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City of Palo Alto (ID # 2588) Finance Committee Staff Report Report Type:Meeting Date: 3/6/2012 March 06, 2012 Page 1 of 20 (ID # 2588) Summary Title: Golf Course Reconfiguration Project Title: Palo Alto Golf Course Re-configuration Resulting From the San Francisquito Flood Control Project From:City Manager Lead Department: Community Services Recommendation Staff does not make a specific recommendation as there are a number of policy and financial implications for the Council to consider. Staff has provided four options with supporting data illustrating tradeoffs, costs and long-term financial viability. We recognize there is a lot of information provided in this report. At the March 6 meeting, Golf Course Architect Forrest Richardson, representatives from the National Golf Foundation and staff will provide an overview of the options and help answer any questions. Staff recommends the Finance Committee review the four Golf Course design options (Attachments A and K), consider the opportunities and challenges that each presents, and provide staff with direction on which option staff should pursue for further design. Executive Summary The San Francisquito Creek Joint Powers Authority (SFCJPA), an agency serving residents in a 45-square mile watershed that includes the City of Palo Alto (City), has entered into a contract with Forrest Richardson & Associates (Richardson) to perform design services for the reconfiguration of several holes of the Palo Alto Municipal Golf Course (Golf Course) to accommodate a new creek levee that will be built as part of the SFCJPA’s San Francisquito Creek Flood Protection and Ecosystem Restoration Capital Project (Project). The purpose of the Project is to provide the flood protection elements needed to protect homes, businesses, and other facilities in the cities of Palo Alto and East Palo Alto downstream of Highway 101, and provide sufficient conveyance of storm water to accommodate future flood protection projects upstream of the Project’s reach. Richardson with staff and community input has narrowed the Golf Course reconfiguration options to four for discussion (Attachment A). Option A is the least complicated and expensive March 06, 2012 Page 2 of 20 (ID # 2588) option. Option D is the golfer’s preferred option; Option F adds one athletic playing field; and a new option has been developed (Option G), which adds three full-size athletic fields. Staff has worked with the SFCJPA and Richardson to create these design alternatives in an effort to support the flood control project, and secondarily to take this opportunity to design a more interesting, inviting and playable Golf Course that has the potential to make the Golf Course more financially viable in the future. There are numerous financial implications associated with the reconfiguration project that need to be considered by the Council, among them are: 1.How would the City fund construction of a design option that seeks to improve the Golf Course beyond flood control mitigation funds from the SFCJPA (options D, F or G)? 2.Should the City take this opportunity to make other Golf Course improvements in conjunction with the Project such as replacing the Golf Course restroom, replacing additional greens, replacing more of the existing irrigation system? 3.How will the City and the SFCJPA mitigate for the anticipated lost revenues from customer fees during Golf Course and levee re-construction, and how do those losses compare to the value of flood protection which would reduce the risk of future closures and clean up after flood events? Council conducted a study session on the Golf Course reconfiguration on December, 5 2011, and provided direction along with numerous questions for staff to address. The Council recommended the matter be referred to the Finance Committee for further review and recommendation. This report and related attachments attempt to address many of the Council’s questions raised at the December 5th study session and provide more details on costs and return on investment (ROI) along with the opportunities and challenges that each design option presents. Particularly helpful is the National Golf Foundation Financial Pro Forma and Supporting Analysis for Reconfiguration Options (Attachment K). This report provides: §A market overview of the Palo Alto area, with an emphasis on area demographics and key golf demand and supply indicators. §A competitive review, including a qualitative assessment of the impact that the potential reconfigurations would have on the Golf Course’s market/competitive position. §A review of Forrest Richardson’s work regarding the potential implications from the renovation options on facility branding and marketing. §Offers an opinion about the long-term implications and potential financial impact of improvements associated with the longer range master plan, including clubhouse expansion, cart storage, event areas, range performance center, range enlargement, entry/parking, and the youth training area. March 06, 2012 Page 3 of 20 (ID # 2588) §Evaluates relevant options available to the City of Palo Alto for the continued operation of the Golf Course, including (but not limited to) continuing on an as is basis or outsourcing all management and maintenance to a full-service management company. Viable options will be identified, and a discussion of the costs, benefits, and financial implications of each operating scenario presented. Another important consideration staff is evaluating is to decouple the levee improvement project from the Golf Course project. Originally, the SFCJPA intended to design and construct the golf course reconfiguration as a part of the flood protection project. More recently, City staff and the SFCJPA are evaluating whether it would be favorable to the SFCJPA and the City for the SFCJPA to provide a direct cash contribution to the City as mitigation for the impacts of the Project to the Golf Course. The reasons this is being considered are: 1)It allows the City to manage the design and implementation of changes to the Golf Course, ensuring that the City’s needs and goals of the reconfiguration are met; 2)It gives the City flexibility in leveraging the contribution from the SFCJPA to improve the Golf Course, utilizing whichever Plan it prefers; 3)By decoupling the two projects, it will allow time more time make a confident decision in the future of the Golf Course, because ???; and 4)It will allow the SFCJPA to publish a Draft Environmental Impact Report before the City must make that decision, thereby not holding up critical flood protection activities along the Project’s reach and at upstream reaches planned for future improvements. Additional advantages of decoupling the projects may include the following: providing greater flexibility in construction scheduling and the opportunity for the SFCJPA to hire a contractor with expertise in levee construction, and the City may have to hire a contractor with expertise in golf course construction. The City Attorneys Office with Public Works and Community Services staff are evaluating the implications of this idea for the Council’s consideration. Due to the time sensitivity of the SFCJPA project the City needs to determine what it intends to do with the Golf Course prior to the levee reconstruction work begins. The SFCJPA has stated that they could be ready to begin working on the levee as early as spring 2013. If that is the case the City needs to, at minimum, implement phase one of a preferred design to make room for the levee. This phase one work would need to occur in fall/winter of 2012-13. Consequently, narrowing our focus and deciding on a design option is needed as soon as possible. Staff asks the Finance Committee to consider the options defined in this report and provide staff with direction on which option to pursue for further design. Background The Golf Course was constructed in the mid-1950’s, on approximately 170-acres of flat former salt marsh and bay fill. The course was designed by noted golf course architects, William P. and William F. Bell, of Pasadena, California. The Golf Course, designed as an 18-hole facility with a par of 72, is a classic championship course that measures over 6,800 yards from the back tees. March 06, 2012 Page 4 of 20 (ID # 2588) The original facility included a large practice putting green, a three-building Eichler-designed clubhouse/golf shop complex and parking lot. In the mid-1970’s, improvements were made to replace the clubhouse buildings. At that time, holes 3, 10, 11 and 18 were also renovated under the direction of golf architect, Robert Trent Jones, Jr. Further improvements were made to the Golf Course in 1998. The improvements included the rebuilding of Greens # 4, 5, 7, 8, 11, 13, 15, 16; the rebuilding of new Tees on Greens # 4, 7, 13, 15; the rebuilding of Fairways on Greens #4, 7, 13, 15, 16; a new storm drain station along with drainage and 35 catch basins throughout the course; new irrigation system; and a new irrigation pump station (See Attachment B –Current Golf Course configuration). The Golf Course is located on a relatively flat site, which ranges in elevation from 4.4 feet below mean sea level to 7.5 feet above mean sea level. The capital improvements in 1998 were funded through public debt issuance of $7 million, and this debt service will expire in 2018. Golf Course revenue is expected to pay for all operating costs including debt service annually. In 2008, the City conducted a Golf Course operational study that describes in detail the conditions of the Golf Course, future operational needs, and opportunities (Attachment C -Golf Course Operational Study staff report CMR 446-08). The proposed flood control levee alignment will encroach onto the Golf Course. Conceptual alternatives for reconfiguration of the Golf Course necessitated by the levee realignment have been contemplated by the City, SFCJPA, and the SFCJPA’s design consultant on the Project and will likely involve changes to holes 12, 13, 14, 15, 16, 17, at a minimum, and possibly hole 4 as well. Modifications to holes not directly impacted by levee realignment will be required in order to maintain minimum separation distances between fairways as required for golfer safety. Given the anticipated scale of the changes that will be needed within the Golf Course, in January 2011, SFCJPA and City staff agreed that a golf course architect should be secured under a separate design contract in order to maintain fairness and transparency in the consultant selection process for this significant element of the Project. On June 9, 2011, SFCJPA staff, City staff, and members of the Golf Advisory Committee interviewed six golf course architects. After careful consideration, a unanimous decision was made to select Richardson for the design review. Richardson’s experience working with high saline turf conditions, renovations on other Bell-designed courses, the hand-picked team he selected to ensure all work tasks can be accomplished for this project, and his experience working with a variety of agencies were key factors in his selection. In addition, his experience in conducting public outreach forums and making presentations, his demonstrated knowledge in successful golf course operations, and his understanding that this project should integrate cohesively with the rest of the Baylands were additional factors in his unanimous selection. Richardson is developing an updated golf course long-range plan with the help of Palo Alto community stakeholders as part of his contract’s scope of work. He strongly recommends the City should not re-design a portion of the golf course without a comprehensive view to ensure March 06, 2012 Page 5 of 20 (ID # 2588) the entire 18-holes playing experience is maintained or enhanced. This approach was very well received by City staff and we are genuinely excited by the concepts that are emerging from his analysis. Richardson has given particular study and analysis to how the golf course can be designed in such a way to effectively utilize space and enhance the golfer experience in order to result in an increase in the patronage of the golf course, rounds of play and generate revenue for the City. It is helpful to think about this Golf Course planning project in two parts. Part A consists of the Golf Course reconfiguration, which is unavoidable due to the flood control work. Part A would be funded mostly by the SFCJPA if the Golf Course re-design is limited to the flood control impacts. That is,if the City chooses to enhance the Golf Course beyond what is required to mitigate the flood control work (options D, F or G), the City will need to find additional funding sources to pay for the incremental difference in cost. The SFCJPA is not responsible to provide improvements to the Golf Course that go beyond direct mitigation of the flood control project. Part B of the Golf Course planning project is the long-range master planning. This includes a vision for the entire Golf Course operation including the club-house, practice facility, parking area and entrance. This more comprehensive long-range planning is important to do concurrently so the design to reconfigure the Golf Course (Part A) is unified with the long-term vision of the Golf Course assets.The actual implementation of the comprehensive long-range plan may not occur for some time, pending further financial analysis. Staff has shared the existing 1994 Golf Course Master Plan with Richardson, along with the 2006 staff report that explored the potential for sports playing fields on the Golf Course (Attachment D –CMR 168-06), and the 2008 Golf Course Operational Analysis by Economics Research Association (Attachment C -Golf Course Operational Study staff report CMR 446-08). Some of the expected benefits and associated improvements from this design project may include: §a course which uses less water and labor to maintain §integrated naturalized areas to reduce the turf footprint and create interest for players §some new greens which will provide better conditions §improved consistency of greens ball roll (quality of play) §several new fairways, and tees §improved pace of play §better overall drainage §improved wildlife habitat §replacement of some of the deteriorating irrigation system on many of the reconfigured holes, and §a more interesting course which are projected to increase rounds of play and revenue for the City. Public outreach meetings with Richardson have been built into the scope of work and contract with the SFCJPA. The public meetings ensure that Golf Course stakeholders and the public have multiple opportunities to ask questions, make suggestions and comments, and receive updates March 06, 2012 Page 6 of 20 (ID # 2588) on the project. The first public meeting was held on August 18, 2011, at the Bay Café at the Golf Course. SFCJPA staff, City staff, and Richardson discussed the Project and gathered information on what the golfers liked and disliked about the current Golf Course. SFCJPA Project Manager Kevin Murray answered questions about endangered wildlife species that might be affected by the project. Mr. Murray explained that measures were in place to avoid impacts to federally protected steelhead, California clapper rail, and the salt marsh harvest mouse. The design should include best ways to conserve water and enhance wildlife habitat. All nesting wildlife will be protected during construction. Richardson presented his work on the reconfiguration of the Golf Course at the second public outreach forum on October 24, 2011 (Attachment E –Summary of the October 24 Public Meeting) and then again at the Parks and Recreation Commission’s regular meeting held on October 25, 2011. Richardson completed review of Golf Course evaluations, an aerial survey and topographic map, and six different schematic design options for the course reconfiguration. At the request of the City, a separate contract between Richardson and the City for long-range master plan work was established. The design concepts were based on the ‘likes’ and ‘dislikes’ expressed by City staff and stakeholders and design options were narrowed to three.Option A is the simplest and least expensive alternative representing mitigation required of the SFCJPA with no additional Golf Course enhancements. Options D is a more complex Golf Course design in an attempt to leverage this reconfiguration opportunity to design a more interesting and playable golf course. Public input and Richardson’s analysis initially favored Option D for a variety of reasons, including a routing comparison study (Attachment F), landscape sustainability, aesthetics, and playability/uniqueness of the tee-to-green features. At this time staff did not have the financial projections provided by the National Golf Foundation (Attachment A) to analyze alternatives. The third option (Option F) recommended the inclusion of a single athletic field adjacent to the existing Baylands Athletic Center. On December 5, 2011, the Council conducted a study session on the Golf Course project where staff and Richardson presented the three design concepts. The Council asked many questions, ranging from acreage of the Palo Alto Golf Course compared to neighboring golf courses, demographic data, whether more athletic fields could be added, and the cost and return on investment for the various options. A summary of the questions and staff responses are provided in Attachment G. Discussion Chief among the comments from the Council was the need for broader public input on the future of the Golf Course. On January 26, 2012 staff held a public meeting and reached to a very broad range of community interests and opinions. Among the outreach efforts were: Advertisement in Daily Post March 06, 2012 Page 7 of 20 (ID # 2588) Advertisement in Palo Alto Daily News Advertisement in Palo Alto Weekly Airport Users Athletic Field Users Authors of the ‘Got Space’ Field’s Need Study (2002) City Website Environmental Volunteers Flyers -Libraries, Community Centers, Parks, Golf Course Friends of the Baylands E-Mail Distribution List Golf Advisory Committee Neighborhood Associations Palo Alto Golf Clubs Parks and Recreation Commission PTA Council Save the Bay The context of this public meeting was explained to the audience as: “The Palo Alto Golf Course is being impacted by the realignment of the San Francisquito Creek Levee Project. Given this unique situation,the City is considering reconfiguration and other alternatives for the Golf Course in the context of the community’s overall parks, open space and recreational needs.” There were 85 participants (including four Parks and Recreation Commissioners) at the January 26, 2012 community meeting and the feedback received was very informative. The meeting began by asking participants what compelled them to come to the meeting. Staff captured all comments on large poster paper and posted them on a wall entitled “What the community cares about.” Staff then proceeded with a presentation that included information about the flood control project, history of the Golf Course and Richardson’s Golf Course designs to date. Staff then asked the participants to reflect on the “What the community cares about” displayed around the room from the beginning of the meeting given additional context from the presentations. Staff then asked the audience if other challenges or opportunities should be added to the “What the community cares about” comments. More feedback was given and added to the comments. Staff then proceeded with seven break-out discussion groups of approximately ten participants in each group. Staff mixed up participants so groups had participants with varied interests and perspectives. The small group discussions were facilitated by staff. Participants were asked to reflect on “What the community cares about” comments on display around the room that articulated interests, concerns, challenges and opportunities. Given this unique reconfiguration situation, causing us to consider Golf Course alternations, staff asked participants to provide feedback on the most salient opportunities and challenges for March 06, 2012 Page 8 of 20 (ID # 2588) addressing the Golf Course reconfiguration project in context of other community interests. After a 20-minute discussion participants came back together and heard from each break-out group. The feedback was again added to the “What the community cares about” wall posts. The final exercise was for all participants to take three colored sticker dots and indicate what they believed to be the most important challenges or opportunities for staff and Council to consider as the City works toward a decision. A detailed summary of the public meeting can be seen in Attachment H. Much feedback was given and staff then analyzed the themes and common interests expressed by participants. The participants’ comments generally fell in three categories of interest: Golf, Athletic Fields, and the Natural Environment. There was more synergy in the comments between Golf Course advocates and the environmental interests. Both groups expressed interest in more natural areas and habitat for local wildlife species. A Golf Course that reflects the Bay in look, feel and experience was an exciting proposition to many participants. At the public meeting, the number of Athletic field users was smaller compared to the number of golfers, yet their comments and opinions were also heard and captured. We heard that more athletic fields or better utilization of existing athletic fields (or both) is important to field user groups. The primary reason for this is more children in our schools, and that trend is likely to continue, and there is growing interest in year-round soccer and other sports such as lacrosse and rugby. However, field user representatives were not necessarily convinced the Golf Course was the right place for additional athletic fields; rather they wanted to express the desire for more assessable athletic fields in Palo Alto residential neighborhoods. Understanding and defining the future athletic field demand and supply issue would benefit from more analysis, perhaps as part of the recommended City-wide Park Master Plan that will be put forward for Council consideration in the 2013 CIP budget.Absent a formal analysis on the topic, Recreation Supervisor Shia Geminder, who oversees the park and field brokering process and is communicating with field users on a daily basis, provides an informed opinion (Attachment I). The City has made meaningful progress in addressing the field shortage issue with additional fields added to the inventory (Stanford Palo Alto Community Playing Fields), more efficient use of existing fields (Field Use Policy) and use of synthetic turf and multi-use field design at several locations (Cubberley, El Camino Park). But does the City meet the demand for athletic fields? The answer varies depending on who you ask. The City seems to have adequate fields to meet Palo Alto-based sports groups needs, who have more than 51% residency participation; but does not have adequate fields to meet the demand of regional and more competitive youth and adult sports groups that have less than 51% resident participation as we are turning down field requests from these groups due to space constraints. Other highlights from the community meeting were concerns about costs and how Options F and G would be funded. Also, the compatibility of noise from athletic fields with the golfing experience was a major concern. Overall there was unanimous support for having a public golf course, all participants whether they came to the meeting to express other recreation, park or March 06, 2012 Page 9 of 20 (ID # 2588) open space interests believed the Golf Course is an important community asset that should be maintained and enhanced if possible. Another key direction Council gave staff at the December 5th study session was to explore a fourth design option that would include multiple athletic fields. The Council also wanted to see additional cost analysis and information on the ROI for the design options being considered. The four design options, including the new multiple athletic field option, are described below and can be seen in Attachment A, which includes estimated costs of Golf Course reconfiguration and related ROI. Option A Option A represents the minimum reconfiguration in order to facilitate the San Fransisquito Creek realignment as required by the SFCJPA. This option shifts holes laterally from west to east, retaining much of the same routing of the existing course. Golf Course holes are moved away from the levee on a minimal basis. Improvements are primarily restricted to the holes repositioned with the remaining holes largely unchanged. Bunker work and naturalization enhancements are made throughout the course in order to provide a more consistent golf experience and landscape. Highlights of Base Work: • 6.5 golf holes relocated • 5 new greens constructed • Par 72 • 6,900 / 6,500 / 5,200 yards (length of the golf course from the three sets of tees) • All bunkers reconstructed and/or new • 38.5 acres transformed to naturalized areas (non-managed turf) • Irrigated Turf Reduced from 135 acres to 96 acres • Revised Hole No. 18 (naturalized hazard) • Adjusted Hole No. 12 • Adjusted Hole Nos. 13 and 14 Projected Cost: $ 3,537,622 Closure, Phasing & Improvement Duration: Option A will require approximately 8-9 months to complete. The Golf Course can be configured as a 9-hole layout at the onset of work by using 10 existing holes located in the southern portion of course. The 10 holes would be used to form a 9-hole layout with one hole at a time able to be closed for improvement, even while the northern area is under construction. This allows partial progress on the southern holes to be concurrent with the more intense work area to the north. The 9-hole “temporary course” to the south would be in play for 5-6 months until the new 9 holes in the northern portion are ready for play. Upon opening the new 9 holes to the north, the southern holes would close and work would commence on March 06, 2012 Page 10 of 20 (ID # 2588) that portion of the course. Approximately 3-4 months would be required to complete the southern holes and open them for play. All existing practice areas would be able to remain open during the work. Additional Work: Additional items within the Golf Course itself may be undertaken concurrently with the development of Option A. These optional items include: • Sand capping of new turf areas (new fairways to be constructed) •Use (spreading) of imported soil from the Stanford University Medical Center Project (potential revenue to receive imported soil to help offset costs) • Reconstruction of all greens (13 additional to those covered) • Re-turfing of all existing fairways (23.5 acres additional) • Replacement of the balance of the existing irrigation system • Reconstruction and features at the existing practice green area • Construction of a new on-course restroom facility Projected Cost for Additional Items: $ 3,250,000 Option D Option D represents an enhanced reconfiguration version from Option A. This option facilitates the San Francisquito Creek realignment as required by the SFCJPA. The primary difference from Option A is that Option D realigns more holes and with more variety, departing from the common parallel routing of the existing course. Golf holes are moved away from the levee, but go beyond Option A to form new views and variation. Bunker work and naturalization enhancements are made throughout the course in order to provide a more consistent golf experience and landscape. These are more prevalent than that afforded through Option A. Highlights of Base Work: • 8.5 golf holes relocated • 8 new greens constructed • Par 72 • 6,900 / 6,400 / 5,000 yards (length of the golf course from the three sets of tees) • All bunkers reconstructed and/or new • 43 acres transformed to naturalized areas (non-managed turf) • Irrigated Turf Reduced from 135 acres to 92 acres • New Island Green Hole No. 13 (elevated tee and bay view) • New Double Green Nos. 3 and 15 • New Hole No. 5 (elevated green and bay view) • New Hole No. 7 (split fairway) • New Hole No. 18 (par-5 and naturalized hazard) • New Hole No. 4 March 06, 2012 Page 11 of 20 (ID # 2588) • New Hole No. 17 • New Hole No. 16 • Future space afforded for a new practice green/short game area Projected Cost: $ 4,118,748 Closure, Phasing & Improvement Duration: Option D will require approximately 9-10 months to complete. The Golf Course can be configured as a 9-hole layout at the onset of work by using 10 existing holes located in the southern portion of course. The 10 holes would be used to form a 9-hole layout with one hole at a time able to be closed for improvement, even while the northern area is under construction. This allows partial progress on the southern holes to be concurrent with the more intense work area to the north. The 9-hole “temporary course” to the south would be in play for 6-7 months until the new 9 holes in the northern portion are ready for play. Upon opening the new 9 holes to the north, the southern holes would close and work would commence on that portion of the course. Approximately 3-4 months would be required to complete the southern holes and open them for play. All existing practice areas would be able to remain open during the work. Additional Work: Additional items within the Golf Course itself may be undertaken concurrently with the development of Option D. These optional items include: • Sand capping of new turf areas (new fairways to be constructed) • Use (spreading) of imported soil from the Stanford University Medical Center Project • Reconstruction of all greens (10 additional to those covered) • Re-turfing of all existing fairways (21.5 acres additional) • Replacement of the balance of the existing irrigation system • Reconstruction and features at the existing practice green area • Construction of a new on-course restroom facility • Future development of a new practice green/short game area Projected Cost for Additional Items: $ 3,096,250 Option F Option F represents an opportunity to remove land from golf course use and transform it to use for athletic field(s). This option was added to the reconfiguration scope based on previous studies with the same objective. For Option F, a general constraint placed on the planning work was to retain playing yardage (6,800 yards) and a par of 72. Safety from the new trail system and within adjoining holes was to be maintained with no compromise to standard golfing guidelines. March 06, 2012 Page 12 of 20 (ID # 2588) Option F facilitates the San Francisquito Creek realignment as required by the SFCJPA. The option is primarily distinguished by the removal of approximately 2.5 acres from the golf course parcel. This land area is shown as athletic field use, accommodating a full NCAA sized soccer field or combination of fields and field types of the same proportion and area. This area would have limited room for parking expansion of the adjoining Baylands Athletic Center. Option F realigns holes with more variety than Option A. As with Option D, the reconfiguration departs from the common parallel routing of the existing course. Golf holes are moved away from the levee to form new vistas and play variation. Bunker work and naturalization enhancements are made throughout the course in order to provide a more consistent golf experience and landscape. As a result of the “domino effect” of moving holes to make room for the athletic field area, these enhancements are as prevalent as that afforded through Option D with even more reconfigured holes. Highlights of Base Work: • 12.5 golf holes relocated • 12 new greens constructed • Par 72 • 6,700 / 6,300 / 5,000 yards (length of the Golf Course from the three sets of tees) • All bunkers reconstructed and/or new • 43.4 acres transformed to naturalized areas (non-managed turf) • Irrigated Turf Reduced from 135 acres to 92 acres • New Island Green Hole No. 13 (elevated tee and bay view) • New Double Green Nos. 3 and 15 • New Hole No. 5 (elevated green and bay view) • New Hole No. 7 (split fairway) • Revised Hole No. 18 (naturalized hazard) • New Hole No. 4 • New Hole No. 17 • New Hole No. 16 • New Hole No. 3 • New Hole No. 3 • New Hole No. 15 • New practice green/short game area developed along with reconfiguration • Temporary preparation of the athletic field area (not field development or improvement) Projected Cost: $ 5,673,645 Closure, Phasing & Improvement Duration: Option F will require approximately 10-12 months to complete. The Golf Course could be configured as a 9-hole layout in the same manner as with options A and D. However, full closure may be a better approach as the work will be more complex with this option and the March 06, 2012 Page 13 of 20 (ID # 2588) experience for golfers may be compromised. All existing practice areas would be able to remain open during the work. Additional Work: Additional items within the golf course itself may be undertaken concurrently with the development of Option F. These optional items include: • Sand capping of new turf areas (new fairways to be constructed) • Use (spreading) of imported soil from the Stanford University Medical Center Project • Reconstruction of all greens (10 additional to those covered) • Re-turfing of all existing fairways (21.5 acres additional) • Replacement of the balance of the existing irrigation system • Reconstruction and features at the existing practice green area • Construction of a new on-course restroom facility Projected Cost for Additional Items: $ 2,530,000 Option F also includes a full size synthetic turf soccer field; costs for the field is estimated to be approximately $11 a square foot, the field is 80,000 square feet, therefore the cost would be $880,000. Additional costs for pathways, support structures and parking is to be determined. Option G Option G represents a plan to remove more land from Golf Course use, transforming this land to use for multiple athletic fields and non-golf recreation purposes. This option was added to the reconfiguration scope based on the direction of the Council to investigate whether the viability of the Golf Course could be preserved while opening more area (than with Option F) for non-golf recreation. The constraint placed on the planning work was to retain a regulation layout with a par of 70 or 71. Safety from the new trail system and within adjoining holes was to be maintained with no compromise to standard golf guidelines. Based on input from National Golf Foundation Consulting, the preference for a par-71 layout was adopted during the planning. Option G also facilitates the San Francisquito Creek realignment as required by the SFCJPA. The option involves the removal of approximately 10.5 acres from the Golf Course. This land area is shown as athletic field use (three full sized NCAA soccer fields or combination of fields and field types of the same proportion and area), and additionally shows areas for a small playground, wetlands park and picnic space, and trails connecting to the San Francisquito Creek levee trails, Baylands and commercial area. Option G realigns holes with more variety than other options. As with Option D and F, the reconfiguration departs from the common parallel routing of the existing course. Golf holes are March 06, 2012 Page 14 of 20 (ID # 2588) moved away from the levee to form new views and variation. Bunker work and naturalization enhancements are made throughout the course in order to provide a more consistent golf experience and landscape. As with Option F, but even more noticeable, virtually all areas of the existing course would be reconstructed, enhanced and improved. The irrigation system would be fully replaced. Highlights of Base Work: • 15 golf holes relocated • 15 new greens constructed • Par 71 • 6,600 / 6,100 / 5,000 yards (length of the golf course from the three sets of tees) • All bunkers reconstructed and/or new • 43 acres transformed to naturalized areas (non-managed turf) • Irrigated Turf Reduced from 135 acres to 92 acres • New Island Green Hole No. 12 (elevated tee and bay view) • New Double Green Nos. 3 and 15 • New Hole No. 5 (elevated green and bay view) • New Hole No. 7 (split fairway) • New Hole No. 18 (par-5, naturalized hazard) • New Hole No. 4 • New Hole No. 14 • New Hole No. 10 • New Hole No. 17 • New Hole No. 16 • New Hole No. 3 • New Hole No. 3 • New Hole No. 15 • New practice green/short game area developed along with reconfiguration • Entire irrigation system replacement (all areas of the 18-hole golf course) • Temporary preparation of the field/recreation area (not field development or improvement) Projected Cost: $ 7,034,748 Closure, Phasing & Improvement Duration: Option G will require approximately one year to complete. While it may be possible to configure a 9-hole layout during the work, this could prove more costly in terms of construction costs and is not recommended. Full facility closure would be recommended. All existing practice areas would be able to remain open during the work. Additional Work: March 06, 2012 Page 15 of 20 (ID # 2588) Additional items within the Golf Course itself may be undertaken concurrently with the development of Option G. These optional items include: • Sand capping of new turf areas (new fairways to be constructed) • Use (spreading) of imported soil from the Stanford University Medical Center Project • Reconstruction of all greens (10 additional to those covered) • Re-turfing of all existing fairways (21.5 acres additional) • Reconstruction and features at the existing practice green area • Construction of a new on-course restroom facility Projected Cost for Additional Items: $ 2,213,750 Unlike other options, Option G includes full replacement of the entire Golf Course irrigation system. This is necessary, because there is no viable method of leaving only three golf holes without replacement. Variables include pumping pressure, control zones and other logistics that had to be considered. Option G also includes three full size synthetic turf soccer fields; costs for the fields is estimated to be approximately $11 a square foot, the fields are each 80,000 square feet, and therefore the cost would be $2,640,000. Additional costs for pathways, support structures and parking is yet to be determined. Because Options G and F include reconfiguring the majority if not all of the Golf Course, phasing the work would be needed in order to be compatible with the SFCJPA timeline and to allow time to seek funding for the broader scope of the project -See Attachment J for the phase one concept for designs F and G. Below is a summary of probable cost for these two phase one options: Stage 1 work for Plan F -Construct (3) New Greens • Construct (4) New Fairways • Construct (3) New Tee Complexes • Construct (3) Temporary Tee Complexes • Construct New Baylands Areas • Site, Path, Irrigation, and Drainage Work Probable Cost Range: $ 1,250,000 -1,450,000 Stage 1 work for Plan G -Construct (5) New Greens • Construct (5) New Fairways • Construct (4) New Tee Complexes • Construct (2) Temporary Tee Complexes • Construct New Baylands Areas • Site, Path, Irrigation, and Drainage Work Probable Cost Range: $ 1,600,000 -1,800,000 March 06, 2012 Page 16 of 20 (ID # 2588) Public Outreach There will be at least sixteen public meetings as the Project moves toward a final decision, public meetings have and will include the Golf Advisory Committee, Parks and Recreation Commission, Planning and Transportation Commission, Architectural Review Board, City Council, and the SFCJPA Board of Directors. All meetings will be posted and advertised by City Staff. Detailed: Tentative Time-line 1 Golf Advisory and General Public 8/18/2011 2 Parks and Recreation Commission 10/28/2011 3 Golf Advisory and General Public 10/24/2011 4 City Council 12/5/2011 5 Community Input Meeting 1/26/12 6 Parks and Recreation Commission 2/28/12 7 Finance Committee 3/6/12 8 City Council Mar/Apr 9 Architectural Review Board Apr/May 10 Planning Transportation Commission Apr/May 11 Parks and Recreation Commission May/June 12 Architectural Review Board May/June 13 Planning Transportation Commission May/June 14 Golf Advisory and General Public June/July 15 SFCJPA Board June/July 16 City Council June/July Tentative Timeline The Project’s timeline is driven by the SFCJPA, which hopes to begin levee realignment work in 2013. Ideally the reconfiguration of the Golf Course would occur in advance of the levee realignment work. However, depending on the scope of the Project, the Golf Course reconfiguration will likely need to be phased, with the minimal amount of work necessary to make room for the realigned levee to occur in winter 2013 and spring 2013 and the remainder to occur sometime in the future when the City can finance the completion of the project. Summary: Public Outreach 9/2011-6/2012 Completed Golf Design 6/2012 Construction (Tentative) Winter 2013 / Spring 2013 Resource Impact The City contributes $98,000 to the SFCJPA annually. A budget of $137,000 for design and $2,000,000 to $3,000,000 for construction for the reconfigured portion of the Golf Course has been recommended by the SFCJPA staff. Any golf course improvements recommended by March 06, 2012 Page 17 of 20 (ID # 2588) Richardson that go beyond the flood control mitigation would be incurred at the City’s full expense. Option A, as seen in Attachment A, represents the flood control mitigation. The difference in cost between Options A and D, F or G is unfunded, and would require the City to find new sources of funds to complete. The City has entered into a contract with Richardson separately from the SFCJPA to develop Golf Course design options and long range planning beyond SFCJPA mitigation at a cost of $22,000 and the National Golf Foundation to provide ROI analysis of the design options and the long range Golf Course planning for $24,000. Some of the specific financial implications to be considered are: Return on Investment Investing City funds into the Golf Course, beyond SFCJPA mitigation, will require an understanding of the ROI data. If, for example,the City pursues design option D, the City will need to provide $500,000 <show the actual difference> or more to make up the incremental difference between the SFCJPA mitigation funding and construction costs for an enhanced design. The final design will bring several benefits such as reduced water use with increased natural areas and fewer acres requiring maintenance, along with a more interesting and appealing golf experience. These changes should <would?> provide an opportunity to increase rounds of play and revenue generated from fees. As mentioned above, staff has entered into a contract with the National Golf Foundation to provide independent ROI analysis on the design options and long range Golf Course plan.Golf Course Pro-Formas for each of Richardson’s design options are presented in Attachment A. Moreover, the existing Golf Course irrigation system is rapidly failing. The high salt intrusion has compromised the system resulting in regular main-line breaks. The capital improvement to the irrigation system in 1998 is not lasting as long as initially anticipated. Consequently, does it make financial sense, and is it financially feasible, to make additional capital improvements to the Golf Course, such as replacing more of the irrigation system than is called for by flood control mitigation, during the Project’s reconfiguration? Lost Revenue Staff recognizes that there will be a short-term loss of revenue due to decreased rounds played during the Golf Course reconfiguration construction period. The levee construction period is unknown at this time but could begin as early as winter 2013. The construction will undoubtedly impact the number of rounds played and affect the City’s tenants (Brad Lozares from the Golf Course Pro Shop and Tom Talai at the Bay Cafe Restaurant). Staff continues to work with SFCJPA to explore appropriate mitigation as the timeline and levee design work progresses. March 06, 2012 Page 18 of 20 (ID # 2588) SFCJPA staff maintain that the flood protection provided to the Golf Course by the Project represents a long-term benefit to the Golf Course and community, as future revenue losses due to closure and clean up in response to flood events will be reduced. The National Golf Foundation’s Golf Course Pro-Formas for each of Richardson’s design options provides data on anticipated lost revenues during construction -see Attachment A. Stanford Soil Stanford University Medical Center (SUMC) expansion will result in a need by SUMC to dispose of a considerable amount of excavated soil. That soil may be available for use in the proposed improvements to the Palo Alto Muni Golf Course and/or the Levee Project. This may represent an opportunity to both support the SUMC project and provide additional funding to support the Golf Course re-configuration project. Staff has met with Stanford representatives on two occasions since December 5, 2011, and it appears a mutually beneficial arrangement is possible. The soils would be used to raise the level of the Golf Course to both correct significant drainage problems and to improve the contour of the Golf Course to add interest and visual appeal. It is also believed that by raising the level of the Golf Course above mean tide level, negative salt impacts to the irrigation system could be reduced and thereby lower Golf Course maintenance and repair costs. Staff is currently waiting for a proposal from Stanford regarding what they are willing to pay the City of Palo Alto to receive up to 100,000 to 150,000 cubic yards of soil in the Spring of 2013. Infrastructure Blue Ribbon Task Force Staff recognizes that there is an Infrastructure Blue Ribbon Committee (IBRC) report that the Council is currently evaluating to address a significant infrastructure back-log facing the City. The infrastructure back-log represents an enormous challenge for the City. This flood control / Golf Course reconfiguration project will need to complement the comprehensive infrastructure improvement plan that will emerge from the IBRC report and subsequent Council discussions. Once staff has a better understanding of the direction that the Council prefers and would like to pursue, staff will provide further funding recommendations. At this time any operating expense would come from the General Fund Budget Stabilization Reserve and infrastructure would come from the General Fund Infrastructure Reserve, both of which are financially challenged. Alternative use of the Golf Course site This staff report as with the December 5, 2011, staff report continues assume to the community wants to have a public golf course. Although alternative use of the land currently occupied by the Golf Course is a possibility, there is no evidence that this is of interest to the public at this time. At all public meetings to date including the community meeting on January 26, 2012, where staff made a very deliberate effort to seek public opinion beyond the golfing community, strong support from meeting participants for the Golf Course was clear. The land is dedicated park land and there is an annual debt service of approximately $550,000 (that expires in 2018), currently being paid for by golfing revenue which limits alternative uses of the land . March 06, 2012 Page 19 of 20 (ID # 2588) Policy Implications The Project is consistent with Policy C-24 and Policy C-26 of the Comprehensive Plan, which encourages reinvesting in aging facilities to improve their usefulness and appearance and avoiding deferred maintenance of City infrastructure; and maintaining and enhancing existing park facilities. This Project also supports Policy N-10, which calls for the City to work with the Santa Clara Valley Water District and other relevant regional agencies to enhance riparian corridors and provide adequate flood control by use of low impact restoration strategies. The Baylands Master Plan provides policy direction on the Golf Course. In 2008 the Baylands Master Plan was reformatted representing the 4th addition of the plan. The policy direction adopted in 2008 (as seen in Chapter 8 of the plan) is to continue the Golf Course in its present use and to continue with the implementation of the Palo Alto Municipal Golf Course Master Improvement Plan. The Baylands Master Plan also provides policy direction on the Baylands Athletic Center –Chapter 7. As with the Golf Course, the policy direction is to continue to maintain the Athletic Center for its current use and to maintain and continue to improve standards of low external glare night lighting. Environmental Review This Project will be subject to environmental review under provisions of the California Environmental Quality Act (CEQA).The SFCJPA will follow the CEQA Guidelines and prepare an Environmental Impact Report (EIR) for the Project. A wetlands delineation study was performed for the Project. The delineation was conducted to assist the SFCJPA in determining the type and extent of wetlands in the delineation study area that may be subject to regulation by the U.S. Army Corps of Engineers under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act. A separate environmental document may be needed if and when recommended elements of Richardson’s Golf Course Master Plan are implemented. A tree survey and arborist’s report for the project area will commence once staff has direction on the preferred reconfiguration option. A meeting with the City Arborist has taken place in the fall of 2011, in anticipation of the impacts to existing trees. It has been clearly communicated to the Golf Corse Architect Forrest Richardson that the project must comply with the City’s Tree Ordinance. Attachments: ·Attachment A -Reconfiguration Options and Costs (PDF) ·Attachment B -Current Golf Course Configuration (PDF) ·Attachment C -2008 Golf Course Operational Analysis CMR 446-08 (PDF) ·Attachment D -2006 Golf Course / Athletic Fields Staff Report CMR 168-06 (PDF) March 06, 2012 Page 20 of 20 (ID # 2588) ·Attachment E -Community Meeting Notes 10-24-11 (PDF) ·Attachment F -Routing Comparison Study Report (DOC) ·Attachment H -Community Meeting Notes 1-26-12 (PDF) ·Attachment I -Athletic Field Demand Memo (DOC) ·Attachment J -Phasing Plan for options F and G (PDF) ·Attachment K -National Golf Foundation -Financial Report (PDF) ·Attachment G -Response Council Questions (DOC) Prepared By:Robert De Geus, Manager Department Head:Greg Betts, Director, Community Services City Manager Approval: ____________________________________ James Keene, City Manager ATTACHMENT A PALO ALTO GOLF COURSERECONFIGURATION OPTIONS 14 1516 17 18 13 11 10 1 23 4 5 6 7 8 9 12 P A L O A L T O G O L F C O U R S E S c h e m a t i c R e c o n f i g u r a t i o n P l a n F ORREST R ICHARDSON G O L F CO U R S E A RC H I T E C T www.golfgroupltd.com Drawn October 2011 by FLR Plan A• 5 New Greens• 7 Older Greens Retained• 6.5 Reconfigured Holes• Lowest Area of Impact• Low Overall Improvement 1 5 535 505 4202 4 420 400 3203 3 200 180 1004 4 425 390 3205 4 410 400 3306 4 440 430 3407 4 350 340 2808 3 190 175 1209 5 535 520 425 Out 36 3505 3340 2655 10 4 320 315 26011 3 170 155 9012 5 540 515 44013 4 400 370 30514 3 215 200 13015 4 430 400 34016 5 515 490 42517 4 405 380 30018 4 400 385 320 In 36 3395 3210 2610 72 6900 6550 5265 0 200 400 600 800 feet Nor thWind San Francisquito CreekMitigation Area P A L O A L T O G O L F C O U R S E S c h e m a t i c R e c o n f i g u r a t i o n P l a n F ORREST R ICHARDSON G O L F CO U R S E A RC H I T E C T www.golfgroupltd.com Drawn October 2011 by FLR Plan D• 8 New Greens• 5 Older Greens Retained• 8.5 Reconfigured Holes• Nominal Area of Impact• High Overall Improvement 1 4 450 430 3502 4 410 400 3303 5 545 520 3954 3 175 150 1005 4 365 335 2656 4 385 365 3057 4 350 315 2408 3 215 180 1309 5 535 525 410 Out 36 3430 3220 2525 10 4 320 315 26011 3 170 155 9012 5 530 500 38513 3 200 175 13014 4 465 430 35515 5 580 550 43016 4 415 395 30517 3 220 180 12518 5 550 520 400 In 36 3450 3220 2480 72 6880 6440 5005 0 200 400 600 800 feet Nor thWind 14 15 1617 18 13 11 10 1 2 34 5 6 7 8 9 12 San Francisquito CreekMitigation Area P A L O A L T O G O L F C O U R S E S c h e m a t i c R e c o n f i g u r a t i o n P l a n F ORREST R ICHARDSON G O L F CO U R S E A RC H I T E C T www.golfgroupltd.com Drawn October 2011 by FLR (Rev 2-2012) Plan F• 12 New Greens• 3 Older Greens Retained• 12.5 Reconfigured Holes• Large Area of Impact• High Overall Improvement 1 4 445 420 3252 4 410 400 3303 5 490 470 3804 3 165 155 1255 4 375 350 2756 4 405 390 3307 4 400 380 3008 3 200 170 1359 5 555 530 430 Out 36 3445 3265 2630 10 4 320 315 26011 3 160 125 7512 5 525 515 39013 3 190 165 12514 5 520 500 42015 5 550 530 44016 4 390 360 31517 3 170 150 13018 4 380 350 305 In 36 3205 3010 2460 72 6650 6275 5090 0 200 400 600 800 feet Nor thWind 141516 17 18 13 11 10 1 2 3 4 5 6 7 8 9 12 San Francisquito CreekMitigation Area AthleticFacility P A L O A L T O G O L F C O U R S E S c h e m a t i c R e c o n f i g u r a t i o n P l a n F ORREST R ICHARDSON G O L F CO U R S E A RC H I T E C T www.golfgroupltd.com Drawn Februar y 2012 by FLR Plan G• 15 New Greens• 2 Older Greens Retained• 15 Reconfigured Holes• Largest Area of Impact• High Overall Improvement 1 4 470 440 3452 4 400 380 3303 5 520 500 3804 3 180 155 1255 4 320 310 2606 4 420 395 3507 4 335 320 2758 3 225 180 1409 5 550 520 430 Out 36 3420 3200 2635 10 4 410 380 30011 4 390 360 31512 3 150 135 10013 5 515 490 41014 4 405 385 32515 3 160 145 11516 4 365 340 27517 3 220 190 13518 5 530 500 430 In 35 3145 2925 2405 71 6565 6125 5040 0 200 400 600 800 feet Nor thWind 14 15 1617 18 11 10 1 2 34 5 7 8 9 12San Francisquito CreekMitigation Area 13 6 Athletic FieldFacility Trai;lConnection Trai;lConnection F ORREST R ICHARDSON G O L F CO U R S E A RC H I T E C T www.golfgroupltd.com Drawn Januar y 2012 (Rev. 2-2012) Nor th0 100 200 300 400 feet EXIST. PRACTICERANGE 11 PLAYGROUND TRAILCONNECTION GOLFCLUBHOUSE& BANQUETCENTER BAYLANDSATLHLETICCENTER 1 TRAILCONNECTION SAN FRANCISQUITOCREEK NATURALIZEDAREA PICNICRAMADAS SHORTGAME AREA 9 18 10 EXIST. PRACTICERANGE 11 PLAYGROUND TRAILCONNECTION GOLFCLUBHOUSE& BANQUETCENTER BAYLANDSATLHLETICCENTER 1 TRAILCONNECTION SAN FRANCISQUITOCREEK NATURALIZEDAREA PICNICRAMADAS SHORTGAME AREA 9 18 10 P A L O A L T O G O L F C O U R S E S c h e m a t i c S i t e P l a n f o r P l a n “ G ” A t h l e t i c F i e l d s SPORTSSHOPSPORTSSHOP WETLANDSCENTERWETLANDSCENTER PRELIMINARY PROBABLE COST ESTIMATE PALO ALTO GOLF COURSE RECONFIGURATION - OPTIONS A, D, F, & G Note Quantity Units Unit Cost Total Quantity Units Unit Cost Total Quantity Units Unit Cost Total Quantity Units Unit Cost Total Notes Mobilization/Bond 1 LS 50000 50,000 1 LS 60000 60,000 1 LS 72000 72,000 1 LS 88000 88,000 Staking/Layout 6.5 Holes 2500 16,250 8.5 Holes 2500 21,250 12.5 Holes 2500 31,250 15 Holes 2500 37,500 Demo Cart Paths 13960 LF 2 27,920 17760 LF 2 35,520 21000 LF 2 42,000 24000 LF 2 48,000 Bury exist paths rubble onsite Demo Existing Features 1 LS 15000 15,000 1 LS 18000 18,000 1 LS 26000 26,000 1 LS 30000 30,000 Includes all course bunkers Tree Removal 450 Ea 200 90,000 400 Ea 200 80,000 525 Ea 200 105,000 525 Ea 200 105,000 Strip Fairway Sod & Bury or Till 33 AC 1500 49,500 37 AC 1500 55,500 45 AC 1500 67,500 50 AC 1500 75,000 Baylands Areas/Pond Earthwork 1 60984 CY 1.8 109,771 53240 CY 1.8 95,832 55000 CY 1.8 99,000 65000 CY 1.8 117,000 Baylands cut of 3' avg, short push, haul Fairway Topsoil Management 35458 CY 3 106,374 39756 CY 3 119,267 48352 CY 3 145,055 53724 CY 3 161,172 8" strip and replace Rough Shaping 6.5 Holes 6500 42,250 8.5 Holes 6500 55,250 12.5 Holes 6000 75,000 15 Holes 6000 90,000 Bunker Shaping - New 22 Each 1200 26,400 21 Each 1200 25,200 30 Each 1200 36,000 40 Each 1200 48,000 Bunker Shaping - Existing renovated 1 38 Each 1400 53,200 28 Each 1400 39,200 23 Each 1400 32,200 12 Each 1400 16,800 New Subsurface Drainage Piping 7500 LF 6 45,000 9000 LF 6 54,000 13000 LF 6 78,000 16000 LF 6 96,000 Includes tie-ins to existing DI's Modify Existing Storm Drain Inlets 15 Ea 2500 37,500 8 Ea 2500 20,000 15 Ea 2500 37,500 15 Ea 2500 37,500 Greens Construction USGA Method 35000 SF 5.75 201,250 5 Each 56000 SF 5.75 322,000 8 Each 84000 SF 5.75 483,000 12 Each 105000 SF 5.75 603,750 15 Each Tee Construction 41500 SF 2.25 93,375 60000 SF 2.25 135,000 90000 SF 2.25 202,500 120000 SF 2.25 270,000 4" sand atop subgrade Bunker Construction New 14800 SF 4 59,200 14800 SF 4 59,200 42000 SF 4 168,000 56000 SF 4 224,000 w/bunker liner, sand cost at $70/tn Bunker Construction Renovated 1 26750 SF 4 107,000 18300 SF 4 73,200 16100 SF 4 64,400 8400 SF 4 33,600 w/bunker liner, sand cost at $70/tn Irrigation - In play areas 35 AC 17500 612,500 40 AC 17500 700,000 58 AC 17500 1,015,000 82.9 AC 17500 1,449,999 Impact areas only Irrigation - Native areas 1 26 AC 5000 130,000 32 AC 5000 160,000 32 AC 5000 160,000 30 AC 5000 150,000 Cart Paths 95820 SF 2.8 268,296 129840 SF 2.8 363,552 133800 SF 2.8 374,640 157200 SF 2.8 440,160 Cart Path Curbing (est.)2500 LF 6 15,000 3400 LF 6 20,400 3500 LF 6 21,000 4100 LF 6 24,600 Finish Shaping 6.5 Holes 4500 29,250 8.5 Holes 4500 38,250 12.5 Holes 4500 56,250 15 Holes 4500 67,500 Fine Grade/Soil Prep in play areas 33 AC 2000 66,000 37 AC 2000 74,000 45 AC 2000 90,000 50 AC 2000 100,000 Fine Grade/Soil Prep Native areas 26 AC 500 13,000 32 AC 500 16,000 32 AC 500 16,000 30 AC 500 15,000 Native Area Hydro Seeding 1 26 AC 2613.6 67,954 32 AC 2613.6 83,635 32 AC 2613.6 83,635 30 AC 2613.6 78,408 Baylands Area Hydro Seeding 1 12.6 AC 2178 27,443 11.0 AC 2178 23,958 11.4 AC 2178 24,750 13.0 AC 2178 28,314 Hybrid Bermuda or Paspalum Sod 31.0 AC 21780 676,115 35.0 AC 21780 761,730 49.0 AC 21780 1,067,220 53.0 AC 21780 1,154,340 Fairways, Roughs & Tees Bentgrass Sod (greens)35000 SF 1.5 52,500 56000 SF 1.5 84,000 84000 SF 1.5 126,000 105000 SF 1.5 157,500 Bridge 1 Ls 30000 30,000 1 Ls 30000 30,000 2 ea 30000 60,000 2 ea 30000 60,000 New Trees 250 Ea 250 62,500 200 Ea 250 50,000 300 Ea 250 75,000 300 Ea 250 75,000 Misc Items 1 LS 30000 30,000 1 LS 32000 32,000 1 LS 35000 35,000 1 LS 38000 38,000 Driving Range Netting Alterations 0 0 0 240 LF 150 36,000 Athletic Field Area Rough Grade 0 0 26000 CY 3 78,000 35000 CY 3 105,000 Athletic Field Area Shape, Temp Planting 0 0 4.1 AC 4400 18,182 10.5 AC 4400 46,200 Short Game Learning Area 2 0 0 1 LS 165000 165,000 1 LS 165000 165,000 Additional GC Arch Fees 4 0 1.5 Holes 8000 12000 5.5 Holes 8000 44000 9 Holes 8000 72000 Additional Environmental Consulting 3 0 1 LS 20000 20000 1 LS 40000 40000 1 LS 40000 40000 Subtotal 3,210,547 3,737,944 5,314,082 6,384,343 Project Management Costs 2.5%80,264 2.5%93,449 2.5%132,852 2.5%159,609 Contingency 7.5%7.50%246,811 7.50%287,354 7.50%408,520 7.50%490,796 TOTAL 3,537,622 4,118,748 5,855,454 7,034,748 Alternate Items Sand Plate Modified Fairways 6"16.5 Acres 35000 577,500 18.5 Acres 35000 647,500 30 Acres 35000 1,050,000 40 Acres 35000 1,400,000 Place Stanford stockpiled earth 100000 CY 3.25 325,000 100000 CY 3.25 325,000 100000 CY 3.25 325,000 100000 CY 3.25 325,000 Rebuild Additional Greens (on course)91000 SF 6.25 568,750 70000 sf 6.25 437,500 42000 sf 6.25 262,500 21000 sf 6.25 131,250 Future Short Game Area NA 1 ls 80000 80,000 NA NA Demo/Replace Restroom 1 LS 95000 95,000 1 LS 95000 95,000 1 LS 95000 95,000 1 LS 95000 95,000 Add cost to Re-Sod all Fairways with Paspalum 23.5 AC 27500 646,250 21.5 AC 27500 591,250 7 AC 27500 192,500 3 AC 27500 82,500 Add cost to replace, update balance of Irrig. system 1 LS 857,500 857,500 1 LS 740,000 740,000 1 LS 425,000 425,000 1 LS NA Rebuild Exist Putting Green Area per Long Range Plan 1 LS 180,000 180,000 1 LS 180,000 180,000 1 LS 180,000 180,000 1 LS 180,000 180,000 Total for all Alternate Items 3,250,000 3,096,250 2,530,000 2,213,750 Notes: 1 Work Extends throughout golf site. 2 New area applies to Options D, F and G only; Option D shown as "Alternate Item" for future development. 3 Additional estimate to golf course area(s) covered by SFCJPA reconfiguration scope. 4 Short game area included for Option G This estimate of probable construction costs is based on the current schematic designs developed which are not engineered or designed construction drawings. Costs to relocate or replace any existing public utilities or accommodate unknown permitting issues are not included. Golf course design fees over and above those to be covered by SFCJPA are shown for Options D, F and G. Alternate Items are estimated based on concurrent construction with base work scope. Other professional fees to be separately covered by SFCJPA and are not included in the cost estimate. OPTION GOPTION FOPTION A OPTION D Revised 2/14/2012 2:16 PM dls EMBARCADERO ROAD EMBARCADERO ROAD EMBARCADERO EMBARCADERO WAY GENG ROAD 14 12 13 17 4 11 16 15 2 3 8 5 10 18 1 7 9 Driving Range 6 Legend Assessment Parcel Golf Hole GOLF COURSE CLUB HOUSE PARKING LOT MAINTENANCE FACILITY LAKE HISTORIC WATERS WETLANDS 0'150'300' Palo Alto Golf Course City of Palo Alto GIS This map is a product of the This document is a graphic representation only of best available sources. CITY OF PALO ALTOINCORPORATE D CAL I FORN IA P a l o A l t o T h e C i t y o f APR I L 1 6 1 89 4 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2005 City of Palo Alto mraschk, 2005-05-24 09:29:48, GOLF COURSE AREAS (\\cc-maps\gis$\gis\admin\Personal\mraschk.mdb) Attachment B CMR:168:06 Page 1 of 10 TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT DATE: MARCH 20, 2006 CMR: 168:06 SUBJECT: GOLF COURSE PRELIMINARY FEASIBILITY STUDY – REPORT TO COUNCIL IN RESPONSE TO COLLEAGUES MEMO ON GOLF COURSE REDESIGN OPTIONS TO INCLUDE SPORTS FIELDS AND RECOMMENDATIONS FOR FUTURE ACTION. REPORT IN BRIEF This preliminary feasibility study provides important information about adding playing fields at the golf course. The information will be useful in helping the City participate more effectively in exploring possible multi-use recreation/flood control options in the San Francisquito Creek Flood Control Study now underway. Several of the flood control options that will be evaluated in the study include modifications to the golf course; flood control solutions incorporating multi- use flood control/recreation facilities will be considered. If a feasible multi-use option is identified, public funds may be available to help offset the cost of a golf course or other recreation facilities that also serve a flood control purpose. The preliminary design studies indicate that there may be room to add up to two playing fields while retaining the existing championship golf course*. However, the costs resulting from the need to reconfigure as many as eight golf holes reduce the desirability of this option. The golf course site does not appear to be large enough to accommodate several playing fields as well as a public regulation/championship golf course, due to the special requirements of a public golf course. The golf course site would be large enough to accommodate a new, smaller non- championship golf course or golf practice facility as well as several sports playing fields. These types of golf facilities provide a different golfing experience and serve a different market segment than the existing championship golf course. The marketability of a smaller non- championship golf course and/or golf practice facility on the Palo Alto golf course site and the level of community support for such a change is unknown. The cost of a new smaller golf course/golf practice facility with 4 or 5 sports playing fields is estimated to be over eighteen million dollars. Private development scenarios that would pay all or most of the cost of a new smaller golf course and sports playing fields were not formally evaluated, but input was solicited from golf course developers and other real estate developers. *Championship course is used to describe a course with a length greater than 6000 yards from the forward (white) tees and a par between 70 – 72. It does not imply that the course would likely hold major championship tournaments Attachment D CMR:168:06 Page 2 of 10 RECOMMENDATION Staff recommends that the City Council: 1) Receive and file this report. 2) Participate in locating funding for the golf course/recreation component of the flood control project if the San Francisquito Creek Joint Power Authority/Army Corps of Engineers flood control study identifies feasible multiuse flood control/recreation options. BACKGROUND Responding to a March 7, 2005 memorandum from City Council members Burch, Kleinberg and Kishimoto, the City Council directed staff to conduct a preliminary feasibility review of possible redesign of the 18-hole championship municipal golf course with the goal of freeing up substantial acreage for sports fields. The objectives to be achieved by such a redesign are: creation of 20-40 acres of new playing field space; improvement of the golfing experience and provision of additional golfing amenities; expansion and enhancement of the natural habitat; and helping to address San Francisquito Creek flood control needs. The Council was also interested in determining whether these changes could facilitate redevelopment of nearby private properties, and identifying possible private funding strategies that could help cover the costs of the golf course redesign and construction of playing fields. See attached City Council memorandum, Golf Course redesign and Playing Fields Creation, dated March 7, 2005 (Attachment A). DISCUSSION Assessment process A working group consisting of City staff from the Public Works, Community Services, Planning, and Administrative Services Departments, as well as a representative from the San Francisquito Creek Joint Powers Authority and consultants from the land use planning firm, Ken Kay Associates (KKA), reviewed City Council direction and comments from the public on this topic and the status of the flood control project; identified key issues to be explored; and developed a framework for examining the potential for locating playing fields on the golf course. For special golf course design expertise, the team included a golf course architect provided pro bono to the City by the golf course design firm, Robert Trent Jones II (RTJII). Through research and site visits to the Palo Alto municipal golf course and a number of other local golf courses, staff assembled information about size and other characteristics typical of different types of golf courses, including public and private regulation/championship courses and non-regulation courses and golf practice facilities. According to the US Golf Association, the average total land area for 18 hole golf facilities is 150 to 200 acres, making the Palo Alto golf course at 169.8 acres a little less than average size. In general, golf courses that are built on fewer acres are either private clubs, such as the Olympic Club, Sharon Heights and Los Altos Hills, that typically play about one-third to one-half as many rounds per year as Palo Alto and other municipal courses, or they are non-regulation courses, such as Poplar Creek, Sunnyvale and Los Lagos, that do not have the par or yardage of a “championship” course. See Attachment B for more information about comparative sizes of different types of golf courses, and Attachment C for the size of current facilities at the Palo Alto municipal golf course. The “championship” designation does not mean that golf championships are played on a course but rather indicates that the course meets the minimum accepted standards of a full size golf Attachment D CMR:168:06 Page 3 of 10 course. According to the RTJII representing architect advising the working group, while the standard is somewhat ambiguous there is general consensus that a regulation/championship course will be a minimum par 70 and have a minimum length of 6000 yards from the forward white tees. The Palo Alto golf course is par 72 and 6200 yards, the length having been slightly reduced during the most recent renovation completed in 1999. Par and yardage influence a golfer’s decision to play a course and the fee he/she is willing to pay. A non-championship course provides a different golfing experience and serves a different market segment than a regulation/championship course. Based on the City Council memorandum, the following five goals were identified to guide development of schematic alternatives for adding sports fields to the golf course: • Provide from one to five sports fields. • Maintain viability of the 18 hole regulation/championship golf course. • Provide sufficient parking. • Preserve and maintain opportunities for flood control solutions. • Protect existing wetlands located on or near the golf course, including incorporating wetlands into the playing area. Several staff/consultant work sessions culminated in an all-day workshop at the golf course on September 14, 2005, attended by working group staff members, the KKA consultants, the RTJII golf course architect and two members of the City’s Golf Advisory Committee. Members of the Golf Advisory Committee and the Parks and Recreation Commission were invited to attend. Prior to the workshop, KKA staff developed exhibits illustrating possible locations for one to five sports fields on the golf course site. In all options, the sports fields are located in the south and west part of the golf course to minimize impacts on the course, take advantage of unused space and make efficient use of nearby parking areas. See attached layout diagrams A, B, C, and D showing the conceptual location of playing fields on an aerial map of the golf course and the Baylands Athletic Center (Attachment D). Evaluation of Four Alternative Sports Field Layouts The purpose of the workshop was to assess the impact to the golf course as increasing numbers of sports fields are added, in terms of the number of golf holes that would require modification or complete redesign; as well as possible impacts to the regulation/championship status of the golf course; playability; and possible impacts on economic viability, operations and safety. The golf course architect described to the working group the key principles of golf course design and other factors to be considered in redesigning the golf course in response to the addition of sports fields. In addition to the rules of golf and the need to design for an interesting, challenging and enjoyable golf game, the following influencing factors were identified by the golf course architect: • There is a “domino effect” when any part of the golf course is displaced. Change to one hole can ripple through several other holes, increasing the risk that yardage and par of the course will be affected by the change. • Differences between public and private golf courses translate into additional space requirements for public courses. The principal difference is that public courses typically have two or three times the volume of play compared to private clubs. Public courses Attachment D CMR:168:06 Page 4 of 10 must be designed to accommodate 80,000 to 90,000 rounds per year while avoiding crowding and delay. Also, more people are on the course at the same time, and players have a wider range of skill levels, both of which increase risk; however, the general public has a lower tolerance for risk than would be the case at a private club. • The continually changing technology of golf clubs and golf balls requires greater distances between players to provide an acceptable level of safety. • On a flat site with no significant high vertical elements such as groves of mature trees, the safety buffer between fairways, green and tees is provided by distance. Due to salt water intrusion in the Baylands area, establishment of large stands of mature trees for buffering would be difficult to achieve, and redesign of the existing course would result in removal of many of the existing trees. • Golf is incompatible with close adjacency to most other uses due to the risk of bystanders being struck by golf balls. Golf customers knowingly assume that risk when they enter the golf course, but users of adjacent sites do not assume that risk. The risk can be managed through design by providing distance or physical barriers. • The wetlands areas located throughout the golf course are a design constraint. While the wetland areas could be incorporated into the course design, the need to design around them will restrict design choices. Following is a description of the four schematic layouts developed and studied in the workshop, including the number of sports fields added, the number of golf holes impacted, and how additional parking is provided under each option: Layout A. One soccer field is provided in the southwest corner of the golf course. This requires the redesign of four holes on the golf course. Existing paved areas are restriped to provide 50 additional parking spaces at the Baylands Athletic Center parking lot and along one side of Geng Road. Layout B. Two soccer fields are located in the southwest corner of the golf course. One of the fields would displace the existing lake. Eight golf holes would have to be redesigned and reconstructed. In addition to the 50 parking spaces added at the existing Athletic Center parking lot and along Geng Road, a new parking lot with 50 spaces is constructed on the golf course. Layout C. Two soccer fields and one baseball diamond are added in the southwest corner of the golf course and along Embarcadero Road. Ten holes on the golf course would have to be redesigned and reconstructed. In addition to the parking provided in the two previous options, Embarcadero Road would be restriped to provide 32 curbside parking spaces along the north side of the street, and a second new parking lot with 25 spaces would be constructed on the golf course, providing a total of 157 new spaces. Layout D. Four soccer fields and one baseball diamond are added in the southwest corner of the golf course and along Embarcadero Road. This would impact all 18 holes, requiring a complete redesign and reconstruction of the entire golf course. Parking would be provided as in Option C, plus 25 additional spaces constructed on the golf course for a total of 182 new parking spaces. Attachment D CMR:168:06 Page 5 of 10 FOUR SCHEMATIC LAYOUTS STUDIED New Parking Provided Layout Sports Fields Added Golf Holes Impacted Restripe existing paving New paving Total new spaces A 1 4 50 0 50 B 2 8 50 50 100 C 3 10 82 75 157 D 4 or 5 Entire Course 82 100 182 Results of the Analysis of Four Alternative Sports Field Layouts The results of the design exercise indicate that if the golf course is to remain a public 18 hole championship golf course serving current or similar user groups, there is limited space that could be dedicated for active recreation uses without compromising the playability, economic viability, and safety of the golf course. See the attached letter from RTJII dated February 28, 2006 for a more detailed description of its analysis and conclusions (Attachment E). Layout A: One sports field could be added to the existing 18 hole course while retaining the championship status; at least four golf holes would need to be redesigned and reconstructed. Layouts B and C: Adding two or three sports field to the existing golf course would require redesign / reconstruction of a large part of the golf course and may not maintain 18 hole regulation category par and course distance. More detailed design study would be required to determine the precise impact of these changes on the championship status of the golf course. Layout D: Adding 4 or 5 sports fields and the additional required parking would require a total redesign and reconstruction of the golf course. While this provides an opportunity to design a completely different course, the area available for the new golf course would be significantly smaller than the existing course. The area may not be sufficient to provide the regulation length and par of a championship course and also meet the special requirements of a public golf course: accommodate a high volume of play and a wide range of skill levels while minimizing risk of injury from errant golf balls. The addition of four or more playing fields presents a decision point between maintaining championship par and yardage or adding playing fields. The golf course par and yardage could be reduced to provide a smaller non-championship golf course that would meet the volume and safety standards of a public golf course and also provide space for additional playing fields. IMPACT OF SPORTS FIELDS ON CHAMPIONSHIP STATUS OF GOLF COURSE Layout Sports Fields Added Impact on championship status of Golf Course A 1 Unchanged B and C 2 or 3 May be Compromised D 4 or 5 Unlikely to provide an 18 hole championship golf course serving the golfing public without compromising playability and safety Attachment D CMR:168:06 Page 6 of 10 Costs and Financial Feasibilty of the Four Golf Course/Sports Field Alternatives The cost of adding sports fields to the golf course would include the cost of designing and reconstructing the impacted portions of the golf course, the cost of constructing the sports fields and any related parking improvements, golf tenant contract changes (revenue reductions) or buyout of existing leases and contracts, and lost revenue for a period during and following construction when it may take several years to regain the existing customer base. During construction some players will go elsewhere and some may not return when the construction is completed, resulting in lost revenue. The number of golf rounds played at the course is still down from the previous golf course renovation completed in 1999. ORDER OF MAGNITUDE COST ESTIMATES (millions) Layout A B C D Revised Revenue $2.0 $1.3 $0.7 $0.01 Costs Golf Course Redesign $3.0 $6.0 $8.0 $10.0 Sports Fields ($1.5 million/field) $1.5 $3.0 $4.5 $7.5 Continuing Operating Costs $2.6 $1.5 $1.5 $0.5 Tenant Contract Pay Off (High Estimate) $10 $10 $10 Total Financial Impact - $5.1 million - $19.2 million - $23.3 million -$28.0 million Total Assuming Donated Sports Field Construction -$3.6 million -$16.2 million -$18.8 million -$20.5 million Included in the above costs is the City’s Golf Course Corporation’s obligation to pay debt service on the outstanding golf course bonds, about $560,000 annually, which will continue regardless of changes that may be made to the golf course. Certificates of Participation were issued in 1998 with the understanding that the debt would be paid from golf course revenues. Reduction or elimination of revenues during reconstruction of the golf course would shift some or all of this cost to the General Fund. Deciding to fund any of the alternatives would have a significant impact on the City’s budget. The City’s ability to fund current service levels and other priorities would be significantly impacted. Potential Flood Control Solutions In October, the San Francisquito Creek Joint Powers Authority (JPA) and the US Army Corps of Engineers (Corps) initiated a feasibility study for a potential flood damage reduction and ecosystem restoration project on San Francisquito Creek. The study is expected to take five to seven years and will identify and analyze potential options to reduce flooding along the creek. The study products will include a preferred flood control project alternative, an environmental Attachment D CMR:168:06 Page 7 of 10 impact report prepared in conformance with both the California Environmental Quality Act (CEQA) and the National Environmental Policy Act (NEPA), and a cost/benefit analysis that will determine whether future federal funding is warranted for the project. Some of the flood control options that the study will evaluate include modifications to the Palo Alto Municipal Golf Course while others do not. The preferred San Francisquito Creek flood control option identified in the study may be one on the following list or a combination of one or more of the listed options: • Upstream storage reservoir • Series of upstream storm water detention basins • Parallel bypass channel or pipeline to convey excess flood flows • Downstream overflow basin • Channel widening • Construction of higher levees or floodwalls • Bridge modifications Implementation of the bypass channel, overflow basin, and to a lesser extent the channel widening options will require a redesign of at least a portion of the golf course. This introduces the possibility of investigating the potential for a flood control solution incorporating a multi-use flood control/ recreation facility. Public funds may be available to help offset the cost of multiuse recreation facilities, and the City should participate in identifying funding sources if a multiuse flood control option appears feasible. The information gained in this golf course preliminary feasibility study has helped position the City to participate more effectively in exploring a golf/recreation component in a possible multi-use flood control facility. For additional information about possible flood control project impacts on the golf course see Attachment F, Public Works Department memorandum. Private Financing Strategies The City Council memorandum directed staff to consider possible private financing strategies that could help cover the costs of designing and constructing a new golf course and playing fields, and also whether changes to the golf course could encourage redevelopment of nearby private properties. Private commercial or residential development scenarios that would contribute substantially to the cost of redesigning and constructing a new golf course and playing fields do not appear promising at this time. City staff spoke with several golf course developers and with representatives of the owners of the Harbor office park about factors influencing possible golf course/commercial/residential development options. There was consensus among the experts consulted that the Baylands is not a good location for developing a resort hotel with golf course. Residential development was described as potentially feasible only with substantial City involvement that would eliminate the upfront cost and risk for the developer, requiring the City to conduct all development studies and environmental review and provide the developer with a “ready to build” site, and at a scale involving several hundred units on 30 to 50 acres of land. Airport noise and the costs associated with meeting flood zone requirements were also considered impediments to residential development in the Baylands. There is some evidence that the current golf course or an improved golf course may support existing and new private development in the Baylands. The Harbor office complex markets the location amenities of the Attachment D CMR:168:06 Page 8 of 10 Baylands, airport and golf course; however, while some of its tenants use these facilities, they do not consider them to be a really big draw. The owners of Ming’s restaurant are now exploring the feasibility of converting the property they own at the corner of East Bayshore Road and Embarcadero Road from a restaurant to a hotel; they have indicated that the presence of the Palo Alto golf course is seen as an asset, particularly for business visitors. VillaSport Athletic Club and Spa, a health club developer, has expressed an interest in exploring the possibility of leasing land on the golf course to construct a private, family-oriented, full service health club. While usually a private membership club, Villasport is willing to provide for some use of the health club by the public. VillaSport constructs and retains ownership of its facilities and manages the facilities. If the City were to develop a new profit-making golf course, Villasport would pay the City for the right to operate the golf course. These payments to the City, which could be substantive, to lease land for the health club and for the right to operate the golf course could be used to help offset the cost of a new golf course. During preliminary discussions with VillaSport, some of the issues that have been identified that would need to be resolved are use of dedicated parkland, access by the general public, and policy implications of the size of the typical Villasport facility - an 85,000 square feet building with a height of 38 feet located on 8 acres, and related parking and traffic issues. While some golf course developers could be interested in developing a new 18 hole championship golf course on the Palo Alto golf course property, as discussed previously there does not appear to be room on the site for both a public 18 hole championship golf course as well as several playing fields. According to the golf course developers and golf course designers who talked with staff, a golf course developer would want the site as unconstrained as possible. Golf course designer Gary Linn described a scenario that might accommodate both a championship golf course and several sports fields if all constraints were removed from the site by eliminating a major portion of the Bay Trail that runs along the golf course so that the golf holes could be raised and extended out to the levies, and eliminating the wetlands on the golf course and mitigating them on or off site. These changes are possible, but they would involve substantial environmental challenges and increased costs. Some golf course developers also may be interested in developing a smaller non-championship golf course and/or golf practice facilities, such as a nine hole golf course and double deck driving range, and providing sports playing fields, as these facilities can be very profitable. However, some of the golf experts who spoke with staff stated that they believe the market for golf practice facilities is saturated in this area. RESOURCE IMPACT No additional costs are associated with the recommended actions. If the City Council were to pursue other options that are discussed in the report, costs would be incurred, and these are discussed in the report on page 6. POLICY IMPLICATIONS The recommended actions do not represent any change to City policies. ENVIRONMENTAL REVIEW This report is statutorily exempt from the California Environmental Quality Act (CEQA) under Section 15262, Feasibility and Planning Studies. Studies for possible future actions which are Attachment D CMR:168:06 Page 9 of 10 not approved, adopted or funded do not require preparation of an EIR or negative declaration. Environmental review will be required for any future project on the golf course. All of the options discussed in this report would result in a more intense use of the site than the existing golf course use. Some of the environmental issues that would need to be addressed for a future project include the following: • Special status species. The Mitigated Negative Declaration (MND) prepared for the 1994 Golf Course Master Plan found that at that time suitable habitat existed on the golf course to support at least eight special status species, several of which were thought likely to be using the site. • Wetlands and riparian habitat. The 1994 MND identified jurisdictional wetlands in eleven locations on the golf course, totaling 2.51 acres. These wetland areas are required to be protected, or mitigated on or off site if they are removed. While some of the wetland areas were of low habitat value, several were considered potential habitat for special status species. The riparian area of San Francisquito Creek is adjacent to the golf course on the north and west. • Artificial night lighting. Artificial night light in the vicinity of natural areas, particularly coastal environments, is considered a potentially significant environmental impact because of its detrimental affect on basic biological and ecological systems. See Attachment G for the article, “Degraded Darkness”, Conservation in Practice, Spring 2004, and additional reference sources on this topic). • Parking and traffic. Some potential future changes to the golf course would require construction of additional paved parking areas and would result in increased traffic. The intersection at Embarcadero Road and East Bayshore Road currently operates with PM level of service D. • Aesthetics. Construction of buildings and tall fences could impact views and the visual character of the Baylands. • Flooding and seismic risk. The golf course elevation is approximately at sea level with site elevations varying from -4.4 feet in drainage channels to + 7.5 feet at the tops of several greens. The one hundred year (1%) high tide event is 8 feet above sea level. The golf course site has high susceptibility for earthquake liquefaction and ground shaking. • Consistency with relevant plans and policies. Some of the concepts discussed in this report could present possible conflicts with adopted land use and environmental policies in the Comprehensive Plan and the Baylands Master Plan. Attachment D CMR:168:06 Page 10 of 10 PREPARED BY: __________________________________ VIRGINIA WARHEIT Senior Planner DEPARTMENT HEAD: __________________________________ STEVE EMSLIE Director of Planning and Community Environment CITY MANAGER APPROVAL: __________________________________ EMILY HARRISON Assistant City Manager ATTACHMENTS Attachment A: City Council memorandum, March 7, 2005 Attachment B: Size Comparison of different types of golf courses with photos Attachment C: Palo Alto Municipal Golf Course: Size by subarea Attachment D: Golf Course/Sports Field Schematic Layouts A, B, C, and D and Impact/Benefit Assessment Table Attachment E: Letter from Robert Trent Jones II Attachment F: Public Works Department memorandum Attachment G: Artificial Night Light Reference Sources cc: Parks and Recreation Commission Palo Alto Golf Course Advisory Committee Patrycja Bossak, San Francisco Bay Trails Robert Trent Jones II Gary Linn Cynthia D’Agosta, San Francisquito Creek Joint Powers Authority Walter Altholz, VillaSport Timothy Cahill,UBS Realty Investors LLC Attachment D PA L O A LT O G O L F C O U R S E C O N F I G U R AT I O N PR O J E C T | S F C J PA Prepared November 9, 2011 Summary of Public Forum Among Golf Groups & Customers Held: October 24th, 2011, 6:30pm at Palo Alto Golf Course This meeting was advertised and open to the public. The City circulated a sign-in sheet. There were approximately 20 members of the public present, including members of the golf associations. There were also staff members present, representing the golf operators and Parks Department. Kevin Murray (SFCJPA) attended as well. Forrest Richardson had the opportunity to present his work on the reconfiguration of the golf course. The work during the past eight weeks has included course evaluations, an aerial survey and topo map. Six different schematic design options for the course reconfiguration were presented via a PowerPoint presentation that also included background on the San Francisquito Creek, its historic alignments and the early development of the golf course (c. 1956). In addition, based on a request of the city and through a separate contract between Forrest Richardson & Assoc. and the City of Palo Alto, an extended master plan for the entire golf facility (clubhouse and practice areas) was presented in schematic form. Consideration taken into account for the six design concepts were based on likes and dislikes gathered from stakeholders during the first public outreach meeting on August 18th. Additionally, the in-depth analysis of the golf course, re-alignment of the San Francisquito Creek, and staff reports about conditions and issues were a part of the process for coming up with options. The six design options for the course reconfiguration included: A Reconfigure 6.5 holes; least area of impact to the course; lowest overall course improvement B Reconfigure 7.5 holes; low area of impact to the course; low overall course improvement C Reconfigure 8.5 holes; nominal area of impact to the course; considerable overall course improvement D Reconfigure 8.5 holes; nominal area of impact to the course; high overall course improvement E Reconfigure 8.5 holes; large area of impact to the course; high overall course improvement F Reconfigure 12 holes; largest area of impact to the course; high overall course improvement with an accommodation for one soccer field FORREST RICHARDSON &ASSOC. G O L F C O U R S E A R C H I T E C T S D R A F T Attachment E (Summary of Public Forum October 24th, 2011 — Continued) All six schematic design options maintained course length, while reducing 25-40 acres of maintained turf, transforming those areas to native Baylands plants and grasses. Plan Options C, D, E and F have significantly more native landscape introduced than A and B. All of the designs had their own separate costs and impacts to the course. One design option (F) was presented to address the longstanding question of whether athletic fields could be accommodated on the site while preserving the public’s desire to maintain course length and quality. The design (F) presented could not find space for more than one NCAA sized soccer field. This design option shows shared parking with the current sports center west of the golf course and also involves the remodel of seventy-five percent of the golf course (12 holes). This option would be the most expensive reconfiguration approach plus the cost of the soccer field and required separation screening from the golf course area. All designs would allow 9 holes to be open for play during construction. This requirement coincides with the public’s need to play the course during reconfiguration work and meets the operation need to maintain golf customer loyalty and as much revenue as possible. In response to the city’s request for an extended master plan, Brian Curtis of Forrest Richardson & Assoc. presented conceptual plans for the clubhouse site, including parking, practice areas, event areas, cart storage and an on-course rest room. Associated with this work were integration of public trails, an improved entry and a focus on making the golf facility more useful for the non-golfing public. Curtis discussed incorporating the Baylands landscape theme into the master plan and how bringing elements of the reconfigured golf course into the clubhouse areas and entry would be a great benefit. A conceptual site plan (including trails, entry, signage locations, new practice greens, an expanded range tee and an event lawn) was presented. Conceptual building elevations were presented for the clubhouse (expanded 31% to accommodate 250-300 person events, a larger kitchen and grill area, expanded patio areas, additional rest rooms and a small proshop addition); a cart storage building; a Range Performance Center (to accommodate teaching facilities and high-tech video); an on-course rest room; and a bag drop area. The existing cart storage area below the clubhouse would be converted to storage for banquet and proshop inventory, needs that are now not being served. The conceptual elevations use a combination of wood, stone, and glass materials to change the appearance of the 1980s clubhouse and will reinforce the landscape theme that is proposed to bring the Baylands look and feel to the building, breezeways and patio spaces. Curtis presented historical documents showing the original Eichler clubhouse created for the Palo Alto Golf Course. While the goal is not to try and recreate the Eichler building out of the 1980s era building, the design approach was to celebrate the Mid-century Modern era of the 1950s course by adapting the building and grounds to a lower and more light-friendly building. Curtis also spoke of sustainable (LEED) concepts that could be integrated. Among them are recycling of water used in cart washing, window designs to bring light and heat to the building naturally, and more reliance on outdoor areas that do not require conditioned space and artificial ventilation. The clubhouse site area, practice area improvements and clubhouse expansion work could be undertaken all at once or over a period of years. The proposed building concepts, including the outdoor spaces for the bar and grill, wedding lawn, patios, and event area, are all configured to have great impact with the least amount of cost practical. An idea to begin with the Range Performance Center was mentioned as a away to temporarily house the proshop and operations of the course while the clubhouse work was being performed. Attachment E (Summary of Public Forum October 24th, 2011 — Continued) Many of the improvements may increase use and revenue to the City, such as expanding the event areas and seating capacity of the clubhouse. Other improvements, such as trail access to bring bikers and hikers into the clubhouse area for food and beverage offerings, may have nominal impact to revenue, but are important to the overall Baylands trail plan and goals. Questions posed by those attending included the following, with discussion in italics: • Where will the funding originate to complete the improvements? Staff commented that the necessary reconfiguration of the golf course would be funded by the SFCJPA, with areas such as the practice areas and certain improvements not associated with the flood mitigation work needing to be funded by the City. There was also discussion that the overall Master Plan work (clubhouse, parking, etc.) were being undertaken so that informed decisions could be reached and that the best possible planning be considered for the whole facility, not just the portions of the golf course to be reconfigured. • Will the course be open during the reconfiguration work? Forrest Richardson told the audience that at least 9 holes would remain open at all times, and that the goal is to have those holes playing to non-temporary greens. • Will the length of the course be less after the work? Forrest Richardson told the audience that all of the design options retain existing length, but would allow for more flexibility for beginners, seniors and women players. • Will there be more views of the Bay (with higher elevation differences)? Each design option presents a different level of meeting this goal. Options A and B do not provide much more view opportunities than currently enjoyed. Options C, D, E and F provide increased opportunities. • Why was the question of losing a part of the golf course areas for soccer re-visited? Staff reminded the audience that this has been a longstanding question and it was determined that the question should be addressed in concert with the present reconfiguration options. It was pointed out that based on public input in the past, as well as the recent forum held in August, the criteria to maintain length and the type of course desired by the public (regulation length, 6,800 yards) precluded conversion of the golf course to 9 holes or make wholesale changes to a completely different type of (shorter) course. The option showing a soccer field amounts to the threshold of change that could accommodate soccer while still upholding the needs of the length and type of course, and the creek realignment. Forrest Richardson summarized by indicating that the plan options had been evaluated for cost and impact, but that these evaluations were preliminary only at this stage. The pace-of-play consultant, Bill Yates has formed an opinion on the most efficient reconfiguration option from a operations perspective, and this will be used to help zero in on the best option. Following the presentation and questions the audience was invited to review the plans in person and to ask questions. The plans were set out across the room and about half of those attending stayed for as long as an hour to look at details and ask questions about the options and Master Plan. Attachment E (Summary of Public Forum October 24th, 2011 — Continued) Rob de Geus invited the public to also attend the Parks Commission meeting on October 25th. He noted that the same presentation would be made for the Board and that the public would be invited to make comments directly to the Board as they consider the options and master plan implementation. The following comments were gathered from those attending and reviewing the plans: • The clubhouse expansion would be very exciting and is long overdue; several felt that the costs could be justified as much more revenue would be generated from groups • There were concerns over some areas shown on the plans relative to safety; these be addressed as designs are developed and a final approach is selected • Plan D was identified as a favorite among several public participants because it seems to address a lot of the public’s desire for more views, better hole orientation (to wind, etc.) and a more exciting golf course • Plan F was criticized for taking golf course land away in favor of soccer; there was skepticism about whether the course could remain open for play with so many holes impacted • Several attending wanted copies of the plan options so they could review them in more detail; staff noted that they would be made available in the coming week • The idea for a Range Performance Center was liked by several people with comments about how this type of facility would put Palo Alto on the map and result in many more new golfers joining to use the public golf course • There were questions about how many trees would be removed; this question cannot be answered until designs are more developed, but any work would follow the City’s tree ordinance and would take into account the introduction of the Baylands theme and landscape appropriate to the site • Comments were made about the need to incorporate sustainable design to the buildings and how that was all but missing from most areas of the facility in its present state of disrepair and older technology • Several comments applauded the new trails and access to the clubhouse by non-golfers (Prepared 11-9-11) Attachment E ATTACHMENT F 1 Palo Alto Municipal Golf Course -Routing Comparison Study - Introduction At the request of Forrest Richardson and Associates, Pace Manager Systems®was asked to perform an initial comparative study of course routing options for the redesign of the Palo Alto Municipal Golf Course to accommodate the flood channel project. The purpose of this study is to provide insights and recommendations to assist the architect and the City of Palo Alto in selecting the best of the six original routing options presented by the architect. The routing of a golf course plays a major role in determining the time it takes to play the course, the customer’s perceived value of the playing experience,and the ease or difficulty in managing the day-to-day quality of the playing experience. And these critical issues help establish player enjoyment, player loyalty, course reputation, and ultimately, the financial success of the course. This study looks at each of the six (6) proposed routings (identified with the letters A to F), by using six (6) key factors. Those factors are: ·The Pace Rating for each routing (an objective measure of the time it “should take” to play eighteen holes when the course is full) ·The Pace Rating time differential between the front nine and back nine (a small variation in the times makes it easier for the management team to provide more playing options such as multiple tee starts, etc.) ·The predicted flow of play on the course. The goal is to optimize the design and routing to allow for a smooth flow of play with minimum structural waiting times built in. ·The ease or difficulty of managing the proper loading of the course (selecting and enforcing the optimal starting interval based on the course design) Note: this analysis will occur later in the redesign project ·The impact that the distances in traveling from greens to the next tees has on the time to play eighteen holes. Long green to tee distances add more time to the course Pace Rating. ·Player Navigation Success, a consideration of the anticipated ease or difficulty players will have in navigating from hole to hole without confusion as to where to go. Methodology Using scaled drawings, having visited and played the present course routing,and by applying Pace Rating formulae and later our proprietary computer simulation technology to gain insight into the dynamics of flow on each of the routings, the author applied both an objective scale (of 1 to 6 points) to some of the above factors, and a subjective scale (of 1 to 5 points) to the remaining factors. The more subjective elements were applied based on the ATTACHMENT F 2 author’s fifteen years of golf industry experience working with the management teams of courses from around the world, and helping them to improve the pace of play on their courses in order to then realize the benefit of increased revenue through the consistent delivery of high quality and high value (but not high cost) playing experiences. Routing Comparison Chart The following routing comparison chart summarizes the comparative scores for each of the six factors across the routing options (A-F). A B C D E F Pace Rating 2 4 4 3 3 4 Time Differential for Nines 1 3 3 5 4 2 Flow on Course Simulations Loading Course 2 4 4 4 4 4 Green to Tee Distances 1 6 4 5 3 2 Player Navigation Success 4 4 3 3 2 2 TOTAL 10 21 18 20 16 14 Note: Subjective Scale 1-5 (5 is Best) Note: Objective Scale 1-6 (6 is Best) Summary It is the author’s opinion that while with the second highest score, Route Design Option D is selected at this time (flow analysis to come later in the project) as the option that delivers the best overall opportunity to deliver the highest quality playing experience, value, and consistency, while giving the management team the most options for the day-to-day operations of the course.The ranking of Routing Options from the top down is as follows: Option D, Option B, Option C, Option E, Option F, and Option A. Submitted:10/22/11 William M. Yates, Jr. Pace Manager Systems Pebble Beach, CA www.pacemanager.com ATTACHMENT F 3 Routing Comparison Chart with Routing Option G -2/14/12 A B C D E F G Pace Rating 2 4 4 3 3 4 5 Time Differential for Nines 1 3 3 5 4 2 1 Flow on Course Simulations Loading Course 2 4 4 4 4 4 4 Green to Tee Distances 1 6 4 5 3 2 1 Player Navigation Success 4 4 3 3 2 2 2 10 21 18 20 16 14 13 1 Notes from Golf Course Community Meeting Thursday, January 26, 2012 A meeting was held at the Lucie Stern Community Center on Thursday evening, January 26, 2012, to discuss the San Francisquito Creek flood control project and the necessity to reconfigure the Palo Alto Municipal Golf Course. Among the outreach efforts were: Advertisement in Daily Post Advertisement in PA Daily News Advertisement in PA Weekly Airport Athletic Field Users Authors of the Got Space Study City Website Environmental Volunteers Flyers ‐ Libraries, Community Centers, Parks, Golf Course Friends of the Baylands Golf Advisory Committee Neighborhood Associations PA Golf Clubs Parks and Recreation Commission PTA Council Save the Bay The purpose of the community meeting was to: 1. Learn how the Palo Alto Golf Course is being impacted by the realignment of the San Francisquito Creek Levee Project; and 2. Given this unique situation, consider reconfiguration and other alternatives for the Golf Course in the context of the community’s overall parks, open space and recreational needs. There were 85 participants at the community meeting and the feedback received was very informative and will help staff and the City Council better understand community interests. Attachment H 2 The meeting began by asking participants what compelled them to come to the meeting? Staff captured the feedback on large sheets of paper posted on the walls titled, “what the community cares about”. Staff then proceeded with a presentation that included information about the flood control project, history of the Golf Course and a presentation from Golf Course Architect Forrest Richardson who shared design concepts to date. Staff then asked the audience if other challenges or opportunities should be added to the “what the community cares about” wall posts. More feedback was given and added to the wall. We then proceeded with seven break‐out discussion groups of approximately 10 people per group. Staff mixed people up so each group had participants with varied interests. The small group discussions were facilitated by staff. We asked participants to reflect on the “what the community cares about” wall posts around the room that articulated interests, concerns, challenges and opportunities. The small groups were asked to discuss and provide feedback on the most salient opportunities and challenges for addressing Golf Course and other community interests given this unique situation. After 20 minutes of discussion we came back together and heard from each group. The feedback was again added to the “what the community cares about” wall posts around the room. The final exercise was for all participants to take three colored sticker dots and indicate what they believed to be the most important challenges or opportunities for staff and Council to consider as we work toward a decision. A summary of the public comments heard can be seen below. Attachment H 3 COMMENTS RELATED TO INCLUSION OF PLAYING FIELDS AT THE GOLF COURSE SITE Opportunities In lieu of adding playing fields in the Baylands, install lights at existing playing fields to increase the volume and hours of play. We would need buy-in from neighbors of existing playing fields to install lights and address noise issues in the evening (5 dots). This project offers opportunity to identify other areas for new playing fields (3 dots). Baylands offers greater access for playing fields. Work towards a mutually agreeable financial arrangement with PAUSD to include preservation of existing playing fields at Cubberley. If we can't add playing fields near the golf course site, then where? Consider artificial fields first at larger neighborhood parks such as Briones, Pardee, Ramos, Greer so that people don’t have to drive to play. This will greatly increase capacity since fields will not be down for restoration three months out of each year. It also increases the number of hours of play each day from 6 hours to 10 hours. Assess what effect the new artificial turf soccer field at El Camino Park together with the multi-use practice field at El Camino has on meeting field user needs before building three fields at the golf course. Can Edgewood Plaza be converted to playing fields? Considering the percentage of resident youth playing soccer, can the meadow at Foothills Park be converted to playing fields? Two group members felt that if studies are correct and it shows more athletic fields are needed, the city should see to it that our KIDS have a place to play. If soccer fields were to be built it was suggested that for every acre taken for fields we should have equal areas elsewhere that would become natural habitat. This is what Mt. View did when doing their renovations. Attachment H 4 COMMENTS RELATED TO INCLUSION OF PLAYING FIELDS AT THE GOLF COURSE SITE Challenges Baylands is not the right place for playing fields (6 dots). Concerns were expressed about the noise, extra lighting and traffic that would be associated with playing fields located right next to the golf course. We want peace and quiet when we golf (2 dots). Council needs to protect the existing playing fields at Cubberley and ensure they are kept under City control (2 dots). What would be the cost to build & maintain playing fields? (1 dot) Additional fields near the golf course would increase traffic and were concerned on how east of the freeway would become more congested which would possibly cause more roads and a larger footprint in the area. Resolve the conflict between the soccer community and the golf community, and their separate interests. Previous study conducted about adding fields to golf course area showed it was not feasible. Playing fields with synthetic turf (i.e. ground up tires that leech into the ground) is not suitable for the Baylands. If playing fields were created at Baylands we would lose golfers, and revenue would be negatively affected. Doesn't Palo Alto already have enough playing fields, especially considering school sites? Demographics must be considered for future plans. Are we sure of youth projections? Where will field operations money come from? The golf course is self-supporting. Limit impact to golf course by adding just one field instead of three. Soccer doesn’t offer multi-generation play. Is their demand for field space in the same location at the same time? How many playing fields are needed to be used simultaneously? The infrastructure issues facing the City are separate from the golf course configuration. After some discussion on how fields and golf could coexist in the Baylands the group felt this location might not be the best place for these fields. They felt if the fields were natural turf, the goose guano would make them unusable. If synthetic turf was used, there could be lead or other toxins leached into the soil from the recycled rubber. Another comment was that wildlife had been known to digest the small rubber pellets used for topdressing these synthetic fields which could be very harmful to them. If golf course and fields were together, golf balls may end up on the fields or hit players on the fields. Attachment H 5 COMMENTS RELATING SPECIFICALLY TO GOLF Opportunities Like proposed enhancements to course (5 dots). Golf has a positive impact on the well-being of youth (4 dots). Make modifications to practice area to introduce more youth to golf; make the course smaller and youth-friendly (i.e. Mariner's Point Facility in Foster City). (3 dots) Would like to see a 9-hole course (1 dot). Opportunity to allow more youth of East Palo Alto to learn the game, and embrace the golf course. As one of Council's five priorities for both 2010 & 2011, the long term plan for the golf course is tied to the Council's priority of youth well-being. The golf course offers a venue to experience many of the assets described in the 41 Developmental Assets adopted by the City & PAUSD (Developmental Assets Initiative). Opportunity to create more incentives for non-resident golfers to play in PA which would increase revenue. Palo Alto Muni is the only golf course in Palo Alto. Stanford and PA Hills have use restrictions and are very expensive. Stanford alumni pay $100 per round. Golf is a multigenerational game; great for seniors, great for kids, great for all ages, can be played from cradle to grave. Golf is "more than a game" and offers youth the opportunity to learn many life skills. Prefer the Stanford driving range because of the quality of the experience; opportunity exists to improve the quality of experience at Baylands, if the practice facility and golf course were improved I would play more golf in Palo Alto. The First Tee has been conducting its classes in life skills education through golf at PA Muni since 2009. Over 100 Palo Alto-area youth participated in 2011, and they hope to expand the program at PA Muni to over 500 participants annually by 2015. They are eager to raise the necessary funds to develop expanded practice areas for participants and the general public. Attachment H 6 COMMENTS RELATING SPECIFICALLY TO GOLF Challenges Concern expressed about keeping the golf course, they do not want to close the course permanently (18 dots). Desire to keep the length and quality of the golf course (15 dots). How do we keep a portion of the course open during the levee project (7 dots)? If we don't address the geese problem, it doesn’t matter what improvements you make at the course (5 dots). Concern expressed over losing play and/or customers because of changes to the course that may make play more difficult (3 dots). Love the idea of a more interesting golf course, but deeply concerned about the significant increase in fees that would be associated with the high end improvement plans. It is important to keep our prices consistent with other local municipal golf courses (2 dots). Concern was expressed about increasing fees to be out of line with the local market for existing golfers (1 dot). Prefer to leave the course as it is since it’s a good value. Golfers want to maintain a safe golf course, and prefer the course be interesting to play. The City only has one golf course, and there are already multiple athletic fields. It doesn’t make sense to add fields to the course, which will dramatically reduce the functionality, profitability, and overall value of the course. One participant noted that shortening the course would be an unacceptable outcome. A female participant noted that shortening the course would be an acceptable change if it meant there would be more of a “wow” factor on the course. Ensure quality of play, regardless if golf or other sports, is at a high standard otherwise will lose users. The Palo Alto Golf Course is the practice facility and home course for PALY and Gunn golf teams and the San Jose Regional Chapter course for The First Tee. If the golf course closes, what happens to these groups? Attachment H 7 COMMENTS REGARDING WILDLIFE HABITAT AT THE GOLF COURSE SITE Opportunities The levee project offers a great opportunity to enhance the current natural wildlife habitat and make a better golf course. Would like to add natural habitat. Challenges Habitat will be negatively impacted (11 dots). Lighting playing fields at night has been known to disrupt wildlife & bird habitat, this is a problem (1 dot). Concern was expressed about protecting sensitive areas at the golf course that go all the way up San Francisquito Creek to Jasper Ridge in the Santa Cruz Mountains. It appears that San Francisquito Creek is the main corridor for a number of animals including the gray fox. It seems that all around us there is an emphasis on preserving open space for habitat. Why would Palo Alto go against that and develop playing fields on a golf course that provides a lot of open space habitat? Wildlife has been known to digest the small rubber pellets used for topdressing on synthetic fields which could be harmful to them. What mitigation is proposed with the creation of playing fields? Habitat can coexist with Golf. How do we replace habitat lost to fields? Attachment H 8 FINANCIAL CONSIDERATIONS REGARDING THE GOLF COURSE RECONFIGURATION & IMPROVEMENTS Opportunities Leverage the levee project monies for an upgraded reconfigured golf course. We would be willing to pay more (no more than $10) in fees to play on a better course. It is important that the new facility (whether as golf course or with fields) is financially sustainable through revenue. Challenges Financing: How much will it cost? Who will pay for it? (9 dots) Without information about how much each option is going to cost and who is going to pay for it, Option A seems to be the most feasible. Concern about the price of improvements being passed on to existing golf community, and pricing the course out of the local market. The golf course needs to pay for itself; it shouldn’t matter if the users are residents or not if it pays for itself. The cost to the City of closing the golf course in the past was $500,000, but the changes made did not make the course more interesting and were not thoughtful in design. Attachment H 9 COMMENTS RELATED TO LONG-RANGE PLANNING AT THE GOLF COURSE SITE Opportunities Expanding golf course to non-golfers by the Clubhouse facility (events, weddings, meals) which brings in revenue (5 dots). Like the idea of making the golf course a destination for non-golfers; create biking trails and walking trails, offer bike rentals, more access to clubhouse (i.e. coffee in am, sandwiches during the day, restaurant and lounge in the evening (3 dots). Create a centralized sports facility or complex (1 dot). Can multiple user groups share a common space? Explore building a rental sports complex such as Twin Creeks Sports Complex in Sunnyvale. Because of the fine dining and the Baylands that Palo Alto has to offer it is a destination location which would only improve with the improvements to the golf course. Challenges Parking: Athletic Center parking is already inadequate. Can we get cooperative interests to be compatible? Plan G could be a workable compromise. However, consider traffic impacts, impacts to habitat (golf links are viable habitat; fields are not), playing fields would only be used by older teens or adults. Concern about the time crunch with the levee project, and those decisions will be rushed. Attachment H ATTACHMENT I Memorandum DATE:January 18, 2012 TO:Rob de Geus, Division Manager, Recreation Services FROM:Shia Geminder, Recreation Supervisor SUBJ:Current demand for soccer fields BACKGROUND The City of Palo Alto Recreation Division brokers all City of Palo Alto and PAUSD fields. These include 16 parks, 5 sports complexes, 14 elementary schools, and 3 middle schools. The City works regularly with 34 local sports clubs and non-profits that represent approximately 25,000 participants. Two things are clear: athletic field space in Palo Alto is in high demand for limited space, and the demand continues to increase each year due to a variety of factors: many programs now have year-round seasons, new housing units, the growing number of girls involved in team sports, growing number of new sports organizations (e.g. lacrosse, rugby), etc. In 2002 the City formed a citizen’s Field Advisory Committee comprised of representatives of youth and adult sports organizations in Palo Alto. For almost a year, the Committee worked tirelessly to understand the issues and recommend solutions. A report of their findings was subsequently presented to Council. The message was clear. Demand for field space exceeded the supply at the time. Both near and long term solutions were presented in the final report. The near term potential solutions consisted mainly of enhancing and leveraging existing field space through the use of synthetic turf and lights, when possible. The longer term potential solutions consisted of multi-party and regional approaches as well as the development of new facilities. DISCUSSION Fast forward to 2012. What actions has the City of Palo Alto taken to address the near term and long term field space solutions presented by the Field Advisory Committee in 2002? Near term solutions: First, the Cubberley Community Center football field is now a synthetic turf year round soccer field. Unfortunately, due to the proximity of adjacent neighbors, no lights were installed. Second, El Camino Park is currently undergoing a major renovation and once complete will have a synthetic turf soccer/lacrosse field and will eventually have lights. Long term solutions: The Stanford/Palo Alto Playing Fields were opened for use in 2006. Both fields have lights, are synthetic turf and have added approximately 6,000 hours of additional field use per year. This is an example of a combination of the near and long term solutions. In 2008, City Council adopted a formal Field Use Policy which establishes policies and procedures governing the use of City of Palo Alto parks and playing fields and ensures Palo Alto residents have priority access to these fields. The field brokering process is much more efficient in allocating the current supply of field space than it was in 2002. ATTACHMENT I Who is currently using Palo Alto soccer fields? The latest Palo Alto residency verification of the four major youth soccer clubs is as follows: 1.AYSO –95% 2.Palo Alto Soccer Club –70% 3.Stanford Soccer Club –78% 4.PSV Union Football Club –52% Other major field users are as follows: 1.Palo Alto Little League –90% 2.Palo Alto Girls Softball –88% 3.Palo Alto Babe Ruth –52% 4.Tomahawks Lacrosse –59% 5.Palo Alto Adult Soccer League –40% 6.Palo Alto Coed Soccer League –16% 7.Silicon Valley Soccer Association –14% Currently, all Palo Alto resident, youth non-profit organizations or leagues are having their field “needs”met with our Field Use Policy. Field “wants” is a whole different story. Some clubs want to be able to practice five days a week, others want to use Mayfield on Monday and Wednesday evenings at 7:00 pm (currently reserved for adults), yet others want all their teams practicing at the same sports complex. In recent discussions with various youth club representatives, it is clear there is still a tremendous demand for fields; however, the current supply is working. Space is adequate at this time. Clubs make do with their allocated field space each season and kids are not being turned away from participating due to lack of field space. Some feel that adding additional soccer fields at the Baylands is not ideal for younger youth players (cold, near freeway, far from home), as it is better to have kids playing closer to home or in their own neighborhoods. Any additional soccer fields at the Baylands would cater more to tournament directors, competitive regional youth sports clubs and non-Palo Alto sports organizations (those that do not meet our 51% residency threshold)that are currently being turned away from Palo Alto fields or are not getting as much field time as they would like. A few representatives would certainly advocate for more playing fields, even at the Baylands, for the older youth players. Adding additional soccer fields would help mitigate concerns by neighbors who are impacted by organized sports use on neighborhood parks (Seale, Pardee). It would also allow non-PAUSD schools in Palo Alto the chance to secure field space for their own programs. (Castilleja, Bowman International, Kehillah High School, Gideon Hausner, ISTP, Girls Middle School, Keys School, etc.) Adult sports clubs would certainly argue that more fields are, in fact, needed due to youth sports organizations having top priority for field space. P A L O A L T O G O L F C O U R S E I n t e r i m C o u r s e C o n f i g u r a t i o n F ORREST R ICHARDSON G O L F CO U R S E A RC H I T E C T www.golfgroupltd.com Drawn Februar y 13, 2012 Plan F “Stage 1”• Build 3 New Greens• Build 3 New Tee Complexes• Build 5 Acres “Baylands” Area• Build 7.5 Acres New of Fairways• Construct 3 Temporar y Tee Complexes 1 5 539 506 4912 4 418 395 3593 3 201 146 964 4/5 431 407 4075 4 392 374 3536 4 439 392 3707 4 351 305 2788 3 192 153 1339 5 536 514 500 Out 36/37 3499 3192 2987 10 4 319 295 25711 3 168 148 10312 4 340 330 30013 3 165 135 10014 5 520 500 42015 5 550 530 44016 3 165 150 13517 4 330 305 27518 4 402 373 328 In 35/35 2959 2766 2358 71/72 6458 5958 5345 0 200 400 600 800 feet Nor thWind San Francisquito CreekMitigation Area 10 11 T 18 12 17 T 13 1416T T 15 Attachment J P A L O A L T O G O L F C O U R S E I n t e r i m C o u r s e C o n f i g u r a t i o n F ORREST R ICHARDSON G O L F CO U R S E A RC H I T E C T www.golfgroupltd.com Drawn Februar y 13, 2012 Plan G “Stage 1”• Build 4 New Greens• Build 4 New Tee Complexes• Build 5 Acres “Baylands” Area• Build 10 Acres New of Fairways• Construct 2 Temporar y Tee Complexes 1 5 539 506 4912 4 418 395 3593 3 201 146 964 4/5 431 407 4075 4 392 374 3536 4 439 392 3707 4 351 305 2788 3 192 153 1339 5 536 514 500 Out 36/37 3499 3192 2987 10 4 319 295 25711 3 168 148 10312 4 340 330 30013 3 150 135 10014 5 515 490 41015 4 405 385 32516 3 160 145 11517 4 330 305 27518 4 402 373 328 In 34/34 2789 2606 2213 70/71 6288 5798 5200 0 200 400 600 800 feet Nor thWind San Francisquito CreekMitigation Area 10 11 T 18 12 17 T 13 14 16 T 15 Attachment J Financial Pro Formas and Supporting Analysis forReconfiguration Options A, D, F, G ForPalo Alto Municipal Golf Course Prepared For: Cityof Palo Alto Rob deGeus,DivisionManager Recreation &Golf Services 1305 Middlefield Road Palo Alto, CA 94301 Prepared By: 1150 SouthU.S.HighwayOne, Suite 401 Jupiter,FL 33477 (561)744-6006 February, 2012 Financial Pro Formas andSupporting Analysis for Reconfiguration Options A, D, F, G Palo AltoMunicipal Golf Course Table of Contents INTRODUCTION.......................................................................................................................1 PALO ALTO MUNICIPAL GOLF COURSE RECONFIGURATIONOPTIONS..........................2 Goals andObjectives..........................................................................................................2 Option A..............................................................................................................................3 AdditionalWork.............................................................................................................................4 Option D..............................................................................................................................4 AdditionalWork.............................................................................................................................5 Option F..............................................................................................................................5 AdditionalWork.............................................................................................................................6 OptionG.............................................................................................................................7 AdditionalWork.............................................................................................................................8 Defermentof CertainImprovements...................................................................................9 MARKETOVERVIEW..............................................................................................................10 Demographics Summary....................................................................................................10 Golf MarketOverview.........................................................................................................11 NationalTrends inGolf DemandandSupply..............................................................................11 Local and RegionalGolf SupplyandDemandIndicators............................................................13 Competitive Golf Market.....................................................................................................15 SummaryInformation– PrimaryCompetitors.............................................................................16 Summaryof Findings – PrimaryCompetitors .............................................................................18 Palo Alto Golf CourseMarketPositioning Assessment......................................................19 FINANCIAL PERFORMANCE MODELS FORPALO ALTO GOLFCOURSE.........................20 Projections Basedon“Option A”........................................................................................20 KeyAssumptions.........................................................................................................................20 ProFormaEstimatefor ‘Option A’Scenario–FY2012 –FY2021..............................................24 Projections Basedon“Option D”........................................................................................27 KeyAssumptions.........................................................................................................................27 ProFormaEstimatefor ‘Option D’ Scenario –FY2012 –FY2021..............................................30 Projections Basedon“Option F”........................................................................................33 KeyAssumptions.........................................................................................................................33 ProFormaEstimatefor ‘Option F’ Scenario –FY2012 –FY2021..............................................34 Projections Basedon“Option G”........................................................................................37 KeyAssumptions.........................................................................................................................37 ProFormaEstimatefor ‘Option G’ Scenario– FY2012 –FY2021.............................................40 FinancialProjectionsSummary..........................................................................................43 Summaryof Options....................................................................................................................43 SummaryResults........................................................................................................................45 Justifications for Revenue Projections........................................................................................45 Other Considerations Regarding ImprovementOptions.............................................................46 OTHERISSUES ANDCONSIDERATIONS..............................................................................48 Market Position /Re-Branding Opportunity........................................................................48 Economics of PotentialLong-Term/ AdditionalImprovements...........................................50 CartStorage Building..................................................................................................................50 Expanded Meeting Space...........................................................................................................51 RangePerformanceCenter ........................................................................................................51 Management Structure.......................................................................................................52 Long RangeConcerns.......................................................................................................53 PotentialEconomicDevelopmentOfTheAirport& Golf “Baylands Gateway” Area............56 Private Funding Possibilities..............................................................................................57 APPENDICES...........................................................................................................................58 AppendixA – Comparative SupplyRatios – PaloAlto GC& KeyMunicipal Competitors...59 AppendixB – Comparative Scoring of Reconfiguration Options.........................................60 AppendixC–Water &Power Use Discussion &Assumptions...........................................63 AppendixD– ReviewOf Probable Cost Estimates............................................................66 AppendixE – PotentialLong-Term MasterPlan Improvements..........................................68 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –1 Introduction NationalGolf FoundationConsulting,Inc. was retained bythe Cityof PaloAlto infurtheranceof the City’s due diligencerelative to theSan FrancisquitoCreek Flood ControlProject,which will involve the reconfiguration of sixholes atthePalo AltoGolf Course. NGF’s objective was to help the Cityidentifytheexpectedfinancialimpactfromthe improvementsrelatedtothe reconfiguration work under PlanOptionsA,D, F,and G. Specifically, NGFhas crafted10-year cashflowproformasthatprojectthe estimatednet financialimpactof theproposed improvements, allowing the Cityto evaluate eachof thefour reconfiguration options under considerationfroman objective standpoint.Ouranalysis includes expected impactonrounds played,feestructure,revenue generation, operating expenses,and capitalspending/debt.The proformasalso provide an estimateforlostrevenues during thetime thatthecourse is impacted and/or closed. Other aspectsof theNGF reviewinclude: A marketoverviewof thePalo Alto area,with an emphasis onareademographics andkeygolf demand and supplyindicators. A competitive review, including aqualitative assessment ofthe impactthatthe potentialreconfigurations would have on Palo Alto Golf Course’smarket/competitive position. A reviewof Forrest Richardson’s work regarding the potentialimplicationsfromthe renovation options onfacilitybranding andmarketing. NGF willalso offeritsopinion aboutthe long-termimplications and potentialfinancial impactof improvementsassociated with thelonger rangemaster plan, including clubhouse expansion, cartstorage,event areas,rangeperformancecenter,range enlargement, entry/parking, andtheyouthtraining area. NGF willevaluate relevant options available to the Cityof Palo Altoforthecontinued operation of Palo AltoGolf Course, including (butnotlimitedto)continuing on anas- is basis oroutsourcing allmanagementandmaintenance toafull-service managementcompany.Viable options willbe identified, andadiscussionof the costs, benefits, andfinancialimplications of eachoperating scenario presented. Thestudyeffortwas managedbyNGF Directorof Consulting Services Richard B.Singerand Senior ProjectDirector Ed Getherall.Activities conducted incompletionofthis reportincluded: fieldresearch;statisticalandfinancialanalysis; meetingswithkeyCitystafffromthe Recreation & Golf Services, Administration, CommunityServices, andFinance Departments;meetingswith the HeadGolf Professional, Golf Course Superintendent, andValleyCrest Area Director;atour of thegolf course;and,interviews with areagolfers. Following is theconsultants’reportsummarizing keyfindings andrecommendations. Throughoutthisreport, we mayrefertoshortenednamesfor:the Cityof Palo Alto (“City”),the Palo Alto MunicipalGolf Course (“Palo AltoGolfCourse”,“PaloAltoGC”or “PAGC”),and NationalGolf FoundationConsulting,Inc.(“NGFConsulting”or“NGF”). National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –2 Palo Alto Municipal Golf Course Reconfiguration Options NGF Consulting was provided fourcoursereconfiguration options prepared byForrest Richardson, ASGCA.These optionswere identified bythetitles“Option A,”Option D,”“Option F” and“OptionG,”and each have uniquecharacteristics.The optionsrepresentfourpossible scenariosforadjusting the coursetoaccommodate theSFCJPAfloodmitigation project. OptionsA,D, FandGwere culledfrom seven proposed alternatives (Options B,C,and E were eliminated priortoourreview) as themost viable and potentiallyopportuneforthe City. Theprocessfordeveloping options has beenthorough, with extensive inputfromgolfers, staff, concessionaires andthepublic at large. NGF Consulting hasreviewed notes and summaries fromthesemeetingsto better understandthegoals and objectives desiredbythose who will use and operatethefacilityfollowing reconfiguration. GOALS ANDOBJECTIVES Among thegoalsand objectives setforthtoguidethe design processforreconfiguration options, inadditiontothefundamentalgoaltoaccommodatetheflood project,included: Establish amorenatural,aesthetic landscapethatincorporatesa“Baylands”theme Improve treecare andvarietyvia a themeto useappropriatetree selection Find ways to eliminategeese and burrowing animalsfromruining thecourse Improve bunkers(condition, strategyand aesthetics) Improve overallcourse conditioning (drainage,irrigation,turf,etc.) Adjustyardagesothecourse isshorterfor beginners,women and seniors Create a“wowfactor”toremain competitive with otherregionalfacilities Add interesttothecourse strategy(dog-legs,differentiation ofholes, etc.) Find ways to offer player development opportunities (shortgame area,range, etc.) Additionally, therewas astrong desiretoaddresslong range issuesthatface theagingfacility beyond those onthegolf courseitself.The Citycommissioned its own scope of work toaddress these issuesconcurrently with the coursereconfiguration planning.Theselong rangeareas included thefollowing: Clubhouse planning Entry, parking andsignage Practice areas Cartstorage andstaging On-courserestrooms Branding and image Trailconnectionsfromthe Baylands and existing trails National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –3 Theobjective of the additionallong-rangeplanning was to look beyond thegolf coursetoensure thatreconfiguration options would not precludeimprovementstotheareason theabove list. Specificgoals andobjectives included thefollowing: Find ways to bring non-golferstothefacilities (group events,restaurant,etc.) Expand the clubhousetoseat200so largergroups can beaccommodated Develop areas to hold multiple outings/eventssimultaneously Improve the arrivalexperience, entryaesthetics,trailconnections andsecurity Develop a cartstorage area/facility Make overallimprovementstotheclubhouse andgrounds(exterior andinterior) Improve and expand thepracticerange Create newplayer developmentand practice opportunities Planforupgrading the on-courserestroomfacility Develop a newbrand and imageconsistent with the reconfigurationgoalsand design A commonthreadamong thelong rangeplanning componentswas a strong designtoreturnthe facilities, withgolf courseapproaching its 60th year andtheclubhouse its30th, toa“Point of Pride” statuswithin the community.Along with this primaryobjective comethebenefits of leveraging thefacilityforeconomic development,tourism and asa hometoannualandspecial events. Secondarily, thecommunityhas astrong desire toseethegolf course bemore compatible with theBaylands environment.Thisgoalisechoed byMr. Richardson inhis reconfiguration options,each of which adds morenaturalized areas tothegolf course.In addition, long range designconcepts associatedwith theclubhouse,entryand imagegohand- in-hand with thisgoal. OPTION A Option Arepresentstheminimumreconfiguration in ordertofacilitatetheSan Francisquito Creek realignmentasrequiredbythe SFCJPA.This option shiftsholes laterallyfromwest to east,retaining muchofthe samerouting ofthe existing course.Golf holes aremoved awayfrom the levee on aminimalbasis.Improvementsareprimarilyrestrictedtotheholesmoved, with the remaining holes largelyunchanged. Bunker work and naturalization enhancements aremade throughoutthe courseinordertoprovide amoreconsistentgolf experience and landscape. Thehighlightsof changes in thisoption include: 6.5golf holesrelocated 5 newgreens constructed Par 72 6,900/ 6,500/ 5,200 yards Allbunkersreconstructed and/or new 38.5 acrestransformedto naturalized areas (non-managedturf) Revised Hole No. 18 (naturalized hazard) AdjustedHole No.12 AdjustedHole Nos.13 and 14 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –4 The totalprojected cost forthisoptionis$3,537,622,includingall professionalfees, project managementand contingency. Additional Work Additional(“alternate”)items within thegolf course itself maybe undertaken bythe City concurrentlywith the development ofOption A.These optionalitemsinclude: Sand capping of newturfareas(newfairways to be constructed) Use (spreading) of imported soilfromthe Stanford University MedicalCenterProject Reconstruction of allgreens (13additionaltothose covered) Re-turfing of allexistingfairways (23.5 acresadditional) Replacement ofthebalance of theexisting irrigation system Reconstruction andfeatures atthe existing practicegreenarea Construction of anewon-courserestroomfacility Projected Costfor AdditionalItems: $3,250,500 Among the additional(alternate) work,Mr. Richardson and NGFrecognize thatthefull replacement ofthe existing irrigationsystemwillbecome aneventualnecessity. Our understanding isthattheexisting system,installed in 1998,presentsregular issuesdueto deteriorating pipefittings. Nowentering its 14th year of service, thesystem isonthe decline due tothe highsalts inherentwithin the soils. Even if the balance ofthe systemremains in commissionfor anothersixyears (20 years isareasonable longevityforirrigation systems) thereexistsgood probabilitythat emergencyrepairs andcostsmayescalate. Forthis reason, we have studied this additionalcost($857,500)as an alternative scopetobe consideredfor Option A. OPTION D Option Drepresents anenhanced reconfiguration versionfromOption A.This optionfacilitates the SanFrancisquitoCreek realignment asrequired bythe SFCJPA.Theprimarydifference fromOptionA isthatOption Drealignsholes withmorevariety, departingfromthe common parallelrouting ofthe existing course.Golf holesaremoved awayfromthe levee, butgo beyond Option Atoform newviews and variation. Bunkerwork and naturalization enhancements are madethroughoutthecourse in ordertoprovide amoreconsistentgolf experience and landscape.Thesearemore prevalent thanthat affordedthroughOptionA. Thehighlightsof changes in thisoption include: 8.5golf holesrelocated 8 newgreens constructed Par 72 6,900/ 6,400/ 5,000 yards Allbunkersreconstructed and/or new 43 acrestransformedtonaturalized areas(non-managedturf) NewIsland GreenHoleNo. 13(elevated teeandBayview) NewDouble Green Nos.3 and 15 NewHole No. 5 (elevatedgreenand BayView) NewHole No. 7 (splitfairway) National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –5 NewHole No. 18 (par-5and naturalized hazard) NewHole No. 4 NewHole No. 17 NewHole No. 16 Futurespace affordedfor anewpracticegreen/shortgamearea The totalprojected cost forthisoptionis$4,118,748,includingall professionalfees, project managementand contingency. Additional Work Additional(“alternate”)items within thegolf course itself maybe undertaken bythe City concurrentlywith the development ofOption D.These optionalitemsinclude: Sand capping of newturfareas(newfairways to be constructed) Use (spreading) of imported soilfromthe Stanford University MedicalCenterProject Reconstruction of allgreens (10additionaltothose covered) Re-turfing of allexistingfairways (21.5 acresadditional) Replacement ofthebalance of theexisting irrigation system Reconstruction andfeatures atthe existing practicegreenarea Construction of anewon-courserestroomfacility Futuredevelopment of anewpracticegreen/shortgamearea Projected Costfor AdditionalItems: $3,096,250 As with Option A, we recognize thatthefullreplacementof theexisting irrigation systemwill become aneventualnecessity.The samecomments applytoOption DasnotedforOption A. Wehave studiedtheadditionalcost($740,000), which is lowerforOptionDasmoreof the existing systemis covered within areas impactedbythe reconfiguration, as an alternative scope to beconsideredforOption D. OPTION F Option Frepresents anopportunitytoremove landfromgolf courseuseand transformittouse forathleticfield(s).Thisoption was added tothereconfiguration scopeofthegolf course architect basedon previous studieswith thesame objective. ForOption F, ageneralconstraint placed on the planning work was toretain yardage (6,800 yards)anda par of 72. Safetyfrom the newtrailsystem andwithin adjoining holes was tobemaintained with no compromiseto standardguidelines. Option Ffacilitatesthe San FrancisquitoCreek realignment asrequiredbytheSFCJPA.The option is primarilydistinguished bytheremovalof approximately2.5 acresfromthegolf course parcel.Thisland areaisshown as athleticfielduse, accommodating afullNCAA sized soccer field orcombinationoffields andfieldtypes of thesame proportion andarea.This area would have limited roomforparking expansion. Option Frealigns holeswith more varietythaninOption A. Aswith Option D,thereconfiguration departsfromthecommon parallelrouting of theexisting course.Golf holes aremoved away fromthe levee toformnewviews and variation. Bunker work andnaturalization enhancements aremadethroughoutthecoursein ordertoprovide amoreconsistentgolf experience and National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –6 landscape. Asaresultof the“domino effect”of moving holes tomakeroomfortheathleticfield area,theseenhancements are asprevalent asthat affordedthroughOption D. Thehighlightsof changes in thisoption include: 12.5golf holesrelocated 12 newgreens constructed Par 72 6,700/ 6,300/ 5,000 yards Allbunkersreconstructed and/or new 43.4 acrestransformedto naturalized areas (non-managedturf) NewIsland GreenHoleNo. 13(elevated teeandBayview) NewDouble Green Nos.3 and 15 NewHole No. 5 (elevatedgreenand BayView) NewHole No. 7 (splitfairway) Revised Hole No. 18 (naturalized hazard) NewHole No. 4 NewHole No. 17 NewHole No. 16 NewHole No. 3 NewHole No. 3 NewHole No. 15 Newpracticegreen/shortgameareadeveloped along with reconfiguration Temporarypreparation ofthe athleticfieldarea(notfield development or improvement) The totalprojected cost forthisoptionis$5,855,454,includingall professionalfees, project managementand contingency. Additional Work Additional(“alternate”)items within thegolf course itself maybe undertaken bythe City concurrentlywith the development ofOption F.These optionalitemsinclude: Sand capping of newturfareas(newfairways to be constructed) Use (spreading) of imported soilfromthe Stanford University MedicalCenterProject Reconstruction of allgreens (10additionaltothose covered) Re-turfing of allexistingfairways (21.5 acresadditional) Replacement ofthebalance of theexisting irrigation system Reconstruction andfeatures atthe existing practicegreenarea Construction of anewon-courserestroomfacility Projected Costfor AdditionalItems: $2,530,000 As with OptionsA andD,we recognize thatthefullreplacement ofthe existing irrigation system willbecome an eventualnecessity.ThesamecommentsapplytoOptionF as notedforprevious National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –7 options.Wehave studied theadditionalcost($425,000), which is lowerforOption F(thanfor A or D)asmore ofthe existing systemis coveredwithin areasimpactedbythe reconfiguration, as an alternative scopeto be consideredforOptionF. OPTION G OptionGrepresents aplan toremove more landfromgolf courseuse,transformingthis landto useformultiple athleticfield and non-golf recreation purposes.This optionwas added tothe reconfiguration scopeofthegolf course architectbased onthe direction oftheCityto investigate whethertheviabilityof thegolf coursecould be preserved while opening more area (thanwith OptionF)for non-golf recreation. Theconstraintplaced ontheplanning work wasto retain aregulation layout with a par of 70or 71. Safetyfromthenewtrailsystem and within adjoining holes was to bemaintained with no compromisetostandardguidelines. NGF Consulting was inthe veryearlystages of our consulting workforthe Citywhen OptionG was put intomotion. Among theforemostquestions we were askedwas whethera significantly shorter courseand/or asignificantlylower par would be advisable fortheCityof Palo Alto.Our conclusion was thatthePalo Alto market,especiallyin the City’s situation as asingle-course owner, is bestserved in this locale bya regulation18-holegolf course witha parof 72 being preferred.Thisconclusion is basedon severalfactors, including thefollowing: A strong historyof thisgolf course producing annualrounds inexcess of 80,000 Statedpreferencesbythe currentcustomer basetomaintain lengthand par Viabilityto hostgroupgolf events“demanding”afull-lengthcourseexperience Competitiveness toareacourses Long termviabilityto hostregionalevents (qualifying, largertournaments,etc.) Regionalofferingsof shortercourses Plan options thataccommodatemoreflexible (shorter)yardagesflexibilityas part of thereconfiguration work NGF Consulting sharedthis conclusion with the Cityand thegolf coursearchitect, recommending thatOption Gshould,if possible,preserve aregulation length of about 6,500 yards (back tees) andapar of 72preferred.If pressed tochoosebetweena reduction in par(to 71) or areduction in yardagelower than 6,500,we opined that it would bebetterto preserve yardage at 6,500 andallowpar to dropto71.(Note:A par71coursemeasuring 6,500yards is perceived as more difficult, andcanbemarketedsuch,thana coursemeasuring thesame yardage but holding apar of 72.Thisis becausethe ratio of partoyardage ismore challenging.) OptionGalsofacilitatesthe San Francisquito Creek realignment asrequired bythe SFCJPA. Theoption involves the removalof approximately10.5 acresfromthegolf course parcel.This land area isshown as athleticfield use(threefullsized NCAA soccerfields orcombination of fieldsandfieldtypes of the sameproportionandarea), andadditionallyshows areasfor asmall playground, wetlands park andpicnic space, andtrails connecting tothe San Francisquito Creek levee trails,Baylands and neighborhood. OptionGrealigns holeswith more varietythaninOption A. Aswith Option Dand F,the reconfiguration departsfromthe common parallelrouting ofthe existing course.Golf holesare moved awayfromthe levee toformnewviews and variation. Bunker work and naturalization National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –8 enhancements aremadethroughoutthecourse inorderto provide a moreconsistentgolf experience and landscape. Aswith OptionF,buteven more noticeable,virtuallyallareas ofthe existing course would be reconstructed, enhanced and improved. Thehighlightsof changes in thisoption include: 15golf holesrelocated 15 newgreens constructed Par 71 6,600/ 6,100/ 5,000 yards Allbunkersreconstructed and/or new 66 acrestransformedtonaturalized areas(non-managedturf) IrrigatedTurf Reducedfrom 135acresto 92acres NewIsland GreenHoleNo. 12(elevated teeandBayview) NewDouble Green Nos.3 and 15 NewHole No. 5 (elevatedgreenand BayView) NewHole No. 7 (splitfairway) NewHole No. 18 (par-5,naturalized hazard) NewHole No. 4 NewHole No. 14 NewHole No. 10 NewHole No. 17 NewHole No. 16 NewHole No. 3 NewHole No. 3 NewHole No. 15 Newpracticegreen/shortgameareadeveloped along with reconfiguration Fullirrigation systemreplacement(allareas ofthe18-holegolf course) Temporarypreparation ofthefield/recreation area(notfield development or improvement) The totalprojected cost forthisoptionis$7,034,748,includingall professionalfees, project managementand contingency. Additional Work Additional(“alternate”)items within thegolf course itself maybe undertaken bythe City concurrentlywith the development ofOptionG.These optionalitemsinclude: Sand capping of newturfareas(newfairways to be constructed) Use (spreading) of imported soilfromthe Stanford University MedicalCenterProject Reconstruction of allgreens (10additionaltothose covered) Re-turfing of allexistingfairways (21.5 acresadditional) Replacement ofthebalance of theexisting irrigation system National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –9 Reconstruction andfeatures atthe existing practicegreenarea Construction of anewon-courserestroomfacility Projected Costfor AdditionalItems: $2,213,750 Unlike other options,Option G includesfullirrigation replacement.This isbecause thereis no viable methodof leaving onlythreegolf holes withoutreplacement.Variables include pumping pressure,controlzonesand other logisticsthat had tobe considered. DEFERMENT OFCERTAINIMPROVEMENTS Other additionalwork listed undereach option above has notbeen incorporatedtothepro formas preparedbyNGFConsulting duetothecomplexityof attaching incrementalrounds, revenues and expensestothese improvements.However, both NGF andMr. Richardson believe thatdeferring some or allofthe alternative (optional) improvements, including long- range work tothe clubhouse building,grounds,entry, practiceareas,etc.,willlikelyhave a negative affect onrevenues and constrain somewhat the City’s abilityto “re-brand” PaloAlto GC. Over theyears,NGFConsulting has witnessedthe implications ofroundsandrevenues ongolf facilities that have deferred maintenance and/orcapitalimprovements.Eventually, golf course conditions and/orthe overallgolf experiencefallto a levelwhere rounds,pricing and,as a result,revenues are constrained,asis themunicipality’s abilityto effectivelymarketthegolf course as anything otherthana“value” provider.Golf consumersbegin tomigrateawayfrom facilities that are not well maintainedwhen thereare otherproximatefacilities offering better conditions and/or equalor even slightlyhigherprice points. Among the optional/alternative improvementsassociated with Palo AltoGolf Course, wefindthe mostpressing are: Course conditions, especiallygreens,drainage and turf condition Yardageflexibility(to attract beginners,youth, women andseniors) Geese andburrowing animalintrusion and damage On-courserestroomreplacement Clubhouse condition andavailable space Most of the above arewellcorrected ormitigatedthoughthereconfiguration options.However, replacement ofthe irrigation system,asan example, is notfullyaffordedwithin thebasework of OptionsA,Dand F. Especiallyin the caseof A and F,thisalternate costmaybe prudentto examine closer asconditions cannotdramaticallyimprove course-wide without aplan toreplace the system.Ifthesystemis allowed to rainfora long period withoutreplacement,revenue is bound todropincrementallyas turf conditionsdecline. Intermsof substantive clubhouse improvements,such asexpanding themeeting space, improvements are not likelyto payfor themselves underthe current operating structurewherebyonly7% of food& beveragerevenue accruestotheCity. Yardageflexibilityis accommodated inmost ofthe options,butmoreso as more work is covered.OptionsD, Fand Gadequatelyallowformoreflexibilityand willtherefore have the potentialtoattractmoreplayer types.Thegeeseand burrowing animalissues, according tothe golf course architect,will be positivelymitigated byallreconfigurationoptions. Yet,plan options with more area impactedwilllikelyresult inmoreappropriatehabitatandareasforthese animals touseratherthan theturf areascurrentlyintendedforgolfers. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –10 Market Overview Below, NGF Consultingprovides a summaryof key“external”factorsthatcharacterize thetrade area in which the PaloAltoGolf Course operates.Weincludebasic demographic variables that have the potentialtoaffectthe economicperformance of thegolffacility, as wellas an analysis of supplyand demand indicatorsin thepublicgolf market. DEMOGRAPHICSSUMMARY Utilizing researchmaterials provided byApplied GeographicSolutions,Inc.(a supplierof demographicresearch based on U.S.Censusresults),NGFConsulting has examined relevant characteristicsof thelocalpopulation.Inthefollowing tables, NGF Consulting indicatesthe population,median age,and median household incometrendsforSan Mateo andSantaClara counties,as wellas the3-,10-, and15-milemarketrings surrounding thegolf courseandthe totalUnitedStates. Palo Alto Golf Course 3mi 10mi 15mi San Mateo County Santa Clara County U.S. SummaryDemographics Population1990 Census 94,021 697,234 1,482,687 649,622 1,496,702 248,710,012 Population2000 Census 100,652 765,828 1,662,257 707,161 1,682,585 281,421,906 CAGR1990-2000 0.68%0.94% 1.15%0.85% 1.18%1.24% Population2010 Census 104,099 806,139 1,750,080 718,376 1,781,728 308,699,447 CAGR2000-2010 0.34%0.51% 0.52%0.16% 0.57%0.93% Population2016 Projected 105,110 817,407 1,775,178 725,980 1,805,397 325,288,086 CAGR2010-2016 0.16%0.23% 0.24%0.18% 0.22%0.88% Median HH Inc $94,304 $96,743 $91,334 $88,233 $88,860 $53,908 Median Age 37.5 37.2 37.1 39.4 36.2 36.9 CAGR=CompoundAnnual GrowthRate Fromthedatacollectedforthis study, NGFConsulting hasmadethefollowing observations regarding the demographics of Palo Alto andsurrounding areas: The10-mile and 15-milemarketsaroundPalo Alto GCaredense,with 2010 estimates of about 806,000 and 1.775million residents,respectively, in these two submarkets.The10-mile markethasaddedmorethan 40,000 net newresidents since 2006,while the 15-mile marketgrewbynearly88,000 people.Population growth is projectedto beverymoderatethrough2016. TheMedian Ages inthesubjectmarket areasaregenerallysimilar tothenational median age of36.9years,though SanMateo Countyoverallis significantlyhigher at 39.4 years.Ingeneral,the propensityto playgolf withgreaterfrequencyincreases with age,making relativelyolder marketsmore attractive togolf facilityoperators,all otherfactorsbeing equal. Median Household Incomes intheareaaremuch higherthanthe nationalmedian. For instance,the10-mile marketexhibits incomesnearly80% higherthanthe nationalmedian incomeof $53,908.Ingeneral, higher incomeresidentsare more likelyto participate ingolf,andtheyplaymorefrequentlythan lower income National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –11 residents.Thesehighfigures aremitigatedconsiderablybythe veryhighcost of living in theBayArea. GOLFMARKET OVERVIEW Belowwe provide an overviewof recent andemerging nationaltrends withrespecttogolf participation andmunicipalgolf, as wellas a summaryofgolf demandandsupplyindicators in the localmarketsfor Palo AltoGolf Course. NGFConsulting utilizes predictive models as benchmarksforestimating potentialmarketstrength.Themethodologyfordetermining the relative strength ofthesubjectmarket isdescribed in thefollowing section. National Trendsin GolfDemand and Supply Participation Golf participationin theU.S. hasgrownfrom3.5% ofthe populationin the early1960sto about 9.2%of thepopulationtoday. NGF estimatesthatthe numberofgolfersfellslightlyin 2011 to 26.1million; it was encouraging news thatthenumberofgolfersgained in2010-11held steady vs. previous years while the numberof lostgolfers droppedsignificantly. For researchpurposes, agolferis definedasa person age6 or above who plays at leastoneround ofgolf inagiven year. All U.S. Golfers (in millions) 1985 1990 1995 2000 2005 2010 Allgolfers age 6+ 19.5 27.4 24.7 28.8 30.0 26.1 Source: National Golf Foundation Thenumber ofroundsofgolf alsofell2.3%during thepastyear,from486million in 2009to 475 million in 2010 (mostrecent year NGF has published),corroborating the decline in the number of golfers.Inthe PacificRegion,which includes California,thestatisticsare somewhat more favorable: Regional Profile Participation Rate Numberof Golfers Percent of Golfers Total Annual Rounds(millions) Pacific Region 7.3% 3,276,000 12.5% 50.4 United States 9.2% 26,122,000 100.0% 475.0 Source:Golf ParticipationintheU.S., 2011edition, National Golf Foundation Considering theseverityof therecession anditseffects onboth discretionaryincome andtime, golf has helduprather well. Multiple NGF studiesof golferssince 2008would attributethe gradualdecline ingolfersandrounds primarilyto the impact of lower jobsecurityand concern over personalfinances,not waning appealforthegame. Over thepast 50years,golf demandgrewatabout 4% per year while facilitysupplygrewat about 2% per year.However, since 1990,thesituation hasreversed –demand hasgrown at only0.5% peryear while facilitysupplyhasgrown at1.4% per year.Withthe increasein supply, National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –12 we are seeing amarkedincrease in competition,and thesupplyisgreaterthanthedemandin somemarkets. In additiontoincreasedcompetition, otherfactorshave contributedtoa decline in the numberof rounds per coursenationallyfrom 2002to2011.In theNGF’smostrecentsurveyof coregolfers conducted inSeptember2011, wefoundthatfearfulfinancialoutlooks,weak consumer confidence,and negativegolferattitudeshave also played a role.The combination of thesehas causedmanygolffacilities tobecome distressed,particularlythosethathave a high debtload because of higherconstruction costs andthe perceived need to build high-end courses. Thenumber ofgolf course closingsquadrupledfrom anannualaverage of24 coursesperyear in the 1993-2001timeperiod tomorethan100 courses in2005.In2006,therewas negative net growthin golffacilitiesforthefirsttimeinsix decades,with 146 18-holeequivalents closingand 119.5 opening.In2007,there were113 openingsand121.5closures,and in 2008, 72golf courseopenings and106closures.In 2009,49.5openingsminus 139.5closures equatedto anetloss of90 18-hole equivalents.Closures continue tobedisproportionately public, stand-alone 9-holefacilities or shortcourses (executive or par-3length)with a value price point. Netgrowth insupplyhas been negative nowforfourconsecutive years, with the largest drop of90 courses in 2009.However, U.S.openingsaveraged 200+ (net)for20 years, and total18-holeequivalent supplyis up5%since 2000,indicating aslowmarketcorrection is underway. In October 2011, NGF projected2011netgrowth of aboutnegative 106.5 (openings minus closings), andprojected actualclosuresfor2011 would be closerto150. NGF estimatesthatnationalrounds played experienced an overalldropfrom 2000to2010 of -9.5%.Bythe endof 2011,rounds hadfurther declined 2.5%in theU.S.,butrounds inthe PacificRegionhad increased 1.2% andCalifornia was up 2.3%. Onthe positive side, thegrowth ingolf coursedevelopment has slowed considerablynationally and in themajorityof localmarkets, atrendthatshould help ease someof thecompetitive pressure. Anotherpositive trend istheaging of America.BabyBoomers are rapidlyapproaching retirementage whengolf activityflourishes.The babyboomersrepresentnot onlythelargest single demographicin the US, buttheyalso approach retirementage with more disposable incomethan anypreviousgeneration. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –13 Local and Regional GolfSupplyand Demand Indicators Thefollowing table summarizes somekeygolf supplyand demandmeasuresforthelocal marketsbased onNGFresearch andgolf demand predictive models. Palo Alto Golf Course 3mi 10mi 15mi San Mateo County Santa Clara County U.S. Golf Demand Indicators #of Golfing Households 6,989 55,008 116,506 49,136 116,439 21,237,600 Number of Rounds Played 226,453 1,769,537 3,717,852 1,571,308 3,765,371 498,831,616 GolfingHouseholdIndex 101 104 103 105 106 100 Rounds Played Index 140 142 141 143 146 100 Golf SupplySummary TotalGolf Facilities 2 13 25 14 33 15,902 Public Golf Facilities 2 8 16 6 20 11,633 Private Golf Facilities 0 5 9 8 13 4,269 TotalGolf Holes 36 207 378 279 576 268,443 Public Golf Holes 36 117 225 108 342 191,214 Private Golf Holes 0 90 153 171 234 77,229 Household/Golf SupplyIndicators Households per 18Holes: Total 19,132 25,655 29,805 16,754 19,127 7,733 Households per 18Holes: Public 19,132 45,390 50,073 43,282 32,214 10,856 Households per 18Holes: Private NA 59,007 73,636 27,336 47,082 26,879 Households SupplyIndex: Total 242 325 378 212 242 100 Households SupplyIndex: Public 171 405 447 387 288 100 Households SupplyIndex: Private 0 221 275 102 176 100 Golf CourseConstruction Activity 2001-2010 Totalholes addedpast 10 years 0 0 18 0 72 24,318 Public holes added past10 years 0 0 0 0 54 17,469 Private holes addedpast10 years 0 0 18 0 18 6,849 PercentTotalHoles Added 0.00%0.00%4.80%0.00%12.50%9.10% Percent Public Holes Added 0.00%0.00%0.00%0.00%15.80%9.10% Percent PrivateHoles Added NA 0.00%11.80%0.00%7.70%8.90% National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –14 Golf participationrates inthesubjectmarkets around Palo AltoGCare verysimilar to the nationalbenchmark,while rounds demandedper household areabout40% higherthanthenationalfigure.Thehighrounds demanded per householdare indicative of theyear-roundgolf climate,the highnumberofgolf courses,and a demographicprofilethatis generallyconducive to highgolf demand, particularlyas it relatestomedian household income. There arethirteentotal,including eightpublic,golffacilities (including Palo AltoGC) in the 10-milemarketarea, while there are 25totalfacilities, including 21 public, within 15 miles of Palo AltoGC. As thetablesindicates,the subjectmarkets havesignificantlymore households per 18 holes ofgolf thanthenation overall. Forexample, in the10-milemarket area surrounding Palo AltoGC, there are nearlyfourtimes asmanyhouseholds pertotal 18 holes and4.5times as manyhouseholdsperpublic 18 holes than inthe overall U.S.(Wecontrastthesesupplyratios tosome ofPalo Alto’skeycompetitors in AppendixA). There was a spate of newgolf courseconstruction in theBayArea inthe1990s and early2000s. Forthe nine-countyBayArearegion,27totalgolffacilities were added between 1997 and 2006.This included 6 private (comprising 90holes)and 21 public (360 holes)facilities. However, as with therestof thecountry, newgolf course construction hasslowed to acrawlin thesubsequent years,andtheNGFdatabase reveals no newgolf course projects currentlyin planning or under construction within 15 miles of Palo AltoGC. Palo Alto andthegreaterBayArea arehometo alargenumber ofmajorcorporate and public employers,including manyhigh-techand internet companies.These large employers areprimetargetsforsoliciting tournament/outing play, and could be akey elementto boosting playlevels and revenues atthe Baylands GC.Outingsare generallysold at the highestgreenfee,andalso expose a number ofgolfers tothe facilityforthefirsttime. Visitorstothe Palo Altoarea have thepotentialto significantlyimpactdemand atgolf courses.Thoughvisitation numbers were not available for Palo Altospecifically, it is estimatedthataboutsixteen million people visit San Franciscoalone eachyear, and the overallBayArea hasconsiderablymore visitorsthanthat. NGFresearch shows thatroughlyone-third ofallgolfers participatein the activitywhile traveling, playing .557rounds per dayoftravel. This supplementalmarketshould be atarget of marketing effortsoncethe improved Baylands Golf Club is opened. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –15 COMPETITIVE GOLFMARKET One ofthe objectives of this effortisto identifyanyopportunitiesthatmayexistfortheimproved “Baylands Golf Club”toincreasemarketshare,fees andrevenues.Inthissection,we present an overviewof thepublic accessgolf marketin which thecurrentPalo Alto GCoperates,with a focus onkeycompetitors.Themapbelowshows the location ofthesefacilities inrelation to Palo Alto Golf Course. Inthetablesthatfollow, NGF Consulting presents summaryoperationalinformationforthegolf facilities identified asdirect competition tothe Palo AltoGolf Course. NGFConsulting identified the primarycompetitorsbased on anumberoffactors, including price point,location,NGF experience in thismarket, andinputfrombothfacilitymanagementandCitystaff. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –16 SummaryInformation – PrimaryCompetitors Thetable belowprovides summaryinformationregarding thegolf courseswe have identified as Palo Alto GC’s primarycompetitors. Palo Alto MunicipalGolf Course KeyCompetitors– SummaryInformation Golf Facility Location Type Year Open Par/ Slope Front Tee/ Back Tee LocationRelative to PAGC* Palo Alto Municipal Golf Course Palo Alto MU18H 1956 72 / 122 5,744/ 6,833 -- Crystal SpringsGolf Course Burlingame MU18H 1924 72 / 127 5,580/ 6,628 16 mi NW Poplar Creek Golf Course San Mateo MU18H 1933 70 / 115 4,768/ 6,042 14.5mi NW San Jose Municipal Golf Course San Jose MU18H 1968 72 / 119 4,200/ 6,700 13 mi SE Santa Clara Golf & Tennis Club Santa Clara MU18H 1987 72 / 118 5,521/ 6,723 8.5 mi SE Santa Teresa Golf Club San Jose DF 27H 1963 71 / 126 4,011/ 6,742 24.5mi SE Shoreline Golf Links Mountain View MU18H 1983 72 / 129 5,437/ 6,996 2.5 mi SE Spring ValleyGolf Course Milpitas DF 18H 1956 70 / 113 5,453/ 6,116 15 mi E Sunnyvale Golf Course Sunnyvale MU18H 1969 70 / 118 5,170/ 5,742 5.5 mi SE *Air milesfromsubjectsite,roundedtohalf-mile;actualdriving distanceswilllikelybegreater. Type: DF– DailyFee; MU– Municipal National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –17 Thetable belowshows summaryfacilityinformation regarding Palo Alto MunicipalGolf Course andits primarycompetitors.Reportedroundsfor 2007 arefromthe2008 Economic Research Associatesreporttothe City.Averagegreen/cartrevenue perroundfor SanJose and SantaTeresa areestimatedbased onERA 2007 numbers. SummaryOperating Data –Palo Alto MunicipalGolf CourseandPrimaryCompetitors Golf Facility Total 2007 Rounds Total 2011 Rounds Average Green / CartFee per Round 18-Hole Resident Green Fee (WD/WE) 18-Hole Non- Resident GreenFee (WD/WE) Per Person18- Hole CartFee 18-Hole Twilight GreenFee (WD/WE) 18-Hole Senior Resident Green Fee (WD/WE) 18-Hole Super- Twi GreenFee (WD/WE) Palo Alto Municipal GC 76,241 66,740 $30.20 / $4.50 $37/$47 $39/$49 $14 $30/$34 $28/DNA1 $26/$28 Crystal SpringsGolf Course 73,654 63,000* $24 /$8 DNA $44/$66 $16 $36/$43 $30/DNA $26/$36 Poplar Creek Golf Course 86,315 70,709 $33.11 / N/A $33$45 $38/$53 $13.50 $27/$33 $22/DNA1 $19/$25 San Jose Municipal GC 86,991 78,000* $32 /$5 DNA $37/$51 $14 $26/$33 $23/DNA $20/$24 Santa Clara Golf & Tennis 87,120 81,000 $26 /$10 $25/$34 $37/$50 $14 $17/$23 res $26/$29 n/r DNA2 $12/$14 res $16/$18 n/r Santa Teresa Golf Club 75,0003 65,000*$29.60 / $5.70 DNA $40/$46/$60 $13.50 $25/$29/$34 DNA $17/$19/$25 Shoreline Golf Links 67,135 50,000 $28 /$5.60 $31/$47 $38/$54 $12 $25/$28 $21/DNA1 $17/$17 Spring ValleyGolf Course N/A N/A N/A DNA $37/$55 $14 DNA/$45 $28 M-F $27/$30 Sunnyvale Golf Course 80,513 72,535 $28 /$4.50 DNA/$44 $35/$48 $13.50 $25/$26 res $25/$30 n/r DNA1 $16/$20 KEY *NGFConsultingestimate N/A–Informationnot available DNA–Does not apply/ Not offered Note: For SanJose, SantaTeresa, “afternoon” rates usedfor twilight and“twilight” forsupertwilight; for SpringValley, “midday” andafternoonusedfor twi /supertwi. 1 Non-resident seniors pay$33 at PaloAlto, $28at Shoreline; senior discounts at Poplar Creekarefor residents only. 2 SantaClaraoffers senior monthlyticket; Sunnyvaleoffers senior discount card. 3 Rounds listedareforregulation18-holecourseonly. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –18 SummaryofFindings – PrimaryCompetitors Based on datareportedto NGFConsulting byareagolf operators, Palo Alto Golf Course is positionedquite similarlyto itschiefmunicipalcompetitors.Thereported averagegreenfeerevenue perroundamong thesubjectmunicipalfacilities in 2011 generallyfellbetween $28 and $32, while average cartrevenue perroundwas most commonlybetween $4.50 and $5.70. Postedgreenfees havebeengenerallyflat inthismarketforthelastseveralyears, with onlyperiodic marginalincreases aimed at costrecoveryat somecourses. Non-residentgreenfeesfallwithin a relativelynarrowrangeamong Palo Alto GC and itsmunicipalcompetitors,butNGFdid notethat Palo Altois atthe lowend ofthe non-residentpricing spectrum,particularlyon weekends.Webelieve thatan improved andre-branded Palo Altofacilityshould be ableto absorb$5to$10 increasesfornon-residentrounds,depending onthereconfiguration option chosen and varying byfeecategory. Of themunicipalgolf courses profiled(leased SantaTeresa excluded),allbut San Jose Municipaloffered afee discountforresidents (Sunnyvale restrictedthe discount to weekends). Most people NGF spoketo considerthe cityof Mountain View’s Shoreline Golf Links Courseto bePalo AltoGC’s mostdirectcompetitor.Shoreline’s reputationin terms of maintenancestandards hasreportedlytakenahit in recentyears,andthegolf course appearedtobe inonlyfair conditionduring NGF’s visit.Shoreline has dropped about one-thirdof itsrounds sincethemid 2000s andwas the least active facilityamong thekeycompetitorsin 2011,with areported 50,000rounds.Due to its location, Shoreline probablysuffersmorethanmost BayAreagolf courseswith the Canadian Geese problem.Therewere also a largenumber of cootsonthe course during ourvisit. As was the casewith nearlyeverygolfmarket NGF examined nationally, average annualrounds played atmanyBayAreagolf courses droppedby25%ormore between the late1990s/2000 andthemiddle part ofthe 2000s.Based onrounds reportedto NGF aspartof this studyeffort,rounds played among the direct competitive set have continued todecline sincethe 2006-07timeperiod,though variations in themostrecent years are atleast partlyattributable toweather variations. Even with thefalling activitylevels, roundsplayed per18 holesamong the subject municipalgolf coursesremain among the highestwe’ve observed anywhere in the U.S. Santa ClaraGolf &Tennis andSanJose Municipal, at±80,000rounds in recent years, arecurrentlythemostactive among the competitive set. Because of heightenedcompetitionandtoday’s economicrealities,fee discounting (e.g.,through internalyield management, useof internet wholesalers suchas golfnow.com),even among high-end dailyfeecourses,is nowcommonin theBay Areagolf market.As aresult,the linescan become blurredbetween “rack”ratesand what themajorityof customersareactuallypayingfor aroundofgolf.Thisdisparity is notcommon among the municipalgolf courseswe surveyed. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –19 PALO ALTOGOLF COURSE MARKET POSITIONING ASSESSMENT NGF hasattemptedtoprovide a qualitative, or subjective,reviewof howPalo Alto GC, under both itscurrent configuration andthe alternatereconfiguration options being considered, stacks up against itskeycompetitorsasidentified above.The objective of thisrelative assessment isto provide somejustificationfor assuming anincrease inmarket share(andsustainablegreen fees)for Palo AltoGC, especiallywith themore intensive renovation options. NGF Consulting has scoredthekeycompetitorsto theplan options(A, D,F andG)for Palo Alto GC.A baseline score isalso providedfortheexisting Palo Altogolf courseandfacility. This scoring hasbeen accomplished bylooking attheamenities,coursequalityandreputation associated with eachcompetitivefacility. Reliance has beenmade onavailable reviews, NGF data,discussions with BayAreagolf writers/course reviewers and ourvisitstothesubject courses. Torank thereconfiguration plansfor PaloAlso we relied ontheschematicplanning work developed as of this date,together with ourratingsforthe planoptions.Scores are expressed as A+, A,A-, B+,B,etc.through D-. Because ofthe options(alternate) work tobe considered, no overall“average”grade is provided. Rather, categories ofcomparisons areprovided. Such scorings are both subjective and objective, combining impressionswithfacts aboutthefacilities, and in thiscase, proposed plans. Because ofthesubjective componentofthis review, personal opinion and disagreement with someoftherelative scoring should beexpected.Assuch,the scoring should beusedas amethodforthereadertoform opinions incombination with the otherreporting coveredwithin this report. ComparisonofPalo Alto GCto KeyCompetitors Golf Facility Clubhouse Facilities Practice Facilities Consumer Reputation Golf Conditions* Palo Alto(Existing) C- C+ C+ C Palo Alto(Option A) C- C+ B B- Palo Alto(OptionD) C- C+ A- B+ Palo Alto(OptionF) C- B A A- Palo Alto(OptionG) C- B+ A+ A SanJose Golf Course D A- A- B- SantaClaraGolf &Tennis B A- A- C+ ShorelineGolf Links B+ B+ C C- SunnyvaleGolf Course C- D- D- C+ Crystal Springs Golf Course A- B+ B+ B Poplar Creek Golf Course A- D B- B SantaTeresaGolf Club B- B B- B- Spring Valley B- B- C+ C+ *As observedJanuary-February 2012 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –20 Financial Performance Models for Palo Alto Golf Course As part ofthis studyeffort,NGFConsulting hasprepared ananalysis to showwhat the potential economic performance of Palo AltoMunicipalGolf Course could beconsidering the reconfiguration options presentedin thisreport.Inthissection,thefacility’s economicpotential is evaluated with estimates of performancebasedon asetof assumptionsthatmayormaynot becomereality.Wefeelthatthese estimatesrepresentthe besteffortto create a“fair estimate of performance”forthisfacilitybased on ourunderstanding ofthegolf facilityoperation,itsplace in themarketandthe changesproposedinthe various renovation options.ThePalo Alto MunicipalGCperformance has beenprojected underthe assumption thattheoperation is continued ‘as-is’with three separate contractsformaintenance,proshopandfood/beverage. Thebasic contracttermsin place in FY2012areassumedtocontinuethroughFY2021.The NGF hasalso assumeda “standard” setof externalassumptionsforregionaleconomic performance,consumerdiscretionaryincome, and weather, with neither severe declines nor increases in anyofthesemeasuresthrough 2021. PROJECTIONSBASEDON “OPTION A” NGF Consulting has created acashflowmodelforthe continued operation of Palo Alto MunicipalGolf Course(to bere-branded as“Baylands Golf Club)underthe assumption ofthe “Option A”improvements.Theseimprovementsassumethebasicminimum upgrades needed to improve thefacilitywithin the SFCJPAfloodmitigation project,with no substantialchangeto the character ofthegolf course.The NGFrevenue estimatehas beencombined with the presentoperating structureto provide afullestimate of Baylands GCperformanceforthenext 10 years, assuming successfulcompletion ofthe“Option A” upgrades.TheNGFhas projected growth to over$3.0million in totalgrossfacilityrevenue (from allsources)by2016.This revenue would then be divided among the parties(City, pro shop, F& Band maintenance) based on existing contract structures. KeyAssumptions TheBase assumptions in preparing theprojectedfinancialperformanceestimates covers severalcategories, including rounds activity, greenfees, averagerevenues (carts,range, concessions,etc.),totalrevenue, expenses, capitaland debt. Rounds Performance Theroundsactivityperformanceassumptionsinclude: Rounds in FY2012 assume a3%reductionfromFY2011 totalroundsbased on actualperformanceinthefirst 6monthsof FY2012 asreported bystaff. Rounds in FY2013 assume ‘as-is’operationon 18-holesforthefirst 9months,then operation ononly9-holesforthe last 3months. During thelastthreemonths a reduction of 15%off historicalroundsforthe corresponding month isassumed.All roundsfrom April-June 2013 areassumedto be9-hole rounds. Rounds in FY2014 assume operation on9-holesforthefirst6months,then operation with an upgraded 18 holesfor January-June 2014.Allroundsfrom July- National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –21 December2013 are assumedto be9-holerounds with a reduction of 15% off historicaltotalsforthecorresponding month. Rounds projectionsassume increasesto astabilized levelof 68,200by2017. Theoveralldistribution ofrounds bycategoryis shown in the table below: Palo Alto MunicipalGolfCourse(Baylands GC) Projected Activityfor Option A(2012-2021) As-Is 9-Mos.18-H / 3 Mos. 9-H 6-Mos.18-H / 6 Mos. 9-H Operate on18-holeswith modestupgrade to the golf course design FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 -2021 Weekday 18-Hole 5,400 3,900 2,625 5,600 5,600 5,600 Senior Non-Resident 6,300 4,600 3,050 6,500 6,500 6,500 9-Hole 1,500 6,850 13,800 1,700 1,700 1,700 Senior 900 750 500 1,000 1,000 1,000 Junior 1,400 1,050 700 1,500 1,500 1,500 EarlyBird 700 525 350 700 700 700 Twilight 11,300 8,150 5,400 11,600 11,600 11,600 Specials 7,500 5,550 3,675 8,000 8,000 8,000 Junior Card 1,100 825 550 1,200 1,200 1,200 Senior Card 800 675 450 1,000 1,000 1,000 Non-ResidentSenior Card 4,000 2,975 1,975 4,200 4,200 4,200 Sub-TotalWeekday 40,900 35,850 33,075 43,000 43,000 43,000 Weekend 18-Hole 10,200 7,300 4,850 10,300 10,300 10,300 9Hole 1,900 9,150 13,950 2,100 2,100 2,100 Junior 800 625 425 900 900 900 Twilight 6,200 4,450 2,950 6,400 6,400 6,400 Sub-TotalWeekend 19,100 21,525 22,175 19,700 19,700 19,700 ComplimentaryPlay 2,500 1,750 1,300 2,500 2,500 2,500 Tournaments 2,200 1,575 1,050 2,000 2,500 3,000 TOTAL ROUNDS 64,700 60,700 57,600 67,200 67,700 68,200 Average Fees / Revenue Theaveragegreenfeesperround bycategoryare shown in thetablethatfollows. Key assumptions driving thisestimate include: There is nochangein averagefeesforFY2012 over FY2011. Theonlyadjustmentin FY2013 isforthe 9-holerate,which has been adjusted downward to reflectthevariousforms of discounting expectedto bepresent when thefacilityis operating on only9 holes inthefinal3monthsof FY2013and thefirst6 monthsof FY2014.NGFhas assumed 9-holegreenfeewillgo as lowas $12.00 per round in somediscountcategories(e.g.,lateafternoon replayrate). Upon re-opening on 18-holes (assumedJanuary1, 2014),averagefees ineach categoryareincreasedapproximately5% over FY2012 (rounded). National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –22 For FY2015through FY2021, NGF hasassumed1% annualincreases inallfee categories. Average Cartfeeand driving rangerevenue perround in FY2012 isbasedonthe actuals in FY2011. For FY2013, average cart/rangerevenue perroundisreduced by20% (from 2011)toreflecttheoperation on only9 holes thelast3months. For FY2014, average cartand rangerevenue isreduced by30%(fromFY2011)toreflect 6 months on9holes. ByFY2015, average cartand rangerevenue isrestored atthe 2011 leveland then increased by1%peryear through 2021. Averagemerchandisesales in FY2012 arebasedon theactualin FY2011.Average sales arereducedby20% (from2011)in FY2013 toreflect9 holes-onlythe last 3 months, and30% in FY2014 toreflect6monthson 9 holes.ByFY2015,average sales arerestoredtothe2011 level with 1% increases through2021. Averagefood andbarsales in FY2012 arebasedon theactualin FY2011.Average sales arereducedby20% (from2011)in FY2013 toreflect9 holes-onlythe last 3 months, and30% in FY2014 toreflect6monthson 9-holes.ByFY2015, average sales arerestoredtothe2011 level with 1% increases through2021. Theaveragegreenfeesbycategoryand ancillaryrevenue perroundareshown in thetable below(assume1% annualincreasesforFY2018-2021 asnoted): Palo Alto MunicipalGolfCourse(Baylands GC) Projected Average Green FeesforOption A(2012-2021) As-Is 9-Mos. 18-H /3Mos. 9-H 6-Mos. 18-H /6Mos. 9-H Operateon18-holeswithmodest upgradetothegolf coursedesign FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Weekday 18-Hole $37.00 $37.00 $39.00 $39.39 $39.78 $40.18 Senior Non-Resident $32.00 $32.00 $33.50 $33.84 $34.17 $34.52 9-Hole $23.00 $18.00 $18.00 $25.00 $25.25 $25.50 Senior $28.00 $28.00 $29.50 $29.80 $30.09 $30.39 Junior $14.75 $14.75 $15.50 $15.66 $15.81 $15.97 EarlyBird $23.00 $23.00 $24.00 $24.24 $24.48 $24.73 Twilight $30.00 $30.00 $31.50 $31.82 $32.13 $32.45 Specials $19.00 $19.00 $20.00 $20.20 $20.40 $20.61 Junior Card $19.70 $19.70 $20.75 $20.96 $21.17 $21.38 Senior Card $23.50 $23.50 $24.75 $25.00 $25.25 $25.50 Non-ResidentSenior Card $27.50 $27.50 $29.00 $29.29 $29.58 $29.88 Weekend 18-Hole $47.00 $47.00 $49.50 $50.00 $50.49 $51.00 9Hole $27.00 $24.75 $25.75 $28.75 $29.04 $29.33 Junior $15.80 $15.80 $16.50 $16.67 $16.83 $17.00 Twilight $34.00 $34.00 $35.75 $36.11 $36.47 $36.83 Tournaments $34.60 $34.60 $36.50 $36.87 $37.23 $37.61 Avg.Cart Fee/ Round $4.54 $3.63 $3.18 $4.54 $4.58 $4.63 Avg.Range Revenue /Round $5.15 $4.12 $3.61 $5.15 $5.20 $5.26 Merchandise Sales /Round $9.94 $7.95 $6.96 $9.94 $9.94 $10.14 Foodper Round $9.56 $7.64 $6.69 $9.56 $9.65 $9.75 Bar per Round $2.23 $1.79 $1.56 $2.23 $2.26 $2.28 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –23 Other Revenue Assumptions Totalgreenfeerevenue includes alldiscount(10-play) cards andmonthlypasses. Ancillaryrevenue per round (carts,merchandise,range,food,bar, other) isderived fromtotalrounds, including complimentaryrounds. Concession revenue tothe Cityof Palo Altoassumesthesamecurrentcontract basics through FY2021,with nominimumsafter April 2013.The Cityisassumed to collect:(1)7%of allF& B revenue;and(2)4%of merchandise sales. Expense Assumptions Labor expenses areforCityoversight only.These include allocationsforcontract oversight, Parks andRecreation Director,Division manager,etc.The estimateis intended toinclude bothsalaryand benefitsallocation and isincreasedby3.0% per year throughFY2021. Commissions paidtotheproshop vendorinclude 38%of driving rangegross revenue and 40%ofgross cartrevenue (aspercontract). Theproshopmanagementfee isfixed at $28,775 permonthforthefullduration of the NGF projection. Reimbursementsformerchantfees(mostlycreditcardfees)areassumedto be 1.4%of totalfacilityrevenue. Contractmaintenanceexpense totheCityof Palo Alto assumes: $62,500 permonthfor FY2012. $62,500 permonthforthefirst 9months,then$37,500 permonthsforthe last 3months of FY2013. $37,500 permonthforthefirst 6months,then$66,667 permonthsforthe last 6months of FY2014. $66,667 permonth(fixed)fortheremainder ofFY2015-2021. Other expensessuch asrepairs,maintenance,supplies, clubfees,materials and otherindirectexpensesare allbasedon actualfiguresforFY2011 with 20% reduction inFY2013 and30%reduction in FY2014,returning toFY2011 levels in FY2015 plus 1.5% increases assumedthrough FY2021. Advertising andpublishing expense is reduced by50% during constructionand operation on9 holes,totaling 15%reduction in FY2013. Uponre-opening thegolf coursethis expense isassumedtoincrease50%toaccountforenhancedmarketing of the upgradedfacilityand re-theme as“Baylands GC.” Water expense hasbeenhighlyvariable and NGFprojectionsarebasedon the4- year average(2008-2011),with assumptions of reductions in useasdescribed previously: 25%reduction during construction- $20,650 permonth 28%reduction uponre-opening - $19,830 permonth. 1.5%annualincreasesfrom FY2015through FY2021. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –24 Other directcharges(including electric) arebased on actual2011totals,based on actualfiguresforFY2011 with 20%reductioninFY2013 and 30%reduction in FY2014. Aslightreduction expected uponre-opening thegolf course inFY2015 (as described bythearchitect). Annualincrease of 1.5% is assumedfrom FY2015 throughFY2021. Debt Service andOtherNon-Operating Expense Assumptions Non-operating revenue attributedto debtservice is assumedto continue at6%of debt service payment aslong aspaymentscontinue (throughFY2019). Debt service paymentswere provided bythe Cityof Palo Alto. ThepaymenttotheGeneralFund($94,849) expires after FY2012. TheCostPlan Chargesare basedon actual2011 chargeswith historical3%growth throughtheend of FY2021. TheNGFhas addeda new“ReserveforReplacement” linetothe proforma beginning in FY2015, setat3%ofgreenfeerevenue. Option Aalso assumesthatthefullirrigationreplacementwillbe completed in FY2020 (orby2020)atacostof $750,000(real2012 dollars). Pro Forma Estimate for ‘Option A’ Scenario – FY2012– FY2021 Utilizing theabove assumptionsand activity/revenue estimates, NGF Consulting has prepareda proformaforthenext 10years of operation,including FY2012(alreadyunderway).Thetable shows thattherenovated Baylands Golf Clubcould produce netincometo theCityin therange of $345,000to $438,000(afterdebt, costplan andreserve) throughtheterm ofthe currentdebt program.AftertheCityis no longerresponsiblefor debt payments(beginning in FY2020),the facilityis expected toproduce netincometotheCityin therange of $854,000 to$868,000per year. Asthis is aprojection, allfigures after FY2012 have been roundedtothenearest $100for simplicity. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –25 Palo Alto Golf CourseRevenue / Expense -Option A Revenues FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Golf Course Revenues Green Fees (Incl. Cards)$2,016,537 $1,960,100 $1,712,500 $1,560,500 $2,152,200 $2,192,400 $2,233,100 $2,255,400 $2,278,000 $2,300,700 $2,323,800 Cart Fees 302,799 293,500 220,300 182,900 304,900 310,200 315,600 318,800 322,000 325,200 328,500 Driving Range 343,911 333,400 250,200 207,800 346,300 352,300 358,500 362,100 365,700 369,400 373,100 Tournament / League Fees 2,196 2,100 2,000 1,900 2,200 2,200 2,200 2,200 2,200 2,200 2,200 Other 11,813 11,500 8,600 7,100 11,900 12,000 12,300 12,300 12,600 12,600 12,800 Total Golf Course Revenues $2,677,256 $2,600,600 $2,193,600 $1,960,200 $2,817,500 $2,869,100 $2,921,700 $2,950,800 $2,980,500 $3,010,100 $3,040,400 Concession Payments Food and Beverage Concession Variable Portion $55,076 $53,400 $40,100 $33,300 $55,500 $56,400 $57,400 $58,000 $58,600 $59,200 $59,700 UtilityPayment $25,920 $25,900 $26,400 $26,400 $26,900 $26,900 $27,400 $27,400 $27,900 $27,900 $28,500 Total fromF &BConcession $80,996 $79,300 $66,500 $59,700 $82,400 $83,300 $84,800 $85,400 $86,500 $87,100 $88,200 Pro Shop Lease Merchandise (4%) $26,536 $25,700 $19,300 $16,000 $26,700 $26,900 $27,700 $27,700 $28,200 $28,200 $28,800 Total FromPro Shop Concession $26,536 $25,700 $19,300 $16,000 $26,700 $26,900 $27,700 $27,700 $28,200 $28,200 $28,800 Total Gross to City $2,784,788 $2,705,600 $2,279,400 $2,035,900 $2,926,600 $2,979,300 $3,034,200 $3,063,900 $3,095,200 $3,125,400 $3,157,400 Operating Expenses FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Salaries & Benefits $259,455 $139,000 $143,200 $147,500 $151,900 $156,500 $161,200 $166,000 $171,000 $176,100 $181,400 Range Fees 130,152 126,700 95,100 79,000 131,600 133,900 136,200 137,600 139,000 140,400 141,800 Cart Fees 117,529 117,400 88,100 73,200 122,000 124,100 126,200 127,500 128,800 130,100 131,400 Club Fees 5,576 5,700 4,600 4,000 5,700 5,800 5,900 6,000 6,100 6,200 6,300 Fixed Lozares ManagementFee 345,333 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 Merchant Fees Reimbursement 36,211 36,400 30,700 27,400 39,400 40,200 40,900 41,300 41,700 42,100 42,600 Contract Maintenance 475,000 750,000 675,000 625,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 Repairs &maintenance 21,943 22,300 17,800 15,600 22,300 22,600 22,900 23,200 23,500 23,900 24,300 Advertising & Publish 10,765 10,900 9,300 16,400 16,600 16,800 17,100 17,400 17,700 18,000 18,300 SuppliesandMaterials 44,417 45,100 36,100 31,600 45,100 45,800 46,500 47,200 47,900 48,600 49,300 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –26 Palo Alto Golf CourseRevenue / Expense -Option A Revenues FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Water Expense 361,870 330,500 310,700 242,900 238,000 241,600 245,200 248,900 252,600 256,400 260,200 Other Direct Charges (Incl. Electric) 45,263 45,900 36,700 32,100 44,700 45,400 46,100 46,800 47,500 48,200 48,900 Indirect Charges 102,571 104,100 83,300 72,900 104,100 105,700 107,300 108,900 110,500 112,200 113,900 Total CityOperating Expenses $1,956,085 $2,079,300 $1,875,900 $1,712,900 $2,066,700 $2,083,700 $2,100,800 $2,116,100 $2,131,600 $2,147,500 $2,163,700 Net Income From Operations (Loss)$828,703 $626,300 $403,500 $323,000 $859,900 $895,600 $933,400 $947,800 $963,600 $977,900 $993,700 Non-operating IncomefromSaleof Property 35,230 D/S Income $0 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0 Total Non-operating $35,230 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0 Total Operating Income(Incl. Non-operating)$863,933 $656,200 $429,200 $348,700 $885,600 $921,400 $959,300 $973,700 $989,500 $977,900 $993,700 Debt Service $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $432,200 $432,300 $431,200 $0 $0 Pmt toGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 NewDebt Service $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 AdditionalCapital $0 $0 $0 $0 $0 $0 $0 $0 $0 $750,000 $0 Reserve for Replacement $0 $0 $0 $0 $64,600 $65,800 $67,000 $67,700 $68,300 $69,000 $69,700 Cost Plan Charges $41,455 $42,700 $44,000 $45,300 $46,700 $48,100 $49,500 $51,000 $52,500 $54,100 $55,700 Total Debt/ OtherCharges $695,843 $636,500 $472,200 $474,300 $539,500 $544,700 $548,700 $551,000 $552,000 $873,100 $125,400 Net Income or (Loss)$168,090 $19,700 ($43,000)($125,600)$346,100 $376,700 $410,600 $422,700 $437,500 $104,800 $868,300 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –27 PROJECTIONSBASEDON “OPTIOND” TheNGFcashflowmodelforoperation under“Option D”assumes amore significant upgrade tothefacilitywith a“more dramatictransformation” asdescribed bythegolf course architect. TheNGFrevenue estimate hasbeencombinedwith thepresent operating structuretoprovide a fullestimate of BaylandsGCperformanceforthenext 10 years,assumingsuccessful completion ofthe“Option D” upgrades.TheNGFhas projectedgrowthtoover $3.2million in totalgrossfacilityrevenue (from allsources)by2016.Thisrevenue would thenbe divided among the parties(City,pro shop, F& Bandmaintenance)basedon existing contract structures. KeyAssumptions TheBase assumptions in preparing theprojectedfinancialperformancematchthosepresented in the projectionforOption A,exceptthefollowing changes noted below: Rounds Performance Theroundsactivityperformanceassumptionsinclude: Rounds in FY2013 assume ‘as-is’operationon 18 holesforthefirst 9months,then operation ononly9 holesforthe last 3months. During thelastthreemonths a reduction of 15%off historicalroundsforthe corresponding month isassumed.All roundsfrom April-June 2013 areassumedto be9-hole rounds. Rounds in FY2014 assume operation on9holesforthefirst7months,then operation with an upgraded 18 holesfor February-June 2014. AllroundsfromJuly 2013 through January2014 areassumedto be9-hole rounds with areduction of 15% offhistoricaltotalsforthe corresponding months. Rounds in FY2015throughFY2021 assumeincreases toastabilized levelof 73,300 by2017. Theoveralldistribution ofrounds bycategoryis shown in the table below: National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –28 Palo Alto MunicipalGolfCourse(Baylands GC) Projected Activityfor OptionD(2012-2021) As-Is 9-Mos. 18-H /3Mos. 9-H 5-Mos. 18-H /7Mos. 9-H Operateon18-holeswithupgraded golf designandmoreappealing features FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 -2021 Weekday 18-Hole 5,400 3,900 2,500 5,900 6,100 6,100 Senior Non-Resident 6,300 4,600 2,850 6,700 6,900 6,900 9-Hole 1,500 6,850 15,000 1,700 1,700 1,700 Senior 900 750 500 1,200 1,200 1,200 Junior 1,400 1,050 600 1,500 1,500 1,500 EarlyBird 700 525 300 900 900 900 Twilight 11,300 8,150 5,100 12,000 12,400 12,400 Specials 7,500 5,550 3,400 8,200 8,400 8,400 Junior Card 1,100 825 500 1,300 1,300 1,300 Senior Card 800 675 400 1,100 1,100 1,100 Non-ResidentSenior Card 4,000 2,975 1,900 4,300 4,400 4,400 Sub-TotalWeekday 40,900 35,850 33,050 44,800 45,900 45,900 Weekend 18-Hole 10,200 7,300 4,600 10,600 11,000 11,000 9Hole 1,900 9,150 15,000 2,200 2,200 2,200 Junior 800 625 400 1,000 1,000 1,000 Twilight 6,200 4,450 2,700 6,500 6,700 6,700 Sub-TotalWeekend 19,100 21,525 22,700 20,300 20,900 20,900 ComplimentaryPlay 2,500 1,750 1,300 2,500 2,500 2,500 Tournaments 2,200 1,575 1,050 3,000 3,500 4,000 TOTAL ROUNDS 64,700 60,700 58,100 70,600 72,800 73,300 Average Fees / Revenue Theaveragegreenfeesperround bycategoryare shown in thetablethatfollows. Key assumptions driving thisestimate include: Theonlyadjustmentin FY2013 isforthe 9-holerate,which has been adjusted downward to reflectthevariousforms of discounting expectedto bepresent when thefacilityis operating on only9 holes inthefinal3monthsof FY2013and thefirst7 monthsof FY2014. Upon re-opening on 18holes (assumedJanuary1, 2014),averagefees ineach categoryareincreasedapproximately10% over FY2012 (rounded). Average Cartfeeand driving rangerevenue perround in FY2012 isbasedonthe actuals in FY2011. For FY2013, average cart/rangerevenue perroundisreduced by20% (from 2011)toreflecttheoperation on only9 holes thelast3months. For FY2014, average cartand rangerevenue isreduced by30%(fromFY2011)toreflect 7 months on9holes. ByFY2015, average cartand rangerevenue isrestored atthe 2011 leveland then increased by1%peryear through 2021. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –29 Averagemerchandisesales in FY2012 arebasedon theactualin FY2011.Average sales arereducedby20% (from2011)in FY2013 toreflect9 holes-onlythe last 3 months, and30% in FY2014 toreflect7monthson 9 holes.ByFY2015,average sales arerestoredtothe2011 level with 1% increases through2021. Averagefood andbarsales in FY2012 arebasedon theactualin FY2011.Average sales arereducedby20% (from2011)in FY2013 toreflect9 holes-onlythe last 3 months, and30% in FY2014 toreflect7monthson 9 holes.ByFY2015,average sales arerestoredtothe2011 level with 1% increases through2021. Theaveragegreenfeesbycategoryand ancillaryrevenue perroundareshown in thetable below(assume1% annualincreasesforFY2018-2021 asnoted): Palo Alto MunicipalGolfCourse(Baylands GC) Projected Average Green FeesforOptionD(2012-2021) As-Is 9-Mos. 18-H /3Mos. 9-H 5-Mos. 18-H /7Mos. 9-H Operateon18-holeswithupgraded golf designandmoreappealing features FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Weekday 18-Hole $37.00 $37.00 $41.00 $41.41 $41.82 $42.24 Senior Non-Resident $32.00 $32.00 $35.00 $35.35 $35.70 $36.06 9-Hole $23.00 $18.00 $18.00 $25.00 $25.25 $25.50 Senior $28.00 $28.00 $31.00 $31.31 $31.62 $31.94 Junior $14.75 $14.75 $16.25 $16.41 $16.58 $16.74 EarlyBird $23.00 $23.00 $25.50 $25.76 $26.01 $26.27 Twilight $30.00 $30.00 $33.00 $33.33 $33.66 $34.00 Specials $19.00 $19.00 $21.00 $21.21 $21.42 $21.64 Junior Card $19.70 $19.70 $21.75 $21.97 $22.19 $22.41 Senior Card $23.50 $23.50 $26.00 $26.26 $26.52 $26.79 Non-ResidentSenior Card $27.50 $27.50 $30.00 $30.30 $30.60 $30.91 Weekend 18-Hole $47.00 $47.00 $52.00 $52.52 $53.05 $53.58 9Hole $27.00 $24.75 $27.25 $28.75 $29.04 $29.33 Junior $15.80 $15.80 $17.50 $17.68 $17.85 $18.03 Twilight $34.00 $34.00 $37.50 $37.88 $38.25 $38.64 Tournaments $34.60 $34.60 $38.00 $38.38 $38.76 $39.15 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –30 Expense Assumptions Contractmaintenanceexpense totheCityof Palo Alto assumes: $62,500 permonthfor FY2012. $62,500 permonthforthefirst 9months,then$37,500 permonthsforthe last 3months of FY2013. $37,500 permonthforthefirst 7months,then$71,000 permonthsforthe last 5months of FY2014. $71,000 permonth(fixed)fortheremainder ofFY2015-2021. Other expensessuch asrepairs,maintenance,supplies, clubfees,materials and otherindirectexpensesare allbasedon actualfiguresforFY2011 with 20% reduction inFY2013 and30%reduction in FY2014,returning toFY2011 levels in FY2015 plus 1.5% increases assumedthrough FY2021. Water expense hasbeenhighlyvariable and NGFprojectionsarebasedon the4- year average(2008-2011),with assumptions of reductions in useasdescribed previously: 25%reduction during construction- $20,650 permonth 32%reduction uponre-opening - $18,730 permonth. 1.5%annualincreasesfrom FY2015through FY2021. Other directcharges(including electric) arebased on actual2011totals,based on actualfiguresforFY2011 with 20%reductioninFY2013 and 30%reduction in FY2014. Aslightreduction expected uponre-opening thegolf course inFY2015 (as described bythearchitect). Annualincrease of 1.5% is assumedfrom FY2015 throughFY2021. Debt Service andOtherNon-Operating Expense Assumptions TheNGFhas assumedthatthe $582,000(+/-) intotalcostneededtocomplete Option D, over and above thecostforOption A,willbe fundedfrom operations in FY2015. Option Dalso assumesthatthefullirrigationreplacementwillbe completed in FY2020 (orby2020)atacostof $500,000(real2012 dollars). Pro Forma Estimate for ‘Option D’ Scenario – FY2012– FY2021 Utilizing theabove assumptionsand activity/revenue estimates, NGF Consulting has prepareda proformaforthenextfive years of operation,including FY2012(alreadyunderway).Thetable shows that with amorecomprehensive renovation,the Baylands GCcould producenetincome tothe Cityintherange of $678,000to $758,000(after debt,cost plan andreserve)throughthe term ofthecurrentdebtprogram.AftertheCityis no longerresponsiblefor debt payments (beginning inFY2020),thefacilityis expectedtoproduce net incometothe Cityin therangeof $1.1to $1.2million per year.Asthis is aprojection, allfigures after FY2012 have been rounded tothe nearest$100for simplicity. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –31 Palo Alto Golf CourseRevenue / Expense -OptionD Revenues FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Golf Course Revenues Green Fees (Incl. Cards)$2,016,537 $1,960,100 $1,712,500 $1,619,200 $2,369,600 $2,477,900 $2,522,200 $2,547,500 $2,572,900 $2,598,700 $2,624,600 Cart Fees 302,799 293,500 220,300 184,500 320,300 333,600 339,200 342,600 346,100 349,500 353,000 Driving Range 343,911 333,400 250,200 209,600 363,800 378,900 385,300 389,200 393,100 397,000 401,000 Tournament / League Fees 2,196 2,100 2,000 1,900 2,300 2,400 2,400 2,400 2,400 2,400 2,400 Other 11,813 11,500 8,600 7,200 12,500 12,900 13,200 13,200 13,500 13,500 13,800 Total Golf Course Revenues $2,677,256 $2,600,600 $2,193,600 $2,022,400 $3,068,500 $3,205,700 $3,262,300 $3,294,900 $3,328,000 $3,361,100 $3,394,800 Concession Payments Food and Beverage Concession Variable Portion $55,076 $53,400 $40,100 $33,600 $58,300 $60,700 $61,700 $62,300 $62,900 $63,600 $64,200 UtilityPayment $25,920 $25,900 $26,400 $26,400 $26,900 $26,900 $27,400 $27,400 $27,900 $27,900 $28,500 Total fromF &BConcession $80,996 $79,300 $66,500 $60,000 $85,200 $87,600 $89,100 $89,700 $90,800 $91,500 $92,700 Pro Shop Lease Merchandise (4%) $26,536 $25,700 $19,300 $16,200 $28,100 $28,900 $29,700 $29,700 $30,300 $30,300 $30,900 Total FromPro Shop Concession $26,536 $25,700 $19,300 $16,200 $28,100 $28,900 $29,700 $29,700 $30,300 $30,300 $30,900 Total Gross to City $2,784,788 $2,705,600 $2,279,400 $2,098,600 $3,181,800 $3,322,200 $3,381,100 $3,414,300 $3,449,100 $3,482,900 $3,518,400 Operating Expenses FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Salaries & Benefits $259,455 $139,000 $141,100 $143,200 $145,300 $147,500 $149,700 $151,900 $154,200 $156,500 $158,800 Range Fees 130,152 126,700 95,100 79,600 138,200 144,000 146,400 147,900 149,400 150,900 152,400 Cart Fees 117,529 117,400 88,100 73,800 128,100 133,400 135,700 137,000 138,400 139,800 141,200 Club Fees 5,576 5,700 4,600 4,000 5,700 5,800 5,900 6,000 6,100 6,200 6,300 Fixed Lozares ManagementFee 345,333 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 Merchant Fees Reimbursement 36,211 36,400 30,700 28,300 43,000 44,900 45,700 46,100 46,600 47,100 47,500 Contract Maintenance 475,000 750,000 675,000 595,800 852,000 852,000 852,000 852,000 852,000 852,000 852,000 Repairs &maintenance 21,943 22,300 17,800 15,600 22,300 22,600 22,900 23,200 23,500 23,900 24,300 Advertising & Publish 10,765 10,900 9,300 16,400 16,600 16,800 17,100 17,400 17,700 18,000 18,300 SuppliesandMaterials 44,417 45,100 36,100 31,600 45,100 45,800 46,500 47,200 47,900 48,600 49,300 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –32 Palo Alto Golf CourseRevenue / Expense -OptionD Revenues FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Water Expense 361,870 330,500 310,700 238,200 204,900 208,000 211,100 214,300 217,500 220,800 224,100 Other Direct Charges (Incl. Electric) 45,263 45,900 36,700 32,100 43,500 44,200 44,900 45,600 46,300 47,000 47,700 Indirect Charges 102,571 104,100 83,300 72,900 104,100 105,700 107,300 108,900 110,500 112,200 113,900 Total CityOperating Expenses $1,956,085 $2,079,300 $1,873,800 $1,676,800 $2,094,100 $2,116,000 $2,130,500 $2,142,800 $2,155,400 $2,168,300 $2,181,100 Net Income From Operations (Loss)$828,703 $626,300 $405,600 $421,800 $1,087,700 $1,206,200 $1,250,600 $1,271,500 $1,293,700 $1,314,600 $1,337,300 Non-operating IncomefromSaleof Property 35,230 D/S Income $0 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0 Total Non-operating $35,230 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0 Total Operating Income(Incl. Non-operating)$863,933 $656,200 $175,400 $619,300 $1,113,400 $1,232,000 $1,276,000 $1,297,400 $1,319,600 $1,314,600 $1,337,300 Debt Service $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $432,200 $432,300 $431,200 $0 $0 Pmt toGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 NewDebt Service $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 AdditionalCapital $0 $0 $0 $0 $582,000 $0 $0 $0 $0 $500,000 $0 Reserve for Replacement $0 $0 $0 $0 $71,100 $74,300 $75,700 $76,400 $77,200 $78,000 $78,700 Cost Plan Charges $41,455 $42,700 $44,000 $45,300 $46,700 $48,100 $49,500 $51,000 $52,500 $54,100 $55,700 Total Debt/ OtherCharges $695,843 $636,500 $472,200 $474,300 $1,128,000 $553,200 $548,400 $559,700 $560,900 $632,100 $134,400 Net Income or (Loss)$168,090 $19,700 ($40,900)($26,800)($14,600)$678,800 $727,600 $737,700 $758,700 $682,500 $1,202,900 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –33 PROJECTIONSBASEDON “OPTIONF” TheNGFcashflowmodelforoperation under“Option F”assumes amoresignificant upgradeto thefacility, with a two-thirds completerenovationthe additionof a soccerfield and a comparable “dramatictransformation” asproposedinOptionD.The NGF estimateshows the Baylands GC revenue performance underOption Foverthe next 10 years would be comparabletoOption D. Thisrevenue would then be divided among the parties(City, pro shop, F& B andmaintenance) based on existing contract structures. KeyAssumptions TheBase assumptions in preparing theprojectedfinancialperformancematchthosepresented in the projectionforOption D,exceptthefollowing changes noted below: Rounds and Average Fee Performance Theroundsactivityandaveragefee performance assumptions arethesame asproposed in “Option D,” except: Rounds in FY2014 assume operation on9holesforthefirst9months,then operation with an upgraded 18 holesfor April- June 2014.AllroundsfromJuly2013 throughMarch 2014 areassumedtobe 9-hole rounds with totalsreducedby15%for each corresponding month. Palo Alto MunicipalGolfCourse(Baylands GC) Projected Activityfor OptionF(2012-2021) As-Is 9-Mos. 18-H /3Mos. 9-H 3-Mos. 18-H /9Mos. 9-H Operateon18-holeswithnearly completerenovation FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 -2021 Weekday 18-Hole 5,400 3,900 1,400 5,900 6,100 6,100 Senior Non-Resident 6,300 4,600 1,600 6,700 6,900 6,900 9-Hole 1,500 6,850 20,000 1,700 1,700 1,700 Senior 900 750 250 1,200 1,200 1,200 Junior 1,400 1,050 375 1,500 1,500 1,500 EarlyBird 700 525 200 900 900 900 Twilight 11,300 8,150 2,850 12,000 12,400 12,400 Specials 7,500 5,550 1,950 8,200 8,400 8,400 Junior Card 1,100 825 300 1,300 1,300 1,300 Senior Card 800 675 250 1,100 1,100 1,100 Non-ResidentSenior Card 4,000 2,975 1,050 4,300 4,400 4,400 Sub-TotalWeekday 40,900 35,850 30,225 44,800 45,900 45,900 Weekend 18-Hole 10,200 7,300 2,575 10,600 11,000 11,000 9 Hole 1,900 9,150 19,000 2,200 2,200 2,200 Junior 800 625 225 1,000 1,000 1,000 Twilight 6,200 4,450 1,500 6,500 6,700 6,700 Sub-TotalWeekend 19,100 21,525 23,300 20,300 20,900 20,900 ComplimentaryPlay 2,500 1,750 1,300 2,500 2,500 2,500 Tournaments 2,200 1,575 575 3,000 3,500 4,000 TOTAL ROUNDS 64,700 60,700 55,400 70,600 72,800 73,300 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –34 Averagegreen andancillaryfees in“OptionF”areidenticaltothose presentedfor “Option D.” Expense Assumptions Contractmaintenanceexpense totheCityof Palo Alto assumes: $62,500 permonthfor FY2012 $62,500 permonthforthefirst 9months,then$37,500 permonthsforthe last 3months of FY2013 $37,500 permonthforthefirst 9months,then$66,667 permonthsforthe last 3months of FY2014 $66,667 permonth(fixed)fortheremainder ofFY2015-2021 Other expensessuch asrepairs,maintenance,supplies, clubfees,materials and otherindirectexpensesare allbasedon actualfiguresforFY2011 with 20% reduction inFY2013 and40%reduction in FY2014,returning toFY2011 levels in FY2015 plus 1.5% increases assumedthrough FY2021. Water expense hasbeenhighlyvariable and NGFprojectionsarebasedon the4- year average(2008-2011),with assumptions of reductions in useasdescribed previously: 20%reduction during construction- $22,000 permonth 32%reduction uponre-opening - $18,730 permonth 1.5%annualincreasesfrom FY2015through FY2021 Other directcharges(including electric) arebased on actual2011totals,based on actualfiguresforFY2011 with 20%reductioninFY2013 and 40%reduction in FY2014. Aslightreduction expected uponre-opening thegolf course inFY2015 (as described bythearchitect). Annualincrease of 1.5% is assumedfrom FY2015 throughFY2021. Debt Service andOtherNon-Operating Expense Assumptions TheNGFhas assumedthatthe $2,320,000in additionalcost neededto complete Option F,over and above thecostforOption A,willbe fundedvia the issuance of a newdebt program(revenue orGeneralObligation Bond),with termsof 3.5% interest for20 years,with payments beginning in FY2015. Option Falso assumesthatthefullirrigationreplacementwillbe completed in FY2020 (orby2020)atacostof $250,000(real2012 dollars). Pro Forma Estimate for ‘Option F’ Scenario – FY2012– FY2021 Based onthe inputs described above,the proforma estimateforfutureperformanceunder “Option F”shows that with thismore comprehensive renovation, theBaylands GCcould produce net incometothe Cityin therangeof $437,000to $628,000(after existing and new debt,cost plan andreserve) throughtheterm ofthe currentdebtprogram.AftertheCityis no longerresponsibleforitsolder(1999)debtpayments(beginning in FY2020),thefacilityis expected toproducenetincometothe Cityintherange of $1.05to $1.07million per year. As this is aprojection, allfigures after FY2012have been roundedtothenearest$100for simplicity. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –35 Palo Alto Golf CourseRevenue / Expense -OptionF Revenues FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Golf Course Revenues Green Fees (Incl. Cards)$2,016,537 $1,960,100 $1,712,500 $1,358,100 $2,369,600 $2,477,900 $2,522,200 $2,547,500 $2,572,900 $2,598,700 $2,624,600 Cart Fees 302,799 293,500 220,300 175,900 320,300 333,600 339,200 342,600 346,100 349,500 353,000 Driving Range 343,911 333,400 250,200 199,800 363,800 378,900 385,300 389,200 393,100 397,000 401,000 Tournament / League Fees 2,196 2,100 2,000 1,800 2,300 2,400 2,400 2,400 2,400 2,400 2,400 Other 11,813 11,500 8,600 6,900 12,500 12,900 13,200 13,200 13,500 13,500 13,800 Total Golf Course Revenues $2,677,256 $2,600,600 $2,193,600 $1,742,500 $3,068,500 $3,205,700 $3,262,300 $3,294,900 $3,328,000 $3,361,100 $3,394,800 Concession Payments Food and Beverage Concession Variable Portion $55,076 $53,400 $40,100 $32,000 $58,300 $60,700 $61,700 $62,300 $62,900 $63,600 $64,200 UtilityPayment $25,920 $25,900 $26,400 $26,400 $26,900 $26,900 $27,400 $27,400 $27,900 $27,900 $28,500 Total fromF &BConcession $80,996 $79,300 $66,500 $58,400 $85,200 $87,600 $89,100 $89,700 $90,800 $91,500 $92,700 Pro Shop Lease Merchandise (4%) $26,536 $25,700 $19,300 $15,400 $28,100 $28,900 $29,700 $29,700 $30,300 $30,300 $30,900 Total FromPro Shop Concession $26,536 $25,700 $19,300 $15,400 $28,100 $28,900 $29,700 $29,700 $30,300 $30,300 $30,900 Total Gross to City $2,784,788 $2,705,600 $2,279,400 $1,816,300 $3,181,800 $3,322,200 $3,381,100 $3,414,300 $3,449,100 $3,482,900 $3,518,400 Operating Expenses FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Salaries & Benefits $259,455 $139,000 $141,100 $143,200 $145,300 $147,500 $149,700 $151,900 $154,200 $156,500 $158,800 Range Fees 130,152 126,700 95,100 75,900 138,200 144,000 146,400 147,900 149,400 150,900 152,400 Cart Fees 117,529 117,400 88,100 70,400 128,100 133,400 135,700 137,000 138,400 139,800 141,200 Club Fees 5,576 5,700 4,600 3,400 5,700 5,800 5,900 6,000 6,100 6,200 6,300 Fixed Lozares ManagementFee 345,333 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 Merchant Fees Reimbursement 36,211 36,400 30,700 24,400 43,000 44,900 45,700 46,100 46,600 47,100 47,500 Contract Maintenance 475,000 750,000 675,000 537,500 800,000 800,000 800,000 800,000 800,000 800,000 800,000 Repairs &maintenance 21,943 22,300 17,800 13,400 22,300 22,600 22,900 23,200 23,500 23,900 24,300 Advertising & Publish 10,765 10,900 9,300 16,400 16,600 16,800 17,100 17,400 17,700 18,000 18,300 SuppliesandMaterials 44,417 45,100 36,100 21,700 45,100 45,800 46,500 47,200 47,900 48,600 49,300 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –36 Palo Alto Golf CourseRevenue / Expense -OptionF Revenues FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Water Expense 361,870 330,500 314,000 254,200 224,740 228,100 231,500 235,000 238,500 242,100 245,700 Other Direct Charges (Incl. Electric) 45,263 45,900 36,700 22,000 42,500 43,100 43,700 44,400 45,100 45,800 46,500 Indirect Charges 102,571 104,100 83,300 50,000 104,100 105,700 107,300 108,900 110,500 112,200 113,900 Total CityOperating Expenses $1,956,085 $2,079,300 $1,877,100 $1,577,800 $2,060,940 $2,083,000 $2,097,700 $2,110,300 $2,123,200 $2,136,400 $2,149,500 Net Income From Operations (Loss)$828,703 $626,300 $402,300 $238,500 $1,120,860 $1,239,200 $1,283,400 $1,304,000 $1,325,900 $1,346,500 $1,368,900 Non-operating IncomefromSaleof Property 35,230 D/S Income $0 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0 Total Non-operating $35,230 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0 Total Operating Income(Incl. Non-operating)$863,933 $656,200 $428,000 $264,200 $1,146,560 $1,265,000 $1,308,800 $1,329,900 $1,351,800 $1,346,500 $1,368,900 Debt Service $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $432,200 $432,300 $431,200 $0 $0 Pmt toGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 NewDebt Service $0 $0 $0 $0 $0 $0 $0 $0 $0 $250,000 $0 AdditionalCapital $0 $0 $0 $0 $163,200 $163,200 $163,200 $163,200 $163,200 $163,200 $163,200 Reserve for Replacement $0 $0 $0 $0 $71,100 $74,300 $75,700 $76,400 $77,200 $78,000 $78,700 Cost Plan Charges $41,455 $42,700 $44,000 $45,300 $46,700 $48,100 $49,500 $51,000 $52,500 $54,100 $55,700 Total Debt/ OtherCharges $695,843 $636,500 $472,200 $474,300 $709,200 $716,400 $711,600 $722,900 $724,100 $545,300 $297,600 Net Income or (Loss)$168,090 $19,700 ($44,200)($210,100)$437,360 $548,600 $597,200 $607,000 $627,700 $801,200 $1,071,300 NOTE: OptionFwouldlikelyincludeadditional revenuefrom soccer fields of approximately$78,000per fieldper year. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –37 PROJECTIONSBASEDON “OPTION G” TheNGFprojectionmodelfor“OptionG”represents asignificantchangefromother options presented.Thisoption would involve a completerenovation ofthe Palo Alto MunicipalGolf Course (tobere-branded as“Baylands Golf Club).The project would involve afullclosureof thegolf coursefrom April2013throughMarch 2014,re-opening asabrand newgolf coursewith the highestqualitygolf featurescommanding higherfeesthan anyotheroption presented.The fullgolf course irrigationsystem would be replaced andthreenewsoccerfields would be added tothe site. TheNGFrevenue estimate hasbeencombinedwith thepresent operating structuretoprovide a fullestimate of BaylandsGCperformanceforthenext 10 years,assumingsuccessful completion ofthe proposed “OptionG” upgrades.TheNGFhas projectedgrowth to almost$3.4 million in totalgrossfacilityrevenue (from allsources) by2016.Thisrevenue would then be divided among the parties (City, proshop,F &Band maintenance)basedon existing contract structures. KeyAssumptions TheBase assumptions in preparing theprojectedfinancialperformanceestimates covers severalcategories, including rounds activity, greenfees, averagerevenues (carts,range, concessions,etc.),totalrevenue, expenses, capitaland debt. Rounds Performance Theroundsactivityperformanceassumptionsinclude: Rounds in FY2012 assume a3%reductionfromFY2011 totalroundsbased on actualperformanceinthefirst 6monthsof FY2012. Rounds in FY2013 assume ‘as-is’operationon 18 holesforthefirst 9months.The golf coursethen closesentirelyforthenext 12months(April2013 –March2014),re- opening asanupgradednewfacilityon April1,2014. Upon re-opening,roundsareassumedtogrowto72,800 in FY2015, stabilizing at 75,700rounds by2017. Theoveralldistribution ofrounds bycategoryis shown in the table below: National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –38 Palo Alto MunicipalGolfCourse(Baylands GC) Projected Activityfor OptionG(2012-2021) As-Is 9-Mos. 18-H/ 3Mos. closed 3-Mos. 18-H/ 9Mos. Closed Operateon18-holeswithmaximum renovationandupgrade FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 -2021 Weekday 18-Hole 5,400 4,000 1,400 6,100 6,200 6,300 Senior Non-Resident 6,300 4,725 1,600 6,900 7,000 7,100 9-Hole 1,500 1,125 400 1,700 1,700 1,700 Senior 900 675 250 1,200 1,200 1,200 Junior 1,400 1,050 400 1,500 1,600 1,600 EarlyBird 700 525 200 900 900 900 Twilight 11,300 8,475 2,900 12,400 12,600 12,800 Specials 7,500 5,625 1,900 8,400 8,500 8,600 Junior Card 1,100 825 300 1,300 1,300 1,300 Senior Card 800 600 200 1,100 1,100 1,100 Non-ResidentSenior Card 4,000 3,000 1,000 4,400 4,500 4,600 Sub-TotalWeekday 40,900 30,625 10,550 45,900 46,600 47,200 Weekend 18-Hole 10,200 7,650 2,600 11,000 11,200 11,400 9Hole 1,900 1,425 500 2,200 2,200 2,200 Junior 800 600 200 1,000 1,000 1,000 Twilight 6,200 4,650 1,600 6,700 6,800 6,900 Sub-TotalWeekend 19,100 14,325 4,900 20,900 21,200 21,500 ComplimentaryPlay 2,500 1,875 650 2,500 2,500 2,500 Tournaments 2,200 1,650 600 3,500 4,000 4,500 TOTAL ROUNDS 64,700 48,475 16,700 72,800 74,300 75,700 Average Fees / Revenue Theaveragegreenfeesperround bycategoryare shown in thetablethatfollows. Key assumptions driving thisestimate include: There is nochangein averagefeesforFY2012 over FY2011. Upon re-opening on 18holes (assumed April1,2014),averagefees in each categoryareincreasedapproximately15% over FY2012 (rounded). For FY2015through FY2021, NGF hasassumed1% annualincreases inallfee categories. Allother ancillaryrevenue centersmirrorestimates madeinOptionsDandF. Theaveragegreenfeesbycategoryand ancillaryrevenue perroundareshown in thetable below(assume1% annualincreasesforFY2018-2021 asnoted): National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –39 Palo Alto MunicipalGolfCourse(Baylands GC) Projected Average Green FeesforOptionG(2012-2021) As-Is 9-Mos. 18-H / 3Mos. closed 3-Mos. 18-H / 9Mos. Closed Operateon18-holeswithmaximum renovationandupgrade FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Weekday 18-Hole $37.00 $37.00 $42.50 $42.93 $43.35 $43.79 Senior Non-Resident $32.00 $32.00 $37.00 $37.37 $37.74 $38.12 9-Hole $23.00 $18.00 $24.00 $25.00 $25.25 $25.50 Senior $28.00 $28.00 $32.00 $32.32 $32.64 $32.97 Junior $14.75 $14.75 $17.00 $17.17 $17.34 $17.52 EarlyBird $23.00 $23.00 $26.50 $26.77 $27.03 $27.30 Twilight $30.00 $30.00 $34.50 $34.85 $35.19 $35.55 Specials $19.00 $19.00 $22.00 $22.22 $22.44 $22.67 Junior Card $19.70 $19.70 $22.50 $22.73 $22.95 $23.18 Senior Card $23.50 $23.50 $27.00 $27.27 $27.54 $27.82 Non-ResidentSenior Card $27.50 $27.50 $31.50 $31.82 $32.13 $32.45 Weekend 18-Hole $47.00 $47.00 $54.00 $54.54 $55.09 $55.64 9Hole $27.00 $24.75 $28.50 $28.75 $29.04 $29.33 Junior $15.80 $15.80 $18.00 $18.18 $18.36 $18.55 Twilight $34.00 $34.00 $39.00 $39.39 $39.78 $40.18 Tournaments $34.60 $34.60 $40.00 $40.40 $40.80 $41.21 Other Revenue Assumptions Totalgreenfeerevenue includes alldiscount(10-play) cards andmonthlypasses. Ancillaryrevenue per round (carts,merchandise,range,food,bar, other) isderived fromtotalrounds, including complimentaryrounds. Concession revenue tothe Cityof Palo Altoassumesthesamecurrentcontract basics through FY2021,with nominimumsafter April 2013.The Cityisassumed to collect:(1)7%of allfood and beveragerevenue; and(2) 4% ofmerchandise sales. Expense Assumptions Labor expenses areforCityoversight only.These include allocationsforcontract oversight, Parks andRecreation Director,Division manager,etc.The estimateis intended toinclude bothsalaryand benefitsallocation and isincreasedby3.0% per year throughFY2021. Commissions paidtotheproshop vendorinclude 38%of driving rangegross revenue and 40%ofgross cartrevenue (aspercontract). Theproshopmanagementfee isfixed at $28,775 permonth while thegolf course is open. Nomanagementfees areassumedforApril2013 throughMarch 2014. Reimbursementsformerchantfees(mostlycreditcardfees)areassumedto be 1.4%of totalfacilityrevenue. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –40 Contractmaintenanceexpense totheCityof Palo Alto assumes: $62,500 permonthfor FY2012 $62,500 permonthforthefirst 9monthsof FY2013 No maintenanceexpensefor April2013throughMarch 2014 $68,750 permonth(fixed) uponre-opening in April2014 (3monthsin FY2014),thenfortheremainder of FY2015-2021 Other expensessuch asrepairs,maintenance,supplies, clubfees,materials and otherindirectexpensesare allbasedon actualfiguresforFY2011 with 20% reduction inFY2013 and70%reduction in FY2014,returning toFY2011 levels in FY2015 plus 1.5% increases assumedthrough FY2021 Advertising andpublishing expense is reduced by50% during constructionand operation on9 holes,totaling 15%reduction in FY2013. Uponre-opening thegolf coursethis expense isassumedtoincrease50%toaccountforenhancedmarketing of the upgradedfacilityand re-theme as“Baylands GC.” Water expense hasbeenhighlyvariable and NGFprojectionsarebasedon the4- year average(2008-2011),with assumptions of reductions in useasdescribed previously: 60%reduction during construction- $11,000 permonth 32%reduction uponre-opening - $18,730 permonth 1.5%annualincreasesfrom FY2015through FY2021 Other directcharges(including electric) arebased on actual2011totals,based on actualfiguresforFY2011 with 20%reductioninFY2013 and 70%reduction in FY2014. Aslightreduction expected uponre-opening thegolf course inFY2015 (as described bythearchitect). Annualincrease of 1.5% is assumedfrom FY2015 throughFY2021. Debt Service andOtherNon-Operating Expense Assumptions TheNGFhas assumedthatthe $3,500,000in additionalcost neededto complete Option F,over and above thecostforOption A,willbe fundedvia the issuance of a newdebt program(revenue orGeneralObligation Bond),with termsof 3.5% interest for20 years,with payments beginning in FY2015. Pro Forma Estimate for ‘Option G’ Scenario – FY2012– FY2021 Based onthe inputs described above,the proforma estimateforfutureperformanceunder “OptionG”shows thatwiththis completerenovation,the Baylands GCcould produce net incometothe Cityintherange of $528,000to $738,000(afterexisting and newdebt,costplan and reserve) throughthetermof thecurrent debtprogram.AftertheCityis no longer responsiblefor its older(1999) debt payments(beginning in FY2020),thefacilityis expected to produce net incometothe Cityin therangeof $1.16 to$1.18million peryear.Asthis is a projection,allfiguresafter FY2012 have beenrounded tothenearest$100for simplicity. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –41 Palo Alto Golf CourseRevenue / Expense -OptionG Revenues FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Golf Course Revenues Green Fees (Incl. Cards)$2,016,537 $1,960,100 $1,459,400 $578,600 $2,555,800 $2,639,100 $2,722,000 $2,749,200 $2,776,700 $2,804,500 $2,832,500 Cart Fees 302,799 293,500 175,900 75,800 333,600 343,900 353,900 357,400 361,000 364,600 368,200 Driving Range 343,911 333,400 199,800 86,100 378,900 390,600 401,900 405,900 410,000 414,100 418,200 Tournament / League Fees 2,196 2,100 1,600 500 2,400 2,400 2,500 2,500 2,500 2,500 2,500 Other 11,813 11,500 6,900 3,000 12,900 13,200 13,700 13,700 13,900 13,900 14,200 Total Golf Course Revenues $2,677,256 $2,600,600 $1,843,600 $744,000 $3,283,600 $3,389,200 $3,494,000 $3,528,700 $3,564,100 $3,599,600 $3,635,600 Concession Payments Food and Beverage Concession Variable Portion $55,076 $53,400 $32,000 $13,800 $60,700 $62,500 $64,400 $65,000 $65,700 $66,300 $67,000 UtilityPayment $25,920 $25,900 $26,400 $26,400 $26,900 $26,900 $27,400 $27,400 $27,900 $27,900 $28,500 Total fromF &BConcession $80,996 $79,300 $58,400 $40,200 $87,600 $89,400 $91,800 $92,400 $93,600 $94,200 $95,500 Pro Shop Lease Merchandise (4%) $26,536 $25,700 $15,400 $6,600 $28,900 $29,500 $30,700 $30,700 $31,300 $31,300 $31,900 Total FromPro Shop Concession $26,536 $25,700 $15,400 $6,600 $28,900 $29,500 $30,700 $30,700 $31,300 $31,300 $31,900 Total Gross to City $2,784,788 $2,705,600 $1,917,400 $790,800 $3,400,100 $3,508,100 $3,616,500 $3,651,800 $3,689,000 $3,725,100 $3,763,000 Operating Expenses FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Salaries & Benefits $259,455 $139,000 $141,100 $143,200 $145,300 $147,500 $149,700 $151,900 $154,200 $156,500 $158,800 Range Fees 130,152 126,700 75,900 32,700 144,000 148,400 152,700 154,200 155,800 157,400 158,900 Cart Fees 117,529 117,400 70,400 30,300 133,400 137,600 141,600 143,000 144,400 145,800 147,300 Club Fees 5,576 5,700 4,600 1,700 5,700 5,800 5,900 6,000 6,100 6,200 6,300 Fixed Lozares ManagementFee 345,333 345,300 259,000 86,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 Merchant Fees Reimbursement 36,211 36,400 25,800 10,400 46,000 47,400 48,900 49,400 49,900 50,400 50,900 Contract Maintenance 475,000 750,000 562,500 206,300 825,000 825,000 825,000 825,000 825,000 825,000 825,000 Repairs &maintenance 21,943 22,300 17,800 6,700 22,300 22,600 22,900 23,200 23,500 23,900 24,300 Advertising & Publish 10,765 10,900 8,700 16,400 16,600 16,800 17,100 17,400 17,700 18,000 18,300 SuppliesandMaterials 44,417 45,100 36,100 13,500 45,100 45,800 46,500 47,200 47,900 48,600 49,300 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –42 Palo Alto Golf CourseRevenue / Expense -OptionG Revenues FY2011 Actual FY2012 Projected FY2013 Projected FY2014 Projected FY2015 Projected FY2016 Projected FY2017 Projected FY2018 Projected FY2019 Projected FY2020 Projected FY2021 Projected Water Expense 361,870 330,500 280,900 155,400 225,600 229,000 232,400 235,900 239,400 243,000 246,600 Other Direct Charges (Incl. Electric) 45,263 45,900 36,700 13,800 41,500 42,100 42,700 43,300 43,900 44,600 45,300 Indirect Charges 102,571 104,100 83,300 31,200 104,100 105,700 107,300 108,900 110,500 112,200 113,900 Total CityOperating Expenses $1,956,085 $2,079,300 $1,602,800 $747,900 $2,099,900 $2,119,000 $2,138,000 $2,150,700 $2,163,600 $2,176,900 $2,190,200 Net Income From Operations (Loss)$828,703 $626,300 $314,600 $42,900 $1,300,200 $1,389,100 $1,478,500 $1,501,100 $1,525,400 $1,548,200 $1,572,800 Non-operating IncomefromSaleof Property 35,230 D/S Income $0 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0 Total Non-operating $35,230 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0 Total Operating Income(Incl. Non-operating)$863,933 $656,200 $340,300 $68,600 $1,325,900 $1,414,900 $1,503,900 $1,527,000 $1,551,300 $1,548,200 $1,572,800 Debt Service $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0 Pmt toGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 NewDebt Service $0 $0 $0 $0 $246,300 $246,300 $246,300 $246,300 $246,300 $246,300 $246,300 Reserve for Replacement $0 $0 $0 $0 $76,700 $79,200 $81,700 $82,500 $83,300 $84,100 $85,000 Cost Plan Charges $41,455 $42,700 $44,000 $45,300 $46,700 $48,100 $49,500 $51,000 $52,500 $54,100 $55,700 Total Debt/ OtherCharges $695,843 $636,500 $472,200 $474,300 $797,900 $804,400 $800,700 $812,100 $813,300 $384,500 $387,000 Net Income or (Loss)$168,090 $19,700 ($131,900)($405,700)$528,000 $610,500 $703,200 $714,900 $738,000 $1,163,700 $1,185,800 NOTE: OptionG wouldlikelyincludeadditional revenuefrom soccerfields ofapproximately$78,000per fieldper year ($234,000 for 3fields). National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –43 FINANCIAL PROJECTIONS SUMMARY SummaryofOptions Comparative tablefor options in 2015and 2020are shown below: Summaryin 2015 Summaryin FY2015 ModestUpgrade More significant upgrade /nicer features Nearly complete renovation Maximum renovation Option Option Option Option A D F G TOTAL ROUNDS 67,200 70,600 70,600 72,800 ANNUAL ROUNDS REVENUE $2,152,216 $2,369,615 $2,369,615 $2,555,758 AVERAGE GREENFEE PER ROUND $32.03 $33.56 $33.56 $35.11 Revenues FY2015 Projected FY2015 Projected FY2015 Projected FY2015 Projected Total Golf Course Revenues $2,817,500 $3,068,500 $3,068,500 $3,283,600 Concessions Total fromF & B Concession $82,400 $85,200 $85,200 $87,600 Total FromPro Shop Concession $26,700 $28,100 $28,100 $28,900 Total Gross to City $2,926,600 $3,181,800 $3,181,800 $3,400,100 Expenses Water $238,000 $204,900 $224,740 $225,600 Maintenance Contract $800,000 $852,000 $800,000 $825,000 Total to Pro Shop Contract 638,300 654,600 654,600 668,700 All Other Expenses 390,400 382,600 381,600 380,600 Total CityOperating Expenses $2,066,700 $2,094,100 $2,060,940 $2,099,900 Net Income From Operations (Loss)$859,900 $1,087,700 $1,120,860 $1,300,200 Total Operating Income(Incl. Non- operating)$885,600 $1,113,400 $1,146,560 $1,325,900 Total Debt/OtherCharges $539,500 $1,128,000 $709,200 $797,900 Net Income or (Loss)$346,100 ($14,600)$437,360 $528,000 Footnotes Partial irrigation Partial irrigation $78,000Soccer revenue $234,000 Soccer revenue National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –44 Summaryin 2020 Summaryin FY2020 ModestUpgrade More significant upgrade /nicer features Nearly complete renovation Maximum renovation Option Option Option Option A D F G TOTAL ROUNDS 68,200 73,300 73,300 75,700 ANNUAL ROUNDS REVENUE $2,300,746 $2,598,658 $2,598,658 $2,804,486 AVERAGE GREENFEE PER ROUND $33.74 $35.45 $35.45 $37.05 Revenues FY2015 Projected FY2015 Projected FY2015 Projected FY2015 Projected Total Golf Course Revenues $3,010,100 $3,361,100 $3,361,100 $3,599,600 Concessions Total fromF & B Concession $87,100 $91,500 $91,500 $94,200 Total FromPro Shop Concession $28,200 $30,300 $30,300 $31,300 Total Gross to City $3,125,400 $3,482,900 $3,482,900 $3,725,100 Expenses Water $256,400 $220,800 $242,100 $243,000 Maintenance Contract $800,000 $852,000 $800,000 $825,000 Total to Pro Shop Contract 657,900 683,100 683,100 698,900 All Other Expenses 433,200 412,400 411,200 410,000 Total CityOperating Expenses $2,147,500 $2,168,300 $2,136,400 $2,176,900 Net Income From Operations (Loss)$977,900 $1,314,600 $1,346,500 $1,548,200 Total Operating Income(Incl. Non- operating)$977,900 $1,314,600 $1,346,500 $1,548,200 Total Debt/OtherCharges $873,100 $632,100 $545,300 $384,500 Net Income or (Loss)$104,800 $682,500 $801,200 $1,163,700 Footnotes Partial irrigation Partial irrigation $78,000Soccer revenue $234,000 Soccer revenue National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –45 SummaryResults Theresults ofthe NGF Consultingfinancialprojectionsfor Palo AltoGolf Course,basedonthe various reconfiguration options andtheanalysis and assumptions presented in thisreport, show thatthefacilitywillgenerate,tovarying degreesbased ontherenovation option, improved rounds andrevenue performancecomparedtothe base“as is” scenario.In relationto estimating lostroundsand revenues during construction, NGF has assumedfor alloptions under which thefacilitywillremain openfor9-holeplaythattheCitywillstill be ableto provide a qualitygolf experiencethat isminimallydisruptive tothegolfer. Keyobservations regarding projected“BaylandsGolf Club at PaloAlto”financialperformance: NGF hasestimatedthattotalgross(toCity) revenues willdecrease byvarying amountsforthefour options evaluated. For instance, underOption A,totalgrossis expected todropbynearly$700,000 between projectedFY 12and FY14,the year of maximum disruption.Thisrepresentsa decrease of about25%. However, because of expense reductions(e.g.,rangeandcartpayments, contract maintenance, water,indirectcharges)during thetime of construction,netincome from operations(beforedebt,other costs) decreases byonly±$300,000over the sametimeperiod.Option G, which involves a 12-month closure of all18holes, naturallyresultsin thegreatestreduction inrevenue, with only$791,000gross incomefrom operationsin FY 2014, when thecourse isclosedfor9months. Rounds played, afteryears of decline,areprojected toreboundunderallofthe reconfiguration options,with options Dand Fatstabilized totalroundsat73,300, representing a 5,100round improvement overOption A.OptionG –fullrenovation – resultsin thehigheststabilized activitylevel, atnearly76,000 annualrounds. Option D, which is expectedto cost±$600,000morethan baseOption A, is projectedto producesignificantlyhighernetoperating incomethanOptionA, resulting in aquick payback of the investment. Stabilized NetOperatingIncome(beforedebt andother costssuchas capital, capital reserve, andcost plan) is projectedto behighestunderOptionG,with 2021 NOI projected at $1.57million.Option Fissecond with $1.37million,followed closelyby Option Dat$1.34million. Even afteradditionaldebt associated with improvementsis considered,Option Gis projectedto produceoverallNetIncometothe Cityverysimilar to that ofOption D. (Also,OptionDincludesa one-timechargeof $500,000 in 2020for partial irrigation replacement). Further down the road when thedebtforOptionG ispaid off, itis expected toproducethehighestNetIncomeforthe Cityof Palo Alto. Justificationsfor Revenue Projections NGF isconfident,given the inputs(e.g., expectedqualityand appealof thegolf coursefollowing improvements)foreachoption,thattherounds,fees,revenues, andexpenses projected under each scenario arereasonable and achievable.The higheststabilized rounds activitywe have projected under anyscenario was less than76,000 totalrounds,a levelthat was achieved as recentlyas 2007-08(andwasfarexceeded in thepast)with a productthatwas inferiortowhat a reconfigured andre-brandedgolf coursewillbring tomarket.Also, wefeelwe have been conservative in terms ofthefeeincreasesthattheimprovedfacilitywillbe able to sustain.(As with anyproforma,thereis a higher degree of uncertaintyaswe gofurther out in yearsasmore variables come intoplay). Likewise, we believe it is more difficulttoestimate thenetimpact on revenues during thetimeof construction, astherearemanyvariables, notthe leastof which are golfer behavior andpreferences,thatcan comeinto play. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –46 Proformas are,bytheirnature,models basedona set of assumptionsthatmayormaynot becomerealityand which aresubjecttoa number of uncontrollablefactors (e.g., weather variations, theeconomy,quality/quantityofthe competition),butNGFbelieves thatour projectionsrepresent a“reasonable” estimateof performanceforthe“Baylands”facilitybased on thefactors discussedin thisreport.Among thefactorsconsideredwhen crafting our projectionsforeachmodelare: Expected higherqualityof the Palo AltoMunicipalGolf Course(levelof improvement depends on intensityofReconfigurationOption chosen, levelof “additional” work). Re-branding andeffective marketing of the“Baylands Golf Club at Palo Alto”,along with more proactive direct selling of largertournamentsand events. Reinventing the productshould re-energize the current customerbase,resulting in increasedfrequencyof play, and also positionthefacilitytocompetemoreeffectively fornon-residentrounds.Results of ERA’s 2008surveyrevealed that thenumberone reason Palo AltoGCwas not theprimarycourseof respondentswas “course quality/playexperience”. Non-residentgreenfeesat Palo Alto, especiallyon weekends,areatthelowend of the price rangeamong the directmunicipalcompetitors.Withan improvedproduct, thereshould belittleresistancetomodest price increasesatthe“Baylands”. Maintaining a strong price/value proposition willensurethattheimproved golf course remains verycompetitive in theareamarket despite expectedmodestfeeincreases. Maintenance conditionsthat willposition thefacilityin themid-to-uppertierof municipalgolf coursesin thismarket. Palo Alto MunicipalGolf Course is operating atrounds levels thatarewillbelowpeak levelsfrom 1990s andearly-to-mid2000s.Thefacilityhas achieved rounds played levels close towhat NGFConsulting is projecting underthemostfavorable option as recentlyas FY2008. TheBayArea remainsone of themostactive marketsformunicipalgolf inthe nation. Atthe peak ofthemarket, Palo Alto andseveralof itschief competitors realized annualactivitylevels approaching,oreven exceeding,100,000rounds. Thoughplaylevels maynever approachtheseextraordinarynumbers again, we believe themarket hasthe potentialtomakearecovery. NGF believes thereis alack of trulyoutstanding directcompetitorsto PaloAlto GC. Also, it islikelythat nonewgolf course inventorywillbe added tothismarketforthe foreseeablefuture. Potentialforregionaleconomic recovery, increased discretionaryincome,etc.The BayArea and Silicon Valleyhave some specific economic attributesthat act as naturaldemand driversforqualitygolf courses, including high incomes,anextremely robustcorporatepresence, andone veryhighvisitation numbers. Other ConsiderationsRegarding ImprovementOptions Asidefromthe expectedeconomic impactof thevarious baseReconfiguration Options,there remainquestionsthat willneed tobe addressedas theCityweighs thereconfiguration options, theirrespective forecastsin terms ofrounds/revenue and what additionalwork willstillbe required inthe instanceof doing lessnowand deferring certain improvementsto later.The overriding decisionto bemade isplan option(A,D, F orG)togowith and howthatfundamental decision willaffectfuturedecisions. For example,reconfigurationOptionA,while least costlyof National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –47 thoseto beconsidered,precludesrouting improvementsbeyond thoseofthefewholes being shifted andplacesoverallrestrictionsonfuture improvementstothegolf asset.Largely,thegolf course would remain thesamein itsanatomyforthe long term underA, but of coursethegolf coursemaybe inmuchbetter conditionandmaybe complemented bybetter supportamenities in thefuture.Themisconnectionmaybe thecourse itself —muchnicer, but asourgrading exercise concludes, notto thelevelof theother options becauseof their improvementsto hole- orientation,varietyand excitement. Thesuccessratefor increased revenues,betterreputation andtheabilityto betruetotheidea of atransformedgolf experience, increaseswith a more intensive re-working of thegolf course. Thedecision on which option toadoptwillneed to takeintoaccountmanyfactors,togetherwith thefinancialforecastsprepared. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –48 OtherIssues and Considerations MARKET POSITION /RE-BRANDINGOPPORTUNITY NGF Consulting hasreviewed the image andbrand recommendationsmade totheCityas part of the expanded scopeof services to addresslong rangeconsiderations.Weconcludethat closer integration ofthegolf coursetothe Palo Alto Baylands Preserve,“The Baylands”, should positivelyaffecttheCity’s effortstobrandthisarea as adestinationfor Palo Altoresidentsand visitors alike.Celebratedas anopenspace andnaturepreserve area,theBaylands represents a rich andpositive locale within Palo Alto and theSilicon ValleyRegion and willbe enhanced with an improved andre-brandedgolf product. Currently, Palo AltoMunicipalGolf Course effectivelylacks abrandimage,and thefacilityis verycloselyassociatedwith thelong-timegolf concessionaire –somuchso thatthe website addressforthegolf course is bradlozaresgolfshop.com, andrecordedphone messagesmention onlythe golf shopandnotthegolf course.Webelieve thata namechange to“Baylands Golf Club at Palo Alto”represents apositive move thatwillhave the effectof repositioning thegolf course,distancing itfroma“muni”layout. Additionally, it willsignalatransformationfrom an older,“worn down” layoutto onethat hasrenewed excitementand positive change.The recommendation toretain “Palo Alto” aspart ofthe courseimageand brand is agoodwayto connect with the existing name, aswellas the Cityitself. Useof “Golf Club” in lieu of“Golf Course” isan additionalsignalthatthegolf experience is not onlysomething new, butata higherquality. Themarketing theme “Public only in price,access and pride”is an excellentmessagetoremind the customerthatthegolffacilityremains accessible, opentothe public and pricedto provide one of thebettergolfing values in the BayArea.Thismessagealsoreinforcesthe transformation, ideallya win-win forthegolf consumertoreceive highqualityat a“municipal” price point. Sample magazine ads provided as partof theMarketing andThemerecommendationshit on importantconcepts,including: Silicon ValleyLocation Tradition —The designlegacyof BillyBell TheTransformation(i.e.,thechanges) The“Green” EnvironmentalCommitmentof theFacility Ourbelief isthatproperimplementation(adequate budgets,qualitycontroland propermedia placement) ofthe program willhave a dramaticeffecton driving newbusiness tothe“new” golf facility. Equallyimportantwillbe the affectthatthese messages andthe newbrand willhave on existing customers,andresidents of Palo Altoandits neighboring communities who currently playgolf elsewhere.In essence,theprogramforre-branding, introducing a newimageand theme, andthemarketing program, hasthe potentialto have averypositive affectonrounds and associatedrevenues. A commitmentonthe City’s partto becoming certifiedwith Audubon internationalas a “SanctuaryGolf Facility” is an integralpart oftheabilityto marketthecourse as a“green”aware and operatedgolffacility.Thisgoalshould be undertakenregardless of which reconfiguration National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –49 option is opted bytheCityand should be workablegiven the operation and/ormarketing budgets afforded.(Note:Beginning thisprocess now, priorto anyreconfiguration work,willhelp guidethereconfigurationwork and willalso establish agreaterdegree of improvement bywhich to attainthe Audubonstatusforthefacility). Plan Option Aposesthegreatest challengeto beconsistentwith the image, brand and marketing changesrecommendedbecauseitdoes notgo as deepintothe manyareas ofthe course intermsof newfeaturesandreconstructed areas. However, thefactthatPlanOption A willdramaticallyreduce turf throughthe course-wide work tocreate native areas andnew “Baylands” themed areas should bean adequatelyappreciated change. Plan OptionsD,F and G willhave no issues aligning with anyof thethemes andmessagesrecommended. With emphasis onaquality, outstandinggolffacility, theCitymaybe ableto realize what we have referredto as a“destination”publicgolf experience.IntheBayareawe would point to such courses as Pasatiempo in Santa CruzandHarding Park in San Francisco asmeeting this definition.Thesetwo courses aregoodexamplesof coursesthat have attained a reputation throughthefollowing attributes: Legacyofthe originaldesign Transformationfrommarginaltoexcellent conditions Commitmentbythemunicipalowners toreinvest in theassets Qualityrebuilding efforts Goodmarketing ofthefinished coursesandfacilities While both oftheabove examples are classiceradesigns(PasatiempobyAlister MacKenzie, and Harding Park byWillieWatson) it isstillappropriatetoreferencetheirsuccessesrelative to what Palo Alto Golf Course could attain.Whetherundertakenunderone,largerreinvestment project,orcarried out overtime,thepotentialtransformationof Palo AltoGolf Courseis bolstered byanumber offactorsinherent inthefacility: A designlegacythatcanbe leveraged—WilliamP. andWilliamF.Bell, theformer responsiblefor designssuch as Stanford,Riviera and Bel-Air A location thatsitsattheheart of Silicon Valley A seaside setting thathasgreaterpotentialtotake advantageof itsnatural landscape —theBaylands environment, Bayandadjoining Sanfrancisquito Creek A population basethat isrobustforgolf roundsbynon-residents A location thatis in oneof thetoptourist areas inthenation Obviously, undertakingmoreintensive reconfiguration(suchas with Plan G) willtransformmore of the existing course and is likelytomeetthisgoalon a strongerbasis.So,too,mayinvesting in moreof thealternate,optionalimprovements,including manyof thelong rangeimprovements beforetheCityforconsideration. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –50 ECONOMICS OFPOTENTIAL LONG-TERM / ADDITIONAL IMPROVEMENTS Forrest Richardson hasproposedthattheCitystudythefeasibilityof certainfacility improvementsthat are inaddition tothe baseimprovementsrecommended within ReconfigurationOptionsA, D,F,andG(pleasesee AppendixEforsummarytable of potential improvementsand estimated costs).Though NGF believes thatmanyof these improvements would improve theoverallqualityof thegolfer(and non-golf customer)experience, as wellas the imageofthefacilityin theeyes of areagolfers, itis not practicaltoassign incremental rounds played andrevenue dollarstomanyof these improvements(e.g., exterior and entry upgrades,signage/parking,rebuilding practicegreens,“alternate”golf course improvements, designatedyouth area).Practically, theseimprovements,tovarying degrees individuallyand certainlyas asumof their parts, are likelyto drawmore patronsoverall,keep them on-site longer, andincreasetheir propensitytospend while atthegolf course. Wehave confinedourbreak-even analysis to severalpotentialimprovementsthattiemore directlytorevenue: (1)The cart storagebuilding;(2) Expandedmeeting space; and(3) Range PerformanceCenter. CartStorage Building Atjust$4.54perroundin FY 2011,the averagegrosscartfeerevenue per round at Palo Alto Golf Coursesignificantlytrailsthe average of its chief competitive set(seeERA 2008 reportfor City).While the lowcartutilization is partiallya function ofthe“walkability” of thegolf course, ridership andrevenues have also likelybeen constrained bytheverylimited cart storage.Palo Alto GChas only46 carts available, some of which areoldergasoline powered cartsstoredin open storage outsidetheclubhouse(fewer than 35 cartscan bestored belowthe clubhouse).A moretypicalinventoryformostregulation length18-holegolf coursesis±70 carts.Wearetold thatfor largertournaments,additionalcartsmustbe leased andbrought infromoff-site.In summary, NGF believes it is likelythatthelimitedcartinventoryand storage space available has constrainedridership andmayhave actuallynegativelyaffected demandfor dailyfee and, especially, tournament playon occasion. As part of Forrest Richardson’s overallcapitalimprovement planfor PaloAlto GC, hehas included construction ofa newcartstorage building atan estimated costof $440,000.Inthe table below, we illustrate thenumber of yearsit willtakeforthe Cityto break even onthis investment,assuming different levels of incremental gross cartrentalrevenue perround,the currentrentpercentageof 60%,and stabilized rounds activityunderOptions DandF –73,300 rounds.Ofcourse, as noted,it ispossible that having additionalcarts willhave a positive effect on roundsplayed as well, butforpurposes of conservatism we areillustrating onlyincreasesin cartrevenue perround.Wealso assumethatallexpenses associated with thecart leaseand maintenancewillremaintheresponsibilityof thevendor,andthatthere will be noincremental Cityoperating costs associated with thenewbuilding. Palo Alto Golf Course Break-Even Analysis for Cart Storage Building AverageGrossCart RevenuePerRound Increase $0.50 $1.00 $1.50 $2.00 $2.50 IncrementalGross Revenue* $36,650 $73,300 $109,950 $146,600 $183,250 IncrementalRevenuetoCity* $21,990 $43,980 $65,970 $87,960 $109,950 Years to B/E* 20.0 10.0 6.7 5.0 4.0 *Assumes $440,000estimatedcost andstabilizedrounds played of 73,300from Options D,F National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –51 Expanded Meeting Space Theexisting restaurant at Palo AltoGChas limited meeting spacethat has significantly constrainedmeeting andbanquetbusiness atthefacility. Notbeing ableto accommodate larger events of ±250people precludes thefacilityfromcompetingforthemost lucrative, highmargin food &beveragebusiness. Assuch, expanding the meeting/banquet space is another componentofthe long rangeimprovement plan preparedfortheCitybyMr. Richardson. Based onthe estimatedcost provided of $1.7million, and assuming theCityincurs allofthe cost oftheimprovement,theannualdebtservice on a 20-year noteat3.5% would be $120,000 (rounded).NGFhas calculated thatthe incremental annualgrossfood& beveragerevenue necessarytogenerate $120,000 in additionalrentstothe Citytomeettheannualdebtservice is morethan$1.71million. Thiscalculation is basedonthe currentrentpercentage of 7%. In its2008study, ERAnoted: “Based ontheexperience of similargolf course oriented banquet facilities andthe demographics of thearea, expanding the clubhousetoaccommodatespecial events with up to250 attendees would add $600,000 to$700,000in annualspecialevent revenue.Thisrentalincome would justifyaboutone-half ofthecostof theimprovements.”NGF concursthat achieving this levelof incrementalgross revenue would likelybe an achievable goal,butwith updatedcost estimates,this levelof revenue would justifyonlyabout 40%of the investment cost.Therefore,thebalance ofthe Cityinvestment inthe expandedfacilitywould have to bejustifiedthroughtheincrementalrounds and associatedrevenues attributabledirectly tothe expandedmeetingfacilities.Based oncurrent andprojected averagegreen+cart(City share)feerevenue perround, itwould take 2,000to3,000of theseroundstohelpfundthe expanded facilities.Of course,theequationwould changemarkedlyif gross revenues accrued tothe Cityunderan alternate operating structure. Range PerformanceCenter Inthetable below, we provide a similar break-even analysis to the oneforthe cartstorage building. Mr. Richardson’s cost estimatefortherangeperformancecenter,plus theadditional6- bayrangeexpansion (we assume both are undertakentogether), is$600,000.Inthetable below, we illustratethe numberof years itwilltakeforthe Citytobreak even onthis investment, assuming different levels of incrementalgrossdriving rangerevenue perround (gross perround was $5.15 in FY 11),therentpercentage of 62%,and stabilized rounds activityunder Options D and F –73,300rounds.Of course,itcannotbe determined what percentageof rangeactivityis afunction of numberof bays as opposedtorounds played, so we have chosen todo a sensitivityanalysis byincreasing averagerevenue perroundratherthanpertee station. Another factor driving thismethodologyis thatthe performancecenter bays willbe usedforteaching, and willlikelyhave less utilization than thealreadyexisting bays. Wealso assumethatallincrementalexpenses associated with theexpanded rangeremain the responsibilityof theconcessionaire, andthatthere willbe no incrementalCityoperating costs associated with thenewbuilding. Finally, we assumethattheCityreceives no lessonrevenue. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –52 Palo Alto Golf Course– B/E Analysis for Range PerformanceCenter+6-BayExpansion AverageGrossRangeRevenuePer Round Increase $0.50 $0.75 $1.00 $1.25 $1.50 IncrementalGross Revenue* $36,650 $54,975 $73,300 $91,625 $109,950 IncrementalRevenuetoCity* $22,723 $34,085 $45,446 $56,808 $68,169 Years to B/E* 26.4 17.6 13.2 10.6 8.8 *Assumes $600,000estimatedcost andstabilizedrounds played of 73,300from Options D,F MANAGEMENT STRUCTURE NGF was toldthatsomeCitystaff would like tofurtherexplore - via issuance of an RFP in advance ofthe ProShopand Maintenance agreementsexpiring inApril, 2013 -theimplications of changing theoperating structure atPalo AltoGolf Courseto amanagementcontract.We have been askedto offerouropinion asto whetherthis type of structurewould be more effective, orproducehigher net operating incometotheCity, thanthe current“hybrid” structure thatinvolves both amanagementfeeand aconcession onthegolf operations side, privatized maintenance, anda separatefood& beverage concession. As EconomicResearchAssociates(ERA) noted in their2008OperationsReviewof the Palo Alto MunicipalGolf Course,the currentagreementforgolf operationsevolved due toIRS regulationsrelatedtothetax-exemptfinancing utilized forthelate1990srenovation ofthegolf course.Specifically, at least 50% ofthecompensation within a management agreementmust befixedfeein sucha case. ERA,afterdoing thefulloperationsanalysis,concluded thatthe current pro shopdealwas “slightlyfavorable”tothe concessionaire. Afterrunning cashflowmodels under various operating scenarios,ERA concluded that CityNet Incomewas maximized with privatemaintenance(subsequentlyput inplace) and“marketrate” concession terms.However, theyalso notedthat“marketrate”, which involved lower concession rentstotheCityand an elimination ofthemanagementfee, was notpermissible by theIRS without arestructuring ofthecurrentdebt. ERA concludedthat,among the operating modelsthat were permissible within the current debtframework,thestructurethatis nowin place at Palo AltoGolf Course –no change in contractterms, but with private maintenance– producedthe highest CityNet Income.Afull-service Management Agreement producedthe second highestCityNetIncome. Withoutdoing afulloperations review, NGF doesnothave sufficient informationtocritically evaluate ERA’s analysis orto identifythe operating structurethat would be thebestfitforPalo Alto GC.Whiletherearea number of advantagestothefullservice managementcontract structure, it is alsotruethat“no onesizefitsall”.There aremanyfactorsand variables to consider when evaluating options,andit would be unfairtoboththeCityand thecurrent vendorsforaconsultanttomake arecommendation regarding theoptimalstructurewithout being retainedtodo afullfacilityanalysis. Carefullyevaluating thevalue proposition that eachof the current vendorsbrings tothetablewould be just onecomponentof such an analysis. For instance,thegolfersurveythat ERA implemented as partof their 2008studyshowed that Brad Lozares was ratedquitehigh bygolfers,indicating considerablegoodwilland “equity” builtup in thegolf shop. Similarly,NGF hasbeentold of improved maintenanceconditions (aswellas considerable cost savings) sinceValleyCrest was brought on. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –53 Having saidthat,we dofeel confident recommendingthattheCityretainthe current structure atleastthrough thecompletion ofthe renovation project.However, delaying consideration of afundamental changeinoperatingstructure shouldnotpreclude modifyingterms.Forinstance,theCityandthe golf vendormaycome toan agreement resultinginloweringthe managementfeetoreflect reducedresponsibilitiesand concession revenues duringrenovation(especially underOptionG),while stilladhering toIRS guidelines.Not only willthe project substantiallydisrupt business,but significant unknowns include thetiming of theproject andhowthe newlyimprovedfacility willcashflow after being broughtbacktomarket and“re-branded”.Also,thefood &beverage contract doesn’t expire until2018, so some of theadvantages ofthe singleoperatormanagementstructuremay be lessened unlessan earlytermination totheagreement canbesuccessfullynegotiated with the current vendor. Finally, negotiating anewagreementduring construction, when proposers themselves willnot have fullinformation abouthowthe improvedfacilitywillcashflow, may result intheCitynot entering intothe bestdealpossible. NGF believes thatthesearejustafewof the important variables thatmake issuing an RFP at this stage lessthanoptimal.Werecommendthatthe Citywait untilafterrenovation is completedandthe improved facilityhas beenupand running fora yearormore before considering a substantive change instructure.This strategywillprovide additionalinformation thatwillput theCityin abetter positiontomake an informed decision regarding operating structure(forinstance,the Citymayfindthattheimproved “Baylands GolfClub” has significant upside revenue potential,thusmaking itrelatively more attractive tocontrolallrevenues under themanagementcontract structure). LONGRANGE CONCERNS Concernsraisedthroughthepublic process ofreviewing reconfiguration options have included thefollowing long term implications: High saltspresentin thenative soils Intrusion bygeese andburrowing animals Potentialforthe adjacentairportto negativelyaffectthegolf experience In essence,thequestionraised is:“CanthePaloAlto Golf Coursebeexpectedto becomea significantlybettergolf experience given theseissues?” NGF Consulting relies on theopinions of professionals associatedwith individualgolf facilities to addresscertainquestions. For example,inthe case of thehigh salts we look toagronomists, the coursesuperintendent and/orthegolf coursearchitect.Inthecaseofanimalintrusion, because these are oftensite specific, we look tonearbyfacilities toseehowtheyhave dealt with theissue. High Salts Soils high in salts are notuncommontogolf courses locatedalong coastalwaterways and oceans.Inthecaseof Palo Alto thesoils arenotonlyaffectedbythelocation bySan Francisco Bay, but bythepoorlydraining soiltypes.Additionally, theuse of effluent(recycled) water, which typicallyhas higher saltcontent, exacerbates thecondition.While our work hasnot included agronomicevaluation, we have endeavoredto understandthegeneralsituation by comparing outcomeswe have observed at othergolf operations. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –54 “Linkscourses,”thoselayouts along thedunesformedcoasts ofthe British Islesand similar locales aroundthe world,arepronetosaltysoils.Yet, with their sandysoilbasis,these sites supportgoodturf because thesaltsareleachedregularlydownward bynaturalrains.This isthe hallmark of links courses, andwhytheir development onthesenatural,sandysoils were so appropriate.When soils are not sandyandporous,the build-upof saltsbecomesproblematic. This isthecaseatPaloAlto Golf Course,where management overtheyears hasbeento periodicallyirrigate withfresh water, driving saltsdownward, and toaddgypsum tothesoils. Additionally, themostrecentremodeling work added a capof sandand better soilmixto several fairways, making themmuch easiertomanageand support healthyturf.These bestpractices have resulted inreasonablyhealthyturf growth despite thesaltysoilconditions. According tostaff,while salts are high,theturf has “learned”to adapt.There is adefinite differencebetweenfairways where the sandcaphas been placedand areas where drainage is not asgood andwhere older native soils arepresent.Also, Paspalumturfvarieties have flourished atthegolf course in afewareas.These areasappeartohavemuch bettersuccess ratesof healthygrowth because thenatureof Paspalumgrass istotolerate saltstoa significantlyhigher degree. NGF Consulting posedthequestionof managing highsaltstoForrest Richardson &Associates, specificallyasking whatadditionalmeasures would be affordedthroughthe reconfiguration options toaddressthis issue.Theresponse summaryis asfollows: Management ofexisting sand capping andhealthyturf rootzone material(the uppermost layers ofrootzone) willbe managedthroughthereconfiguration,replacing thatmaterialas“topsoil”to newfairwayand turf areas;thiscostisrepresented inthe probable cost estimatespresentedtotheCityforreconfiguration options. Newsoils willbe imported as possible within thebudgets,potentiallyfromthe StanfordUniversityMedicalCenterproject(s);these additionalcosts(andrevenue potential) have beenaccounted in probable costestimates. Paspalum turfgrasswillbe usedtosod allnewareas offairways, roughsand tees (Note:Thespecific variety is yetto bedetermined). Theirrigationsystemwill provide dualwatering capabilities, able todeliver potable water toselectedareasand amixof effluent(higher saltcounts)andfresh water; this capabilityallowsflushing (leaching of saltsdownward) as is being done currently. Significantlyimproved drainage isaffordedin each reconfigurationoption,helping to prevent build-up of saltsbyquickertransportationof surfacewater awayfromturf areas andthesoilrootzone, andtherebyreducing thebuild-up of saltsthatoccurs when water is allowed to standandslowlyseep intotherootzone. Theseareprudentmeasuresthatarecommonamong golf course sites with highsaltspresent in the soil.Additionally, we understandthattheCityhas agoaltoreducesaltcountswithin its effluentwater system,agoalthatis not necessarilyaimed at improving conditions atthegolf course,butwillhave a definite value to City’sgolf operation asset. Whilethesuccessrate of overallcondition improvementcannotbeguaranteed, we can look at comparableoperationswhere high salts are effectivelymanaged.Thereare numerous examples of thisthroughout California,including the BayArea.California examples include National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –55 Monarch Bay(San Leandro), LasPositas(Livermore), Metropolitan(Oakland),Olivas Linksand Buenaventura (Ventura),andIrvine (ShadyCanyon Club). Manycourses with salt issues areturning to Paspalum turfgrassas ananswer. Some ofthe example coursescited have moved to 100% Paspalumgrass.NGFConsulting notesthatthis trendis widespread in Florida,the Caribbean, Mexico, SouthTexas, andHawaii. In Hawaii,for example, Paspalum varieties have literallytransformedthegolf landscapefroma struggling Bermudagrassregiontoone that nowpredominantlyuses Paspalumin orderto overcome high saltsfrom water, soils and theproximitytotheocean. Even in Montereywe areseeing Paspalum use. Atthe MontereyPeninsula Club,forexample, some areaslocated onthe shore thatwere never ingoodcondition, have beencompletelyre-plantedwith Paspalum and arenow in excellent condition. Ourconclusion isthatPalo Alto can enjoyagoodsuccess overthelong term atthe existinggolf coursesite.Managing salts willhave a goodresult,notonlythroughgoodmaintenance practices, but incombination with thereconfiguration work, which should maketheCity’s efforts tomanage saltsmoreproductive, less costlyand,ultimately, more impacting toa positive golf experience. Ourcautionis thattheplan options(A,D,F andG)each have anassociatedresultthat is specific totheinvestment.Plan A,for example,addressesonlya minorityof the courseturf areas(drainage,rootzone,topsoilmanagement,irrigation,etc.) andwilltherefore not produce positive results acrossthefullgolf course.Plan G, atthe otherend ofthespectrum,resolves virtuallyallareas. Animal Intrusion Managing CanadianGeese infestation isoften dependent onregulationsand restriction placed on locales.Ouradvice totheCityis tostudyavailable mitigationmeasuresandto carefullynote themeasurestaken byneighboring courses.Geese populations have been successfully managedthroughthefollowing measures: Traineddogs,suchasbordercollies Reducing standing waterand openwater(ponds,lakes, swamps) Increasing habitatsurrounding thegolf coursethat willappealtogeese populations Implementing noise,reflective or otherrepellants Sterilization agentsto stopgenerationalreturnofgeesetothegolf courseareas Among themostsuccessfuloperations in Northern California arethecourses of the Monterey Peninsula, notablyPebble Beach Companies andtheprivate clubsin thearea.Withfew exceptions, these operators have usedtrained dogstomanagegeeseawayfromtheirturf areas.An on-sitedog specificallytrainedtomanagegeese populations remainsthemost efficientmeasuretoridgeese infestationfromgolf coursesin theU.S. Notonlyis thismethod humane,butithasthe benefit of alower costthan manyothermeasures,and is less interruptive tothegolf experience.Weunderstand there is added complexityrelative tothe adjacentairportoperation andtherequirementsassociated with making surethatgeese are not diverted totheairport,but awayfromboththegolf courseandtheairport.Forthis reason,we recommendthatthe Citytakea look atjointlyworking out aplanforboththegolf andairport needs. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –56 Withregardtotheground squirrelinfestation,we understandthatthis isbeing metwith ongoing mitigation effortsthatareallowed under stateguidelines. Also,the increaseof naturalized areas afforded byallreconfiguration optionswillhelp drive habitat awayfromturf and in-playareasof thegolf course. Airport Effects Manygolf facilities arelocated immediatelyadjacentto airports,and yet enjoyagoodreputation and highqualityof golfing experience.Weseenoundue negative associated with therelatively smallprivate plane airport, especiallygiven thattheflight pathsdo not directlyovertop thegolf course itself. Moreover, Silicon Valley appearsto beutilizing the airportforcorporateflights infavor ofthe largerregionalairportsthat posedelays and complexities due totheir scheduled, commercial flightbusiness.Thisfactmayactuallyprove beneficialto thegolf operationshould thegolf course anditsfacilities be elevated a “destination” levelof qualityandreputation.Theresultwith nominalairport useisthatmorevisitorsto Palo Alto willknowaboutthegolf course andbe able toget afirsthandviewofits offerings. Summary Based on experience and inputfrom ForrestRichardson,NGFConsulting believes thatlong- termmitigation oftheconcerns ofthis site isworkable andworththe premiumsrequiredfor maintenanceandmanagement.Inmanycases,golf courses are located on degradedland because thatland cannot beusedforotherpurposes.Wesuspectthis isthe case inPalo Alto and would find itdifficulttojustifyalternate solutions totherenovationsthatmight be considered:(a) continued operation in adeclined state;(b) abandonmentof the assetinfavorof a newlocation,given land values in the area;or(c) abandonmentoftherecreation amenity altogether,given itshighuse andthefinancialforecastspresented. POTENTIALECONOMICDEVELOPMENTOFTHE AIRPORT&GOLF “BAYLANDSGATEWAY” AREA Thegolf course“corner”and sharedentrywith the airport are considereda “gateway” to the Baylands Preserve areas. Assuch,this intersection hasgreatpotentialtobecomemorethan justagolf clubhouseandairport with nominalretailofferings. According tothe CommunityServices Department,forward and creative thinking hasbeen aimed atthepotentialforthis areatobecomeamore user-friendlyand service-oriented destination.Thusfar,thinking has included whetherthe area couldsupportamodestcollection of cafes,retailshops, and perhapseven a hotel.While noformalplans have been commissioned,the Cityhas discussedageneral,long rangeapproachto looking more in depth atthis possibility. Such development,especiallyif it included asmallhotel, would add naturaldemanddrivers in immediateproximitytothegolf course,thusresulting in increasedroundsand revenues. As an example, a 130-room business hotelina high demand localemayhave as manyas28,000 roomnightsbased onanaverage60%occupancyrate.Using amultiplierof 1.3guestsper room,this equatesto approximately36,000guests per year.Using apercentage of 10%golfers and assuming thatthegolf course couldgeteven 20%of thesegueststoplay, the resulting bump would be near1,000 additionalgolfersperyear. Also,thesegolferswould comprisenon- residentspaying the highest applicable rates, andtraveling golferstypically exhibit less price National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –57 sensitivityand would be likelyto alsospendmoneyon the practice range,pro shop, and/or restaurant. PRIVATEFUNDING POSSIBILITIES Of course,asidefromreceiving compensatorymoneyfromtheSan FrancisquitoCreek Joint Powers Authority,the Citymayhave tograpplewith howtofundadditionalmoneyrequiredif ReconfigurationOptionsD, F,orG ischosen,and/orif anywork identifiedas “additional”or “alternate”in thisreportitundertaken.One ofthemechanismsthatwould obviouslybe very preferable totheCityis raising privatemoneytofund some, or even all,of theneededmoney. Based on preliminarydiscussion held between Forrest Richardson,NGF, and theCity, the privatefunding mechanismmaytakea combination of thefollowing avenues thatthe Citywill have to explorefurther: Naming rightsforsomecomponentsofthefacility(e.g.,rangeperformancecenter, certain holes,teemarkers, designated youth area);thismaybefeasible dotothe numberof verywealthyindividuals in Palo Alto, as wellas the verystrong corporate (especiallyhigh-tech/ internet-based)presence. Grants –forexample,the FirstTee,which is very active in thearea. Lease-Back –some within theCityhave mentioned thepossibilityoffinding a design/build entitythatmightbe interested in undertaking allofthe improvements, including soccerfieldsif Option ForG ischosen,and restructuring thefinancing packagetogetthe entireproject, including someor alloptionalmasterplan improvements, doneat one time.Inthiscase,the±$3million the Cityreceives from the SFCJPA couldbe used toward paying offtheold debt anda newarrangement put in placeforthe work torebuild thegolf course. TheStanfordSoilImportis a wildcard in the equation. It could bring revenue intothe equation, but likelynotmorethan $500,000.Thismayprovide a partialfunding mechanismtohelp payfor some ofthemiscellaneous suggested work that willnot have a revenue streamattacheddirectlyto it(entryexperience, trails,signage, parking, etc.). National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –58 Appendices APPENDIX A– COMPARATIVE SUPPLY RATIOS –PALO ALTO GC&KEY MUNICIPAL COMPETITORS APPENDIX B– COMPARATIVE SCORINGOFRECONFIGURATIONOPTIONS APPENDIX C– WATER &POWERUSE DISCUSSION&ASSUMPTIONS APPENDIX D– REVIEWOF PROBABLE COSTESTIMATES APPENDIX E – POTENTIAL LONG-TERMMASTERPLANIMPROVEMENTS National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –59 APPENDIX A–COMPARATIVESUPPLYRATIOS– PALO ALTOGC&KEY MUNICIPALCOMPETITORS NGF haspresenteda comparisonof somekeygolf supplymeasuresforPalo Alto GCand its keymunicipalcompetitors, with the5-mile radiusaround eachfacilitythe basisfor comparison. Wenotethatallof thesubjectfacilities, exceptforSantaTeresa, have veryhigh household/supplyratios,which is one ofthekeyfactorsthatexplains the veryhighrounds figuresrealized per 18 holes among municipalgolf courses inthismarket. Also of note,in its2009publication “The Futureof PublicGolf in America,”NGFhypothesized thatthebestpredictorofa publicgolf course’ssuccess was thenumberofgolfersper18holes within a 10-mile radius,with 4,000identified asthekeynumberforprojectedfinancialstability. As shown in thesecondtable below, allof thesubjectcourses(again withexception of Santa Teresa)exceed this numberforthe 5-mile market. Golf FacilitySupply– 2011 (5-MileRadius) 5-mileRings TotalNo.of Golf Facilities TotalNo.of Golf Holes Households per18holes Households per18Hole Index (US=100) Palo AltoGolf Course 4 72 19,836 251 Poplar Creek Golf Course 5 81 17,942 227 SanJose MunicipalGolf Course 6 90 31,377 398 SantaClaraGolf &Tennis Club 6 90 21,027 266 SantaTeresa 6 135 7,841 99 ShorelineGolf Links 4 72 24,206 307 SunnyvaleGolf Course 8 126 19,435 246 Source: National Golf Foundation Golfersper 18 Holes(5-MileRadius) 5-mileRings Golfing Households Est.No.of Golfers1 Total18-H Equivalent Golfersper 18holes Palo AltoGolf Course 14,206 21,309 4 5,327 Poplar Creek Golf Course 14,243 21,365 4.5 4,748 SanJose MunicipalGolf Course 30,527 45,791 5 9,158 SantaClaraGolf &Tennis Club 17,855 26,783 5 5,357 SantaTeresa 12,250 18,375 7.5 2,450 ShorelineGolf Links 16,695 25,043 4 6,261 SunnyvaleGolf Course 24,118 36,177 7 5,168 TotalU.S.“Threshold” forSuccessfulPublicGolf (10-mile Ring) 4,000 1 GolfingHouseholds x1.5 Source: National Golf Foundation National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –60 APPENDIXB –COMPARATIVESCORINGOFRECONFIGURATION OPTIONS As a usefultoolinformulating proformaprojections, NGF hascomparedthe Reconfiguration Optionsusing a“scorecard approach”wherebyattributes andbenefits areassignedscores(1- 10).Thismethodallows a side-by-side comparison, providing a wayto reviewpluses and minuses associated witheach option.Webaseour scoring onseveralfactors,including the following: Details presented(plans,conceptualimages, etc.) Public commentsand historicaluseof thefacility(rounds anduse) NGF Market Analysis (localand regionaltrendsandgolf participation) Competition within themarketarea Details and othergivensregarding the changestotakeplace(golf designconsultant involved, howfaralong the proposedchangeshave been studied,budgets, etc.) Long termviabilityof thechangesandmarketacceptance Known preferencesofgolfersrelative tocourseconditioning,consistency,etc. Qualityof theconsultants involved In situations wheregolffacilities are proposedtobe reconfigured,thereare bothsubjective and objective considerations.Additionally, there isoften difficultyin verifying to what degree proposed changes willbe carried out. Fortunatelyin thecaseof thePalo Alto Golf Course,the Cityand SFCJPA have accommodateda verythorough processand detailso we areable to look attheplans, beforeand afterimages, andother documentationthatquantifythechanges associated with theoptions. Scoring is onefactorconsidered in estimating potentialchanges inthefinancialperformanceof thegolffacility. For example, agolf course with significantlymorepracticeopportunities, especiallywhen such use is in demand,willpotentiallybring in newuse and associated revenue. Inthecaseof asignificanttransformation of agolf coursefrom an averageorbelow average experienceto one with newholes, views and overalllandscape improvement,it islikely thatan increase in use and/orrevenue willbe realized. And, where we cansee potentialto marketthefacilitybeyond theimmediate area,itis possible torealize an added price-per-round fornon-resident use.Inthis latter example we often citetheabilityofgolf coursessuch as TorreyPines toadopt agreenfee structurethatholds lowratesforresidents ofthe area while chargingmarketratesthat are veryhighfor playersfrom out ofstate.Inthe case ofTorrey Pines, thegap between resident ratesand visitorratesareamongthe widest inthegolf business.Thoughthistype ofgap willnot berealisticforPalo Alto,we doexpect that, depending onthereconfiguration option chose, non-residents willeffectivelybe “subsidizing” to some degree ahighquality, butstillaffordable,golf experiencefor cityresidents. Thefollowing ratingsusea 1-10 scalewhere 1 isthe lowest and 10 isthehighest.Thisranking includes somefinancialconsiderations,butis ancillaryto theproformafinancialanalysis for each option.Therankings hereareusedtoformsome oftheforecastswithin the proforma analyses. Scoring is based onthe basereconfiguration work foreach option (i.e.,less all optional/alternate work listed). Asummarytable ofrankings is presentedfollowing thecategory descriptions. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –61 Thefollowing arecategories usedtoformthescoring: Yardage & Par –Accommodation of yardage(regulation length)for acourse andpar thatwillbe viable and competitive within themarket andregion Interruption ofPlay During Reconfiguration –Abilityof theplantoretainsome holes (9-hole play) andpractice during reconfigurationwork Consistency of Bunkers& Hazards –Overall impact ofthe planrelative tobunker consistency, aestheticsand other hazards Consistency ofGreens –Overall result ofgreensqualityand consistency Drainage Improvement –Overall positive impacton drainage;eliminating wet conditions Irrigation Improvement –Overallpositive impact on irrigationcontrol,consistency and associatedturfquality Pace-of-Play – Degreeto which the plan accommodatespositive pace-of-playand long range abilitytomanageforgoodpace Improved VisualImpact–Overalllandscape enhancements(added naturalizes areas andvisualimpact) Improved Views –Accommodation ofmoreviews totheBayandterritorialvistas ImprovedGolfExperience Impact-Overallplan benefitstostrategy, excitementof holes, variation of direction, orientationtowind, etc.) Competitivenesswith Area Courses–Abilityof the coursetocompetewith courses in the immediatearea Competitivenesswith RegionalCourses –Abilityof the coursetocompetewith coursesin theregion Likelihood for Destination Visits –Abilityof thecourseto attract specificvisits expresslyto playthe course Ability to Leverage“Green”Marketing –Consistencyof theplan with a“green” environmentalmessage(Baylands tie-in,morenaturalized areas,naturallandscape, etc.) ConsistencywithLong Range Planning –Integration of theplan withfutureplanning (clubhouse,practice,etc.) TurfReduction(irrigation) –Reduction ofmanaged turf acreagefor lesswateruse and reducedpumping TurfReduction(managed care) –Reductionof managedturf in relation tothe ability to shiftmaintenance emphasisfromout-of-playareastogolffeatures andareas moreappreciated bythegolfer National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –62 Comparative Scoring of ReconfigurationOptions Option A Option D Option F Option G Yardage & Par 8 8 8 6 Interruptionof Play during Reconfiguration 5 4 3 1 Consistency ofBunkers & Hazards 7 8 9 10 Consistency ofGreens 3 5 6 8 Drainage Improvement 4 6 8 9 Irrigation Improvement 3 6 7 10 Pace-of-Play 5 10 7 7 Improved VisualImpact 4 6 7 8 Improved Views 2 7 7 8 Improved Golf Experience Impact 3 7 8 8 Competitiveness with Area Courses 5 8 8 8 Competitiveness with RegionalCourses 2 6 7 8 Likelihood for Destination Visits 1 5 7 7 Ability toLeverage“Green” Marketing 5 7 8 9 Consistency with LongRangePlanning 7 9 9 9 TurfReduction(irrigation) 4 6 8 9 TurfReduction(managedcare) 4 7 8 9 National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –63 APPENDIXC –WATER&POWER USE DISCUSSION & ASSUMPTIONS NGF Consulting was notcharged with afullwateror power useanalysis. However,forecasting costsassociatedwith each reconfiguration optionrequiresreasonable estimatesontheaffects of amore efficientirrigation systemcombined with lessturf acreage. Ourconclusions onwater andpower use are based onthefollowing assumptions, derived from CityStaff andthegolf course architect/designteam: Currentirrigation (managed)turf acreage:135 Newirrigation areas efficiencyover/above the existing system:+10% Currentirrigation inefficiencydue toleaks andbreaks(loss):-5% Currentpower inefficiency: -10% Newpower efficiencyrealized withfullcourse better watering times/durations:+15% Annualcostforirrigationrepair duetoage andcondition: $30,000 Using the data andassumptions, NGF Consulting has developed thefollowing forecastfor water and power usedifferences with eachreconfiguration option. Option A Totalirrigatedturffollowing reconfiguration: 96.5acres Water usereduction based on newirrigatedacreage: 28% Approximate areaof reconfigured coursewith newirrigation system:35acres Percentageof irrigated Area with NewIrrigation: 36% Water usereduction of newusage basedon efficiencies of newsystem area: 3.6% (10%efficiencyx36%=3.6%) Water efficiencyof newusagegained duetofewer leaks/breaks: 2%(5%efficiencyx 36%= 2%) Power efficiencyrealized with better watering times/duration:+5% Conclusions ReducedWaterCostEst.(effluent)$- 0- ReducedWaterCostEst.(potable)$100,800(28% x$360,000) ReducedWaterCostEst.(potable efficiencies)$5,645([3.6%+2%] x$100,800) Reduced Power Cost Est.(efficienciesrealized) $1,200(5%x$24,000) TotalEst. Reduction inWater & Power Cost $107,645/ annual Option D Totalirrigatedturffollowing reconfiguration: 92 acres Water usereduction based on newirrigatedacreage: 32% Approximate areaof reconfigured coursewith newirrigation system:40acres Percentageof irrigated Area with NewIrrigation: 43% Water usereduction of newusage basedon efficiencies of newsystem area: 4.3% (10%efficiencyx43%=4.3%) National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –64 Water efficiencyof newusagegained duetofewer leaks/breaks: 2%(5%efficiencyx 43%= 2%) Power efficiencyrealized with better watering times/duration:+10% Conclusions ReducedWaterCostEst.(effluent)$-0- ReducedWaterCostEst.(potable)$115,200(32% x$360,000) ReducedWaterCostEst.(potable efficiencies)$7,258([4.3%+2%] x$115,200) Reduced Power Cost Est.(efficienciesrealized) $2,400(10%x$24,000) TotalEst. Reduction inWater & Power Cost $124,858/ annual Option F Totalirrigatedturffollowing reconfiguration: 91.5acres Water usereduction based on newirrigatedacreage: 32% Approximate areaof reconfigured coursewith newirrigation system:58acres Percentageof irrigated Area with NewIrrigation: 63% Water usereduction of newusage basedon efficiencies of newsystem area: 6% (10%efficiencyx63%=6.3%) Water efficiencyof newusagegained duetofewer leaks/breaks: 3%(5%efficiencyx 63%= 3%) Power efficiencyrealized with better watering times/duration:+12.5% Conclusions ReducedWaterCostEst.(effluent)$- 0- ReducedWaterCostEst.(potable)$115,200(32% x$360,000) ReducedWaterCostEst.(potable efficiencies)$10,711([6.3%+3%] x$115,200) Reduced Power Cost Est.(efficienciesrealized)$ 3,000 (12.5% x$24,000) TotalEst. Reduction inWater & Power Cost $ 128,911/annual OptionG Totalirrigatedturffollowing reconfiguration: 92acres Water usereduction based on newirrigatedacreage: 32% Approximate areaof reconfigured coursewith newirrigation system:92acres Percentageof irrigated Area with NewIrrigation: 100% Water usereduction of newusage basedon efficiencies of newsystem area: 10% (10%efficiencyx100%= 10%) Water efficiencyof newusagegained duetofewer leaks/breaks: 5%(5%efficiencyx 100%= 5%) Power efficiencyrealized with better watering times/duration:+15% Conclusions ReducedWaterCostEst.(effluent)$- 0- ReducedWaterCostEst.(potable)$115,200(32% x$360,000) National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –65 ReducedWaterCostEst.(potable efficiencies)$23,040([15%+ 5%]x$115,200) Reduced Power Cost Est.(efficienciesrealized) $3,600(15%x$24,000) TotalEst. Reduction inWater & Power Cost $141,840/ annual National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –66 APPENDIXD –REVIEWOF PROBABLE COSTESTIMATES NGF Consulting hasreviewed the probable costestimates provided tothe Cityfor reconfigurationOptionsA, D,F,andG.In orderto objectivelyevaluate proposed budgets we look fora baseline of comparison.Thebestresources aresimilar public sectorgolf course projectsinvolving reconfiguration.All golf courseprojectsareunique, as arethe conditionsof the site,construction costs,availabilityof construction materials(sand, proximityof sodgrowing, etc.),andterrain.Additionally, in a situation where theproposedmodifications tothecourseare underway, as in this case, we look toother projects bythe samegolf course architect. Thebestcomparisonsare three projectsbyForrest Richardson,ASGCA: Buenaventura Golf Course (Cityof Ventura,California) PeacockGapGolf Course (San Rafael, California – privatelyowned) Olivas Links(Cityof Ventura, California) TheBuenaventura project was undertakentorebuild an existing 18-holefacilityoriginally designed byWilliam P. andWilliamF.Bell.Thescope was to largelyretain hole corridors throughexisting maturetrees,buttore-turf allof thegolf course.Theproject involved approximately88 acresof fullre-turfing,greensrebuilding (19),newponds (3) andcomplete rebuilding of allfeatures(bunkers,teesandfairways).This projecthad astatedbudgetof $4.5 million which also included site work foranewmaintenance area,a newmaintenancebuilding and improvementstotheentryand parking areas.The work was completed in 2005 andwas funded bytheCityof Venturathrough acapitalbond program. NGF was told thatthegolf course specific work totaled approximately$3.6million and themarketconditionsatthattimewere very similar tocurrentconditions. ThePeacock Gapproject was a completere-build of an 18-holegolf course (also anoriginal design ofWilliamF.Bell), associatedre-routing work forsafetyreasons,anewpond, new drainage,fullnewirrigation system, andallnewfeaturesincluding anewpracticerange.The totalacreage involved was approximately94 acres and included similar naturalized area development as has been proposedfor Palo Alto.The project was carriedout overtwo phases beginning in 2004for areportedinvestmentof $5.1million. Of note isthattopsoilmanagement was verysimilar tothat covered in the PaloAlto Probable CostEstimates. TheOlivas Linksprojectis most similar toPalo Alto among thesethree examples.This course was originallydesignedbyWilliam P.andWilliam F. Belland alsoborders ariver at itsestuary termination point.Thecourse was pronetoflooding and hadverypoor soilconditions asaresult of effluentirrigation and inherentsaltsbywayof its seaside locale.Also apartof thecapital bond programof theCityof Ventura,this 2006-07work was contracted at$5 million in termsof directgolf course improvements.These includedfullre-building using on-site soils. Paspalum grass was usedforfairways, with Bentgrassonthegreens.Ourestimation of thetiming of this work was that itfellduring themostaggressive contracting time inthepast10-15years.The work appearsto have been publicallybid with six qualified bids,eachveryclose tothelowest bid atthe $5million point.TheCityspentadditionalfundstorelocateandreplace their maintenancefacilityover and above thegolf course construction contract. Thoughthere are variables that could affectcost,such astheultimatetiming of theproject and a change inregionaleconomic conditions, NGF’sgeneralassessmentgiven ourexchangeswith Forrest Richardson onthis matter isthatthe probable costestimatespreparedfortheCity (Options A,D,F andG)appearto coverthescope of thework shownforthe options,andare National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –67 conservative in approach. According torepresentatives of theGolf CourseBuilders Association of America(GCBAA) theBayArea represents one of themostcostlyworking locales in NorthernCalifornia based on available labor, housing andthegeneralcost offuel, operations and logistics.Wenotethatthe architect,recognizing thisreality, hasincluded a significant degree of projectmanagementand contingencyin estimatespreparedforthe City-important componentsthatwe often see omitted atthis stage of planning. National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –68 APPENDIXE –POTENTIAL LONG-TERM MASTERPLAN IMPROVEMENTS Thetables belowsummarize some ofthe long-term and/oroptionalimprovementsthathave been presented byForrest Richardsontothe Cityof Palo Altoforconsideration. ClubhouseImprovements Exterior Condition &Upgrades - Estimate:$250,000 Aestheticimprovement to facings, color, materials Replace, upgrade landscaping ExpandMeeting Spaces - Estimate:$1,700,000 Current Space: 75 in one room + 70 on patio Expand main pavilion room to hold 200 Expand/open patio to hold 100 additional(300 total) Create outdoor wedding garden Reconfigure grillas potentialrestaurant space (60) Reconfigure bar as pub seating w/ patio for 60 addl. Expand/improve kitchen Expand/screen service yard Expand/open patio to hold 100 additional(300 total) Golf ShopUpgrades - Estimate:$100,000 Expand office/storage Free-up 1,000 s.f. retailspace CreateCartStorage Building- Estimate:$440,000 Currentlystorage for 15 carts; balance kept outdoors and leased temporarily as needed for groups Newbuilding for 70 carts Arrival& EntryImprovements NewEntry, SignageandParking- Estimate: $400,000 Newentry Newsignage Resurfaced parking w/ Landscaping &Lighting (expand to 300 spaces) NewEntry, SignageandParking- Estimate: $200,000 Newtrailconnections (to Baylands, etc.) Bike racks, signage, etc. Practice Facility Improvements RangePerformanceCenter - Estimate:$500,000 Newbuilding &hitting bays for Instruction Smallmeeting spaces and offices RangeExpansion- Estimate:$100,000 (6) Additionalhitting bays(adjusted netting to north) RebuildExistingPracticeGreen- Estimate: $180,000 Newgreen complex as short game area CreateDesignated Youth Area- Estimate:$200,000 Along Embarcadero (2 Acres) RangePerformanceCenter - Estimate:$500,000 Newbuilding &hitting bays for Instruction Smallmeeting spaces and offices National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –69 Other“Alternate” Improvements On-courseRestroom Replacement- Estimate:$95,000 Newstructure and demo existing Replace Balance of IrrigationSystem (Varies w/ Plan Option)Complete newsystem &control RebuildAll Greens onCourse(Varies w/PlanOption)Rebuild allgreens to USGAspecs Resodall Fairways onCourse(Varies w/ Plan Option)Newand consistent turf variety throughout NewEvent PracticeGreen/Area- Estimate:$80,000 Separate event green and area (Plan Donly) SandPlateNewFairways (Varies w/PlanOption)Sand cap to 6 in. ATTACHMENT G 1 December 5, 2011 Council Study Session Questions and Answers a.Does $3 million reconfiguration estimate include replacement of the irrigation system? Response: Yes, but not the entire irrigation system, rather only for the holes that are reconfigured which varies in the four design options. b.How much money would we get for the Stanford dirt The exact dollar amount would need to be negotiated.Staff has met with Stanford twice since the December 5, 2011 study session. Stanford has indicated interest but has not yet proposed a dollar figure. c.Will the SFCJPA pay for loss of revenue during construction? Unknown at this time; staff has expressed the concern of lost revenue to the SFCJPA and have quantified what the loss in revenue may be with the four design options being considered -See National Golf Foundation Golf Course Pro Formas d.What will be the difference in rounds of play with the proposed improvements? See National Golf Foundation Golf Course Pro Formas e.What is the anticipated revenue after improvements? See National Golf Foundation Golf Course Pro Formas f.What is the size (acreage, holes, par) of other neighboring or competing golf courses (both public and private) (Shoreline, Sunnyvale, etc.) Palo Alto Golf Course Driving Range 4.9 acres Clubhouse 1.5 acres Parking Lot 1.9 acres Maintenance Facility 2.0 acres Pond 1.7 acres Designated Wetland Areas 2.5 acres Historic Waters 17.3 acres Golf Course irrigated acres 135 Golf Course (excluding existing facilities) 157.8 acres Golf Course (excluding facilities and sensitive areas) 138 acres Weekdays $39 Residents $37 / Weekends $49 Residents $47 / Senior Resident $28 Other golf course comparisons: Poplar Creek Golf (public course in San Mateo, Ca) 18 holes / Par 71 / 6042 yards /Rest / Pro Shop / No Driving Range ATTACHMENT G 2 105 acres which has 80 irrigated Weekdays $38 , Residents $33 / Weekends $53 Residents $45 Moffitt Field Golf Course (public golf course in Santa Clara County) 18 holes / 6517 yards / Par 72 / Pro Shop 125 acres which has 73 acres irrigated Military Weekdays $10 / Retired $25 / Weekends Military $20 Retired / $25 / NASA $25 Weekdays $34 Weekends Quail Lodge Golf Club (semi private resort Monterey County) 18 holes / par 71 /6515 yards / CH / Maintenance Yard / DR / Pro Shop 130 acres which has 115 acres irrigated The Olympic Club Golf Course (San Francisco, Ca. Private) It has 45 holes / 2-18 Hole Par 71 courses / Lake Course 6871 yards /Ocean Course 6496 yards / DR/ CH / Maintenance yard / Pro Shop 365 acres which has a 200 acres irrigated. Callippe Golf Course (public course in Pleasanton, Ca.) 18 holes / 6748 yards / Par 72 /CH / Maintenance yard / DR / Pro Shop 175 acres which has 126 acres irrigated Weekday $37, non-resident $44 / Weekend $53, non-resident $64 / senior $27 Stanford Golf Club (private course in Stanford, Ca.) 18 holes / Par 72 / 6231 yards /CH / Maintenance yard /Pro Shop 170 acres which has 110 acres irrigated. San Jose Municipal Golf Course (public course in San Jose,Ca.) 18 holes / Par 72/ 6700 yards / Bar/ Grill / Maintenance / DR / Pro Shop 120 acres which has 100 acres irrigated Weekday $37 / Weekend $51 / senior $23 (no resident discount) Sunnyvale Municipal Golf (public course in Sunnyvale, Ca.) 18 Holes / Par 70 / 6255 yards / Bar and Grill / Maintenance Yard / Pro Shop 145 acres which has 100 acres irrigated. Weekdays $35 / Weekends resident $44, non-residents $48 Santa Teresa Golf Club (public course in San Jose, Ca.)27 holes / CH / Maintenance Yard /DR / Pro Shop 150 acres which has 120 acres irrigated.27 holes. ATTACHMENT G 3 Weekdays $40, Fridays $46, Weekends $60, seniors $24 Resource: Gary Carls—past Golf Superintendent and Director of Shoreline Golf (public course in Mt. View, Ca.) 18 holes / 6996 yards / restaurant / Maintenance Yard / DR / Pro Shop 150 acres which has 130 acres irrigated Weekday$31 nonresident $38 / Weekend $47 non-resident $54 Senior$28 Santa Clara Golf (public course in Santa Clara, Ca) 18 holes / Par 72 / 6704 yards / Driving Range / Club House / Pro Shop 150 acres which has 100 acres irrigated $25 Weekday,non-resident $37 / Weekend $34, non-resident $50 Spring Valley Golf (public course in Milpitas, Ca.) 18 Holes / Par 72 / 6,140 yards/ DR / CH / Pro Shop / 120 acres which has 85 irrigated Weekdays $37 / Weekend $55 / Seniors $28 Pajaro Golf Club (public course in Watsonville , Ca. ) 18 hole / Par 72 / 6500 yards /DR / CH / Maintenance Yard / Pro Shop 120 acres total which has 90 acres irrigated Weekdays $45 / Weekends $55 g.Can the Palo Alto course be more compact? Yes, see design option G h.How much land would the creek levees take? 7.4 acres i.What percentage of golfers that play Palo Alto Golf Course are Palo Alto residents? Residency data for Palo Alto and neighboring Golf Courses: §Palo Alto 20% §Callippe 30% §Santa Clara 35% huge resident discounts §Sunnyvale 23% §Shoreline 26% §Los Lagos 60% j.What percentage of field users are Palo Alto residents? The latest Palo Alto residency verification of the four major youth soccer clubs is as follows: 1.AYSO –95% 2.Palo Alto Soccer Club –70% 3.Stanford Soccer Club –78% 4.PSV Union Football Club –52% ATTACHMENT G 4 Other major field users are as follows: 1.Palo Alto Little League –90% 2.Palo Alto Girls Softball –88% 3.Palo Alto Babe Ruth –52% 4.Tomahawks Lacrosse –59% 5.Palo Alto Adult Soccer League –40% 6.Palo Alto Coed Soccer League –16% 7.Silicon Valley Soccer Association –14% k.What percentage of Palo Altans are golfers (and may play other places)? Unknown at this time l.What kind of revenue could we derive from a double deck driving range The driving range is managed by the Brad Lozares as part of his management agreement wit the City. The City and Lozares split the revenue from the driving range,62% City and 38% Lozares. Lozares is responsible for maintenance, day to day operations and marketing. City is responsible for capital improvements. Total revenues are approximately $340,000 annually. m.If the dimensions of the holes are altered significantly to accommodate field space, will this affect the popularity of the course? It depends; what makes a Golf Course popular has many factors, among those listed below. To the extent the factors below and others remain in the new configuration the Golf Course can be more or less popular among golfers: Length -6,500 yards or longer Safe –holes are not too close to one another Quality playing surfaces –particularly the greens, approaches and tees Customer Service –fun, professional, convenient Pace of play Memorable holes (wow factor) Rodent and geese control n.What are the demographics of golfers? Total Annual Rounds: §Junior Rounds-12% §Senior Rounds-24% §All Others-64% o.Did we get full input from all stakeholders? i.A community meeting was held on January 26, 2011 that included a wide range of stakeholders beyond the golfing community. The community meeting was very valuable in understanding varied interests. A summary of the feedback received from this meeting ATTACHMENT G 5 is attached to the staff report and can also be seen at the City website: www.cityofpaloalto.org/golf p.What is the cost of plan F? Costs for all four Golf Course design options can be seen in Attachment A q.Will the SFCJPA be the lead for EIR for improvements beyond the basic restoration? No, the City will need to conduct all environmental analysis for altering the Golf Course beyond what is needed as part of the flood control mitigation. r.Who would be responsible for the supplemental EIR for the clubhouse improvements? The City of Palo Alto s.How can we turn around the trend of declining rounds of play? If we invest in the Golf Course asset, as seen in design options D, F and G,the ROI analysis by the National Golf Foundation suggests Palo Alto will be able to differentiate itself from our neighbors and find a competitive advantage to turn the trend around. Changing the golfing experience to be more Bay friendly, including renaming the Palo Alto Muni to Baylands Palo Alto, and many more Baylands features including elevated tees and greens so golfers can see the bay and surrounding hills are some of the design features Richardson has developed that staff feel will generate additional golf play. t.Why is there only a $2 differential between residents and non-residents? Because non-resident play is critical to the cost recovery of the Golf Course the resident discount or put another way non-residents premium,has been minimal. u.How many people use the driving range annually? Lozares estimates 20% of the driving range patrons use the range before their round of golf. The remaining 80% of the patrons use the driving range for practice and/or instruction. Approximately 42,000 buckets of range balls are sold annually. How many unique driving range users is unknown. v.How many driving range users are residents? This information is unknown as there is one set of fees for using the driving range with no differentiation for residency. w.What is the timeline of the SFCJPA project, including decision points? SFCJPA to provide x.If Council decided not to keep the golf course, would we loose JPA mitigation money? To be determined, the question has been posed to the SFCJPA staff.