Fort Walton Beach Council agenda — 06-17-08 special agenda — reading text

Fund will continue to experience annual cash flow deficits and entirely deplete its total net assets with current rates and levels of play without assistance from the General Fund. 2. The Golf Fund' s equity in pooled cash is estimated to be negative $ 356K at 09/ 30/ 08 — the current $ 262K plus an additional $ 94K. 09/ 30/ 03 09/ 30/ 04 09/ 30/ 05 09/ 30/ 06 09/ 30/ 07 05/ 31/ 08 09/ 30/ 08 est EIPC < 81, 616> < 375, 897> < 471, 860> < 359, 531> < 449, 135> < 261, 802> < 355, 544> Total Net Assets 700, 748 401, 970 141, 679 606, 553 407, 199 n/ a 313,457 3. General Fund departments have been requested to submit a budget that is 8% less than the current year due to decreases in ad valorem revenue, local option fuel tax, municipal revenue sharing, half -cent sales tax, and interest earnings. Decreases in service levels and staff reductions are already anticipated. Forgiving the Golf Fund' s estimated 09/ 30/ 08 negative equity in pooled cash amount over the two year period FY 2008 -09 and FY 2009 -10 would necessitate either greater General Fund cuts or use of fund balance ( which would consequently fall below the 30% reserve threshold). Recommendation Budget forgiveness of half of the Golf Fund' s negative equity in pooled cash balance as of 09/ 30/ 08 estimated to be $ 356K) in FY 2008 -09 and the other half in FY 2009 -10; which will require a transfer from the General Fund' s undesignated Fund Balance. This amount is subject to change based on any rate adjustments Council may adopt during this Golf Fund Meeting. Paae 15 of 59 15 of 23  Meeting Golf Fund Tr- oot 23 Golf Fund Meeting MEMBERSHIP DIFFERENTIAL Policy Decision Should the City and County residents pay different membership rates? Background 1. There used to be several membership categories based on residence ( City resident, City property owner, County resident) and age ( over or under 62). 2. Currently, there are only two membership categories ( City resident, County resident) and the fee is $ 350 for a 12 -month membership and $ 200 for a 6 -month membership. nigri is qinn _ 1. The Golf Fund is an enterprise fund, meaning it does not receive any property tax revenues and should be self-sustaining. In this regard, it does not make sense to base fees on residency. 2. However, to the extent that over $ 400K in cost allocation expenses are not being reimbursed to the General Fund, a discount to City residents may be warranted. 3. City residents account for roughly 67% of member rounds and comprise a similar percentage of memberships. 4. Since FY 2000 -01, membership is down 53% or 425 members. There are currently 181 City members ( down 69 %) and 193 County members ( down 9 %). County members comprise 52% of members. 5. The City has considered on several occasions incentives for voluntary annexation. While golf rates alone will not likely affect anyone' s decision to annex, the generosity of the City in offering recreational activities at no cost differential or only a nominal cost differential to County residents creates a disincentive to annex. 6. The City provides water service to Cinco Bayou and portions of the unincorporated County at a 25% surcharge. 7. The City charges non -City residents double the fee for adult and youth athletics, double for senior center membership, nearly 50% more for a tennis center membership, about 10% more for summer day camp, and up to 15% for the BMX park. Policy Impact 1. The FY 2007 -08 budgeted cost to produce one round of golf is $ 33. 87 based on 75, 000 paid rounds. Purchasing a play card or walking further The member rate is $ 26. 50 /round with cart. reduces the revenue to the City. Those who play more than 35 rounds per year benefit from a membership. 2. Several alternatives exist for memberships: a. County resident membership fees same as City resident membership fees b. County resident membership fees 25% more than City resident membership fees c. County resident membership fees 50% more than City resident membership fees d. County resident membership fees double City resident membership fees e. Eliminate all membership fees 3. Given the overall decline in membership, that less than half the members are City residents, and that less than 1 % of City residents are members, it is worth considering transitioning to daily fee based operations and eliminate memberships. 4. If all memberships are eliminated, staff would suggest a rate structure of $44 /round including cart fee. If there is a desire for City residents to receive some sort of discount, staff would suggest a 10% discount to $ 40 /round including cart. Recommendation Modify County resident membership fees to be 25% more than City resident membership fees. Paae 17 of 59 17 of 23 Golf Fund Meeting AS of 23 Golf Fund Meeting PLAY CARDS Policy Decision Should play cards continued? Background 1. Play cards were introduced in June 2006 to increase non -member play during the slow season. The cards were only valid May 1 — November 30, provided a 20% discount on the 18 -hole non- member green fee, and expired 12 months after issue. A player could purchase a maximum of three 10 -round cards or six 5 -round cards during a 12 -month period. 2. Effective October 2007, play cards were restructured: a. The non -member play card was changed to $ 2200 /year for unlimited walking play during a 12 -month period excluding weekend and holiday mornings. b. A member play card was introduced that discounts green fees 33% from $ 15 /round to 10 /round, with no limit on the number of rounds. c. A family member play card was introduced that allows family members of golf club members to play twice per year at the 18 -hole member green fee rate ( cart at non -member rate). d. A condo /rental agency bulk purchase was introduced that discounts play 25% from $ 40 /round to $ 30 /round ( including cart) during May 1 — November 30 and 7% to $ 37 /round ( including cart) during December 1 — April 30. Play is purchased in advance in increments of 100 rounds. Discussion 1. The FY 2007 -08 budgeted cost to produce one round of golf is $ 33. 87 based on 75, 000 paid rounds. This budgeted cost excludes over $ 400K in services absorbed by the General Fund due to the Golf Fund' s lack of reimbursement per the Cost Allocation Plan. 2. The full price for 18 -holes with cart is $ 26. 50 for members. Due to the $ 350 annual fee for single members, the members who play more than 35 rounds per year benefit from a membership. The breakeven is much lower for dependents. Members account for 30% of paid rounds. 3. The full price for 18 -holes with cart is $ 40. 00 for non -members. Non -members comprise 63% of paid play. 4. In general, just over 80% of non -members use a golf cart. Member use is slightly less. Policy Impact 1. Member play cards result in <$ 12. 37> less revenue for each 18 -hole round with cart played in excess of the 35 -round breakeven point. 2. Year -to -date through May 31, member rounds are down 52% or 6, 497 rounds, while play card rounds are up 5, 178 rounds. Staff believes this shift is directly attributable to the introduction of member play cards in October 2007. 3. Year -to -date through May 31, paid rounds are on target to reach 74, 000 rounds this fiscal year, which is about 2% or 1, 500 rounds less than last fiscal year. However, green fee revenues are on target to be about 9% or $ 132K less than last year. Staff believes the disconnect between relatively stable rounds yet decreased revenues is directly attributable to play cards. Recommendation 1. Discontinue issuing member play cards and family member play cards effective immediately. 2. November 30, provide a 20% discount on Modify the non -member play card to be valid May 1 — the 18 -hole non -member green fee only, expire 12 months after issue, and be limited to a maximum of three 10 -round cards or six 5 -round cards during a 12 -month period per player. Paae 19 of 59 19 of 23 Golf Fund Meeting Page 20 of 59 20 of 23 Golf Fund Meeting TWILIGHT PLAY Policy Decision Should the hours for twilight play be modified? Background 1. Prior to October 2007, twilight play began at 1 pm ( 2pm during daylight savings) and there was only an 18 -hole twilight rate. 2. As of October 2007, the hours for twilight play begin at 12 noon ( regardless of daylight savings) and there is also a 9 -hole twilight rate. nicrri iccinn 1. Twilight play is on track to total 21, 000 rounds this year for 18 -hole play, comparable to play in FY 2005 and FY 2006. FY 2007 was just under 13, 500 rounds. 2. An additional 4, 700 rounds are anticipated from 9 -hole twilight play this year. Policy Impact 1. Staff does not believe changing the twilight start time from 1 pm to 12 noon has a significant adverse impact on revenues and appears to have increased rounds during the heat of the day. Recommendation Continue twilight play as currently structured. Pacie 21 of 59 21 of 23 Golf Fund Meeting MULTI -YEAR RATE PLAN Policy Decision Should a rate change be implemented? Background 1. In March 2004 a comprehensive rate study was finalized and a multi -year rate plan was adopted by City Council. Membership fees, last adjusted ten years prior, were adjusted consistent with inflation over the same time period. Prior to this comprehensive review, green fees and cart fees had been adjusted in 2000 and 1995. 2. In April 2006 City Council adopted a revised five -year rate plan with rate adjustments effective each June 1 through 2010. Among the rate changes, member green fees were increased from 5. 00 to $ 15. 00, a non -member play card was introduced, cart