2008-03-25
E
CITY OF ENCINITAS
ENCINITAS RANCH GOLF AUTHORITY
MINUTES OF SPECIAL MEETING
GOLF COURSE CLUBHOUSE
QUAIL GARDENS DRIVE
TUESDAY, MARCH 25, 2008 at 4:00 p.m.
CALL TO ORDER/ROLL CALL
Chairman Dean called the meeting to order at 4:05 p.m.
DIRECTORS PRESENT:
Peter Cota-Robles, Phil Cotton, Bill Dean, and Chris Hazeltine.
DIRECTORS ABSENT:
Cindy Jacob.
John McNair, Rod Linville, John Fuller, Kent Graff, JC Resorts;
Member of the Public Gwenn Truax, City Staff Jay Lembach,
Nancy Sullivan, and Board Secretary Joan Woods.
ALSO PRESENT:
Chairman Dean called the meeting to order and then turned the meeting over to Kent Graff, who
gave the board members a tour ofthe golf course.
1. Discussion of identified Deferred Maintenance/Replacement Proiects and Tour the Course.
(John McNair)
On the tour of the first nine holes, Mr. Graff identified some primary deferred
maintenance/replacement projects.
Mr. Graff stated some prep work had been done on the drainage issues this winter so the
sod could be installed this spring which would expedite the process. Mr. Graff stated they
had started sprig and seeding the thinning areas that were identified on the tour of the
course. He indicated they had good results with the paspalum sod which s.eemed to blend
better with the current sod.
Chairman Dean reconvened the meeting at the clubhouse at 5 :06 p.m.
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ORAL COMMUNICATION
Gwenn Truax spoke about her interest in learning about the Encinitas Ranch Golf Authority Board
and the condition of the golf course.
Chairman Dean read an e-mail received from Bob Rief regarding the frequency of tee times and
food costs.
2. Approve Minutes of Regular Meeting of February 26,2008.
ACTION:
Hazeltine moved, Cotton seconded to approve the February 26, 2008 Regular Meeting
minutes. Motion carried: Ayes: Cota-Robles, Cotton, Dean, and Hazeltine. Nays: None.
Absent: Jacob.
3.
Adopt JC Resort's Plan of Corrective Action
(John Fuller)
A Plan of Corrective Action was to identify current and potential future issues that could impact
performance and the application of financial policies and procedures. ERGA Management
conferred with JC Resorts Financial Management ahd discussed the development of a Plan. The
plan of Correction Action was submitted to the ERGA Board at the February 26, 2008 meeting
and directed to be brought back to the Board for adoption at the March Board Meeting.
ACTION:
Hazeltine moved, Cotton seconded to adopt JC Resort's Plan of Corrective Action that was
submitted to the Board at the February 26, 2008 meeting. Motion carried: Ayes: Cota-
Robles, Cotton, Dean, and Hazeltine. Nays: None. Absent: Jacob.
4. Review Summary of Revenues and Expenditures/Financial Statement/update on Capital
Reserves for February 2008. (Rod Linville/John McNair)
Mr. Linville reviewed the summary of the February financial report as follows:
Revenues for the month were $297,084 at 86% of budget; Expenditures were $220,160 at
75% of budget; Income for the month was $76,724 at 151% of budget. Total rounds were
4,284 at 88% of budget. Year to date net income was $679,853 at 104% of budget. Year to
date total rounds were 42,976 at 94% of budget. Mr. Linville stated current revenues were
down due to the rainfall in the month of February. Although revenues were down, net
income remained on budget due to expenses held down to 75% under budget. Mr. McNair
commented with Torrey Pines north course's temporary closing, there would be an
anticipated increase in the rounds at Encinitas Ranch.
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Mr. McNair reviewed the summary of Capital Reserve and Expenditures for February as
follows:
Capital Reserves reflected at total ~f $88,628.89 and Long Term Capital Reserve balance of
$29,542.96 for a total of all reserves of$118,171.85.
5. Encinitas Ranch Golf Authority revenue recognition policy regarding the execution and/or
sale of a revenue producing lease (Information item only) (Jay Lembach)
Mr. Lembach responded to the Board Members inquiry for the proper accounting
treatment of revenue-producing leases for cell towers on the property of Encinitas Ranch
Golf course. A question had been raised on how to record revenue from these leases
when the lease was sold and ERGA received a lump sum payment upfront that covered a
multi-year lease period. Mr. Lembach stated generally accepted accounting principles
(GAAP) provided guidance on the proper accounting treatment of these transactions.
GAAP accounting treatment would require the lease revenue be recognized over the term
of the lease, regardless if received in an upfront lump sum in one year or periodic
payments over several years. Mr. Lembach stated an example ofthe accounting treatment
of a 5 year lease, was approximately 1/5 of the lease revenue would be recorded each
year.
6. Discussion of Budget process and appointment of Board Subcommittee.
Chairman Dean opened discussions on the Budget process and discussed forming a
subcommittee to establish a long term budget forecasting. Mr. Dean suggested a committee
which consisted of: himself, Chris Hazeltine, John McNair, and ERGA staff.
Mr. Lembach stated he and John Fuller had done some updates for the current year budget
and submitted a copy of the budget referred to as Attachment A to these minutes.
Mr. McNair stated revenue was below budget due to the fires in October, which was
directly linked to the decrease in actual golf rounds. Mr. McNair stated although the golf
revenue was down, cafe revenue was up and expenses were kept low. Mr. McNair
anticipated this year's projected revenue to be back on track thru the remaining fiscal year.
Mr. Cotton complimented JC Resorts on their good job in managing the balance of revenue
to expenses.
Mr. Cotton stated the Board had in the past used market rates in price structuring rather than
a comprehensive budget utilizing actual costs. The long term budget forecasting would
enable the Board to address increased costs (water, carts, gas and labor), projected capital
improvement projects, and in the treatment ofthe excess surplus golf revenues.
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7.
Discussion of Cart fee rate structure.
(Rod Linville/John McNair)
Mr. Linville notified the Board that Chairman Dean had executed the leases with EZ-Go for
the new golf carts. Mr. Linville said delivery was expected in May with the lease payments
beginning in July.
Mr. Linville provided a cart fee survey:
Course
Encinitas Ranch
Torrey Pines
Balboa Park
The Crossings at Carlsbad
Vineyard
Oceanside Municipal
Coronado G.c.
Cart Fee
$12 per rider
$20 per rider
$15 per rider
Cart fee included but ride along guest was$25
$14 per rider
$10.75 resident - $12 non-resident per rider
$15 per rider
Mr. Cotton requested this item be agendized for the next meeting. This would allow time
for the preparation of the preliminary budget, which would be utilized in the pricing of the
carts.
8.
Encinitas Ranch Golf Course Marketing Plan.
(John McNair)
Mr. McNair had no reports and requested this item be temporarily removed from the
agenda. Mr. McNair stated he would notify the Board when there was a need for an
updated Marketing Plan.
9.
Report on Course Enhancements.
(Kent Graff)
Mr. Graff referred to the following identified Deferred Maintenance/Replacement Projects:
Cart Paths:
Bunkers:
twenty three areas of modification work (widening, curb and drainage)
improved drainage on all fairway bunkers and 50% of the "green side"
bunkers need improved drainage
additional sand on all fairway bunkers and 40% of "green side" bunkers
need additional sand
improved landscape on restrooms front/back, five tee areas, and the slope on
the seven fairway
Landscape:
Mr. Graff presented an option about the possibility of corporate advertising to defray some
costs of miscellaneous equipment replacement on the tees and utility fees. The Board
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members were concerned about setting a precedent, but would have legal counsel review for
agendizing the discussions of commercial sponsorship for a later date. ~
10.
Update on Cell Tower Discussions.
(John McNair)
Mr. McNair updated the Board of the status of Verizon's cell tower request and stated it
was currently being reviewed by both parties' legal counsels.
11.
Incidents and Accidents.
(Rod Linville)
Mr. Linville stated there were no specific reports. Mr. Linville explained that periodically
they get graffiti on the stairwell under the bridge overpass and that he had contacted the City
for the graffiti removal.
12. Directors and/or Manager Reports
There were no reports.
!3. Next Meeting - Tuesday, April 22, 2008 at 4:00 p.m.
14. Adiournment
Chairman Dean adjourned the meeting at 6:30 p.m.
Respectfully submitted,
,/"<>') ...
'~1f-K tJHI~
J<t Woods, Board Secretary
~~ -
Bfll Dean, Chairman of the Board
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ENCINITAS RANCH (;()L.F cbURSE
fl)(fEOPH~EtGE$&M-qMTFg e:.
MANAGEMENT FEE
LEASES'
INSURANCE .
PRC)p~RTYrAX
OPERATI0Nf\~JMPRQVEMENJ$
CJTY~UPPORTE)(PENSES
~~MPAS$ES$,Mp.N.T
ADIY1TNFEFS.aONI? '
C1TYQVI;"RHeP.O
. TOTAL.FIXED&MGryrrFEE
INCQME(l..t>SS)
Rt)1,IND$
R"EVENl)'E:
GOLF
ROQM RENTAL-INCOME
LE;A~EREVENl;)E-CAFE
"'EAS!; RE:V~Nl.JE;.~CI':lOOl;.
INTEREST INCOfylE
"OTA~ REVENl)E ..
DEPAP(rMeNTA~EXPEN$E$
aRO$'50pe~TINOINyOME
(A)
ACTUAL.
2006.07.
$4,7~,$99
<(I~l ($HA)
aUQGET
20.07-Q8 VARIANCE
(e) (Cj.lB>
YTD THROUGH: BUDGET 2007/2008
2129/2008. I MA~-iJlIN PR.OJECTED VARIANCl:
2,954,297.
2,60Q
89,;368
..1;745
8;8Z7
.3;056;83r
1 ,$1$,185
$4;'tq9.~1
~,Q@o
126;8$8
2/'5)3.
1:QSl2'l
...4;!J~J,.7~~'
37,49Q
.1;048
t;2~O .
ti854;9~3'
679,8Q3
71,5.00
42.978
.26,008
68.986
Attachment A
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