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HomeMy WebLinkAbout1996-02-13 City CouncilC ty Manager’s City of Palo Alto Summary Report TO:HONORABLE CITY COUNCIL ATTENTION: FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT: Community Services DATE:FEBRUARY 13, 1996 CMR: 123:96 SUBJECT:Implementation Plan for the Development of the Golf Course Master Improvement Plan This report is a follow up to CMR:298:95, Implementation and financJngd~ms_fox development of the Golf Course_Master Improvement Plan. This report gives Council an overview of the progress made toward implementing the Golf Course Master Improvement Plan. This is an informational report and there are no recommendations for action at this time. POLICY IMPLICATIONS This report is consistent with City policy. The Golf Course Master Improvement Plan is a conceptual proposal to upgrade various components of the Golf Course, as addressed in CMR: 248:95. The Master Improvement Plan’s objectives were designed to address existing problems and to create a format that takes advantage of opportunities permitting long-term cost savings and increased value. Council approved a Site and Design Application in May 1995. The Master Improvement Plan originally called for approximately $8 million of improvements and the developement of an action plan for completion of the project. After much study, and with participation from the departments of Administrative Services, Public Works, and Community Services, staff developed a modified Implementation Plan to fit within budgeting constraints. The Implementation Plan ;~cludes $5 million for construction prolects, including design, a project manager and a con, _gency, a long-term accelerated maim ~nce program, and a plan to execute some Master Plan improvements at a later date due to financial constraints. The benefits of the proposed project are considerable, including irrigation, drainage, fairway, and driving range improvements. These enhancements will provide for a high quality Golf Course that will facilitate maintenance, ensure water savings by using reclaimed water more efficiently, significantly improve playing conditions, and solidify long-term revenues through a satisfied customer base. To finance this project, staff is formulating a plan that involves issuing bonds and a possible subsidy to the Golf Course from the General Fund, as Golf Course revenue will not cover all costs during the construction phase. Staff is also exploring potential partnerships with tenants that would result in customer service improvements, and long-term enhancements to the restaurant and pro shop. Tenant improvements are not included in the $5 million. Tax law changes regarding the use of tax exempt bonds for portions of the Golf Course improvements, have raised issues that require additional research and discussion. A separate staff report recommends retaining a financial advisor to assist staff in studying these questions with bond counsel, supporting discussions on tenant lease negotiations, and structuring a financing package. FISCAL IMPACT No fiscal impact at this time. ENVIRONMENTAL AS~tESS31EN~ 1. Environmental Assessment recommended adoption of a negative declaration. Council approved a Mitigated Negative Declaration that determined that any potential impacts can be mitigated to levels of less than significance. ATTACHMENTS CMR:298:95 Golf Course Project Schedule Prepared by: Richard James, Department of Community Services Department Head Review: PAUL THILTGEN Director of Community Services City Manager Approval: City CMR: 123:96 Page 2 of 8 City of Palo Alto City Manager’s Report SUBJECT:Implementation Plan for the Development of the Golf Course Master Improvement Plan RECOMMENDATIONS This report is a follow-up to CMR:298:95, Implementation and financing plans for development of the Golf Course Master Improvement Plan. The report gives Council an overview of the progress made toward implementing the Golf Course Master Improvement Plan. BACKGROUND The Golf Course Master Improvement Plan is a conceptual proposal developed to upgrade various components of the Golf Course, as addressed in CMR: 248:95. Council approved a Site and Design Application and a Mitigated Negative Declaration for this plan in May 1995. The Master Improvement Plan objectives were designed to address existing problems and to create a format to take advantage of opportunities permitting long-term cost savings and increased value. The Master Improvement Plan cites the following as its objectives: -Address critical irrigation and drainage problems; -Optimize the use of reclaimed water; -Maintain affordable green fee structure and provide quality golf; -Minimize environmental impacts relative to areas of potential renovations; -Ensure the safety of golfers, staff and neighbors; -Balance long-term maintenance and budgetary requirements; -Improve parking, restaurant, golf shop and driving range facilities to meet safety issues and enhance revenue production; and -Improve the maintenance and storage facilities to address associated environmental concerns. The Master Plan originally called for approximately $8 million of improvements and developed an action plan for completion of the project. After much study, and with participation from the departments of Administrative Services, Public Works and Community Services, staff developed a modified Implementation Plan to fit within budgeting constraints. The objectives of the modified Implementation Plan are: CMR: 123:96 Page 3 of 8 -Address the most pressing recommendations of the Master Improvement Plan, -Develop a viable financial plan, and -Maintain revenue flow by not closing the Golf Course during construction periods. The modified Implementation Plan includes $5 million for construction projects, including design, a project manager and a contingency, a long-term accelerated maintenance program, and a plan to execute Master Plan improvements that are being deferred due to financial constraints. The benefits of the proposed project are considerable, including irrigation, drainage, fairway, and driving range improvements. These enhancements allow for a high quality Golf Course that will facilitate maintenance, ensure water savings by using reclaimed water more efficiently, significantly improve playing conditions, and solidify long-term revenues through a satisfied customer base. To fmance this project, staffis formulating a plan that involves issuing bonds and a subsidy to the Golf Course from the General Fund, as golf course revenue will not cover all operating and debt service costs during the construction phase. Staff is also exploring potential parmerships with tenants that would result in customer service improvements, and long-term enhancements to the restaurant and pro shop. Tenant improvements are not included in the $5 million. Tax law changes regarding the use of tax exempt bonds for portions of the Golf Course improvements, have raised issues that require additional research and discussion. It is anticipated that bonds will not need to be sold until 1997-98. POLICY IMPLICATIONS This report is consistent with current City policy. DISCUSSION IMPLEMENTATION PLAN The proposed Implementation Plan is the result of a collaborative effort by City staff to design a program that balances customer needs with the need for horticultural and drainage improvements to the Course, regulatory agency requirements, and available funding. This Implementation Plan is grouped into ten areas consisting of: Project Management, Consultant Selection, Project Design, Interim Improvements, Project Schedule, Proposed Construction, City Staff Implemented Improvements, Tenant Improvements, Enhanced Maintenance Program and Financial Plan. Project Management Project management will be accomplished using a unique, team concept, composed of staff from the Public Works and Community Services Departments. This team approach will take advantage of each Department’s strengths and expertise. Community Services staff possesses knowledge and experience in Golf Course design, operation and maintenance, and works closely with the golf community. Public Works’ expertise lies in project planning, document CMR: 123:96 Page 4 of 8 preparation and contra,..legotiations. All aspects of the prt.j..ct will be monitored and appropriate decisions made using the knowledge and background contained within each Department. Staff is confident that this team approach to project management will be a blueprint for future projects of this nature. Consultant Selection The Master Plan consultants, Amphion Environmental, Inc. and Halsey Daray Golf, will provide the design and construction services for this project. The 1994 Golf Course Master Improvement Plan "Request for Proposals" included a provision to retain the consultant for future design work, if the initial work were deemed successful. The firrns selected to prepare the Master Plan were successful in working with the community and City staff, and developed a quality product. Subsequently, staff is commencing negotiations with Amphion Environmental, Inc. and Halsey Daray Golf to have them continue to supply the services necessary to carry out the Master Plan. Project Design: The proposed Implementation Plan includes all of the recommended Master Improvement Plan Golf Course renovations. Although there are not sufficient funds to pay for all of these renovations, staff proposes that all greens, tees and fairways proposed to be rebuilt, be designed now with some as add-alternates to the bid. This would allow them to be included in the construction project, should estimates come in lower than anticipated. Designing all of the Course improvements at this time will also allow for consistency of design, create cost efficiencies, and provide opportunities to proceed with the balance of the improvements should resources become, available in future years. Interim Improvements: To allow continued golf play during the project, City staff will make necessary interim improvements to the Golf Course before construction. These include building temporary greens and tees, erecting safety barriers around the modified tee areas, and performing minor irrigation changes to help maintain the temporary greens and tees. Staff will return to Council following the design process with recommendations for temporary staffmg, and supplies and materials for interim improvements. Project Schedule This element of the project is scheduled to begin its design phase in April 1996 and be completed in April 1997. Interim construction (temporary tees and greens) would commence no later than July 1997 and reach completion in time for course demolition, grading and renovation beginning in March 1998. Bonds would most likely be sold during this time. The initial construction project would be completed between March 1999 and June 1999. (A detailed project schedule is attached.) Proposed Construction: The work that will be accomplished during the initial construction period includes: Golf Course: CMR: 123:96 Page 5 of 8 0 Construction of a master drain system and storm reservoir. Replacement of the irrigation system. Reconstruction of five fairways, approximately nine greens and fourteen bunkers. Grading and leveling six tees and renovating various rough areas throughout the Golf Course. Driving Range: ¯ Reposition the driving range away from Embarcadero Road. Install higher fencing to contain errant balls from entering Embarcadero Road, office buildings, and the tenth fairway. .Grade, sand cap, install irrigation, and plant turf on the range. Parking Lot/Access Road: o Enlarge parking lot and provide a new exit to Embarcadero Road to improve traffic flow. ¯Improve the Golf Course/Airport access road. °Improve restaurant delivery service entry and employee parking area. City Staff Implemented Improvements: The Parks and Golf Division can complete the balance of the deferred improvements through a combination of in-house work, outside contracts and capital improvement projects. The deferred components could be funded when cash flow allows, which staff estimates to be in the fiscal year 2005-06. Completion of deferred components may include: Repairing and enhancing the cart path system; Planting trees for safety and esthetics; -Improving the fairways, greens and tees that were not part of the initial project; -Maintaining facility improvements; and -Other items as defined in the Master Improvement Plan. Tenant Improvements: Several improvements recommended in the Master Improvement Plan included customer service enhancements to Golf Course tenant facilities. Implementing such improvements is contingent upon future lease contracts with the restaurant and pro shop operators. Potential tenant improvements include: Pro shop expansion allowing increased retail space, retail storage, and potential increases in revenue; Installation of driving range lighting allowing for limited night use and increased revenues; -Additional restaurant seating capacity enabling large tournament and meeting groups to use the facility, thus increasing potential revenue sources; and CMR: 123:96 Page 6 of 8 -Outside restaurant seating and a pass-through service window to provide quick and easy access for golfers and non-golfers to obtain food and beverage service. Enhanced Maintenance Program The Golf Course consultant and the Master Improvement Plan recommend an enhanced maintenance program. Accomplishing this will require an increase in present levels of maintenance expenditures, which involves augmentations in staffing, equipment and materials. Noting that present staffmg levels are considerably below comparable courses, the Master Plan recommends at least three full time staff be added to the operating budget. This implementation proposal recommends the addition of two full time maintenance " personnel. The additional personnel will facilitate the Master Plan’s recommended increase in turf maintenance and aid in the completion of deferred maintenance and Master Plan projects. The Master Plan also recommends an accelerated topdressing program to improve existing turf conditions and to reduce future capital costs for improvements. This topdressing program is designed to improve the soil structures and medium for those fairways deferred or not designated for sand capping. Periodic light layers of sand, approximately 1/4" thick, will be applied to the fairways to improve existing soil conditions and drainage in the surface of the soil structure. The sand will be applied monthly during the growing season. The long- term goal is to raise the existing surface of the fairways 12 to 18 inches, over a 7 to 10 year period, creating a medium suitable to growing turf and better utilization of reclaimed water. Implementation of this program calls for an increase to the operation budget of $150,000 for supplies and materials. Financial Plan To finance the Implementation Plan, staff has been formulating a financial plan that involves funding from a bond issuance for construction projects and a subsidy from the General Fund to maintain golf operations during the construction period, when green fee revenue will decline due to an anticipated decline in golf rounds played. In exploring bond fmancing, a number of issues arose which affect the type and amount of debt that can be issued and also affect the City’s Golf Course’s contractual arrangements with its tenants. Because staff is still working with bond counsel and the Golf Course tenants on these issues, a reasonably accurate pro forma cannot be prepared at this time. However, staff is able to provide background information into the questions at hand and into the essential features of Master Plan fmancing. Bond Financing Issues A nonprofit Golf Course Corporation was formed in 1977 to facilitate Golf Course improvements. Since the Corporation last issued debt in 1978, tax laws have changed. These changes center on the extent to which a tax-exempt bond issuance for a public facility can CMR: 123:96 Page 7 of 8 benefit a private, for profit business. The City also has the option of issuing taxable bonds for Master Plan improvements. Use of taxable bonds allows the City to enter into any type of contractual agreement with lessees and make any improvements Council approves, but that method of financing is more costly. The type of bonds issued, therefore, has an impact on the amount of debt that can be incurred, and on the terms of the leases with tenants. The role of the financial advisor will be to help staff study these questions with bond counsel, support discussions on tenant lease negotiations, and structure a financing package. Based on a conservative, tax-exempt rate of 6.3 percent and anticipated project and issuance costs of $5.6 million, the Golf Course’s annual debt service would equal $501,000 per year. At a higher, taxable bond rate of 8.3 percent for the same project, an annual debt service of $584,000 would be required. The rate spread, between the types of bonds issued, requires staff to carefully assess options and altematives in financing the Master Plan and in developing contracts with lessees. In addition, staff will explore with bond counsel whether the issuance of new debt requires the Golf Course to refinance the remaining debt from the 1978 bond issuance. ALTERNATIVES Alternatives are not addressed in this report. FISCAL IMPACT The recommendations in this report have no direct fiscal impact. ENVIRONMENTAL ASSESSMENT Council approved a Mitigated Negative Declaration for this project in May 1995 (CMR:248:95). Major issues that were discussed included biotic resources, hazardous materials, reclaimed water, flooding, lighting and glare, and traffic and circulation. The Mitigated Negative Declaration determined that any potential impacts can be mitigated to levels of less than significance. STEPS FOLLOWING APPROVAL 1. Develop Request for Proposal for financial advisor services. 2. Award contract to Financial Advisor. 3. Begin contract negotiations with Amphion Environmental, Inc., and Halsey Daray Golf. 4. Return to Council for approval of an amended consultant contract including a Budget Amendment Ordinance. 5. Create a Capital Improvement Project for construction design services. 6. Initiate design work for the project. ATTACHMENTS/EXHIBITS CMR:298:95 Golf Course Project Schedule CMR: 123:96 Page 8 of 8 City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: Community Services AGENDA DATE: SUBJECT: June 12, 1995 CMR: 298:95 Implementation and financing plans for development of the Golf Course Master Improvement Plan REQUEST This is an informational report and no Council action is requested. RECOMMENDATIONS There are no recommendations at this time. Staff will submit to the Finance Committee a recommendation for implementation, development and financing, for the Golf Course Master Improvement Plan, late this Summer. A Committee recommendation could then be given to Council in the Fall. POLICY IMPLICATIONS This project does not represent any change to existing City policies. EXECUTIVE SUMMARY The Golf Course Master Improvement Plan is a conceptual proposal to upgrade various components of the golf course, as addressed in the Planning and Community Environment Site and Design CMR: 248:95. Staff, the Consultant Team and the Golf Advisory Committee will continue to refine the technique for developing and financing the Master Improvement Plan. Finance, Community Services and Public Works Departments are in the process of reworking the pro forma financial statements and the development of work schedules, so that this project can be accommodated within fiscal constraints, and allow the Golf Course to remain open in some manner during the construction phase to minimize public disruption. FISCAL IMPACT There is no fiscal impact at this time. CMR: 298:95 Page 1 of 2 ENVIRONMENTAL ASSESSMENT There is no environmental assessment or impact associated with this report. Related CMR:248:95 Site and Design Application (Copies available in City Manager’s Office) PREPARED BY: Paul Dias, Parks and Golf Division DEPARTMENT HEAD REVIEW: PAUL Director of Community Services CITY MANAGER APPROVAL: er CC:Golf Advisory Committee Golf Course Corporation CMR:298:95 Page 2 of 2 GOLF CbdRSE PROJECT S HEDULE February 6, 1996 Construction Start July 97 WORK ITEM Council review RFP for Financial Advisor Negotiate Consultant Agreement Council approve Consultant Agreement Amendment. Prepare preliminary Plans (10%)/Review by Staff Golf Advisory Board/ARB Prepare 50% Plans/Review by staff Prepare 95% Plans!Review by staff Council approve financial plan Golf Advisory Board Prepare !00% Plans/Solicit Bids Award Construction Contract Start Construction Storm Drainage Irrigation Parking Lot and Entrance Road Rough and Final Grading ACTION DATE February 96 April 96 August 96 February 97 April 97 July 97 July 97 START March 96 May 96 September 96 ¯ January 97 April 97 July 97 July 97 July 97 March 98 Landscaping Driving Range End Construction June98 April 98 March 98 FINISH April 96 August 96 December 96 April 97 May 97 October 98 October 98 October 98 April 98 June 98 June 98 >. >. 0 <> ~0