Loading...
4B Sales Tax Corporation Minutes - 06/17/2005MINUTES OF THE 4B SALES TAX CORPORATION June 17, 2005 Present: Warren Ayres, President § Leon Mallonee, Vice - President § Ray Gonzalez § Corporation Board Members Arthur Bea Williams § Rick Boone § Tommy McCulloch § Matt Benoit, Assistant City Manager § Joe Rasile, Golf Course Superintendent § Steve Thayer, Pro Shop Manager § City Staff Linda Merrill, Recording Secretary § Absent: Benay Ayers, Secretary- Treasurer § Corporation Board Member I. Call To Order President Warren Ayres called the meeting to order at 8:02 a.m. II. Approval Of Minutes (October 14, 2004) Tommy McCulloch moved that the minutes be approved, seconded by Arthur Bea Williams. Linda Merrill noted there was a typographical error on page 1, but that it had been corrected. The motion to approve the minutes unanimously carried. III. Consider Request for Golf Course Consulting Fees Matt Benoit informed the Board that the agenda was arranged in the customary format — the request for the project at hand, review of the financial statement, public hearing, and then project approval. Request for Consulting Fees. Mr. Benoit had approached the City Council to discuss the issue of golf course consultant fees. The Council is very receptive to making improvements to the golf course. 4B Minutes — June 17, 2005 2 History of Golf Course. From 1986 -97, Mr. Benoit explained, the City had an agreement with a private company for the operation and maintenance of the course. The City abandoned that agreement for several reasons; one being that the course was not maintained at a level of service that the City desired. In 1997, when the City again took over the course, it was at its height of disrepair. Revenues. The golf course's revenues hit a high in the 1999 -2000 fiscal year of $675,000. This figure reflects all things that involve people being at the course, including green fees and cart fees. There was a fairly significant decline in revenue in the most recent fiscal years. The reasons for this decline include a nationwide decline in conjunction with a sagging economy, and the economic effects of September 11. (Steve Thayer enters the room.) Mr. Benoit has talked with other city managers and golf course supervisors. The golf course business is not necessarily profitable at this time. Some of those he spoke with indicated they had improved their courses, and the general fund picked up the debt service. The improvements resulted in golf courses that could cover their own maintenance and operations costs, but not their debts. Locally, Weeks Park Golf Course suffered another blow besides September 11, when Hawk Ridge opened up in 2001. River Creek (in Burkburnett), Hawk Ridge, and Weeks Park all do about 30,000 rounds of business per year. Prior to the opening of Hawk Ridge, Weeks and River Creek split the rounds at about 45,000 each per year. None of the three courses can be doing very well at the current volume. This fiscal year will be the first since the City took over the course in 1997 that the general fund will have to subsidize the golf course (in the sum of $100,000). This same amount will be needed for the next fiscal year. There are other enterprise funds throughout the city, such as the water and sewer fund, and the sanitation fund. They are intended to operate on their own. In fact, they are looked at to subsidize the general fund. For example, the sanitation fund pays for most of the street maintenance program. It does not usually work the other way, where a general fund subsidizes an enterprise fund. The solution may be to go back to a private agreement, or to make certain improvements. But continuing to spend tax dollars is not the way to go. Mr. McCulloch asked for confirmation that this is the first year that the general fund has been used for the golf course. Mr. Benoit confirmed this. Mr. McCulloch observed that if revenues were down $10,000, one would assume that expenses were up $90,000, and the course went from breaking even the prior year to losing $100,000 the next. Mr. Benoit explained the City had been making equity appropriations in the golf course fund to continue operation of the course. There is no more money there. The asset situation is not cash; it is inventory from the pro shop. There is not a change 4B Minutes — June 17, 2005 in revenue, but a loss of a cash balance. Mr. McCulloch noted it would have been helpful to have a profit- and -loss statement provided to the Board. Mr. Boone asked how many people actually use the course. Mr. Benoit noted they can have 200 golfers a day on the course. Mr. McCulloch interjected that one user of those 30,000 rounds might account for 200 of those rounds. There are regulars probably every day. Ms. Williams noted that when it becomes public knowledge that the course is being subsidized with general funds, there will be complaints from citizens who are not interested in this particular endeavor. Mr. Benoit stated they do count paying customers who pay a green fee. It is not possible to quantify those who are playing in tournaments, however, as they do not pay a green fee. Mr. McCulloch noted that at the Country Club, there are perhaps 500 people who play golf. He would guess that same number play at Weeks, as there are about 30,000 rounds played at the Country Club, as well. The top 100 Club users probably put in 90% of the rounds. It probably would not help the City's case to say money is being spent on the course for the benefit of a few hundred people. Mr. Benoit replied that he would approach it from the viewpoint that a fund that has been self sufficient for five to six years is no longer able to pay its own way. Other budgetary pressures to the general fund are not going to make it easy for it to absorb those expenses. Request for Proposal. Mr. Benoit had prepared a request for proposal, divided into three areas of analysis: (1) market, (2) capital improvements, and (3) operation. (1) Market. Identify what improvements might give Weeks Park a competitive advantage. If improvements were made, would people be willing to pay more to play 18 holes of golf there. Course improvements have to be considered, but it is important to know if those improvements would result in a better revenue position. (2) Capital Improvements. The golf course has drainage and irrigation issues. It takes a long time after a rain for water to evaporate. Staff cannot mow certain areas after a rain because of the water. After a good rain, the course can lose one to one and one -half days of business. (Ray Gonzalez enters the room.) The irrigation system is professionally maintained, but was not necessarily professionally installed. There are places where grass will not grow because they cannot get water to it, and there are yet other places that need more accurate watering. The lack of a driving range has had a revenue impact that is not easy to quantify. There are a few ways to put a range on the course. All of those scenarios would affect the course layout. Property acquisition is not necessarily involved, however. 4B Minutes — June 17, 2005 4 If the course is torn up to fix the drainage system, and potentially create water features, as well as move holes around to create a driving range, it would be an appropriate time to consider a new ground cover, such as is used at the Country Club. Public Works could do a drainage assessment, Mr. Benoit continued, but it could not do the irrigation, course layout, or ground cover recommendations. The City would get to a point where outside expert suggestions are needed on significant capital improvement. (3) Operations. The fee structure needs to be reviewed. It would be appropriate for a consultant to review the fleet maintenance, pro shop and snack bar issues, as well. Public participation in this process will be important. Mr. Benoit hopes to win back some customers they may have lost over time. He has talked with city officials in Galveston. They are in the process of developing their own comprehensive plan, which was heavy on the operations side, and light on the capital improvements side. They might turn over their course to a resort, such as Moody Gardens. The cost for the consultant at Galveston was $25,000. Mr. Benoit also spoke with officials in Carrollton. They had a comprehensive plan developed 3 -4 years ago, and have since renovated their courses. The courses make ends meet on the operation and maintenance side, and the general fund is picking up the debt service. He wants the consultants to share their approach on the different issues (drainage, course layout, irrigation). Each item is to be priced separately. He fully intends to ask for prices, and negotiate based on services offered, adding that he wants to move forward based on value. There are two options available to the Board if they choose to proceed: (1) give the City a certain not -to- exceed dollar amount and instruct them to get as much as possible with that figure; or (2) have the City distribute the RFP to consultants, review the offers, and then approach the Board with a suggestion for the best consultant. Mr. McCulloch noted he was supportive of doing something. He equated Weeks Parks Golf Course's greens to a restaurant's quality of food. That course would never have survived as a restaurant, as the "quality of food" has been unacceptable. A golf course needs good greens, good fairways, and the right rough. If those are in place, the driving range, pro shop and snack bar won't matter. City staff can fix the irrigation issues. Hawk Ridge is no comparison to Weeks Park. Its layout is inferior, and it should not even be within striking range of Weeks. 4B Minutes — June 17, 2005 5 Mr. Benoit said he is not the first to say that. Personally, he is not ashamed of Weeks Park; they do a great job with what they have, but a new approach is needed. Mr. McCulloch noted that Burkburnett took care of its greens at River Creek, and made it a long time on that alone. Now they are improving their fairways. It is important that Weeks Park do the same. Mr. Benoit acknowledged that the City might be able to take an in -house approach on the irrigation issues. Mr. McCulloch agreed, noting that any consultant would have to hire a qualified civil engineer. He opined that citizens would not be willing to pay $20 per round, even after improvements are made. Mr. Boone asked how many golfers Weeks Park had lost to River Creek. Mr. McCulloch noted that River Creek also has 30,000 rounds a year; it is only 15 minutes away from Wichita Falls. Mr. Mallonee noted that a lot of people left Weeks Park when the annual pass was eliminated. Mr. Thayer agreed. He said Weeks lost tournaments and large groups that used to meet 4 -5 times a week. Mr. Benoit stated that (former City Manager) Jim Berzina eliminated the annual pass when the City took over the course in 1997. The fee was ridiculously low. The course may have lost some customers, but revenues went up from the time the pass was eliminated until 2001, but he agrees that annual fees are going to have to come back. Mr. McCulloch noted there must be some dollar amount for the pass that would work. Mr. Mallonee pronounced that the lack of a driving range at Weeks has always been a problem. Ms. Williams asked Mr. Thayer and Mr. Rasile what issues they felt were important. Mr. Thayer stated irrigation and drainage issues were problematic. Once those are solved, there could be "wall -to- wall" grass out there. A driving range could bring in revenue to offset the capital improvement costs. He added that equipment costs are very high. Fairway mowers cost $40,000, and green mowers about $25,000. Mr. Rasile noted they were finally able to replace the seven - year -old greens mowers last year, and has recently rented a fairway mower. Mr. McCulloch noted those are problems the City should immediately fix. He does not mind funding $25,000 toward this project, but it appears the analysis has already been done. This is easy stuff. Mr. Benoit disagreed. Mr. McCulloch noted the course has never lost a customer due to the quality of the hamburgers. It is inconvenient not to have a driving range, but the lack of a range is not the reason people do not play at Weeks. Mr. Benoit stated he is not concerned about hamburgers. If a consultant is going to look at drainage and irrigation, course layout and a driving range, and will, for a nominal fee, assess the pro shop and snack bar, he'll take their advice. He has not lost focus on what is important. 4B Minutes — June 17, 2005 6 Mr. McCulloch stated a consultant is not needed for the drainage or irrigation problem, either. Ms. Williams agreed, stating the City already knows where the problems lie. She knows it will be hard to get the money to take care of the problems at the course, and suggested using the $25,000 toward improving the drainage and irrigation. Mr. Benoit stated he understands this can be done with in -house skills. He could demand that (Public Works Director) Scott Taylor assist with this project. However, they are extremely busy, and any help he could give would not be timely. Mr. Benoit acknowledged the City knows where the water stands, and where Holliday Creek is. Water flows downhill; if it doesn't, it can be pumped. But there could be consideration given to creating a water feature. There is also an issue with effluent, which may cause a redesign of where water is sent. There is more to look at then sending water to the closest available low -lying area and cutting ditches through the fairway. Mr. McCulloch explained that the RFP would not provide a qualified civil engineer and a whole consultant scheme with the money he is requesting. Instead, any consultant will tell the City it has drainage problems, and will recommend the hiring of a civil engineer. It will then fall back in Engineering's lap. Mr. Ayres interjected that he believes Mr. Benoit is looking for a comprehensive plan developed by an expert in golf course operations that would explain the various issues that need improvement. He could present that to the Council or to this Board to seek appropriate funding to hire a golf course architectural firm to design improvements. He needs a marketing plan behind it, once he has a quality product to sell. Mr. Benoit agreed, adding that if he asked Scott Taylor for assistance, he would accommodate as best he could, with solutions from an engineering standpoint. There would be holes in the fairway, and this Board would wonder why water features were not considered. Mr. Boone opined that the layout is adequate, but the fairways and greens need improved, there is a need for a driving range, and drainage issues need to be addressed. It sounds fairly simple to devote some money to fixing those issues in phases. Mr. McCulloch moved that the Board allow up to $25,000 be spent to hire a consultant to look into issues of golf course improvement as outlined by Matt Benoit. Mr. Mallonee seconded the motion. 4B Minutes — June 17, 2005 7 IV. Review Financial Statement Mr. Benoit reviewed the financial statement. The Board has approximately $1.7 million in collections, which is 2% over the sales tax collections to date from last year. Interest earnings are at $96,700. The bottom line reflects $2.1 million in unreserved fund balance. River Bend Nature Works has submitted a fair amount of invoices. That project will be closed when he pays those. The drainage improvement project for $500,000 is still pending. There have been no payments made to date on the debt service. A sum of $3.3 million is tied up in projects either not yet satisfied or not yet started. He discussed a second handout, regarding the various public safety projects. Bonds were issued for some of these projects. The accuracy of the financial statement is affected because the bonds are in a different category. Considerably more bond proceeds were spent for the radio project than anticipated. A significant amount of the debt service was spent over the course of two months to avoid arbitrage. A lot more of the debt service money, versus cash, went to the two -way radio project. Although it may appear that the radio project was under spent, it was not. The cash devoted to the project on the financial statement will only look under spent, because more debt was spent on the project than originally intended. On the flip side, less bond proceeds were spent on the CAD project. The remaining $900,000 for this project will be paid in cash. V. Conduct a Public Hearing on Golf Course Consulting Fees Mr. Ayres opened the public hearing. There was no member of the public present. The public hearing was closed. VI. Consider Project Approval for Golf Course Consulting Fees Mr. Boone asked the timeframe on the RFP. Mr. Benoit plans to have a contract negotiated in two to three months, so that any improvements could be done in the fall and winter, to be ready for golfers in the spring. The motion was unanimously approved. VII. Staff Report A. Fire Grant Mr. Benoit noted the City received a grant to pay for the portable radios in the Fire Department in the sum of $304,700. 4B Minutes — June 17, 2005 8 B. Radio Project This project is completed. He is withholding the final payment of $600,000 until the Council officially closes the contract. There have been no major problems, and he has received very positive feedback from the users. C. CAD /Records Project Mr. Benoit noted that this project requires more attention than did the radio project and training center. The City is fortunate to have liquidated damages in the contract, because the contractor needs constant pushing to turn out the work. He anticipates this project is about six months from closure. D. River Bend Nature Works Project He has spoken with Mr. Estes, the Interim Executive Director of River Bend Nature Works. River Bend has hired an engineer. When they raise a certain amount of money, to stop to figure out what they can afford to do with it. The foundation is about to be done. VIII. Other Business A. Tour of the Municipal Public Safety Training Center A tour was not held among the members. IX. Adjourn The meeting adjourned at 9:01 a.m. Warren Ayres President