Fort Walton Beach Council agenda — 03-28-06 Workshop — reading text

5 o g~ E 0) .....0) 0) 3 aiten8I.Len:: E$~ O)~~ OI~~ O) 8 U 0... a.. c~ OC) I- w I- u 9 5 o i c:  B6AGf-t GI1] OF FOR.T WALTON Memorandum TO: Golf Club Advisory Committee ~. THROUGH: Joyce Shanahan, City Manager ~' ~/) Jim Frazier, Golf Club Administr lw FROM: Charlotte Dunworth, Financial Analy-- 6b CC: City Council Members and Charter Officers RE: Golf Club Operations Rate Study DATE: March 10, 2006 Backaround has Foundation Consulting, Inc., a nationwide drop in rounds According to a report prepared by National Golf Five factors contribute to the decline: 1) competition occurred since the late 1990s, beginning in 2000 or 2001. for a stagnant market, 2) a worsening from an increased number of public access courses competing time 11, which greatly reduced the traveling golfer market, 4) increasing economy, 3) the aftereffects of 9- and 5) abnormally poor weather conditions. pressure on individuals and families, between 1995 and 2004. In contrast, rounds nationwide The number of golf courses in the US increased 21% 3. 6% in US Region, however, rounds decreased decreased 3% in 2002 and 1. 5% in 2003. In the Southeast Paid rounds fewer play days in 2004 than the US total. 2003 and hurricanes contributed to an average of 10 fiscal courses have declined each year between years at the City of Fort Walton Beach' s two 18- hole golf 1998- 99 and 2004- 05, from 113, 717 rounds to 86, 085 rounds. after Ivan to clear trees and debris off the courses, The golf courses were closed for five and a half days the courses the time FY 2003- 04. In addition to rounds lost during resulting in a 3. 8% decrease in rounds in their own were closed, play decreased in the ensuring months as players focused on cleaning up and repairing closed for seventy- nine days in the Spring of 2005 resulting homes and businesses. The courses were again Dennis in July 2005, from heavy rains that saturated the courses and prevented play. As a result of Hurricane course closures resulted in a 2. 0% decrease in rounds in FY 2004- 05. exists net loss each of the past four fiscal years. The potential The City' s Golf Enterprise Fund has incurred a are not in fiscal year 2005- 06 if additional fiscal remedies for the fund to have a total net asset deficit and debt service costs. Due to Cash flow from operating activities is not sufficient to pay capital implemented. resources the General Fund for services such as human operating deficits, the fund has not been reimbursing maintenance; and financial services including payroll recruitment and hiring; computer, fleet, and equipment the City' s indirect cost allocation plan. and accounts payable as required by have undertaken a series of the financial position of the Golf Club and City Council and staff are aware of of the Club. measures to improve the financial position workshops, rate structure changes, and cost cutting Club Advisory Committee to Business Operations Plan and formed a Golf City Council adopted a Golf Club Club Operations. Key components of the business operations address the long- term financial outlook of Golf sufficient Club was in consistently good playable condition and generated plan were to ensure that the Golf club fee study was completed and adopted revenues to cover operations. In addition, a comprehensive golf a multi- year plan of rate increases. In order to minimize rate by Council in March 2004 implementing rate plan the expenditure levels projected in the multi- year increases and still achieve financial stability, earlier than minimal capital improvements. However, reflected delayed equipment replacements and and bulkhead, seawall, been needed to maintain course conditions anticipated equipment replacements have hurricanes. Revenues have not covered these rains and and bridge repairs have been necessitated by heavy expenses, which were not anticipated at the time of the rate study. to reevaluate rates and staff and the Golf Club Advisory Committee InAugust 2005 City Council directed and capital improvements cover operations, equipment replacements, develop a new multi- year rate plan to 1 of 3  Staff and the Golf Club Advisory Committee have such as storage buildings, irrigation, and rebuilding greens. strike a balance