2007-12-19
CITY OF ENCINITAS
ENCINITAS RANCH GOLF AUTHORITY
MINUTES OF SPECIAL MEETING
Golf Course Clubhouse
Quail Gardens Drive
WEDNESDAY, December 19,2007 at 4:00 p.m.
CALL TO ORDER/ROLL CALL
Chairman Dean called the meeting to order at 4:03 p.m.
DIRECTORS PRESENT: Bill Dean, Peter Cota-Robles, Cindy Jacob, Phil Cotton and Chris
Hazeltine.
DIRECTORS ABSENT: None.
ALSO PRESENT: John McNair, Rod Linville, Rob Oosterhuis, John Fuller, David
Saltenstall, Paul Reed and Kent Graff (until 5:00 p.m.), JC Resorts;
Chris Calkins, Carltas Co. (until 5:00 p.m.); City Staff Jennifer
Smith, Jay Lembach, Nancy Sullivan and Board Secretary Joan
Woods.
ORAL COMMUNICATION
None.
REGULAR AGENDA
1. Approve Minutes of Special Meeting of November 13,2007.
ACTION:
Hazeltine moved, Cotton seconded to approve the November 13, 2007 Special Meeting
minutes as amended below.
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The November 19,2007 Minutes beginning on page 2 were amended as follows:
Mr. McNair provided a photo simulation of the proposed cell site along with the curt bum
range ball machine room enlargement to house the equipment for one cell tower facility.
Mr. McNair stated a factor of consideration was that the cart barn range ball machine room
would have. . . .
Mr. McNair suggested a matching fayade of the clubhouse on the north and south side of
the cart barn after the enlargement for aesthetics...
.Motion carried: Ayes: Cota-Robles,Cotton, Dean, Hazeltine and Jacob. Nays: None.
Item #6 was taken out of order.
6.
Update on Cell Tower Discussion
(John McNair)
Mr. McNair updated the Board on the status of the cell tower discussions with Verizon.
Mr. McNair stated ERGA legal counsel had reviewed the leases. Mr. McNair contacted the
vendor who had purchased the previous cell tower leases and the approximate revenue was
$230,000 to $235,000 from the sale of the lease plus the fayade enhancements of
approximately $36,000. Actual funding would take about one year, cell towers must be up
and running for three months before the lease can be sold.
Mr. McNair confirmed that the second cell tower was still on hold per his contact at
Cingular Wireless.
2. Review Summary of Revenues and Expenditures/Financial Statement/update on Capital
Reserves for October 2007 and November 2007. (Rod Linville/John McNair)
Mr. Linville reviewed the summary ofthe October financial report.
Revenues for the month were $316,994 compared to a budget of $339,335 or 93% of
budget; Expenditures were $226,942 compared to a budget of $290,057 or 78% of budget;
Income for the month was $82,926 compared to a budget of $49,278 or 168% of budget.
Total rounds were 4,489 compared to a budget of 4,685 or 96% of budget.
Year to date net income was $591,288 compared to a budget of $541,926 or 109% of
budget. Year to date total rounds were 25,413 compared to a budget of 25,654 or 99% of
budget.
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Mr. Linville reviewed the summary ofthe November financial report.
Revenues for the month were $334,633 compared to a budget of $357,798 or 94% of
budget; Expenditures were $274,412 compared to a budget of $283,611 or 97% of budget;
Income for the month was $53,495 compared to a budget of $74,187 or 72% of budget.
Total rounds were 4,678 compared to a budget of5,022 or 93% of budget.
I
Year to date net income was $644,782 compared to a budget of $616,113 or 105% of
budget. Year to date total rounds were 30,091 compared to a budget .of 30,676 or 98% of
budget.
Mr. Linville stated that there was no indication that the Carlsbad Course had impacted
October and November financials. Mr. Linville stated that the total rounds were down in
November due to the rain, but stated the rain was good for course conditions.
Board Member Hazeltine asked about the increased lease and insurance expenses. Mr.
McNair stated this may have been only a billing issue as the year-to-date totals reflected
within budget.
3. Encinitas Ranch Golf Authority Fiscal Year 2006-2007 Financial Results
(Jay LembachlNancv Sullivan)
Jennifer Smith from the City of Encinitas presented the staff report on Encinitas Ranch Golf
Authority Fiscal Year 2006-2007 Financial Results. Ms. Smith stated the staff report was
not the report of the independent auditors, and did not include the finalized annual financial
statements. The anticipated completed audit results would be presented at the January 2008
meeting.
Ms. Smith stated the staff report was to address three issues:
1. Provide the actual cost and seek direction from the Board on the Clubhouse Expansion
Capital Project.
2. Receive Board direction on the end-of- year surplus golf course net revenues.
3. Receive Board direction on the review of the monthly payment plan from JC Resorts to
the City Treasury.
Ms. Smith stated the Clubhouse Expansion Project was completed in June 2007 at a total
cost of $1,736,103. After depleting the Capital Reserves and the ($300,000) loan from
the operating fund, this left a shortfall of $1 02,603 at June 30, 2007.
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Ms. Smith said City Staffhad calculated the end-of-year surplus golf course net revenues
based on the amount of net cash "available" in the City Treasury as of June 30, 2007
fiscal year:
The calculation used to get the net cash "available" in the City. Treasury as of June 30,
2007 fiscal year had assumed:
. An operating reserve equal to the next two months operating expenses would be
on deposit in the Golf Course Manager (JC Resorts) ERGA account (less the loan
of $300,000), with all other "excess cash" on deposit with the City.
. Deductions from net cash "available" for the earmarked ERGA bond payments
(11 months of principal and 5 months of interest) and the CFD #1 bond payments
(the total amount due in the next fiscal year).
Under these assumptions, the allocation of total cash for purposes of calculating "available cash"
was shown below:
City Treasury
Operating Acct
Total Cash
Actual Cash on Hand
$1,083,078
$381,556
$1,464,634
Deductions:
ERGA bond payments
CFD# 1 bond payments
Amount available for distribution
($531,965)
($385,638)
$165,475
Surplus Golf Course Net Revenues
Ms. Smith presented the following staff recommendations:
(1) Authorize an additional loan from the Operating Reserve of $102,603 to cover the additional
expenditures.
(2) Authorize a transfer of $187,372 from the City Treasury to the JC Resorts Operating account,
retroactive to July 1, 2007, to restore the operating reserve to the two months operating expenses
less the $300,000 initial loan amount.
(3) Provide direction to Staff on how to apply the proceeds ($165,475) of the Surplus Golf Course
Net Revenues (Option A - apply to the City of Encinitas Sales Tax Advance account, Option B -
apply to the repayment of the operating loan)
(4) Approve and authorize the repayment plan for the operating reserve loan.
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Chairman Dean asked for some briefing on the City of Encinitas Sales Tax Advance account.
Nancy Sullivan stated that this was part of the Development Agreement which was established
between the City and Carltas for the development of the golf course and the housing infrastructure
at Encinitas Ranch. Chris Calkins stated that Carltas had been and still was supportive of the golf
course and the ability to generate enough revenue to satisfy the Sales Tax Advance. Mr. Calkins
suggested that a portion of the available surplus golf course net revenues be applied to satisfy
Carltas' obligation to repay 5% of the outstanding sales tax advance balance due on June 15,2008,
and that the issue be re-visited at a later date. Chairman Dean proposed a committee comprised of
Nancy Sullivan, Jay Lembach, Chris Calkins and Phil Cotton to review the Sales Tax Advance
issue and return to the Board at a future date with recommendations.
Board Member Cotton suggested if the Board desired that he would direct city staff, forpurposes of
continuity, to draft a policies and/or procedures for addressing reserves, payment obligations, etc.
The Board asked for draft polices to be prepared.
ACTION:
Cotton moved, Cota-Robles seconded to: (1) authorize as additional loan from the Operating
Reserve of $102,603 to cover the additional expenditures, (2) authorize a transfer of $187,372
from the City Treasury to the JC Resorts Operating account, retroactive to July 1, 2007, to
restore the operating reserve to the two months operating expenses less the $300,000 initial
loan amount, and (3) to consider applying some or all of the proceeds of the Surplus Golf
Course Net Revenues ($165,475), to the City of Encinitas Sales Tax Advance account. (A
committee comprised of Board Members, Carltas Representatives and City Finance Staff
would discuss and recommend an amount.). Motion carried: Ayes: Cota-Robles, Cotton,
Dean, Hazeltine and Jacob. Nays: None.
4.
Discussions on Storage Building
(John McNair/Rod Linville)
Mr. McNair addressed the Board on some storage issues with the new Clubhouse. Mr.
McNair requested the Board Members view the current storage area at the clubhouse and
suggested that this item be agendized for a later date.
5.
Report on Course Enhancements
(Kent Graff)
Mr. Graff reported on the course enhancements and stated that because of the recent
rainfall of about 4 inches this year which exceeded last year's rainfall their focus was on
drainage at the course.
Mr. Graff stated that a good potion of the lighting in the parking lot had been restored, but
ground water had been shorting out the system so repairs were made to the system. Mr.
Graff stated that lights on the cart barn had been replaced and made it safer for pedestrians
at night.
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6.
Update on Cell Tower Discussions.
(John McNair)
This item was addressed before item #2.
7.
Incidents and Accidents.
(Rod Linville)
Mr. Linville stated that there were two incidents and accidents to report for the month. The
first incident was a roof leak in the storeroom which was covered under warranty and PCC
Construction had been contacted to repair the leak. The second item was a "snatch and
grab" of a laptop computer in a vehicle in the parking lot and police were contacted.
Chairman Dean asked Mr. McNair to update the Board on the status of the insurance claim
during the October fires and discuss the catering and room contract as preventable
accidents.
Mr. McNair stated there was no update for the fire insurance claim.
Mr. McNair presented a draft of the catering and room contract to the Board. Mr. McNair
stated they had been approached by several charities and wanted direction from the Board
on the policies and procedures.
Board Member Hazeltine stated that the policy would be addressed at the next board
meeting, but preferred a "resident/non-resident" rate discount over a charitable rate. Mr.
Hazeltine said that the City already had other existing facilities to accommodate the
charitable events.
Mr. Calkins asked if there was an appeal process on the cancellation policy for hardship
cases. Mr. McNair stated the policy was stringent due to the potential lost revenue and the
proposed policies were similar to other JC Resorts and the City of Encinitas Community
Center.
Board Member Cota-Robles suggested that a charity discount may be a business incentive
to get exposure for possible future bookings, especially if the facility was vacant. Mr.
McNair stated that the original intent from the Board was for the facility to be primarily
available to the golfers who were the target segment.
ACTION:
Board Consensus was the status quo for the catering and room contract without any
discounts to be utilized until the January or February 2008 Board meeting to address
charities or resident discount pricing.
6
Mr. Linville stated that he had been approached and agreed to the clubhouse to be a polling
site. Mr. Linville stated this was Igood exposure for the facility. Board Member Cotton
suggested that ERGA Counsel review arid advise the Board about utilizing the clubhouse as
a polling location.
8. Directors and/or Manager Reports.
There were no reports.
9. Next Meeting - Tuesday, January 22,2008 at 4:00 p.m.
10. Adjournment
Chairman Dean adjourned the meeting at 5:15 p.m.
Respectfully submitted,
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Bill Dean, Chairman of the Board
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Joan Woods, Board Secretary
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