Title
Receive Report and Discuss the Golf Fund Budget.
Body
To: Honorable Chair and Members of the Golf Commission
From: Amy Wooldridge, Recreation and Parks Director
Re: Receive Report and Discuss the Golf Fund Budget.
BACKGROUND
The Golf Fund budget is a subfund under the Recreation Fund and is where all city revenue and expense for Corica Pack is managed. Since it is under the Recreation Fund umbrella, it is considered a special revenue fund so that any fund balance (positive or negative) stays within that fund and is not transferred to the General Fund or other city funds.
This report is to provide the Golf Commission with a more detailed understanding of the revenues and expenditures of the Golf Fund.
DISCUSSION
The following information provides details on what is included within the Golf Fund revenue and expenditure budgets.
REVENUE DETAILS
Rental Income
1) Greenway Golf Lease. Per the lease amendment, Greenway Golf is paying $75,000 per year through Dec. 31, 2020. It then increases to $175,000 through Dec. 31, 2022. After that, the rent is based on 8% of Greenway Golf’s gross income for most revenues and 3% for Par 3 fees and club repairs with a $300,000 minimum rent required each year.
2) Cell Tower Leases - The cell tower lease revenue to the city is $61,000 per year and increases each year per Bay Area Consumer Price Index (recently averaging 3-4%)
Concession Income
Jim’s on the Course rent is based on 5% of its gross income, which was $88,000 in FY 2017/18. Once the Event Center is completed and the Certificate of Occupancy is issued, then the concession rent will be waived for two years, per the Concession Agreement.
Miscellaneous Income
Per their lease, Greenway Golf makes an annual payment totaling $28,000 to reimburse the City for the Harbor Bay Assessment District Fee ($14,000) and 5% of the Recreation and Parks Director salary and benefits ($14,000). The latter is for the Director’s staff time coordinating with Greenway on the lease and construction. Once construction is complete, that fee will no longer be assessed. The Harbor Bay Assessment fee is ongoing and is paid by all business in the Harbor Bay District to fund maintenance of streets, medians and other infrastructure.
EXPENSE DETAILS
Salary and Benefits
This is 5% of the Recreation and Parks Director salary and benefits as explained above.
Storm Water Fee
The storm water fee is charged by Public Works and offsets their costs to manage the storm water system and infrastructure. It is charged based on the amount of impervious and pervious surfaces. Impervious surfaces includes areas that are asphalt and concrete and when it rains the water sheets off the surfaces, picking up particulates along the way that end up in the storm drainage system managed by Public Works. Pervious surfaces such as grass are areas that the water can percolate through and back into the ground water. In 2004, Public Works reduced the fee from a higher “Institutional parcel” fee to $80,000. This was based on a justification that the golf course was a “Park” which are considered by the Alameda County Clean Water Program to have an average imperviousness of 20% of total surface area. Earlier in 2018, Commissioner VanWinkle met with the Public Works Director and City Engineer to discuss this fee and Mr. Logan of Greenway Golf provided detailed information about actual impervious versus pervious surface at Corica Park. Public Works staff recalculated the fee and it was reduced to $15,331 annually starting in FY 2018/19.
Harbor Bay Assessment District
This fee is charged to the Golf Fund and is reimbursed by Greenway Golf as described above under Miscellaneous Revenues.
Cost Allocation
There are certain City services that used by all departments and those costs are allocated accordingly. These expenses include General Liability, Workers’ Compensation, Information Technology, Legal, Finance, Human Resources and City Management. This cost fluctuates year to year as the City’s liability and other costs change. In addition, the City recently completed a professional review of how it allocates costs which adjusted those calculations for various departments. In FY 2017/18, the Golf Fund paid almost $10,000 in cost allocation and in FY 2018/19, the cost allocation is budgeted at $21,000.
Driving Range Debt Service
The driving range was renovated a number of years ago and has since been significantly improved by Greenway Golf. The original project was managed by Public Works and paid by a City bond. Bonds provide funding for projects up front and are paid back over a long time period of time, with interest, often 30 years. The Finance Department recently audited and reviewed the bond that funded the Driving Range as well as other city projects including the Library construction and Police building improvements. Finance found that the Golf Fund was being slightly over charged and made adjustments that lowered the debt service payments. The Golf Fund was paying $131,000 annually. It now will pay per the following schedule:
FY 2018/19 $69,789
FY 2019/20 $91.463
FY 2020/21 $91,733
FY 2021/22 $91,811
Other Expenses
There are sometimes smaller expenditures that are unanticipated and paid by the Golf Fund. One example is in FY 2017/18 when the City paid to remove several large eucalyptus trees and install a new double gate on Flower Lane to provide direct access for the cell tower maintenance vehicles. This ensured that the maintenance trucks and large equipment would no longer drive on the cart path adjacent to the driving range. This project cost $24,000.
Additionally, as part of the original Greenway Golf lease agreement, a $1,000,000 payment was due from the City to Greenway for South Course construction costs. The Golf Fund did not have enough available funds to make this payment and as a result, $350,000 was loaned from the Recreation Fund to the Golf Fund. A payment in the amount of $100,000 was made in FY 2017/18 and there is a remaining debt of $250,000 owed by the Golf Fund.
Separate from the Golf Fund, there is a Capital Improvement Project Budget for the Golf Parking Lot in the amount of $500,000.
Total Net Costs and Fund Balance
There were specific assumptions made in this current two-year budget cycle that affected the budget versus the actual revenue. Specifically, the Greenway Golf rental income was budgeted based on the assumption that there was no lease amendment when the budget was adopted in June 2017 and therefore the lease revenue was budgeted for the minimum $300,000 annually that would have been implemented in September 2017. It was also assumed at that time that the Jim’s on the Course extended patio would be completed and per the agreement, the rent waived for two years during this budget cycle. Since the budget approval, both agreements were amended and the Greenway rent is now $75,000 until 2020 instead of minimum annual $300,000 as budgeted and the Jim’s on the Course rent is continuing as 5% of gross revenues until the Event Center Occupancy Permit is issued when it then will be waived for two years.
|
TOTAL BUDGET |
FY 2017/18 Budget |
FY 2017/18 Actual |
FY 2018/19 Amended Budget |
|
Revenue |
408,100 |
258,833 |
165,000 |
|
Expense |
244,479 |
212,549 |
133,469 |
|
Net Total |
163,624 |
46,284 |
31,531 |
RECOMMENDATION
To receive a report and discuss the Golf Fund Budget.
Respectfully submitted,
Amy Wooldridge, Recreation and Parks Director