair passed around a copy of their new golf collateral brochure for directors to view. He advised that their web site is changing as well. His goal is that by the end of February to have an interactive web site for tee times so players can actually book on line. 4. Replacement Plants for Brome Grass. (Mark Warren/john McNair) Director Archibald was asked to serve on a subcommittee with Mark Warren and Director Wigginton and bring back to the next Board meeting for approval of the expense. 5. 14th Tee Update. (Mark Warren/John McNair) Mr. Warren reported that everything is going well although it is not completed yet. He has about 4000 sq.ft. of sod still to lay, some hydro-seeding of the native plants to tie in at the roadway, and additional plantings on the slopes. He expects to get this completed within the next two weeks. Irrigation is complete as are the coverage tests. 6 Mr. Linville said he is starting surveys again to see how many people shoot to the 15th tee. In the previous survey they know that about 6% of the golfers were going up to hole #15 with their tee shots. Mr. Cotton advised that the $35,000 check due from Cornerstone has been received and deposited. 6. Authorize Mark Warren to submit a landscaping plan for Hole 14 and slope area to the City's Planning Department. (Ed Kaiser/ john Nabors) Mr. Cotton said that they had an abbreviated design review with the Planning Department. They said "go" and Mark should be able to do what they require without hiring a landscape architect. Planning can then close out the books on the Issue. 7. Status of Entrance Monument. (Alan Archibald) Director Archibald said he has received no word back from Ure Kretowicz of Cornerstone. Also, he is waiting to hear if Mr. Kretowicz has connections to get the Torrey Pines for the slopes along Quail Garden Drive. 8. Quail Gardens Drive Bridge Update. (Bridge Sub Committee) Director Lamson said that john Nabors had submitted the application forthe bridge permit to the City. She had also received a call from jim Gay of Hazard who said that it was looking lik~ the additional fee for the added expansion on the structural support would be about $1200-$1500. The base price is $322,000 plus this additional amount. Chairman Kaiser asked if the Board should set aside some capital reserve now and do they need to talk about borrowing the money from the City. (see item 10) Taken out of order. 10. Impact of Bridge Loan Payments on Revenue Flow of Golf Course. (Nancy Sullivan/Leslie Suelter) Ms. Sullivan said she had prepared a cash flow showing what would happen to the bond if there was a bridge loan. Ms. Suelter said they wanted the Board to know that the revenue generated off the course is sufficient to pay back the City's $250,000 per the agreement that had been worked out. Discuss decision on financing at the next Board meeting. 9. Review and Approve Amended Bylaws. (reviewed and approved by General Counsel Sabine) (Chairman Kaiser) ( 7 Director Miller moved approval of the amended Bylaws, seconded by Chairman Kaiser. Approved 4-0-1 (Wigginton absent) Director Lamson said she had some small changes to make to the Bylaws which she will give to the Secretary. 11. Incidents and Accidents. (Rod Linville) Mr. Linville reported that about a week previously another ball from hole 9 hit a car turn signal light. 12. Discussion of Safety Fencing at Holes 2, 3,4 and 13; Trail Usage. (Ph i I Cotton) Mr. Cotton advised that during the last Board meeting there was discussion about the installation of safety fencing along the trail at hole 13. During that discussion there was some concern that the trail is posted for equestrian usage. The Board requested that the City consider restricting equestrian use of City trails in the vicinity of holes #2, 3,4 and 13 on the Ranch golf course. Mr. Cotton distributed a copy of his analysis and said he has thoroughly reviewed the parcel maps as to who owns specific property where trails are located adjacent to the golf course. The trail at hole 13 is a native dirt trail which runs from Quail Gardens Drive extending eastward in front of the back tee at hole 13. It runs up to the east bluff and to the back of the OMWD water tank. Authorized use at this time includes pedestrians, non-motorized bikes, horses and City maintenance and emergency vehicles. The trail is located and dedicated open space and is on ERGA property. It is not a trai I easement, it is a trai I in the open space. The proposed trail that Cornerstone will install is from the number 2 tee south down around number 4. The proposed authorized use at this time would be pedestrians, non-motorized bikes, horses and City maintenance and emergency vehicles. The trail wi II be located at a publ ic trai I easement but is on private property owned by Cornerstone Communities. The Encinitas Ranch Specific Plan provided for all of the trails. Two key issues in the plan are that it was supposed to be a network that took people from one point to another - it was a design system. There were planned combination pathways and trails in the area and it was known they were going to be next to the golf course. Also in the Specific Plan it was addressed that the trails to the golf course should be designed to be compatible with the golf course and sited such that they not require tall fences. Current City policy only prohibits the use of motorized vehicles and motorized bicycles on City trails. However, the City reserves the right to restrict specific use on certain trail segments to avoid environmental degradation, conflicts with property adjacent to the trail, or trail users" Based on the current City policy, the Specific Plan and the Board's concerns for trail users' safety it would be appropriate for ERGA to request a restriction on the trail in the vicinity of hole 13 as well as 2, 3 8 0- 13. i L__ and 4. A possible restriction that the Board may wish to consider is to prohibit equestrian use on those trails. Director Archibald reviewed a map on which he had plotted the safety zones as prescribed by the American Society of Golf Course Architects. He pointed out the trails that are within the safety zone of the golf course and to protect trail users they will need to be fenced. He had consulted with ERGA's General Counsel, Glenn Sabine, about security fencing to keep people on the trails from walking onto the golf course. He advised that as long as the trail is signed in appropriate places along the trail restricting the use of the trail and prohibited people from leaving the trail and going onto the golf course, then we didn't need to have a continuous fence. Cornerstone will be erecting the fence. Mr. Cotton said his recommendation is for the Board to ask staff to prepare a written request to the City from ERGA requesting that trails in the vicinity of holes 2, 3, 4 and 13 be posted to prohibit equestrian use. He will write the request if directed so to do. Director Miller suggested that the recommendation be represented by ERGA at the Trails Workshop meeting the following week and to raise the issue with the Planning staff at a public forum so as to put people on notice. Director Miller moved approval of the staff recommendation, seconded by Director Archibald. Approved 4-0-1 (Wigginton) Drainage and Trail Easement Along Holes 2, 3 and 4. (Alan Archibald) Director Archibald said he had put this item on the agenda because it is related to the same issue as item 12. Cornerstone developed a plan so that when the trail is built there would be a 10ft. private storm drain easement within the golf course. City has worked with them to come up with a better deal whereby rather than having a 10ft. easement ERGA would give them a 2 ft. easement and they would move the storm drain to the west and out of the golf course but still low enough to serve the golf course drainage. They will have to move the temporary water line that is in there, and when they depress the trail they will have to adjust the storm drain. There are two reasons for moving the storm drain into the easement area: 1) it would be on their property and since it is a private drain they would be maintaining it on their property. The fence would be between the golf course and the storm drain so that anyone doing maintenance on the drain would be protected by the fence. Also, they won't tear up the golf course while they are doing it. 2) We have to move the irrigation lines back off Cornerstone's property to the edge of the golf course so that then they can go forward with the temporary water line, the storm drain and the trail construction. What is intended is to minimize the impact on the golf course. Director Archibald recommended that the Board substitute a 2 ft. easement for the 10ft. easement, and go forward with the irrigation line relocation. Director Miller left the meeting at 5 p.m. to go to another meeting. 9 Director Archibald moved that the Board approve a two foot easement on the golf course in lieu of the ten foot easement that was previously authorized and signed, seconded by Chairman Kaiser. Approved 3-0-2 Chairman Kaiser moved that the Board allocate up to $15,000 from the capital reserve fund to do the project, seconded by Director Archibald. Approved 3-0-2 (Wigginton and Miller absent). 15. Capital Improvement Issues/Discussion: (a) Restrooms; Prel iminary Design/Sewer Line for Restrooms at the south end of the golf course. Issue for discussion at next meeting. Mr. Linville said they had relocated the temporary toilets between holes 13 and 14 to hole 15 to get them off the path. (b) Club House Discuss at next meeting. (c) Fountain in Pond at Hole 8. Mark Warren said he had obtained three quotations (but only had two with him). The biggest issue was meeting with the County relative to the reclaimed water in the pond. Drift and location was a big concern of the County. No drift can reach maintained turf. So his requirement was that the fountain needs to be mobile so that it can go into a portion of the lake, possibly the north-west corner, where the prevailing winds would not bring the drift to hole number 8. His second requirement was that we go with the largest drop in size as possible to reduce any drift in wind and spray. Mr. Warren described the two proposals that he had and explained the differences between the fountains. Both of the proposals meet the County's requirements, but he bel ieves the one from California Turf would better meet the requirements re drift. Chairman Kaiser requested pictures for the next meeting. (d) Other No additions. Bring items to next meeting. 10 16. Potential Course Enhancements. Mr. Linville said he has a proposal to change the fleet of carts one year earlier than what the lease calls for. He was authorized to bring the request to the next meeting. 17. Discussion/Direction Concerning Course Operations, Conditions Needing Change. Nothing for discussion. 18. 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. 19. Next Meeting - Thursday, December 14, at 3:00 p.m. 20. Adjournment. Chairman Kaiser adjourned the meeting at 5: 15 p.m. Respectfully submitted, ~~~- '. ~., .' .. r--. ic;>l/ ...-u.-GL.o.. . ,RA...A,,> /J .) ~~(t7~- Edward Kaiser Chairman of the Board Patricia Drew Board Secretary \ 11