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Golf 2004/08/26GOLF COMMISSION MINUTES AUGUST 26, 2004 - 4:00 P.M. Community Services Department Conference Room #1 COMMISSIONERS PRESENT: Chairman Gaby CITY STAFF PRESENT VALLEY CREST GOLF CALL TO ORDER Vice -Chairman Wright Commissioner Kresal Commissioner Raab Commissioner Schultz Terry Lowe, John Kudron, Michael Lautenbach, Bob Johns, Dave Johansen, and Gail Barruga No representative present Vice -Chairman Gaby called the meeting to order at 4:00 p.m. APPROVAL OF THE MINUTES A Motion was made by Vice -Chairman Wright, seconded by Commissioner Raab to accept the Golf Commission Meeting Minutes of July 22, 2004. Motion passed. OLD BUSINESS Starter Building Recommendation Mr. Lowe introduced himself to the Commission members and stated that he is up to date on the issue. It is his understanding that his attendance at the Commission meeting is part of an appeals process, concerning installing starter buildings at the courses. Terry Lowe stated staff has kept him well informed and he has met with Chairman Gaby and Vice -Chairman Wright several months ago. He asked the Commission if there was any additional information and/or questions before he made his comments. His is aware the Commission voted in favor of recommending the City add the starter buildings to each golf course. Chairman Gaby asked Terry Lowe if he saw the voting. He confirmed he had. Commissioner Schultz stated, that after consideration of all the things and reviewing the things that are recommended for capital improvements at the golf courses and other things that have not gotten done over the years, he does not feel they are necessary, and the money would be spent more wisely spent in other places. At the golf courses, there are certain things for the overall enjoyment and use of the golf courses that need to be corrected where the funds would be more prudently spent rather than on the half dozen days per year that we have weather that would be inclement enough to warrant something like this. GOLF COMMISSION MINUTES AUGUST 26, 2004 Page Two Vice -Chairman Wright stated she agreed with Commissioner Schultz as far as the budget that has been approved for the golf course, but her understanding is the Commission could go to the City Council and ask them to amend the budget to include the cost. Terry Lowe stated that any citizen or Commissioner can go to City Council any time they want. Vice -Chairman Wright asked if the Commission would be taking anything way from their monies that have been allocated to do any of the funds for capital improvements or anything on the course if we ask the City Council. Terry Lowe stated there is a fixed amount of money, and the City Council has hundreds of millions of dollars in ideas. The Parks Division has over 100 unfunded capital projects, that have been identified as a great need that are not yet funded. Terry explained the internal procedure prior to going to City Council, if there comes a point where we have not reached a satisfactory conclusion between staff and the Commission, would be to speak with the City Manager. Terry stated the Commission is not held to that procedure. If the Commission chooses to speak to the City Council, the Council will request a recommendation from the City Manager who will request Terry Lowe as the Director of Community Services to develop a recommendation. The City Council could appropriate funding for this project, however, currently underfunded are the two new library projects, a youth center/police station that has been in the works for 10 years which are now costing several millions more due to the construction industry increases. Terry stated in his 20 year tenure with the City, rarely does he remember a situation where a Commission went to the City Council in opposition to staff. Terry reviewed the Maxwell Park project, where the Park and Recreation Commission was in support of staff until they heard from the citizens, and then did not support staff's recommendation for the project. When the citizens went to the City Council stating their objections, the Council requested a report from staff. The City Council ultimately decided to support staff on the proj ect. Terry stated as the Community Services Director, he is weighing a number of different options, and looking at this as a relatively small issue, but is more concerned with the relationship between staff and the Commission. He is touched the Commission cares so much for the City employees. Vice -Chairman Wright stated the employees are the backbone of the operation and the person selling your product. Terry stated by her comment, he is lead to believe that the Commission does not believe staff shares that feeling. It is important for the Commission to understand, that he started with the department 32 years ago, and part of the reason he is in his position today, is because he does have the institutional knowledge and experience at all levels of the agency. There is no resource within the department that he is concerned with and is charged with protecting than our human resources, none. He does appreciate the Commission feeling that staff is very important. We depend on our employees every day. Many of the Recreation staff are teenagers, hundreds of teenagers who are out carrying my reputation. I can sit in my office with my executive staff creating policies and procedures, but the people on the line carry them out. As such, my reputation depends on how well we train and prepare them. Terry Lowe stated he deeply appreciates the Commission care and concern about the staff, and they will have to take his word for it that staff shares that sentiment. GOLF COMMISSION MINUTES AUGUST 26, 2004 Page Three Vice -Chairman Wright stated the Commission has no doubt that both staff and the Commission have the same feelings towards the staff, but have opposite ways in expressing it. Vice -Chairman Wright stated it was important for 19 of 24 player assistants who feel this is important to them and something they would like to have. It is not a million dollar expense, but a minimal amount to be spent. At Anaheim Hills there is a podium and an umbrella that is held in place by a rock which could fall and injure someone and result in a Workers' Compensation claim. The player assistants carry the podium in and out and move it periodically depending on the location of the sun. Vice -Chairman Wright asked why not have a structure that is aesthetically looks better than an umbrella and podium. She disagrees with the argument that the player assistants will stay inside the building and not come out and talk to the players. If they are trained and their job requires them to talk with the players and they are not doing it, then give them a warning. If they continue not to do their job they way you expect them, then you fire them. Terry Lowe stated staff is capable of training and managing the staff. He stated he did not attend the meeting to talk the Commission out of a starter building. He is attending the meeting to hear the Commission's comments and provide his best professional opinion. What has been discussed to this point is a more global concern about the relationship between the Commission and the staff and making sure the Commission understands how important staff is to him. They are part of the backbone. Terry Lowe stated that after his meeting with Chairman Gaby and Vice -Chairman Wright on a number of issues regarding the Commission, as is his standard practice, he reported to the City Manager and Mayor about the outcome of the meeting. He continues to keep the City Manager and Assistant City Manager, Tom Wood, his immediate boss, up to date on the issues regarding the Commission. In fact, he just came from a meeting with Tom 20 minutes prior on capital projects within the department. Each of the reports that have been brought to the Commission in writing and/or orally were shared with him prior and no decisions were made in a vacuum by the staff. Likewise, since this became an issue, the City Manager's Office has become involved at each step. If this comes to the point, that a vote of the City Council is necessary to decide whether or not there will be starter buildings at these facilities, then that is where it will go. Terry states his offer as an alternative to, yes, we will have it and build it tomorrow, or no, it is not going to happen, is his recommendation to the City Manager's Office and they have agreed, to add this item as a project to the golf capital projects list, which will become part of the process for developing capital projects on the golf course. Terry stated seven months ago, when he was hired as the Director, he was given specific direction regarding the golf courses. First, we need to return a minimum of $2 million dollars to the General Fund. Without that contribution, it causes direct service reductions to the public, i.e. senior and children programs, that don't pay for themselves. Second, high levels of service at the courses by providing good courses, very good professional staff, management and fiscal responsibility, and he believes all the tools are in place to accomplish this task. Third, to pay off the debt service on the new Anaheim Hills clubhouse. Dave Morgan, the City Manager, is most concerned about doing all these things but still having a top notch operation. The spending priorities are safety, making sure we have facilities at both courses that serve the golfer most effectively. Golf is an enterprise fund and we have the courses to provide good service, but also to make money, which is the reason the City did not turn them over to a private organization to manage. As such, the department is charged with responsibility of spending money judiciously as possible and as effectively as possible to reach those objectives. As Commissioner Schultz alluded to, making sure the physical structure of the GOLF COMMISSION MINUTES AUGUST 26, 2004 Page Four golf courses is serving the golfers as well as possible. Terry stated in his discussion with the CMO about the starter building, the City Manager asked about the condition of the bunkers. Terry stated what he will agree to do to get past this issue and move forward to the other business of the Commission, is to agree to put this item on the capital projects list, but cannot state when it will be funded or occur. The department will develop each fiscal year a plan based on what best serves our objectives. This will fall somewhere below bunkers and other things within the golf course that need to be fixed, but he will not say it will not happen. He knows this is important to the Commission, and keep in mind from the Parks Division standpoint, most of the restrooms in the parks are not ADA accessible. The City has already been sued for not complying at one park. Jack Kudron stated there are about 100 restroom buildings that are not in compliance and each would cost $150,000 to bring them in compliance. Terry stated he is responsible for weighing all the factors. If it is not at the top of the list, it isn't because he doesn't think it is important, but there are limited resources and there are a lot of priorities. Vice -Chairman Wright asked if the department provides all the clothing for the player assistants? Michael Lautenbach stated only shirts, pants and hats are provided. Vice -Chairman Wright asked what the cost per year? Michael Lautenbach stated approximately $2,000. Vice -Chairman Wright asked if there could be a trade-off, if the cost of the clothing would offset putting in what the player assistants want as far as a starter building. In years past, Disneyland would provide the uniforms which would be turned in by the employees and issued new ones. Now, the employees are responsible for their own cleaning. Jack Kudron stated the player assistants are issued a uniform but are responsible for cleaning. Vice -Chairman Wright stated maybe they would be willing if that is something they want that strongly, and instead of putting the starter building into the capital improvement budget, if they would trade off? Why can't they buy their own shirt and hat? Terry stated he would be concerned about image. Marketing is more than advertising. It is the impression and the experience the consumer has from the time they first come in contact with your business to time they leave. When you look at the ads, the dress of our staff, to the consistency of our colors, all goes into our marketing package. In the past we used to provide uniforms for the park maintenance staff, but it was either cut the uniforms or cut staff. In recent conversations with the park maintenance staff they miss the uniforms and the consistent look, the professional look. Today, they only receive shirts. They don't feel as good about themselves as far as projecting a professional image. Terry would not agree to say to the player assistants you can now buy or wear what they choose. Also, I don't agree if you compare the costs they are the same. Terry stated he would weigh this project with the other projects as the budgets are developed. Terry stated that he has a much greater concern regarding the golf courses which is that there is no reserve fund as other courses that do have a sizable reserve fund. He is very concerned about an El Nino year which could cause serious erosion problems on the course and not have the ability to deal with repairs. Commissioner Schultz stated that has been that way for 30 years. Jack Kudron stated it has been 10 years that Golf has contributed profits to the General Fund. He stated when the Golf Operations was transferred to the Parks Division, there were no contributions to the General Fund. During that first year, a decision was made to take some of the golf profits and turning them over to the General Fund, the initial contribution was $350,000. This quickly reached to over $2 million per year. Jack stated over the past 10 years Golf Operations has contributed over $19 million to the General Fund. GOLF COMMISSION MINUTES AUGUST 26, 2004 Page Five Commissioner Schultz stated the City Council has an asset that they are not protecting. He asked if the City has any other reserve funds? Terry stated the City has many reserve funds. Commissioner Schultz stated as a golfer, the City takes away from the courses, not that it doesn't go to good causes, but not getting anything on the back end. Finally, this changed with the building of the new clubhouse which was long fight to replace an eyesore. The City Council has been short sighted because they have this asset that continues to contribute. It is like a cow that keeps giving milk, pretty soon you forget to feed the cow, because it just keeps giving milk. Commissioner Schultz is glad that both Terry and the City Manager understand this cannot continue. Terry stated this is one of the things that keeps staff up at night. Terry's responsibility is to make sure accurate information is being presented to the Commission and City Council. Terry stated in the last budget, as of July 1, the department lost 17 positions, 8 have been back filled, but are due to run out in the Spring. Also, for the first time, both the Fire and Police departments each took a 5% cut in their budgets. It shows the depth of the problem. The City Council is faced with making the decision of golf reserves or policemen, fire fighters or senior citizen centers. ACTIVITY REPORT Superintendent's Update Jack Kudron referenced the letter from Valley Crest regarding the replacement of the pump shaft for the water well at a cost of $20,000. Course Conditions Report There were no questions. Director Of Golfs Report Bob Johns stated, in speaking with his peers at courses around the county, they are experiencing a drop in group tournaments primarily because companies have stopped sponsoring employee events due to fiscal problems. Many company events are gone. Also, golf groups in general are all smaller than they used to be. The industry itself probably shot itself in the foot a number of years ago and priced itself out of the market and some of the players go to other sports. Golf is coming back in Orange County. We are up about 2% where other parts of the country are down. There just are not as many golf events. To date, for 2005 there are only 60 events at Anaheim Hills and 20 booked at Dad Miller. However, that may change in September when the City of Los Angeles and the County of Los Angeles open their tournament schedule for 2005. If groups cannot book with them, then they will come to our courses. We have incentive programs, offering complimentary rounds of golf based on the number of players for booking tournaments. Jack Kudron stated the same issue is occurring in the convention industry. We may have the same number of conventions bookings, but the number of attendees is down considerably. GOLF COMMISSION MINUTES AUGUST 26,200 Page Six FINANCIAL REPORT July Financial Summaries Jack Kudron stated there is a slight dip in the number of rounds, but at the individual courses Anaheim Hills was up and Dad Miller was down nearly 10% which can be contributed to the Tiger Wood's construction. The preliminary August numbers are better than the July figures. All other categories were up. GPS acceptance rates are up 7%. Food and beverage figures continue to be up. Jack stated the first five full months of operation at the new clubhouse (March through July) the gross revenue was $835,000 which far exceeds expectations. Staff projected $1 million for the first year. Jack stated there is still a lot of capacity and we can grow even more. Chairman Gaby stated she recently attended a wedding at a competing golf course that could only accommodate 200. It was too small. Commissioner Schultz stated the increased size of the banquet room at the Anaheim Hills Clubhouse can be attributed to former Council member Lucille Kring. Jack stated staff presented to the City Council a design recommendation for a 250 banquet room capacity. Council members Kring and Mc Cracken both stated if we are going to do this right, the City needed to increase the capacity to 350, which was done. FY03/04 Year End Financial Report Jack Kudron stated the FY03/04 was a great rebound year. All our revenue areas were up in an industry that is depressed. Golf made $119,000 over the contribution to the General Fund. This amount is placed in a fund balance in Golf Operations, but for emergency purposes. These funds are not identified in a capital reserve account that can automatically be used for a capital project. Also, staff does not have the authority to spend it on a big project without an appropriation from City Council. Golf Operations needs to establish a capital reserve fund. The Golf Commission could support staff in trying to establish a capital reserve and the ability to do larger projects rather than only the smaller type of project currently being done. For example, the irrigation system at Dad Miller needs to be replaced. There is at least one mainline break a week, sometimes more, but a new system might cost $2 million. The irrigation system at Anaheim Hills that was installed in 1994 cost $1.3 million. There are years when Golf Operations finished in the red, and to balance pulls funds from the fund balance. Commissioner Schultz asked how much is in the fund balance? Michael Lautenbach stated there is $500,000. Commissioner Schultz asked if the monies needed to replace the shaft in water well could come from the fund balance. Jack stated no because it is not appropriated. The fund balance is not appropriated and staff cannot spend without specific authority from City Council. Commissioner Schultz asked what do we need to do to go to City Council and allocate those funds for emergency? Jack stated the Council would ask if there were other funds in the budget to fund the project. The answer to that would be yes. It is against the law for staff to authorize work without having the funds appropriated. Jack suggested the Commission could lend support for a capital reserve account to be put in the budget each year. Commissioner Schultz asked if staff needs to ask the City Council to move some of the monies in the fund balance to a capital reserve account? Jack stated the time to do this is during the budget process and suggested the GOLF COMMISSION MINUTES AUGUST 26,200 Page Seven Commission appoint a two member sub -committee to work with staff to develop a report which will first be presented to the entire Golf Commission and then to the City Council for consideration. Jack stated at first it would be presented to City Council as an informational item. Jack stated the key thing that is missing is we don't appropriate a capital reserve and he would recommend if a subcommittee is appointed they work on the more global issue of why a business needs a capital reserve and why Golf Operations needs a capital reserve. Commissioner Schultz made a Motion to appoint a two member sub -committee to work with staff to formulate a proposal to be presented to City Council for a capital reserve fund and specifically ask for the $20,000 for our immediate need. The Motion was seconded by Vice -Chairman Wright. Commissioner Raab asked about the capital reserve, that Golf Operations doesn't give it to the City? Jack Kudron stated Golf Operations is still required to contribute $2 million. Jack stated the Commission could recommend that to build a capital reserve is to request that the fund balance never go below a specific amount and ask the City Council for a policy in terms of building a capital reserve that anything Golf Operations has over an "x" amount that is to be kept in the fund balance reserve. Commissioner Raab asked what happens to this money now? Jack stated it is in the bank. It is a rainy day fund, and can be used to balance a bad year. In 1994, a bad El Nino year, Golf Operations finished in the red and balanced the year with funds from the fund balance. Commissioner Schultz asked how the funds were transferred to balance. Jack stated that since golf is an enterprise fund the funds are not mingled with any other funds. It is a matter of an internal accounting transaction. Commissioner Schultz asked you cannot use this same transaction to make a repair on the golf course only to fund the bottom line at the end of the year. It can only be done once a year? Jack stated that is correct. There being no further discussion, the Motion passed 5-0. Chairman Gaby asked for volunteers, Commissioner Schultz stated he would work with staff to develop a report to bring before the Commission. The Commission agreed. OLD BUSINESS A. Starter Building Recommendation See above. B. Tiger Woods Learning Center Update Jack Kudron reported the modifications to the golf course are moving along at a better pace. All the fine grading is complete, the greens have been seeded, and all the irrigation is in. The trees are being selected in the following week, to be planted next month. The cart paths will be installed and the last item will be to seed the fairways. 0 9 GOLF COMMISSION MINUTES AUGUST 26, 2004 Page Eight The Tiger Woods Foundation initially did not feel that feel the current irrigation pump would need to be replaced once it was moved. However, after evaluating the pump, they do not want to take the chance the pump would not work after moving it. They have made a proposal to the City that they will install a new irrigation pump at their cost if the City will give them irrigation water at no cost for the Tiger Wood Learning center in perpetuity. Jack stated this is a win/win situation for the City because there is a water well at Dad Miller and the water costs are only $27,000 per year. Chairman Gaby asked if they are back on schedule? Jack stated he is hoping the new holes will be opening at the beginning of the year. Phase II can start then and will take approximately six months to complete. Commissioner Schultz asked, at the new driving range, if there is going to be a significant set of nets installed? Jack stated the poles for the nets are over 100 ft. tall. There will be a new lighting system also the new range is located closer to the clubhouse so there are better opportunities to warm up before the golf. C. Future Improvement Projects at Courses Jack Kudron stated staff will add the starter buildings to the capital improvement project list and provide costs to the Commission for their prioritizing of the projects. Chairman Gaby asked the Commissioners if there were any items to be added to the list. Jack stated the Commissioners can phone, fax, email their requests to staff. NEW BUSINESS A. Golf Commission Meeting Days and Time Jack Kudron stated the City Council asked all departments with commissions to confirm the commission meeting day and/or time. There are some commissions that have not had quorums for several months due to the time of the meeting. Jack Kudron stated the Commission can change the day and time for the meetings by making a Motion. Chairman Gaby asked the Commissioners if they were in agreement with the current day and time of the meeting. The current meeting day and time was acceptable to all Commissioners. Chairman Gaby suggested that in the future the frequency of the meetings could be changed. B. October Golf Commission Outing Gail Barruga asked the Commission to clarify the location of the October golf outing as discussed conflicts with the original schedule at Anaheim Hills. Commissioner Schultz asked if there will be enough Commissioners that will be playing golf. If there are only going to be two Commissioners than it wouldn't be right to take staff's time away from their jobs. Vice -Chairman Wright stated the GOLF COMMISSION MINUTES AUGUST 26, 2004 Page Nine Commissioners wanted to play at Dad Miller while it was under construction. Michael Lautenbach confirmed golf would be starting at 10:00 a.m. with the Commission meeting at 3:00 p.m. at Dad Miller. C. November/December Golf Commission Jack Kudron stated the November Commission meeting falls on Thanksgiving Day. Past practice of the Commission is to combine the November and December meetings and hold it on the first Thursday of December, which this year would be December 2, 2004. The October 2004 Commission meeting will be adjourned to December 2, 2004. D. Tiger Clinic Jack Kudron stated the event is not open to the public. Those who confirmed their attendance should have received the credentials and parking pass to the event. Jack reviewed the schedule with the Commissioners. Chairman Gaby asked if there were any other comments or questions. Jack Kudron announced that the next Golf Commission meeting will be his last as he will be retiring from the City October 28, 2004. Jack stated that he will be working part-time in the Planning Development section on capital projects. He plans to stay involved with the Tiger Woods project until its completion. ADJOURNMENT Commissioner Schulz made a Motion, seconded by Vice -Chairman Wright, to adjourn the meeting. The Motion passed. There being no further business the meeting adjourned at 6:00 p.m. The next Golf Commission meeting will be held on Thursday, September 23, 2004 at 4:00 p.m., City Hall East, 200 S. Anaheim Blvd., 4th Floor, Conference Room #1.