Fort Walton Beach Council agenda — 08-12-08 regular agenda — reading text

Action 1 st 2nd Vote: Agenda Item Number: 1  CITY COUNCIL MEETING August 12, 2008 Consent Agenda Approval of Minutes: Special Council, June 17, 2008 Regular Council, June 24, 2008 Special Council, July 8, 2008 City Clerk) Council Action 1 St 2nd Vote: Agenda Item Number: 2  175 MINUTES OF THE SPECIAL COUNCIL MEETING OF THE CITY OF FORT WALTON BEACH, FLORIDA JUNE 179 2008 INTRODUCTION A special meeting of the City Council of Fort Walton Beach, Florida, was held on Tuesday, June 17, 2008 at 5: 30 p. m. in the Council Chambers at City Hall, with the following members present: Mayor Mike Anderson Councilmen: Mike Holmes, Virgil Miller, Dennis Reeves, Bill Garvie, Dr. Wayne Pullen, Jim Hartwell, and Mike Minich. Also Present: Joyce Shanahan, City Manager; Helen Spencer, City Clerk; Brandy Wunker, Interim Finance Director; Toni Craig, City Attorney; Department Directors. PURPOSE The purpose of this meeting is consideration of golf course financial matters; consideration on first reading Ordinance 1764 Dog Friendly Dining, and Ordinance 1768 Stormwater Management Utility. CALL TO ORDER The Mayor called the meeting to order and welcomed everyone. He requested anyone who wished to address Council to approach the podium after being recognized, and then state his or her name and address for the record. PLEDGE The Mayor led in the Pledge of Allegiance. APPROVAL OF AGENDA Mr. .Minich moved to approve the agenda as the business of the day. Mr. Hartwell seconded motion and it carried unanimously with Holmes, Miller, Reeves, Garvie, Pullen, Hartwell, and Minich in favor. GOLF COURSE - BUDGET POLICY ISSUES The City Manager stated before the policy discussion begins staff would like to give some background information, history of the golf club, revenues, and expenditures. She mentioned there was a rate st schedule due to go into effect June 1 that has been held in abeyance until this meeting. She said if any changes are made to the rate schedule staff will have to bring those back to Council in a resolution. Charlotte Dunworth, Budget and Grants Manager, went through a PowerPoint presentation that started with the objectives of the meeting are to explain the Golf Fund' s available revenue sources and current fee structure, and allow revisions as desired, to ascertain City Council' s position on certain policy issues critical to golf course operations becoming self-sustaining, and to prepare a balanced budget that matches ongoing expenditures with ongoing revenues and achieves self- sufficiency. The presentation included background information that during FY 03/ 04 Council adopted a Golf Club Business Operations Plan and formed the Golf Club Advisory Committee, and in March 2004 adopted a comprehensive golf club fee study that implemented a multi -year rate plan; in April 2006 Council adopted a revised five -year rate plan 1St with rate adjustments effective every June through 2010, forgave the $ 100, 000 advance from the General Fund and a $ 172, 000 advance from the Sanitation Fund, and voted to have the General Fund continue to absorb the Golf Fund' s portion of the City's Cost Allocation Plan for the next three years; in May 2007 Council canceled the fee increases scheduled to take effect June 1, 2007 per the multi -year rate plan adopted April 2006; in September 2007 Council decreased certain fees and adopted reduced - rate play cards, the unrestricted net assets of the Golf Fund have been negative every fiscal year since FY 2003, and the City auditors have commented about the Golf Fund' s cash flow deficits and deficit. unrestricted net assets in the management letter of the audit each fiscal year since FY 2005; the FY 2007- 08 budgeted revenues from green fees, tournament fees, membership fees, cart rental, driving range, rental income, and other fees; and budgeted expenses for wages, benefits, operations & maintenance, capital outlay, capital improvements, debt service, and transfers out.  Special Council 6 -17 -08 176 GOLF COURSE - BUDGET POLICY ISSUES Cont. Ms. Dunworth continued with the presentation with information on the increases in expenses that have occurred since the last rate increase in June 2006; the proposed changes for FY 2008 -09 that will eliminate three full -time greenskeeper positions and convert seven full -time greenskeeper positions to part-time; a pro -forma that converts revenues and expenses into the manner they will be presented in the financial statements and is intended to show the effect of maintaining the current rates and levels of play through FY 2013, given the parameters the total net assets of the golf fund will be negative in FY 2011, in the event that the total net assets of an Enterprise Fund goes negative the State intervenes at that point, and the auditors have said the City must be able to show them a plan to remedy the situation or a get well plan this year or they will have to make a significant findings note in the audit this year, and concluded with a review of the capital, restricted, and unrestricted assets of the fund. City Council' s position on the following policy issues is critical to development of the FY 2008 -09 budget: Cost Allocation Plan, Clubhouse Debt Service, Equity in Pooled Cash, Membership Differential, Play Cards, Twilight Play, and Multi -Year Rate Plan. POLICY ISSUES Cost Allocation Plan Policy Decision: Should the cost allocation plan transfer to the General Fund be forgiven? The presentation included information that annual inter -fund transfers to the General Fund for reimbursement of services provided have been based on the 2003 Maximus study, adjusted for inflation, as resources have allowed each year, approximately $ 400, 000 for Golf; in April 2006 Council endorsed the General Fund continuing to absorb the Golf Fund' s cost allocation expenses for the next three years; certain expenses not considered during development of the Cost Allocation Plan or not in existence at the time are included in the inter -fund transfer amount on a proportionate basis, for FY 2007 -08 budget 62, 000 for Golf; the Golf Fund' s share of City resources is currently negative $ 262, 000; and the net assets are on track to decrease $ 94,000 in FY 2008 despite mid -year reductions in personnel and operating expenses. Staff recommendation is to forgive the Golf Fund' s transfer to General Fund per Cost Allocation Plan for FY 2008 -09 and evaluate annually thereafter during the budget process. Peter Bower, 222 Sleepy Oaks Road NW, received clarification that if the golf club no longer existed, the general fund would no longer need to be reimbursed for services and adjustments would have to be made to the cost allocation, but the debt would still remain. Mr. Minich moved to forgive the Golf Fund' s transfer to General Fund per Cost Allocation Plan for FY 2008 -09 and evaluate annually thereafter during the budget process. Mr. Miller seconded motion. Discussion included comments that the golf course has come a long way and is heading in the right direction; with no change in revenues and an increase in expenses the pro -forma shows the golf fund in the negative in 2011; that even with the mid -course, mid -year adjustments the golf fund' s share of City resources is negative $ 168, 000; to forgive as the Cost Allocation Plan recommends this year it will be 415, 000; do not need to continue to forgive the Plan at the expense of the General Fund; that there is no choice, there are expenses; one benefit of the cost allocation is that the schools could use the driving range during physical education and the students would possibly become future members of the golf course; that there are recreational benefits of the golf course to the youth on the schools golf teams who use the golf course for practice and to the senior community, and there are other benefits similar to those of the Parks and Recreation Department so the administrative costs that the City incurs for the recreational benefits should be forgiven; and the cost allocation is covering recreation. The Mayor called for the vote on the motion and it carried by a vote of 6 to 1 with Holmes, Miller, Reeves, Garvie, Pullen, and Minich in favor and Hartwell opposed. Special Council 6 -17 -08 177 POLICY ISSUES cont. Clubhouse Debt Service Policy Issue: Should the General Fund compensate the Golf Fund for debt service? The presentation included information that in 1999 a 30 -year $ 3. 4 million bond was issued to finance construction of a new golf clubhouse with cart storage, the Two Trees restaurant, the Edwin Watts pro shop, realign six holes and improve the driving range, with approximately $ 245, 000 paid annually for principal and interest; that Two Trees pays the City $ 32, 000 per year and Edwin Watts pays the City 44, 000 per year per lease agreements; that FY 2011 will be the last year for debt service for the back 9 holes on the Oaks eliminating $ 97, 000 in expense in future years; and decreases in service levels and staff reductions are already anticipated in the General Fund for FY 2008 -09, adding $ 245,000 in expense would necessitate further cuts or use of fund balance; and additional information on the debt service that showed the proportionate share of the debt attributable to Two Trees Restaurant, Edwin Watts Pro Shop, Golf Club Operations & Cart Storage, and the course renovations with a total debt payment of approximately $ 244, 000 less $ 75, 000 received in lease payments for a net debt payment expense of approximately $ 168, 000 attributable to the golf course operations. Staff recommendation is do not budget a transfer from the General Fund to the Golf Fund for clubhouse debt service payments. The Mayor opened the floor for public comment. Kabe Woods, 240 Brooks Street, received clarification that the primary pledge for the debt are the revenues from the golf course recreation facilities with a secondary pledge from the general fund non -ad valorem revenues. Chuck Wheelahan, 613 Powell Drive, commented the club house is a nice building with two commercial entities but there is only one room dedicated to the golfers and there are no showers or lockers available. He expressed that the golf course was not built to be in competition with a country club and voiced his objection to the golfers paying the highest rent. He expressed his thought that the City holds the deed to the property,=signed the construction contract for the clubhouse, obtained the bond and the City, not the golfers, should pay for it as it does for other city property. Joe Herzig, 128 Clements Street, questioned why the golfers have to pay for Council' s predecessors