FEASIBILITY OF EXPANDING DRIVING RANGE AT SUNKEN GARDENS
GOLF COURSE (97-039)
REPORT IN BRIEF
At the December, 1995 Council Study Workshop, City Council
directed staff to evaluate the feasibility of expanding the
customer capacity of the driving range located at the Sunken
Gardens Golf Course. Specifically, Council requested information
regarding addition of an upper deck for hitting and the current
licensee's (Art Wilson Golf Shops, Inc.) interest in
re-negotiating the existing license agreement (current agreement
extends to 2006) if expansion were to occur. Additionally,
information regarding safety, parking lot capacity, and physical
limitations of the site were to be focused upon as costs and
revenue generating potentials are discussed.
Staff has reviewed the cost/benefit of the proposed project
and contracted with Beals Landscape Architecture, Inc. to develop
conceptual plans, construction cost estimates and projections of
ongoing and start up costs. Adjacent neighbors were invited to a
presentation early in the process to gather input and assess
their thoughts of a possible expansion. In addition to studying
the Sunken Gardens Golf Course facility, ten nearby competitor
driving range sites were surveyed to determine what components
golfers favored most and which of these components might fit at
Sunken Gardens. Sunnyvale's pro shop licensee and driving range
operator, Art Wilson Golf Shops, Inc., provided essential
information regarding current and projected use patterns as well
as Professional Golf Association (PGA) perspective regarding this
study issue.
Through the process, it became apparent that limited numbers
of new customers could be attracted to the driving range.
Physical site constraints limit many customer driven
improvements, and construction costs increase dramatically with
complete renovation and modernization of the range. Staff,
consultants, licensee and PGA staff concur that in and of itself
a second deck of hitting stations would not likely attract many
new customers. Therefore, the construction and down time costs
combined with operations costs to care for new components and
future remodel/renovation costs over the next 40 years far exceed
the projected increased revenue.
In addition, public relations issues also have come to the
forefront. Clearly, a number of balls currently leave the site
due to errant golf shots. Expansion of the range, even with a
limited number of new customers, could result in increased public
relations concerns. Liability issues are also closely connected
to the public relations issues. Each year a number of damage
claims are paid by the City to provide for repairs to homes
adjacent to the driving range. Neighbors are concerned that
through expansion additional windows may be broken and the
possibility of a person being struck by an errant golf ball
increases as does potential for litigation.
Examination of the financial impacts in the 40-year plan and
potential increases in City's liability and public relations
concerns leads staff to recommend that Council take no action to
expand the current number of hitting stations for the driving
range located at the Sunken Gardens Golf Course.
BACKGROUND
Golf services, including the driving range activities, are
part of the non-dependent population Program 644 of the Community
Recreation Fund (25). Revenues from all leisure activities such
as ticket sales, room rentals, sports, etc. are received into the
fund, and all operating expenses, Capital Improvement Projects,
debt retirement (from Sunken Gardens Golf Course purchase) and
loan payments (for previous improvement projects) are paid for
out of the fund. While golf services are profitable, the overall
fund expenditures have been and are currently much greater than
the revenues, hence the necessity for General Fund subsides. It
is anticipated that the Community Recreation Fund will become
fully self sufficient by fiscal year 2003/04.
There is no direct tax support for golf services through
property, sales, business or special taxes. With this in mind,
Council's recently adopted Recreation Sub-Element includes clear
policy to provide staff direction in achieving this objective.
Pertinent Goals, Policies and Action Statements include:
GOAL C: DEVELOP AND ENHANCE THE OPERATION OF THE COMMUNITY
RECREATION FUND, MAINTAINING SOUND FINANCIAL STRATEGIES AND
PRACTICES THAT WILL ENABLE THE CITY TO PROVIDE AN ARRAY OF
RECREATION PROGRAMS, FACILITIES AND SERVICES TO A MAXIMUM NUMBER
OF CITIZENS WHILE MINIMIZING THE IMPACT UPON THE GENERAL FUND.
Policy C.2: Identify revenue sources and, where possible,
increase revenues which can be allocated to recreation programs,
facilities, and services.
Action Statement C.2.a: Leverage available resources by
pursuing co-funded and/or cooperative agreements for both
expansion and maintenance of programs, facilities, and services
in order to maximize benefits to the community.
An additional Recreation Sub-Element Action Statement ensures
staff will consider function and ongoing operational aspects of
facility usage.
Action Statement E.1.d: Explore ways of maximizing facility
usage to most effectively meet the community's needs, considering
such issues as function and hours of operation along with
maintenance requirements.
Consistent with the Recreation Sub-Element, Council has
approved an outcome based operating budget for the Leisure
Services activities. Program 640 (the management program of all
recreation activities and services) states:
PROGRAM 640: LEISURE SERVICES SUPPORT PROGRAM
PROGRAM OUTCOME: IMPROVE THE COMMUNITY'S QUALITY OF LIFE.
REDUCE CRIME AND DEPENDENCE ON MORE EXPENSIVE PUBLIC ASSISTANCE
PROGRAMS, AND REDUCE DEPENDENCE ON THE GENERAL FUND BY PROVIDING
CUSTOMER AND ACTIVITY SUPPORT, FACILITIES AND LEISURE SERVICES
FOR DEPENDENT AND NON-DEPENDENT POPULATIONS BY PROVIDING OR
BROKERING LEISURE SERVICES ACTIVITIES.
There are six Outcome Measures for use in determining progress
in reaching the above stated Program Outcome. Two of these
Outcome Measures are very helpful in viewing potential
expenditures (operational, capital or special projects) and
possible fluctuations in revenue sources (increases or decreases)
and their related impacts to both the Community Recreation Fund
and the General Fund. These measures are as follows:
Outcome Measure 1. Overall revenue to operating expense ratio
is .91 or better; program is self supporting by year 2003/04;
and,
Outcome Measure 4. Average cost to the General Fund per
participant hour is $.16 for total combined leisure activities.
Outcome Measure 1 is a tool to gauge activity value including
potential improvement projects. It is staff's task to ensure the
ratio of revenue to expense meets or exceeds the approved target
resulting in the fund becoming self supporting. Outcome Measure 4
moves beyond the balance of revenue to expense and charts the
cost of leisure activities to the General Fund.
Closely connected to Program 640, Program 644 (Leisure
Services for Non-Dependent Populations) contains a Program
Outcome and related Outcome Measures as follows:
PROGRAM 644: LEISURE SERVICES FOR NON-DEPENDENT POPULATIONS
PROGRAM OUTCOME: ENHANCE QUALITY OF LIFE, PHYSICAL FITNESS,
AND POSITIVE USE OF DISCRETIONARY TIME THROUGH A MARKET BASED
APPROACH BY PROVIDING OR BROKERING LEISURE SERVICES FOR
NON-DEPENDENT POPULATIONS.
The pertinent Outcome Measures are:
Outcome Measure 1. Revenue to operating expense ratio is 1.42
for non-dependent populations; and,
Outcome Measure 4. Average cost per participant hour is $1.45
for non-dependent populations (not including revenue).
Outcome Measure 1 is similar to Outcome Measure 1 of Program
640. However, its target ratio of 1.42 reflects the desire to
have revenues exceed expenditures so as to provide funds for
dependent leisure activities (youth, disabled, and seniors).
Outcome Measure 4 provides the target for an appropriate
expenditure to produce each participant hour. Increases or
decreases to operating and/or capital costs, as well as changes
to the actual number of participant hours provided, will be
reflected by this measure.
DISCUSSION
All Leisure Service activities receive close scrutiny for
expense, revenue and bottom-line results. As a net-profit
activity within the Community Recreation Fund, golf services have
received additional attention toward potential for improvements
in revenue generation. It is in this light that Council, in the
December, 1995 Council Study Workshop, directed staff to study
the potential for expanding the driving range. The major issues
related to expansion of the range include: Current Conditions/
Potential Improvements; Public Relations/Liabilities; License
Negotiations Opportunity; and Architectural Components. Following
is an in-depth discussion of these major issues and various
options for the future use of the range including the options of:
no construction; construction of a two-tiered hitting structure;
construction of a two-tiered structure and field improvements;
and a full master plan type of construction.
CURRENT CONDITIONS/POTENTIAL IMPROVEMENTS:
The City driving range is located at the North end of the
Sunken Gardens Golf Course, 1010 South Wolfe Road, adjacent to
the nine-hole executive course with a newly remodeled pro shop
and Wild Woody's Clubhouse Cafe (please see Appendix A). The
range is maintained by City staff and operated by licensee staff
(Art Wilson Golf Shops, Inc.). The licensee provides instruction,
rubber mats, golf balls, and the staff/ machinery/equipment to
clean and sell the balls in buckets: Small $5, Medium $6, and
Large $7. Range maintenance is minimal with mowing biweekly, and
aeration and replacement of protective netting as needed.
The range is an approximate six-acre valley surrounded by
trees, perimeter netting to 60 feet and residential homes. The
hitting field is 240 yards deep and some 130 yards wide. While
this may seem a large area, it actually is at a minimum for this
type of facility creating the need to provide "limited
flight" golf balls and areas for "irons only." The
limited depth of yardage also dictates the need to use rubber
hitting mats rather than turf grass tees because turf tees
require 40 to 60 yards of grass to rotate hitting locations
forward each day, and this site is not large enough to provide
customers this desired component.
The valley is the lowest portion of the entire Sunken Gardens
Golf Course site which was once a sand and gravel quarry.
Consequently, all areas of the parking lot and adjacent slopes
drain to the range creating difficulties in growing turf. This
causes golf balls to be mired in the mud thereby increasing
operating costs and causing closures in inclement weather.
Currently, 28 hitting stations and supplemental teaching areas
are used primarily as a practice/training area and secondarily as
a warm-up for a round of golf. About one hour each day the range
is at full capacity with some customers waiting 15 to 20 minutes
for an open station. The hour of full capacity occurs within the
3 to 3½ hours of prime time each day (12 to 1 p.m. and 5 to 7:30
p.m.) of the warm season. Full capacity use decreases in winter
months, especially on weekdays.
There are some 145 parking spaces shared among the driving
range, golf course, and restaurant customers and staff. While
range customers have not been negatively impacted by this limited
parking, many times restaurant customers have had difficulties at
peak periods. Any project considered which would place a moderate
to heavy increase in usage should address this concern.
By license agreement (in effect through 2006), revenue
collected at the range is received by Art Wilson Golf Shops, Inc.
The City charges $625 per month rent ($7,500 per year) and
receives 25 percent of the driving range revenue after the first
$50,000 is received each year. The City revenue and expense for
the past three fiscal years is as follows:
| Fiscal Year | Gross Revenue | City Revenue | Operating Expense | Net Profit |
| 1995/96 | $354,125 | $82,906 | $16,038 | $66,868 |
| 1994/95 | $365,271 | $86,318 | $7,716 | $78,602 |
| 1993/94 | $429,718 | $102,430 | $4,745 | $97,685 |
Decreased gross revenue in fiscal years 1994/95 and 1995/96
are related to increased competition in the market place combined
with rainfall which was higher than average and much higher than
the previous "drought" years. Increased operating
expense for fiscal year 1995/96 does not indicate a change in
maintenance practices; rather, administrative overhead has been
included and distributed to each task area (FY 1995/96) rather
than to the entire program at year end (FY 1994/95).
The most recent revenue estimate for fiscal years 1996/97
through 2006/07 includes growth at or slightly above inflation
for a total of $1,501,971 for driving range revenue. This total
is down some $200,000 from earlier estimates. The declining
revenue noted takes into account the increased competition in
this market. Five new driving ranges have been opened and one
range has been expanded in the past four years. An additional
range is set to open in Fremont this year. As our City has
essentially reached build-out residentially and employment growth
has been marginal, new customers within our City limits have been
few. With the increase in ranges near Sunnyvale fewer golfers
travel to our range for practice. Therefore, customer use has
been somewhat static these three years. Recently, the costs of
buckets of balls was increased to $5, $6 and $7; subsequent
year's increases will likely hold only to inflation and not
above.
With the current revenue picture focused to provide a positive
revenue flow and growth only at inflation levels, means of
attracting additional customers is a viable strategy. As such,
staff has conducted a market survey of ten nearby golf driving
ranges to determine amenities which customers prefer and which
would create a successful facility (please see Appendix B -
Market Survey of Driving Range Amenities).
As noted in the survey, some 30 percent of local ranges have
an upper-deck level. The ground-level teeing stations were
favored by most golfers since club selection is limited on most
upper decks (irons only). The upper decks did provide shade cover
to the lower level for golfers at three sites, and a limited
number of separate shade-covered teeing stations were supplied at
two additional ranges. This amenity, though valuable in hot
weather locations (Coyote and South San Jose), is not of great
value in wet months because equipment used to collect balls
damages the turf by pushing balls into the wet soil. Therefore,
most ranges close in wet weather.
By far local ranges tend to have more hitting stations than
does Sunken Gardens. This has been the case due to the limited
acreage and close proximity of residences to the Sunken Gardens
range. Of all ranges surveyed, only one (Vista Oaks Golf Center)
had adjacent residential neighbors. Most had larger fields with
open land or golf course property adjacent to their driving range
reducing both public relations and liability exposure concerns.
PUBLIC RELATIONS/LIABILITIES:
Due to errant golf balls, public relations issues and related
residential neighbor concerns have been high. Accordingly, as
staff examined this project, a neighborhood meeting was conducted
(July 2, 1996 at the Clubhouse Cafe) to allow input from those
neighbors living adjacent to the driving range and golf course.
The number of errant golf balls leaving the site to adjacent
properties varies with the fewest noted along the West side
(Ponderosa Avenue) at one every couple of months, and the highest
numbers along the East side (Poplar Court and Starflower Court)
when at times several balls may come over in one day. Neighbors
at the far North end of the range (Rosette Terrace) note balls
leave the range headed to their properties a couple times each
month. Nine neighbors attended and they in unison stated they'd
like to see these balls controlled and they'd like to have a
better response from range staff when they call before any
thought is given to expanding the range.
In response to their concerns, pro shop managers have provided
additional customer service training for range staff. An
information list for each concern call received was created.
Claims package forms are available on course, and the Sunnyvale
Risk and Insurance Division handles claims quickly. Questions
also arose regarding the potential for more golf balls to leave
the site if additional customers use the range. Appendix C
provides a history of these claims which correlate the seasonal
use patterns. Bar charts reflect gross revenues/claims for
damages per quarter for the previous three fiscal years. Five
claims were filed in the low use quarters two and three. Seven
claims were filed in the very busy quarters one and four. With
the minimal difference in claims filed in low versus high use
periods over this three-year time line, it does not appear that
increased use will automatically result in increased claims.
There does remain a potential for more damage if use was
increased dramatically.
All of the damage claims paid by the City for the driving
range to date have involved cracked and/or broken windows of
homes. The three-year average is four claims per year with an
average $1,301.53 paid out per year. This data would support
near-neighbor concerns regarding errant balls. The largest
portion of the claims being noted along the East side where
neighbors have collected balls numbering in hundreds over the
years. This relatively small amount paid per year may not present
a complete picture of the City's liability exposure at the range.
There remains the possibility of a ball striking an individual.
In such a case it must be assumed that damages would rise
dramatically. Efforts put forth to attract large numbers of
additional golfers would have to be matched with innovations
which may be capable of holding City liability exposure to
current or decreased levels.
Should Council choose to construct additional hitting stations in the form of a two-tiered structure, the following measures may be employed in an effort to maintain and/or reduce the occurrence of errant golf shots leaving the site:
As ongoing customer service improvements, pro shop staff has
focused additional attention in the teaching area (closest to
these neighbors), phone calls are tracked more closely, and a
recorder is in place for times when staff are out of the office.
LICENSE NEGOTIATIONS OPPORTUNITY:
Since 1968, Art Wilson Golf Shop, Inc. has maintained a strong
working relationship with the City of Sunnyvale as licensee for
golf pro shop services. Throughout this time period Mr. Wilson
has established himself within the golf community as a true
authority on golf shop and driving range operations in California
achieving the award of 100 Best Golf Shops of the Nation for ten
consecutive years. This long-term relationship has been very
positive for both parties. A 1994 Santa Clara County Grand Jury
Report on Public Golf noted the golf license in Sunnyvale as
being well negotiated and supervised in the operation of its golf
courses.
The current license agreement for the golf operations is in
effect through the year 2006. Regarding re-negotiation of this
license to include an expanded driving range as detailed above,
Mr. Wilson responded that he appreciated the opportunity to
review the information and would like to work with the City on
any project which could benefit golf customers, the City and his
company. However, he feels that this particular project may not
be our best opportunity to meet these objectives. Site
constraints such as limited acreage, access to only 9 golf holes
rather than 18, limited parking, and possible increased liability
issues are very real concerns.
The cost estimates and projected participation increases seem
reasonable and appear to result in a net negative return for the
City with construction cost recovery many years away.
Additionally, the loss of driving range revenue while
construction occurred would be detrimental to fiscal health of
his company. While driving range operations generally result in
profit, other portions of the operations required within the
license agreement (Sunken Gardens pro shop) routinely result in
losses. As a whole the balance of profit and loss is manageable;
however, the disruption of cash flow for the 5 to 12 month
closure would be extremely difficult to offset. The projected
increase in customer participation would not seem to cover these
costs in addition to the noted construction costs, and his
company's operating costs would increase to provide additional
amenities such as mats, balls, baskets, etc.
Mr. Wilson concluded that he has appreciated a greater
involvement in project discussions and looks forward to
participating in alternative, future projects which may provide
better opportunities to meet the objectives of all of the parties
involved.
ARCHITECTURAL STUDY:
Beals Landscape Architecture, Inc. of San Jose provided an
in-depth report including conceptual plans, construction
cost/time line estimates and recommended priorities of component
construction. With many awards for innovative sports field and
landscape designs, this firm is well known for producing quality,
thoughtful project documents. Additionally, they employ
successful local contractors in developing cost estimates to
provide accuracy in planning. These practices have assisted
Sunnyvale several times previously as Beals Landscape Architects
Inc. has provided documents for Parks Division projects at
several sites including Ortega Park and Cupertino Middle School.
Presently, they are in progress with the Washington Park Master
Plan. Additionally, staff of the Public Works Department has
reviewed driving range construction components and cost estimates
to ensure their usefulness in fiscal planning.
Essentially, three phases or options of one master plan for
the site was developed. Each option could be constructed as a
final and complete project, or the second and/or third option
could be added to an earlier completed project. The statements of
probable construction costs include some elements which could
increase or decrease total costs. These include drainage costs:
(1) increased costs to connect surface run off water to the City
storm drain system; and, (2) decreased costs to connect run off
water only to existing water storage tank. Additionally, an
estimated $85,000 cost to depress the hitting structure into a
basement, first-floor level should be added to the total costs.
Should Council determine to construct, staff recommends this
depressed structure be included and the more expensive connection
to the City storm drain system be utilized. Estimated additional
operational costs and future year increased expenses are over and
above current costs projected to provide for upkeep and general
maintenance of the improvements, specific to each phase (option).
These activities would include mowing, litter/debris, graffiti
removal, electrical maintenance, etc.
Revenue estimates associated with each option have been
developed with concurrence of the architectural consultants, PGA
staff, the current golf services licensee and City staff. These
estimates are projected to provide the revenues which would
likely result through increased customer participation which
varies according to the level of improvements provided by each
project. Details of the potential projects are as follows:
Option I (please see Appendix D, Site Plan
Option I).
This project would include the two-tiered, concrete hitting
structure and minimal landscape turf work necessary to match the
new structure to the existing field with no change to the parking
area or number of parking spaces at the site. The licensee has
expressed no desire to re-negotiate the current license agreement
to include an expanded driving range. Therefore, project expenses
and increased operating expenses as well as revenue distribution
must be planned within the structure of the current license
agreement. Additionally, the licensee might reasonably request
compensation for anticipated net profits in the four to six month
construction closure period.
As noted, construction costs would total $698,282 including
contingencies. A minimum of four to six months of closure of the
driving range for construction to be completed and turf to grow
in. Included is $85,000 to provide a structure which would result
in a basement, first-floor configuration rather than the more
common first-floor, second-floor configuration. This
recommendation is provided to best meet the concerns of
near-neighbors as noted in the Public Relations Liability section
of this report. An additional $40,000 is planned for
remodel/renovation of this structure in fiscal year 2011/12. This
amount has been inflated accordingly and totals $65,720 in fiscal
year 2011/12. Similarly, $118,358 has been placed in fiscal year
2026/27 to provide for remodel/renovation of the Option I
improvements. Maintenance costs to provide for this construction
would increase some $4,500 the first year and $2,500 per year in
following years with inflationary increases.
Increase in customer volume is anticipated to be five percent
($5,848 first year). This limited increase is due to the absence
of change to the target areas in the field or additional practice
components. This five percent increase projects a growth in
revenues which would not meet "break even" with new
expenses (construction, operation and financing) in the 40-year
planning model (please see Appendix G - Fund 25, 40-Year Fund
Balance Report and Cost Analysis). As noted in the cost analysis,
with implementation of an Option I project, the Community
Recreation Fund bottom-line would have a net loss of $2,160,090
in the 40-year plan (net present value). Of the construction
phases, Option I presents the lowest potential for elevating
public relations and liability concerns. However, adjacent
neighbors have strongly stated concerns regarding any planned
project which would result in increased use of the site.
Option II (please see Appendix E, Site Plan
Option II).
This project includes all improvements of Option I and the
more customer-driven components, but does not include hardscape
work such as adjacent sidewalks or added parking spaces for the
site. The field would be re-graded to create target greens with
shapes much like those encountered by golfers on golf courses.
Sand bunkers and water hazards would be created with concrete
basins textured to discourage skate boards/roller blades and
colored to imitate their on-course counterparts: pale blue water
hazards and beige sand bunkers. These basins would serve as water
shed run off control basins. The licensee has expressed no desire
to re-negotiate the current license agreement to include an
expanded driving range and field improvements. Therefore, project
expenses and increased operating expenses as well as revenue
distribution must be planned within the structure of the current
license agreement. Additionally, the licensee might reasonably
request compensation for anticipated net profits in the five to
eight month construction closure period.
As noted, the total construction costs with the use of a
depressed structure (added $85,000) would be $1,568,286. Closure
for construction and turf establishment is estimated at five to
eight months. Remodel/renovation is projected in fiscal year
2011/12 for an amount of $85,000. This amount has been inflated
accordingly and totals $134,278 in fiscal year 2011/12.
Additionally, $241,826 has been placed in fiscal year 2026/27 to
provide for remodel/renovation of the Option II improvements.
Increased maintenance costs would total $10,500 the first year
and would decrease to $8,500 for each year thereafter with
inflationary increases.
Public relations and increased liability concerns may be quite
high with the Option II project due to the additional numbers of
golfers who would be attracted to the improved facility. Adjacent
neighbors have expressed strong opposition to this level of
expansion for this site. The increase in customer participation
is anticipated to be considerable at some 12 percent above
current levels. This 12 percent increase projects growth in
revenues to be $14,035 above baseline estimates in the first year
following construction. However, increased revenue in Option II
would not meet "break even" with new expenses
(construction, operation and financing) in the 40-year planning
model (please see Appendix G - Fund 25, 40-Year Fund Balance
Report and Cost Analysis). The cost analysis indicates that with
implementation of an Option II project, the Community Recreation
Fund bottom-line would have a net loss of $3,503,734 in the
40-year plan (net present value).
Option III (please see Appendix F, Site Plan
Option III).
An aggressive plan which includes all of the components of
Options I and II, Option III is the master planned site.
Additional parking, more practice areas, a relocated putting
green, and a new pro shop building are included. The existing pro
shop square footage would become available for use by the
food/beverage services as added kitchen space or seating area.
The licensee has expressed no desire to re-negotiate the current
license agreement to include this project. Therefore, project
expenses and increased operating expenses as well as revenue
distribution must be planned within the structure of the current
license agreement through fiscal year 2005/06. Additionally, the
licensee might reasonably request compensation for anticipated
net profits in the 12 month construction and turf establishment
period.
While no construction documents have been produced, the pro
shop building square footage has been priced to provide a
first-class structure comparable to surrounding courses. It would
be a well appointed facility with high ceilings, customer/staff
restrooms, a snack bar, and all of the ball washing/dispensing
equipment presently located at the driving range.
Total construction costs would be $3,282,697 including the
$85,000 option for the depressed structure and removal of all
surface water to the City storm drain system. Remodel/renovation
is planned in fiscal year 2011/12 for an amount of $164,000. This
amount has been inflated accordingly and totals $269,441 in
fiscal year 2011/12. Similarly, an amount of $485,248 has been
planned for fiscal year 2026/27 to provide remodel/renovation of
the Option III improvements. Increased first-year maintenance
costs for the driving range would total $10,500 and would
decrease to $8,500 in each following year. Additional building
maintenance and amenity upkeep would likely add yearly expenses
of $6,000 per year. All maintenance costs would require
inflationary increases.
Closure for construction and turf grow in is estimated at a
minimum of twelve months. However, many components of this plan
and additional site elements typically receive greater detail in
the conceptual and construction steps of a full master plan. With
additional opportunity to examine food/beverage services and site
amenities, this project could grow well beyond the scope of this
study issue report creating higher costs and increased timelines.
While the hitting structure and field improvements are
identical to those in Option II, the Option III project would
likely attract more golfers to the entire facility greatly
increasing the possibility of public relations and liability
concerns. The increase in customer participation is estimated at
17 percent above current levels. This 17 percent increase is very
optimistic and projects growth in revenues which are also
substantially above the growth estimated for Option I and II. In
the first year following construction, this 17 percent increase
would be $19,883 above the estimated baseline revenues. However,
this level of increased revenue would not meet or exceed new
expenses (construction, operation and financing) in the 40-year
planning model (please see Appendix G - Fund 25, 40-Year Fund
Balance Report and Cost Analysis). As seen in the cost analysis,
with implementation of an Option III project, the Community
Recreation Fund bottom-line would have a net loss of $4,645,855
in the 40-year plan (net present value).
No-Build Option
The final option for consideration, the no-build option, would
not bring any new components to the site; however, through
completion of this study staff has focused attention more closely
on the driving range portion of the Sunken Gardens Golf Course
and sees room for improvements.
In the absence of a capital project, operations budget funding
could provide continued, moderate aesthetic improvements. Field
turf renovations would supplement irrigation components installed
just two years ago. Trees planted through a grant received in
fiscal year 1994/95 are maturing and in the coming years should
provide a more beautiful frame for the valley, and planned
infrastructure projects should assist in care of the driving
range building.
While this option does not bring an estimable increased
customer participation, it should provide for the aesthetic
improvement which will help the site compete in this increasingly
crowded market place. The City currently has a strong return on
the yearly maintenance dollar expended (5:1 ratio of revenue to
expenses), and this positive revenue stream would continue
uninterrupted.
Liability concerns also would not increase. Public relations
concerns would likely be improved in that neighbors' perspective
would be supported. Additionally, several of their expressed
concerns have been addressed while this study has been in
progress.
FISCAL IMPACT
As a net-profit leisure service, driving range operations are
very important to the fiscal health of the Community Recreation
Fund. Profits retained in these services assist in providing
activities to dependent populations such as youth, senior center
and disabled populations and decrease costs in the General Fund.
Therefore, project decisions and spending patterns become more
critical to ensure continued funding for these services and/or
understanding of resource impact to the General Fund.
The City's Finance Department has prepared a 40-Year Fund
Balance report with a cost analysis (please see Appendix G - Fund
25, 40-Year Fund Balance Report and Cost Analysis). Funding for
the various projects has been projected with the following
assumptions: (1) construction loans will be provided at 6.25
percent interest (including borrowing costs) over a period of 25
years; (2) incremental revenue and expenditure in the baseline
and three construction scenarios are adjusted by the same
inflation amounts used in the Spring, 1996 budget process - 3
percent for the initial 10 years and 4 percent for the remaining
30 years; (3) renovation/remodel costs have been factored in
every 15 years; and (4) life of the construction project will be
over 40 years. It is important to note in the Fund Balance
spreadsheets that increases in driving range revenue do not
provide an increase in total available funds. This is due to the
impact of project expenditures upon reserve funds which provide
interest revenue. Losses of the interest revenue are substantial.
Within the 40-year planning period the baseline for interest
revenue earnings is $16,912,784. For Option I this amount is
$7,873,877 (a loss of $9,038,907). Option II interest revenue is
$2,991,851 ($13,920,933 below baseline interest revenue). The
interest revenue total for Option III project is $1,070,547
($15,842,237 less than the baseline amount). Therefore, the
cumulative affect is a decrease in the Resource Allocation Plan
(bottom-line) for each of the options.
With the cost analysis planning tool, it can be seen that within the 40-year planning period the net present value (NPV) of the Community Recreation Fund would be impacted as follows:
Losses as noted above would have to be offset with revenue
growth in other leisure activities to meet Council directed goals
for becoming self supporting. Alternately, certain dependent
leisure activities (youth, senior or disabled) could be reduced,
eliminated or goals for becoming self supporting could be
adjusted.
PUBLIC CONTACT
Conceptual site plans were displayed and general public input
was received at a neighborhood meeting held July 2, 1996 at the
Clubhouse Cafe at Sunken Gardens Golf Course. Notice of this
meeting was provided by delivery of an invitation to each
residence, town home, and apartment unit adjacent to the golf
course and driving range. As detailed within this report the
strong consensus opinion of the near neighbors did not support
expansion of the driving range.
This report was reviewed by the Parks and Recreation
Commission on October 23, 1996, and public testimony was heard.
Public notice was provided to golfers, neighbors, and noticed to
the public (please see Appendix H - Public Notice of October 23,
1996, Parks and Recreation Commission Meeting). The Parks and
Recreation Commission recommended Council approve Alternative 1:
City Council accept the Report to Council as submitted and select
the No-Build Option and not approve expansion of the current
number of hitting stations at Sunken Gardens Golf Course driving
range due to noted public relations/liability exposure concerns
coupled with the anticipated and extended negative fiscal impact
to the Community Recreation Fund as outlined in the report. In a
separate related action, the Parks and Recreation Commission
recommended that staff follow-up on suggestions by resident golf
course neighbors to increase efforts aimed at measuring the
frequency of errant golf shots and reducing the number of golf
balls entering adjacent properties. (Please refer to Appendix I -
Excerpt from Approved Minutes of Parks and Recreation Commission
Meeting, October 23, 1996.)
Subsequently, staff toured adjacent properties with neighbors
on October 28, 1996. On November 7, 1996, staff conducted a
problem-solving meeting with neighbors to develop a list of
options which could reduce the numbers of errant golf balls
(please see Appendix J - Letter to Neighbors Reviewing Meeting
Held November 7, 1996). On December 28, 1996, staff initiated a
cooperative program with neighbors to survey 13 adjacent
properties each week to determine the number of errant golf balls
as well as the impact of operational efforts to reduce that
number.
Having implemented various operational procedures to reduce
the number of errant golf balls entering neighbors' properties
(temporary elimination of group lessons, periodic restriction of
clubs at driving range, weekly errant ball collection surveys and
screening the base of the netting near number one green), staff
met with neighbors on January 23, 1997, to assess the progress
made toward reduction of errant golf balls (please see Appendix J
- Letter to Neighbors to Review Information from November 7,
1996, Action Plan Meeting).
Golf course neighbors will be invited every six months to
review with staff the effectiveness of measures implemented to
reduce errant golf balls from entering private properties. Staff
has committed to continuing those meetings until such time as
neighbors indicate they are no longer necessary. Residents have
been encouraged to continue contact with the golf shop driving
range, the Superintendent of Golf and the Director of parks and
Recreation on related matters.
During the January 23, 1997, meeting several residents
expressed appreciation for the recent efforts of staff directed
toward this issue.
On February 12, 1997, staff provided an Informational Report
to the Parks and Recreation Commission outlining operational
efforts to address related resident concerns.
ALTERNATIVE COURSES OF ACTION
1. City Council selects the No-Build Option and does not
approve expansion of the current number of hitting stations at
the Sunken Gardens Golf Course driving range due to the noted
public relations/liability exposure concerns coupled with the
anticipated and extended negative fiscal impact to the Community
Recreation Fund as outlined in this report.
2. City Council does approve of expansion of the current
number of hitting stations at the Sunken Gardens Golf Course
driving range as outlined in this report and selects Options I,
II or III for the initial construction project indicating the
means staff may anticipate for offset of the selected project(s)
negative impact to the Community Recreation Fund balance; that
is, increased funds transfer from the City General Fund,
decreased service levels in dependent leisure service areas
(Senior Center, disabled, youth services) and/or alternative
revenue generating means.
3. City Council determines another course of action regarding
the expansion of the current number of hitting stations at the
Sunken Gardens Golf Course driving range.
RECOMMENDATION
Alternative No. 1.
Prepared By:
Curtis Black
Superintendent of Golf
Carl Clark
Assistant Director-Leisure Services
Reviewed By:
Robert A. Walker, Director
Parks and Recreation
Approved By:
Thomas F. Lewcock
City Manager
Appendices: