HomeMy WebLinkAboutStaff Report 3576
City of Palo Alto (ID # 3576)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 3/18/2013
City of Palo Alto Page 1
Summary Title: Golf Course Contracts
Title: Finance Committee Recommendation of a Five-year Contract Extension
for the Palo Alto Golf Course Management Services Agreement with Brad
Lozares (Lozares); Amendment to Golf Course Pro Shop Lease with Lozares to
Reduce the Term of the Option to Extend the Lease From Ten Years to Five
Years; and Five-Year Contract Extension for the Golf Course Maintenance
Services Contract with Valley Crest Golf
From: City Manager
Lead Department: Community Services
Recommendation
The Finance Committee and staff recommend that the Council:
1. Approve and authorize the City Manager or his designee to execute the Amendment No.
6 to the Management Agreement for Golf Course professional services with Brad
Lozares Golf Shop in the amount of $2,058,073 (Attachment A) and the Amendment No.
4 to Lease of the Palo Alto Golf Pro Shop premises with Brad Lozares for a term of 5
years, beginning May 1, 2013 ending April 30, 2018 (Attachment B).
2. Approve, and authorize the City Manager or his designee to execute the Amendment
No. 1 to the General Services Agreement with ValleyCrest Golf Course Maintenance, Inc.
in the amount of $4,072,533 and for a term of 5 years, beginning May 1, 2013 ending
April 30, 2018 (Attachment C).
Background
There are four separate, but related, contracts applicable to the Palo Alto Golf Course:
1. Golf Course Maintenance Services Agreement (expires April 30, 2013) - ValleyCrest Golf
is the service provider. (Existing Contract- Attachment D)
2. Golf Course Management Services Agreement (expires April 30, 2013) - Brad Lozares is
the current services provider. The management services agreement provides Golf
Course and driving range management, Golf Course marshaling, Golf Course revenue
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collection, customer service, starting time coordination and cart rental services.
(Existing contract- Attachment E)
3. Golf Pro Shop Lease (expires April 30, 2013, with a current 10-year extension option) -
Lozares is the tenant, and has conditionally agreed to reduce the lease term extension
from ten years to five years, pending Council approval of the five-year extension of the
Golf Management Services Agreement (Item 1, above).
4. The Food and Beverage Services Lease between the City and R&T Restaurant (expires
April 30, 2018). This Lease is not being amended at this time and is only mentioned as a
reference point for the relevant golf course contracts’ expiration dates falling on April
30, 2018.
One of staff’s primary goals in negotiating these contracts was to have them expire on the same
date.
Staff from Administrative Services, Community Services, City Attorney’s Office, and City
Manager’s Office have carefully considered the pros and cons of a Request for Proposal (RFP)
for both the Golf Professional management services and the Turf and Landscape maintenance
services and have concluded that, on the cusp of a major proposed reconfiguration of the golf
course, now is not the preferred time to conduct the RFP process for these two particular
contracts. The timing of the reconfiguration construction project has not yet been finalized, and
there is some uncertainty of the level of service needed during golf course construction at this
time. If these contract extensions are approved, staff recommends conducting an RFP in April
2018 when all four Golf Course contracts, as outlined above, are expected to expire.
Coordinating the concurrent expiration of the four contracts will provide an opportune time to
attract more interest in bidding on an RFP, because it could well include the entire golf course
operation. In addition, maintaining continuity with the current contractors during the
reconfiguration process will enable certain services, such as the Golf Course driving range, to be
maintained throughout the process. The increased ease of coordination with vendors that are
already familiar with the current operation will be invaluable as the City navigates the multi-
agency reconfiguration process.
Staff came to this conclusion for several reasons which are summarized below:
1. San Francisquito Creek Flood Management Levee Project
The San Francisquito Creek flood control project managed by the San Francisquito Creek Joint
Powers Authority (SFCJPA) presents significant unknown factors, including, without limitation,
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the timing of the project, impact on the golf course operation during construction, and the
quality and performance of the yet to be reconfigured golf course. These unknown factors
make it very difficult to prepare a clear and accurate RFP scope of services for Golf Professional
management services and Golf Course maintenance services; it consequently will be difficult to
evaluate submittals to determine which is most favorable to the City.
The upcoming levee capital improvement work will have a direct impact on the operation of the
golf course during staging and construction. The golf course may be closed for as long as 12 to
18 months to complete the Option G design work. The proposed levee work would directly
affect the golf course and thus it could adversely affect the City’s ability to successfully conduct
an RFP for management services to the extent interest in bidding on an RFP is dampened.
The SFCJPA at this point believes that it will start the two-year construction process on the
levee in April 2014. If the SFCJPA timeline is accurate, the one-year golf course construction
project would also begin in April 2014.
2. National Golf Foundation Recommendation
Extending the terms of the Lozares and Valley Crest contracts beyond the construction period
of the golf course reconfiguration project was recommended by the National Golf Foundation
(an independent consultant who performed Financial Pro Forma and Supporting Analysis for
Reconfiguration Options concerning the reconfiguration project); as well, independent golf
course financial consultant, Richard Thorman, and Golf Course architect, Forrest Richardson,
who were all asked to provide their professional opinions. The consultants agree that the
substantial disruption in business, the unknown impacts of timing and project design, and the
time consuming and costly work involved to produce and conduct an RFP process without
affording potential bidders access to all the information needed, for example, how a new
facility will produce cash flow, could make it challenging for the City to enter into the well-
informed and negotiated agreements.
It was recommended by these consultants that the City wait until after the renovation is
completed, and the improved facility has been up and running for a year before considering a
substantive change in maintenance and operating structure. If the City renegotiates the
management services agreement with Lozares for another five years, the City will be aware of
the performance of the new golf course design, have all contracts expire concurrently, and be
better prepared to negotiate management services agreement and/or lease terms and
conditions that will best meet the City’s needs and interests.
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These professional consultants further recommended that extending the golf course
maintenance contract with Valley Crest Golf for another five years will also benefit the City. The
independent consultants pointed out how critical it is to have the contracted Golf
Superintendent responsible for maintaining the course involved and present during the
construction of the new course. Having the current Superintendent, who knows and intimately
understands the landscape of the golf course, with a vested interest in the outcome of the
project on hand, will be a tremendous benefit to the City.
3. Lozares Pro Shop Lease and Management Agreement
Mr. Lozares indicated he would exercise, and indeed did exercise, the ten-year extension option
on his lease for the Pro-Shop, but also indicated he would effectively agree to revise the ten-
year option to a five-year option under Amendment No. 6. If the City were to competitively bid
the management services agreement and award the contract to a firm other than Lozares, that
firm would need to negotiate a sublease for a period of ten years from Lozares, or the new
operator would have to negotiate a separate mobile trailer outside of the Golf Shop leased
premises. This is very likely to be a disincentive for any third party considering a proposal for
the management services agreement and would be cumbersome at best for customer service
at the golf course.
Ideally, all four golf course contracts (management services agreement, Pro-Shop lease, Golf
Course maintenance services, and food & beverage services concessions) would be aligned to
concurrently expire. This would create an opportunity for a comprehensive RFP to manage the
entire golf course operation.
The current tax exempt debt represented by the Certificates of Participation, that funded the
1998 Golf Course renovations, restricts the City from entering into a long-term lease agreement
for a firm to manage the entire golf course operation. This tax exempt debt is set to expire in
2018. If all of the golf course contracts expire at the same time, the City would have much more
flexibility in issuing a comprehensive RFP to manage the golf course at that time.
Extending the Lozares agreements will also benefit the City, because the City would have a
contractor who is well-respected and trusted by the Palo Alto golf community, which may be
valuable during the transition period associated with the reconfiguration and disruption during
construction. One of staff’s goals is ramp up play activity as swiftly as possible after
construction is completed, and it is believed the current Golf Pro is in the best position to do so.
In addition, staff believes it would be more effective to issue a comprehensive golf course RFP
in 2018 when the levee work has been completed and there is no potential for disputes
regarding the Pro-Shop lease and management services agreement to arise.
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4. Food and Beverage Service
Food and Beverage service is often a central element of a golf course operation. Since the
current contract for the Bay Café expires on April 30, 2018, it would be advantageous to have
the other contracts expire at the same time to attract more interest in bidding on an RFP that
includes the entire golf course operation.
Discussion
Golf Course Management Services Agreement and Pro Shop Lease
The Community Services and Administrative Services Departments met with Lozares in seven
separate sessions to negotiate the terms of a five-year contract extension for Golf Management
Services and the Pro-Shop lease. As part of the contract extension, Lozares agreed to reduce
the length of the option to extend the Pro-Shop lease from ten years to five years (expiring in
2018). Given the pending golf course reconfiguration project, which will require closing the
majority of the golf course, the contract is set up in three distinct phases:
Phase 1: Pre-Golf Course Construction.
Time frame: May 1, 2013 until golf course reconfiguration construction begins (Estimated time
frame for start of construction: April 2014).
Phase I Elements & Background:
Lozares will continue to perform golf management services during Phase I. Mr. Lozares enjoys
an excellent reputation among the local golfing community. His outstanding customer service
helps keep golfers returning to play at Palo Alto. This is especially valuable because of the
uncertainty of the timing of the SFJPA project and golf reconfiguration project, which has
caused some golfers to look elsewhere to book tournament events. City survey cards
consistently illustrate that Lozares’s customer service ranks good to excellent. Fourteen times
Lozares Golf Shop has been named as one of the top 100 golf shops in the country. He was
named the Golf Professional of the Year by Professional Golf Association in 2001.
Terms of Agreement: (Phase I terms are the same as the existing agreement)
i. Management fee : $345,333 annual (This is the fixed amount that the
City pays to Lozares)
ii. Cart rental revenue: 60% for the City and 40% for Lozares
iii. Driving range revenue: 62% for the City and 38% for Lozares
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iv. Green fees: 100% to City
v. Pro-shop rent: $2,000 per month or 4% of gross revenue whichever is
higher
The table below shows the estimated compensation using revenue figures from FY12 actuals
and FY13 adopted budget.
Phase I: No Changes to Current Calculation
Contractor Compensation FY2012 Actuals FY2013 Budget
38% of Driving Range Revenue $135,126 $148,200
40% of Cart/Club Rental Revenue $120,490 $148,000
Fixed Fee $345,333 $345,333
TOTAL Estimated $600,949 $641,533
Phase II: During Construction.
Time frame: First day of golf course reconfiguration construction until the reopening of the golf
course (Estimated time frame: April 2014 through April 2015).
Phase II Elements & Background:
During the closure of the golf course or during reconfiguration construction Lozares will
continue to work on future tournament bookings, implementation and marketing of the
renovated Palo Alto Golf Course, provide management and full operation and equipment
for the Driving Range, support the Palo Alto Golf Course web site, respond to golf inquiries,
provide professional services for golf instruction, and broadcast e-mail blasts weekly on the
weekly progress of the course renovation.
Terms of Agreement:
i. Management fee : $30,500 annual
ii. Range revenue: 15% for the City and 85% for Lozares
iii. Pro-shop rent - $1,500 per month or 4% of gross revenue whichever is higher.
During the slow golf activity months of November, December and January
Lozares will only be required to pay 4% of gross revenue.
iv. There will be no Green fee or cart revenue due to construction work
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During this time is it expected that the main source of revenue will be from activity on the
driving range, which is not a part of the reconfiguration project. The contractor will retain some
staff to maintain operations at the range, which includes helping customers, processing
payments, providing golf ball clean up services, and range maintenance. The increased share of
range revenue to the contractor acts as an incentive to encourage activity greater than the
National Golf Foundation’s revenue projections. The table below includes a sensitivity analysis
which shows the potential compensation to the contractor and additional revenue to the City
based on range activity.
Phase II: Increased Share of Range Revenue, Reduced Fixed Fee
NGF Estimate in
Construction
Year (FY14)
35% of FY12
Activity
50% of FY12
Activity
70% of FY12
Activity
Range Revenue Estimate $82,400 $124,458 $177,797 $248,916
Contractor Compensation
85% of Range Revenue $70,040 $105,789 $151,127 $211,578
Fixed Annual Fee $30,500 $30,500 $30,500 $30,500
Total Estimated $100,540 $136,289 $181,627 $242,078
Additional City Revenue $0 $6,309 $14,310 $24,977
Phase III: Post Construction.
Time frame: Reopening of the reconfigured golf course (Estimated time frame: April 2015
through April 30, 2018).
Phase III Elements & Background:
In addition to ensuring the City is able to cover all operational costs at the Golf Course (including old and
new debt service) and generating a surplus, an important goal of the City’s negotiating team was to
create an agreement that creates a stronger tie between overall golf play activity that benefits the City
(productivity) and provides compensation for the contractor. A primary element of this proposal is the
inclusion of variable compensation based for Green Fees and Play Cards. The inclusion of this new
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revenue stream is tied to a reduction in other variable compensation rates for both Driving Range and
Cart Rentals.
Terms of Agreement:
i. Management fee : $300,000 annual
ii. Range revenue: 80% for the City and 20% for Lozares
iii. Cart rental revenue: 80% for the City and 20% Lozares
iv. Green fee revenue: 95% for the City and 5% for Lozares
v. Pro-shop rent: $3,000 per month or 5% of gross revenue whichever is higher
vi. credit card fees to be split between City and Brad according to the agreed
breakdown split of all revenue sources
vii. On-site club rentals and pull cart revenues will be considered as part of the
merchandise revenue from the Pro Shop, which the City receives 5% of the
gross merchandise revenue or $3,000 per month- whichever is greater.
A comparison of the above terms and those in the Phase I category above provides a clear picture of
how the Pro contract will change after the new course opens.
Financial Implications:
The table below is based on the revenue and expense projections modeled by the National Golf
Foundation consultant and presented to Council on July 23, 2012 (Attachment F). Staff has
used NGF’s revenue forecasts and calculated the expected compensation to the Golf Pro based
on the new contractual terms. Compared to the current contract (Phase I contract), staff
estimates savings to the City of at least $50,000 annually.
Phase III: Added Golf Fee to Variable Compensation, Reduced Fixed Fee
NGF Revenue Projections First Year of New
Course
(NGF FY15)
Second Year of
New Course
(NGF FY16)
Last Year of
Contract
(NGF FY17)
Green Fees $2,341,500 $2,510,600 $2,680,900
Driving Range $353,400 $377,400 $401,900
Cart/Club Rentals
$286,100 $307,300 $353,900
Contractor Compensation
5% of Green Fee Revenue $117,075 $125,530 $134,045
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20% of Driving Range Revenue $70,680 $75,480 $80,380
20% of Cart/Club Rental Revenue $57,220 $61,460 $70,780
Fixed Fee $300,000 $300,000 $300,000
TOTAL Estimated $544,975 $562,470 $585,205
The golf course management services contract cost is predicated on the assumption that the
contract phases will have the following durations: Phase I – one year; Phase II – one year; and
Phase III-- three years. The contract cost also includes a 10% contingency. The scheduling of the
golf course reconfiguration and the duration of the phases cannot be determined at this time.
Staff has presented a contract costs based on our best estimate. Depending on how the
reconfiguration schedule changes, staff may need to return to Council with a Budget
Amendment Ordinance.
IRS Requirements
Because the Golf Course has been previously funded by publicly financed bonds, the City must
adhere to IRS tax regulations that concern the compensation structure for Golf Management
contracts. The variable compensation (based on revenue) portion must not exceed the amount
that is provided by the fixed fee. The requirements do allow for a two-year period during
closure or renovations for the compensation to be developed outside of the traditional
structure, which the City has utilized in the Phase II component. The Administrative Services
Department consulted with bond counsel and has confirmed that the planned agreement
meets the requirements of the Internal Revenue Code of 1986, as amended.
Golf Maintenance Agreement
The Community Services and Administrative Services Departments met with Valley Crest Golf
numerous times to negotiate the terms of a five-year contract extension for the Golf Course
Maintenance at the Palo Alto Golf Course. Since Valley Crest Golf has very successfully
maintained the golf course for the past two and one-half years, significant improvements have
taken place. Sustaining Valley Crest’s excellent maintenance service throughout the completion
of the golf course reconfiguration, and the period of time after the new course opens and a
new level of business stabilizes, will be valuable to the City. Valley Crest staff has intimate
knowledge of the difficult irrigation system and how to keep it functioning until replacement,
water management specific to this unique environment, drainage, growing conditions, sensitive
wildlife habitat, and wetland areas. Valley Crest has established good working relationships
throughout the City, which will all be beneficial during the reconfiguration project. Its staff has
participated in all the meetings with the SFCJPA and the planning process for the
reconfiguration of the golf course. It has provided agronomic and environmental expertise
when needed.
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Given the pending golf course reconfiguration project, which will require closing the majority of
the golf course for approximately one year, the contract is set up in three phases:
Phase I: Pre-golf course construction.
Time frame: May 1, 2013 until golf course reconfiguration construction begins (Estimated to be
April 2014).
Phase I Elements & Background:
Valley Crest will continue to perform the same golf maintenance services during Phase I as they
did in the pervious contract. City staff has received numerous customer compliments regarding
the service Valley Crest provides.
Terms of Agreement: (Phase I terms are the same as the existing agreement)
i. Annual fee of $750,000
Total anticipated costs for Phase I = $750,000
Financial Implications:
The last two years of the previous Golf Course Maintenance contract also had an annual fee of
$750,000.
Phase II: During Construction.
Time frame: First day of golf course reconfiguration construction until the reopening of the golf
course. Anticipated duration of Phase II is one year.
Phase II Elements & Background:
During the closure of the golf course, Valley Crest will continue maintaining the putting
green and associated irrigation, driving range, landscaping around the parking lot/Pro-Shop,
and general site safety and aesthetics. The Valley Crest Golf Superintendent will also be on-
site daily to monitor, serve as a consultant on the reconfiguration project, and document
the irrigation construction which will improve response times to future irrigation issues.
Valley Crest will also be responsible for caring for the newly established natural turf after it
is ready for mowing, which is referred to as the grow-in process (prior to the opening of the
new course). The grow-in period requires frequent fertilizing and adding other
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amendments, along with higher maintenance to ensure that the new turf is properly
established.
Terms of Agreement:
I. Monthly fee $18,158 for first 7 months of phase II.
ii. Five month grow-in period: $415,000 (lump sum)
Total anticipated costs for Phase II = $542,106
Phase III: Post Construction.
Time frame: Reopening of the reconfigured golf course through April 30, 2018.
Phase III Elements & Background:
One of the main goals of the City’s negotiating team was to ensure that the City controlled
maintenance costs while at the same time made improvements in the level of service to reflect
the investment in the new and improved golf course.
For several years Canada geese and the feces they produce have been the number one
complaint about the Palo Alto Golf Course. The most effective technique to address the goose
loitering problem has been the use of specially trained herding dogs. At a cost of approximately
$20,000 per year, the City has contracted with a private company that brings trained dogs to
the course to encourage the geese to leave or migrate. In this new contract, Valley Crest will be
required to have its own trained dog on-site.
The second most common complaint at the golf course has been ground squirrels and the holes
and tunnels they produce. The new contract will provide for on-going rodent control consistent
with the City’s Integrated Pest Management (IPM) Policy.
In addition, Valley Crest will also be purchasing new maintenance equipment, some specifically
specified by the City which will provide improved quality course conditions. Valley Crest will
also be responsible for maintaining lower weed thresholds at the golf course.
Terms of Agreement:
I. Annual fee: $796,262 (Initial yearly/monthly pricing shall be fixed for the first 18
months thereafter CPI (Consumer Price Index for all Urban Consumers – San
Jose/Sunnyvale/Santa Clara) will be applied on a yearly basis. CPI approximately
1.34%.
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Year 1= 796,262
Year 2= 801,597
Year 3= 812,338
Total anticipated costs for Phase III= $2,410,197.
Total costs for all three phases of Valley Crest Golf maintenance contract is $3,702,303 plus
10% contingency = $4,072,533
The golf course maintenance contract cost is predicated on the assumption that the contract
phases will have the following durations: Phase I – one year, Phase II – one year, and Phase III--
three years. It also includes a 10% contingency. The scheduling of the golf course
reconfiguration and the duration of the phases is uncertain. Staff has presented a contract costs
based on our best estimate. Depending on how the reconfiguration schedule changes staff may
need to return to Council with a Budget Amendment Ordinance.
Finance Committee
On March 5, 2013, the Finance Committee reviewed the golf course contracts. The minutes
from the meeting are in Attachment G. The Finance Committee approved a motion
unanimously (4-0) to recommend that City Council approve, and authorize the City Manager, or
his designee, to execute, the appropriate amendment to the General Services Agreement for
Golf Course management services with Brad Lozares in the amount of $2,058,073 and the
appropriate amendment to lease of the Palo Alto Golf Pro Shop premises with Brad Lozares for
a term of 5 years, beginning May 1, 2013 ending April 30, 2018; as well, approve, and authorize
the City Manager, or his designee to execute, the appropriate amendment to the General
Services Agreement with ValleyCrest Golf in the amount of $4,072,533 and for a term of 5
years, beginning May 1, 2013 ending April 30, 2018.
The Committee appreciated the concept of extending the contracts to 2018 in order to afford
the City an opportunity to conduct an RFP that could include the entire golf course operation.
The Committee also liked that the Golf Management Agreement with Lozares would have lower
costs for the City and would now provide more incentive for Lozares to provide a high quality
golf experience and help increase the number of rounds played at the course.
There was a discussion on the maintenance costs in Phase III. It seemed counterintuitive that
the maintenance costs would increase in Phase III of the new contract, considering the new
course will have approximately 35 fewer acres of managed turf. Staff explained that, while
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there is a reduction in managed turf, there are a few factors that would require additional
labor, that would include: higher level of service commensurate with a higher quality new golf
course (on-site geese herding dog, lower thresholds for weeds, etc.); and the current course is
very flat, straight and simple, while the new course will be have a lot of undulations and
interest that will require more maintenance.
The Committee pointed out that the City would have had more leverage and possibly
negotiated a better deal if it had gone out to bid. Staff pointed out that NGF had anticipated
higher costs for contract maintenance contract (FY15 $825,000, FY16 $837,000, and FY17
$862,000), while staff was able to negotiate with Valley Crest below this amount (FY 15
$796,262, FY16 $801,597, and FY17 $812,338).
Resource Impact
The Fiscal Year 2013 Adopted Budget shows an overall net income to the City for the Golf
Course Operations of $271,745. For Phase I of the Lozares contract, this is estimated to remain
the same as the terms of the contract will not change. As well, the maintenance and
professional contracts discussed in this report have been formulated to account for reduced
activity during construction periods.
For the construction period of the course, there will be no green fee or cart rental revenue. It is
also anticipated that there will be a decrease in range revenue. The National Golf Foundation
projected a 77% decrease in Range revenue; however, through the inclusion of revenue
incentives in the Lozares contract, the City is hopeful that the contractor will be able to diminish
the impact on range activity.
Looking ahead to the reopening of the course, City Staff were able to negotiate contracts below
National Golf Foundations expenditure projections. Attachment H provides an update to the
original NGF projections for the new course with the negotiated contract terms. The estimated
annual savings to the City as a result of contract negotiations is approximately $50,538 to
$107,895, which would result in a total of $661,127 over the first seven years of the new golf
course.
It is important to note that the SFCJPA creek flood protection project and City Golf Course
construction start dates and timelines have not been finalized at this time. Currently, the Office
of Management and Budget is projecting budget figures for a closure of the course in spring of
2014.
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In addition, the speedy completion of construction is vital to minimizing the impact on the
general fund operating budget. NGF projected that the new course would generate
approximately $251,708 gross revenues each month during the first year. The potential loss of
this revenue with fixed maintenance and operational costs in place will cause the impact on the
general fund to grow with each additional month of closure.
If the course reconfiguration timeline is changed, staff will submit a Budget Amendment
Ordinance to Council to account for the impact of any changes may have to the operating
budget.
Policy Implications
The project is consistent with Policy C-26 of the Comprehensive Plan, which encourages
maintaining and enhancing existing park facilities.
Attachments:
Attachment A - Golf Management Contract Lozares 2013-2018 (PDF)
Attachment B - Lease Amendment No 4 Final Brad Lozares Golf Shop (DOCX)
Attachment C - Golf Maintenance Valley Crest 2013-2018 (PDF)
Attachment D - Golf Valley Crest Contract and Staff Report (PDF)
Attachment E - Golf Course Contract Management Services Dec 2010- Lozares (PDF)
Attachment F - Golf National Golf Foundation Report April 2012 (PDF)
Attachment G - Finance Committee Minutes 03-05-13 Excerpt Item 2 Lozarez Lease
(DOC)
Attachment H - Update to the National Golf Foundations Expenditure Projections (PDF)
ATTACHMENT B
1
AMENDMENT NO. 4 TO LEASE #211 BETWEEN
THE CITY OF PALO ALTO AND BRAD LOZARES
THIS AMENDMENT NO. 4 TO LEASE #211, dated, for convenience, March __,
2013, is entered into by the CITY OF PALO ALTO, a California chartered municipal corporation
(the "CITY"), and BRAD LOZARES (“TENANT”) (individually, a “Party” and, collectively, the
“Parties”), in reference to the following facts:
RECITALS:
A. On March 16, 1998, the Parties entered into Lease #211 (the “Lease”), by which
Section IV provides for a term of fifteen (15) years, commencing May 1, 1998 and expiring on
April 30, 2013. Section VI provides for an option to the TENANT to extend the term of the Lease
for one ten-year period, provided certain conditions have been met (the “Option”).
B. The Parties wish to amend the Lease to change the Option to reduce the option
term from ten (10) years to five (5) years. The TENANT will provide the CITY with prior written
notice to exercise the Option.
AGREEMENT:
SECTION 1. Section VI. OPTION TO EXTEND is amended in its entirety to read, as
follows:
“TENANT shall have the option to extend this Lease term for an additional five (5) years
if the following conditions have been satisfied:
A. TENTANT has, to the satisfaction of the City Manager, faithfully performed each and
every condition of this Lease throughout the Lease term. The City Manager’s
assessment of TENANT’s performance shall be final and conclusive and shall be
based on information received from CITY’s staff, and other that may have knowledge
of TENANT’S performance; and
B. TENANT has submitted to CITY, a written notice of TENANT’S intent to extend the
Lease in accordance with the terms of this clause, on or before thirty (30) days prior
to the end of the Lease term set forth in Clause IV (Term).
CITY may notify TENANT if TENANT’S performance has not been acceptable in
accordance with subparagraph A of this clause within two (2) months of receipt of
TENANT’S notice of intent to extent this Lease. CITY’S failure to notify shall not be
deemed or construed as CITY’S approval of TENANT’S option to extend.”
SECTION 2. Except as amended herein by this Amendment No. 4 to Lease #211 and
consistent herewith, the terms of the Lease, as modified by Amendment Nos. 1, 2 and 3, shall
remain in full force and effect.
ATTACHMENT B
2
IN WITNESS WHEREOF, the Parties have by their duly appointed representatives
executed this Amendment No. 4 to Lease #211 in Palo Alto, County of Santa Clara, State of
California, on the date first above stated.
CITY OF PALO ALTO TENANT
___________________________ ___________________________
City Manager BRAD LOZARES
APPROVED AS TO FORM
___________________________
Senior Asst. City Attorney
APPROVED:
____________________________
Director of Administrative Services
____________________________
Director of Community Services
City of Palo Alto
City Manager's Report
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: COMMUNITY SERVICES
DATE: OCTOBER 25, 2010 CMR: 390:10
REPORT TYPE: CONSENT
SUBJECT: Approval of a General Services Agreement with ValleyCrest Golf Course
Maintenance, Inc. in the Amount of $1,850,000 for Maintenance Services and
Sale of Used City Golf Course Maintenance Equipment to ValleyCrest for
$125,000
EXECUTIVE SUMMARY
At the October 18th Council meeting staff made a presentation, as summarized in CMR 382: 1 0
, . (Attachment A), recommending the following four actions:
1. Authorize the City Manager or his designee to execute the General Services Agreement
(Attachment B) in the amount of $1,850,000 with ValleyCrest for a term of 30 months
beginning November 1, 2010 ending April 30, 2013, and the sale of used golf course
maintenance equipment (Attachment D) to ValleyCrest for $125,000; and
2. Authorize the City Manager or his designee to negotiate and execute one or more change
orders to the. contract with ValleyCrest Golf Maintenance for related, additional but
unforeseen work that may develop during the term, the total value of which shall not
exceed $185,000 (10% Contingency); and
3. Refer to the Finance Committee the question of how staff should propose fair and
reasonable mitigation for anticipated lost revenues at the Golf Course due to the
construction of the San Francisquito Creek Joint Powers Authority's (JPA) flood control
project.
4. Refer to the Finance Committee the question of whether staff should develop for the
Council's approval a proposal to establish a new infrastructure reserve fund in the
amount of the annual savings realized above the fully loaded operating costs of the Golf
Course for the eventual replacement of anticipated infrastructure needs at the Palo Alto
Municipal Golf Course.
Recommendations 3 and 4 (above) were approved by Council on October 18 and items 1 and 2
were deferred to the October 25, 2010 consent calendar for approval. The deferred action for
items 1 and 2 pertain to contract revisions, as described in the Council Memo, dated October 18th
(Attachment C).
CMR390:1O 10f2
The final General Services Agreement with ValleyCrest is attached as Attachment B.
RECOMMENDATION
Staff recommends that the Council:
1. Authorize the City Manager or his designee to execute the General Services Agreement
(Attachment B) in the amount of $1,850,000 with ValleyCrest for a term of 30 months
beginning November 1, 2010 ending April 30, 2013, and the sale of used golf course
maintenance equipment (Attachment D) to ValleyCrest for $125,000; and
2. Authorize the City Manager or his designee to negotiate and execute one or more change
orders to the contract with ValleyCrest Golf Maintenance for related, additional but
unforeseen work that may develop during the term, the total value of which shall not
exceed $185,000 (10% Contingency).
ATTACHMENTS
Attachment A
Attachment B
Attachment C
Attachment D
CMR 382:10, October 18, 2010, recommending approval of a General
Services Agreement with ValleyCrest
Final version of the General Services Agreement between the City of Palo
Alto and ValleyCrest, also provided to Council on October'18
Supplemental Council' Memo, October 18, 2010, summarizing key
contract revisions
List of used City Golf Course maintenance equipment to be sold to
ValleyCrest
/~!/ //J P~PMrnDBY: __________ (_"~,/~~~~~ /.~~ __ ~~~~ __ ~~~ ______ _
ROBDEGEUS
DEPARTMENT HEAD APPROVAL:
Division Manager, Recreation Services
~ '!:1izJ (~';) ~T~ -----------
rector, ommunity Services
Department
.~ ..... -.} ""----
CITY MANAGER APPROV AL: ----"~~/:-:)-~-t~'f-M-¥:..-/--;/ ",4~~.~<:::::~L:"'::'·~""/_//~)--t.---f~ft::::, "::.::..'?'L~ ____ _
City Manager
CMR390:10 20f2
ATTACHMENT A
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: COMMUNITY SERVICES
DATE: OCTOBER 18, 2010 CMR: 382:10
REPORT TYPE: ACTION
SUBJECT: Approval of a General Services Agreement with ValleyCrest Golf Course
Maintenance, Inc. in the Amount of $1,850,000 for Maintenance Services and
Sale of Used City Golf Course Maintenance Equipment for· $125,000; and
Referral of Golf Course Financial Planning Issues to the Finance Committee
EXECUTIVE SUMMARY
Due to the ongoing fiscal challenges facing the City of Palo Alto's (City) General Fund the
Community Services Department (CSD) recommended, and the Council approved, the
exploration of "contracting out" Palo Alto Municipal Golf Course ("Golf Course") maintenance
services during the 2011 budget process. The",recommendation to explore private maintenance
was also suggested in the findings of the Golf Course operational study conducted by Economic
Research Associates (ERA) in 2008. The Executive Summary of the ERA study is attached as
Attachment A.
This report describes the Request For Proposal (RFP) process for Golf Course maintenance that
has resulted in the recommendation of an award of contract to ValleyCrest Golf Course
Maintenance, Inc. (ValleyCrest) to assume Golf Course maintenance responsibilities, beginning
November 1, 2010 for a 30-month term ending on ·or soon after April 30, 2013 at a cost of
$1,850,000 and a purchase of used golf course equipment at a cost of $125,000. ValleyCrest is
recommended for an award of contract due to its extensive golf course maintenance services
experience, low cost proposal relative to the public maintenance option, and its commitment to
enhance the City's existing Integrated Pest Management (IMP) program, customer service and,
most importantly, to improve the quality of Golf Course maintenance services to ensure the Golf
Course will remain competitive with neighboring golf courses. The proposed contract between
the City and ValleyCrest is attached as Attachment B.
The report also discuses related Golf Course issues that require the Council's direction and
action in the near future. The current outstanding issues include:
• The need for flood control project mitigation, not only for the physical disruption to the
Golf Course but also for anticipated revenue losses from decreased play during levee
reconstruction; and
CMR382:10 10f8
ATTACHMENT A
• Consideration of the establishment of an infrastructure reserve for the Golf Course to pay
for capital improvements from positive Golf Course cash flow to reduce the need for
future capital improvement-related debt.
Staff requests that these two items be referred to the Finance Committee for further discussion.
Finally, the report also discusses the intent to make coterminous both the Golf Professional
contract with Brad Lozares and the Pro-Shop lease agreement with Brad Lozares, so the
agreements will terminate concurrently in the month of April 2013. Staff will make a
recommendation to the Council before the end of calendar year 2010.
RECOMMENDATION
Staff recommends that the Council:
1. Authorize the City Manager or his designee to execute the General Services Agreement
(Attachment B) in the amount of $1,850,000 with ValleyCrest for a term of 30 months
beginning November 1, 2010 ending April 30, 2013, and the sale of used golf course
maintenance equipment (Attachment C) to ValleyCrest for $125,000; and
2. Authorize the City Manager or his designee to negotiate and execute one or more change
orders to the contract with ValleyCrest Golf, Inc., for related, additional but unforeseen
work that may develop during the project, the total value of which shall not exceed
$185,000 (10% Contingency); and
3. Refer to the Finance Committee the question, of how staff should propose fair and
reasonable mitigation for anticipated lost revenues at the Golf Course during the San
Francisquito Creek Joint Powers Authority's (JPA) flood control project.
4. Refer to the Finance Committee the question of whether staff should develop for the
Council's approval a proposal to establish a new infrastructure reserve fund in the
amount of the annual savings above the fully loaded operating costs of the Golf Course
for the eventual replacement of anticipated infrastructure needs at the Palo Alto
Municipal Golf Course.
BACKGROUND
The Golf Course was constructed in the mid-1950's on 184 acres of flat former salt-marsh and
bay fill. The course was designed by noted golf course architect William R. Bell of Pasadena,
California. The Golf Course was designed as an I8-hole facility with a par of 72. The Golf
Course is a classic I8-hole championship course that measures over 6,800 yards from the back
tees. The facility includes 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, & 18 were renovated under the
direction of golf architect Robert Trent Jones, Jr.
The Golf Course is a City of Palo Alto General Fund operation. All excess revenues or shortages
are returned to the City'S General Fund. The Golf Course currently generates sufficient revenues
to support debt service, direct and indirect expenses, and City cost plan charges. There is no
reserve or replacement fund for the Golf Course, consequently; additional debt service is taken
on by the Golf Course when new capital improvement needs arise. The debt service for the
Certificates of Participation, which represents approximately $570,000 annually, will be fully
retired in June 30, 2018.
CMR382:1O 20f8
ATTACHMENT A
Presently, the City has entered into both a Golf Professional management agreement and a Pro
Shop lease agreement with Brad Lozares (Lozares) for golf operations. As a result of Internal
Revenue Services (IRS) debt issuance limitations, the management agreement and the lease for
the building are separate contracts. The management agreement includes the following
responsibilities: reservations; green fees collection; starting; and marshalling services. The lease
agreement for the building includes: responsibility for managing golf cart rentals; the driving
range; merchandise sales; and instruction services. The Lozares management agreement with the
City for operating the Golf Course expires December 31, 2010. The lease agreement with
Lozares for lease of the building expires in April 2013. The building lease also includes an
option to extend the term of the concession 10 additional years, if the option is exercised at the
City's sole discretion.
There is also a separate lease agreement with R&T Restaurant Corporation (R&T) for food and
beverage services at the Golf Course. The R&T lease agreement for food and beverage
operations expires April 20, 2018.
Currently Golf Course turf and irrigation maintenance services are provided by CSD's Parks,
Open Space and Golf Division. CSD oversees daily turf and ground maintenance operations that
include coordination of services between the tenants and City maintenance staff in order to
provide a seamless experience for visitors to the Golf Course. The Real Estate Division of the
Administrative Services Department oversees tenant leases. The Club House and Pro Shop
building rriaintenance (exterior) and janitorial services are provided by the City's Public Works
Department, Facilities Management Division.
In 2007, the City Council authorized staff to proceed with an operational analysis of the Golf
Course. The operational analysis was conducted by Economics Research Associates (ERA)
(Attachment A), and provided information on the Bay Area golf market and conditions of the
Golf Course facility; and the current and alternative operating models available for the Golf
Course.
The ERA study was presented to the City Council on November 17, 2008 (CMR: 446:08;
Attachment D). The study concluded that, despite a Bay Area wide decline in golf play, the Golf
Course performance has been relatively strong when compared with similar municipal facilities
in the market area. The recommendations to sustain the long-term viability of the golf course
program from the staff report are summarized below:
1. Retain a golf course design consultant to work with the JPA and the City's staffs to
design an environmentally friendly flood control project that will balance flood control
and recreational use solutions and also benefit the Golf Course.
2. Recalculate the Cost Plan allocation for the Golf Course to a more traditional golf
course operation allocation. This would allow for excess funds to be set aside to
establish a replacement reserve to fund ongoing minor capital improvement and/or
more intensive maintenance.
3. Align the two tenant leases and management contract so they expire concurrently. This
would allow consideration of other, potentially more effective and efficient, operating
options and a smoother transition of operation, should that be deemed advantageous in
the future.
CMR382:10 30f8
ATTACHMENT A
4. Commit to a plan of cost-neutral capital improvements to ensure the Golf Course
remains competitive. That is, proceed with improvements that are economically
justified by increased net operating income stemming from the improvements.
5. Direct Community Services and other relevant City staff to work in cooperation with
the labor union to further evaluate the advantages and disadvantages of private versus
public maintenance.
Since the 2008 Golf Course study was presented to Council, the Golf Course has continued to
experience a decline in annual rounds of play from 74,000 in 2008, to 72,000 in 2009, and to
68,500 in 2010. In order to keep the Golf Course financially viable budget cuts were made in
2009 and 2010 that continued to erode the resources available for the City-operated maintenance
program. Although the Golf Course managed to end FY 2010 with net revenues of $77,000, this
was achieved with a 40% reduction in staff, which is less than the level of staff needed to
provide comprehensive quality Golf Course maintenance.
As the FY 2011 budget process began, it became clear the City needed to make significant
structural budget reductions to the General Fund with an anticipated deficit of $7.3 million. As
CSD considered alternatives for budget reductions, the "contracting out" of Golf Course
maintenance services was recommended, not only for the potential cost savings, but also to
return maintenance levels to a standard that allows the Golf Course to remain competitive with
the objective of increasing golf rounds, which has been compromised through numerous years of
program budget cuts.
Staff recommends the approval of a Golf Course maintenance services agreement with
ValIeyCrest and replacing in-house maintenance staff with contract personnel. Below, staff will
provide information on the process that was used to arrive at this recommendation and will
discuss the progress and current thinking on the other recommendations listed above, stemming
from the ERA Golf Course study .
. DISCUSSION
The process for exploring "contra~t out" Golf Course maintenance services began in spring 2010
by notifying SEIU of the City's intent to explore contract maintenance services for the Golf
Course. The City and SEIU engaged in a discussion about the City's financial challenges and
rationale for the need to consider an alternative service delivery for Golf Course maintenance.
Although some ideas were discussed to mitigate the need for contracting out Golf Course
maintenance, such as a regional golf course maintenance agreement between several neighboring
cities, this suggestion was deemed by the City to be financially infeasible.
CSD staff prepared a detailed scope of service, with input from several other City departments
including Public Works, Utilities and Administrative Services (ASD). The Request for Proposal
(RFP) was released in June. A mandatory pre-solicitation meeting was held at the Golf Course
which included a tour of the Golf Course that allow all interested parties to walk the Golf Course
and ask specific questions during the hole-by-hole walk. Five potential bidders attended the pre
bid meeting. Four proposals were received in August when the responses to the RFP were due.
CSD assembled an evaluation panel to evaluate the proposals. The eight member panel included
members of the Golf Advisory Committee, CSD Director, Palo Alto's Golf Course
CMR382:1O 40f8
ATTACHMENT A
Superintendent, Recreation Division Manager and the Parks, Open Space and Golf Division
Manager. The stated RFP criteria used to evaluate the proposals were:
A. Quality and completeness of proposal;
B. Qualifications & experience of proposer in providing Golf Course Maintenance
Services as stated in this RFP; including experience and qualifications of project
manager & key staff to be assigned to project;
C. Similar experience and expertise in the type of work required, with the City, or with
other municipal golf courses or private golf courses;
D. Demonstrated understanding of the scope of services requested, timeframes,
scheduling ability, ability to provide back up or follow up services, if needed;
E. References/Financial stability of Firm; and
F. The Cost to the City.
Of the four proposals, based on the RFP criteria above, two were determined by the evaluation
panel as more responsive to the RFP. The proposals were submitted by Lozares and ValleyCrest.
Both companies were invited to interview with the panel; the interviews occurred in Septymber.
At the conclusion of the interviews each company was asked to provide a Best and Final
proposal with an emphasis on reducing overall costs with minimal or no impact to the scope of
services defined in the RFP. The "Best and Final" offers were received in mid September.
Concurrently, reference checks were made and, where feasible, site visits were conducted to
evaluate maintenance levels at other golf courses maintained by the firms.
At the conclusion of the RFP process ValleyCrest was unanimously determined by the
evaluation panel to have provided the most complete responsive proposal and thereby it
recommended ValleyCrest as the party to provide private Golf Course maintenance services to
the City. The factors that weighed most heavily on the ValleyCrest recommendation was the
depth of experience exhibited by ValleyCrest and the proposed overall cost savings, which is
approximately $300,000 below the Lozares' "Best and Final" proposal, and approximately
$500,000 below what it would cost the City to continue Golf Course maintenance services in
house over the 30-month term of the proposed contract. Furthermore, the ValleyCrest
management team displayed a commitment to customer service and high quality maintenance
that the City desires for the Golf Course. ValleyCrest is very interested in working closely with
the City's water quality control program, environmental goals and the IMP program. ValleyCrest
brings a wealth of knowledge and expertise in horticulture and agronomy that staff believe will
serve the City well as we continue push the boundaries toward excellence in Golf Course
maintenance, sustainability and environmental conservation.
ValleyCrest Golf Course Maintenance is one of five operating divisions of the ValleyCrest
Holding Co. and Subsidiaries. It is the country's largest horticulture maintenance, golf course
maintenance and construction company. ValleyCrest currently maintains· over fifty golf
CMR382:10 50f8
ATTACHMENT A
properties located in California, Texas, Florida, Georgia, North Carolina, South Carolina,
Pennsylvania, New Jersey, Massachusetts and Michigan.
Furthermore, ValleyCrest is open and enthusiastic to providing displaced City Golf Course
maintenance staff with an opportunity to join the ValleyCrest Company. Staff was very
encouraged to hear this and will work with ValleyCrest to connect displaced employees with
ValleyCrest. Of the seven regular staff affected by contracting out Golf Course maintenance four
have already made the decision to retire, one has found other employment, and one has bumping
rights per the SEIU labor agreement with the City and will move to the Parks, Open Space and
Golf division of CSD. The remaining staff member will be laid-off as of November 1, 2010;
however, staff is hopeful that a vacancy may emerge in the Parks Open Space and Golf division
over the next month that will provide an opportunity for a transition.
As CSD staff will need to maintain the Golf Course until the effective date of the transition to
ValleyCrest, the proposed negotiated sale of City-owned Golf Course maintenance equipment to
ValleyCrest is preferred for the effective and efficient transition from public to private
maintenance. The City's Public Works fleet management staff valued the existing Golf Course
equipment, staff then negotiated a fair and reasonable price with ValleyCrest, which has agreed
to pay $125,000 for all major equipment.
As described in the contract (Attachment B), ValleyCrest will occupy the Golf Course
maintenance yard and facilities therein to deliver the Golf Course maintenance services. The City
Attorney's office, ASD Budget and Purchasing Divisions together with Risk Management
provided support in drafting the contract, including review and approval of the occupancy terms
and insurance requirements for use of the City facilities and property.
A third party furniture, fixtures and equipment consultant will be retained by the City to
determine the fair market value (FMV) of all other minor items (tools, supplies and materials)
that remain at the Golf Course maintenance yard. ValleyCrest has agreed to pay for the
remaining items based on this FMV independent furniture, fixtures and equipment consultant's
valuation, This will be completed on or before November 1,2010. .
Discussion of Related Golf Course Issues
The topics below relate to the staff recommendations from the 2008 ERA Golf Course study,
summarized on page 3 of this staff report and in CMR: 446:08 Operational Analysis of the City
of Palo Alto Municipal Golf Course (Attachment D) The action items before Council at this time
is the recommendation refer items 1 and 2 below to the Finance Committee for further
discussion.
1. San Francisquito Creek Joint Powers Authority -Flood Control
The Council has requested that the JP A retain a golf course design consultant to work with the
Joint Powers Authority andCity staff to design an environmentally friendly flood control project
that will balance flood control and recreational use solutions and that will also benefit the Golf
Course. The JPA has been very supportive of the City'S need for fair and reasonable mitigation
measures to the Golf Course for levee improvements; the impact to the Golf Course will include
the need to re-design 4 to 6 holes due to levee realignment and encroachment onto the Golf
Course. The JP A hopes to begin work in summer 2011, but the likelihood of this occurring is
CMR382:1O 6.of8
ATTACHMENT A
unknown at this time. The impact and related mitigation to the physical impacts to the Golf
Course is moving in a positive direction and staff is confident that a workable win/win design
will be developed. However, the loss of City revenue during the levee reconstruction is difficult
to quantify. Staff does not have a specific recommendation to mitigate expected lost revenues at
this time but does want to bring this issue to the Council's attention and ask that this issue be
referred to the Finance Committee. A possible mitigation to consider is to seek additional and
more comprehensive Golf Course design and planning beyond mitigating for the golf holes
impacted by levee realignment. For a point of reference, during the major capital improvements
at the Golf Course in 1998-99 the City experienced a 25% reduction in annual play; such a
reduction today would translate to $500,000 annually in lost revenues. Staff is working with the
JP A to explore appropriate mitigations as the timeline and levee design work progresses and look
forward to discussing options with the Finance Committee.
2. Golf Course Infrastructure Reserve
Regarding the revision of the Cost Plan allocation for the Golf Course to a more traditional golf
course operation allocation will occur with the reduction of 7 Full Time Equivalent (FTE) to .45
FTE staff previously dedicated to the in-house Golf Course maintenance operation, as city Cost
Plan is allocated based on FTE. The result of the Cost Plan revision, coupled with the lower
. overall cost of private Golf Course maintenance, will be a positive cash flow for the Golf Course,
if annual rounds played hold steady at 68,000 or more. It is recommended that revenues above
and beyond the cost of operating the Golf Course be considered for a infrastructure reserve for
ongoing capital improvement needs· for the Golf Course. This recommendation aims to reduce
the need for debt when the 1998 bond debt of $~70,000 annually expires in 2018. The Golf
Course Advisory Committee believes creating an infrastructure reserve, paid for by the golfing
community, as a very important step for the long-term financial health of the Golf Course. Staff
recommends that this item also be referred to the Finance Committee for further discussion
Other related items for that staff would like Council to be aware of are:
3. Aligning Golf Course Contracts -Food and Beverage, Professional Services, Golf Course
Maintenance and Pro Shop
The recommendation to align the two tenant leases and management contract at the Golf Course,
so they will expire concurrently, remains a staff recommendation. Specifically alignment of
contracts would allow consideration of other, potentially more effective and efficient, operating
options and a smoother transition of operation, should that be deemed advantageous in the future.
The ValleyCrest maintenance contract is strategically aligned with the existing lease agreement
with Brad Lozares for operating the Pro-Shop. Moreover, staff intends to bring an extension of
the existing management agreement with Lozares to the Council before the end of 2010 to align
the management agreement with the Pro-Shop Lease and the proposed ValleyCrest maintenance
agreement expiration date. This would result in 3 of the 4 Golf Course contracts to expire at the
same time, April 2013. The lease with R&T Restaurant Corporation, who operates the Bay Cafe,
has a term that expires in 2018; options for re-aligning this lease with the other three Golf Course
contracts is also being considered.
4. Capital Improvement
Lastly regarding the recommendation to commit to a plan of cost neutral capital improvements,
to ensure the Golf Course remains competitive, the only CIP improvements recommended at this
CMR382:10 70f8
time are those related to the improvements derived at through cooperation with the JPA to design
an environmentally friendly flood control project that will balance flood control with long-term
financial viability and improvements to the Golf Course.
RESOURCE IMPACT
The cost of the proposed ValleyCrest contract for Golf Course maintenance is $1,850,000 for a
term of 3D-months and a contingency of $185,000. The CSD budget has sufficient funds to
address the contract and 10% contingency. In addition staff has negotiated a fair and reasonable
price ~th ValleyCrest for all major City-owned Golf Course maintenance equipment on-site for
$125,000. The total cost savings to the City for entering into the ValleyCrest contract, as
compared to the cost of the City to provide Golf Course maintenance, is expected to be
approximately $500,000 over the term of the proposed contract.
ENVIRONMENTAL REVIEW
No environmental review is needed 'at this time. However, should a Golf Course capital
improvement project be considered at a future date all appropriate environmental review and
consideration will take place prior to approval.
ATTACHMENTS
Attachment A
Attachment B
Attachment C
Attachment D
PREPARED BY:
Economics Research Associates Golf Course Operational Study -
Executive Summary
General Services Agreement between the City and ValleyCrest
List of used City Golf Course maintenance equipment
CMR: 446:08 Operational Analysis of the City Palo Alto Municipal Golf
Course ~hmenlS available online: ~ ~. " www~ci1yofpaloallo~org
ROBDEGEUS
Division Manager, Recreation Services
DEPARTMENT HEAD APPROVAL: _~-=.=~ ...... ~-.~~---=-... '--________ _ ~S ~
Director, Community Services
Department
CITY MANAGER APPROVAL: ----2IC-J-----r;.--41J-------
CMR 382:10 80f8
ATTACHMENT B
CITY OF PALO ALTO CONTRACT NO. Cl1136681
GENERAL SERVICES AGREEMENT
THIS GENERAL SERVICES AGREEMENT (the "Agreement"), made and entered into on the 1st day of
NOVEMBER, 2010 (the "Effective Date"), by and between the CITY OF PALO ALTO, a California Chartered
Municipal Corporation (the "City"), and V ALLEY CREST GOLF COURSE MAINTENANCE, INC., a
California corporation, located at 24151 Ventura Blvd, Calabasas, Ca 91302, Telephone Number: 818-737-3110
(the "Contractor") (individually a "Party" and collectively the "Parties"). In consideration of their mutual
covenants, the Parties agree; as follows: .
AGREEMENT
1. SERVICES. The Contractor shall provide or furnish the services (the "Services"), as described in Exhibit
"A" Scope of Services and as may be agreed to from time to time. .
2. EXHIBITS. The following exhibits are attached to and made a part of this Agreement:
rg] "A" -Scope of Services
rg] "B" -Schedule of Performance
rg] "c" -Schedule of Fees
rg] "D" -Insurance Requirements
rg] "E" -Bonds (Performance and/or Payment Bond) I2l "F" -Liquidated Damages
. rg] "0" -Schematic of Facilities to be accessed by the Contractor
CONTRACT IS NOT COMPLETE UNLESS ALL EXHIBITS ARE ATTACHED.
3. TERM.
The term ofthis Agreement (the "Term") begins on November 1,2010 and ends on April 30, 2013, subject
to earlier termination by a Party and further is subject to the provisions of Sections Q and V of the General
Terms and Conditions. The Term does not include any period of time after April 30, 2013, which may be
the subject of the renewal of this Agreement or any other contract relating to golf course maintenance
services between the Parties.
4. SCHEDULE OF PERFORMANCE. During the Term, the Contractor shall perform the Services in a
prompt and timely manner based upon the circumstances and directions communicated to the Contractor,
and, if applicable, in accordance with the schedule set forth in Exhibit "B" Schedule of Performance. Time
. is of the essence in this Agreement.
5. COMPENSATION FOR ORIGINAL TERM. The City shall pay the Contractor, and the Contractor
shall accept, as not-to-exceed compensation for the full performance of the Services and reimbursable
expenses, if any: .
The total maximum lump sum compensation of dollars ($ );OR
The sum of
amount of
dollars ($
dollars ($
) per hour, not to exceed a total maximum compensation
);OR
o A sum calculated in accordance with Exhibit "c" Schedule of Fees, not to exceed a total
maximum compensation amount of One Million Eight .Hundred and Fifty Thousand Dollars
($1,850,000.00), payable during the Term, as follows:
The Contractor covenants and agrees that it can perform the Services for an amount not to exceed the total
maximum compensation set forth in this Agreement, including Exhibit "C". Any hours worked or Services
1 Rev. January 11,2010
S:\ASD\PURCH\SOLICITATIONS\CURRENT BUYER-CM FOLDERS\KATHY\Contra cts\Cll136 681-ValleyCrestGolf
Maintenance\Cll136681 Valleycrest GC Maintenance Agreement FINALl 0.12.201 O.doc
perfonned by the Contractor, for which payment would result in a sum total exceeding the maximum
amount of compensation set forth in this Agreement for perfonnance of the Services, shall be performed at
no additional cost to the City, except as expressly provided in this Agreement. The Contractor
acknowledges that the City has infonned it that the current Palo Alto municipal golf course (the "Golf
Course") configurations could be changed or re-designed after the: Effective Date, and that the City's
collaboration with the San Francisquito Creek Joint Powers Authority (the "JP A") to implement any
reasonably necessary flood control measures with respect to the San Francisquito Creek, which lies
adjacent to the Golf Course, could result in the temporary closure of one or more areas of the Golf Course
and, consequently, could affect ona temporary or periodic basis the' Contractor's duties and obligation to
perfonn the Services hereunder. In that event, the Parties shall in good faith timely negotiate an adjustment
to the Services, including, without limitation, the compensation otherwise payable to the Contractor, as set
forth in this Agreement, in order to reflect any changes, including, without limitation, modifications to the
scope of the Services.
The City has set aside the sum of One Hundred Eighty-Five Thousand Dollars ($185,000.00) for
the Contractor's perfonnance of Additional Services, if any may be required to be performed by
the Contractor. The Contractor shall provide any Additional Services only after receipt of the prior
written authorization of the City Manager or designee. Thereafter, the Contractor, at the City's
request, shall submit a detailed written proposal, including a description of the Additional
Services' scope of services, 'schedule, level of effort, and the maximum compensation, including
reimbursable expenses. Such compensation shall be based on the hourly rates set forth in Exhibit .
"C" or, if such rates are not applicable, a negotiated lump sum. The City shall not authorize, and
the Contractor shall not perfonn, any Additional Services, for which any payment would cause the
total :\um compensation for Additional Services to exceed the amount of $185,000.00. Payments
for Additional Services shall be subject to in the provisions of this Agreement.
6. COMPENSATION DURING ADDITIONAL TERMS.
C! CONTRACTOR'S compensation rates for each additional tenn shall be the same as the original
tenn;OR .
13 The Contractor's compensation rates shall be adjusted effective on the commencement of each
Additional Term, if any. The lump sum compensation amount, hourly rates, or fees, whichever is
applicable as set forth in section 5 above, shall be adjusted by a percentage equal to the change in
the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco
Oakland-San Jose area, published by the United States Department of Labor Statistics (CPI) which
is published most iliunediately preceding the commencement of the applicable Additional Term,
which shall be compared with the CPI published most immediately preceding the commencement
date of the then expiring tenn. Notwithstanding the foregoing, in no event shall the Contractor's
compensation rates be increased by an amount exceeding five percent (5%) of the rates in effect
during the immediately preceding Tenn. Any adjustment to the Contractor's compensation rates
shall be reflected in a written amendment to this Agreement.
7. INVOICING. The Contractor shall send all invoices to the City, Attention: the Golf Services Manager
(the "GSM"). The present GSM is Joseph Vallaire, Golf Course Superintendent, CommunitY Services
Dept., Parks and Golf Division, Telephone: 650-329-2175. The invoices: (a) shall be submitted in arrears
for the Services performed; (b) shall not be submitted more frequently than monthly; and (c) shall provide a
detailed statement of the Services perfonned during the invoice period. which statement may be subject to
verification by the City Manager or City Auditor or designee. The City shall pay the undisputed amount of
any invoice within thirty (30) days of its receipt.
GENERAL TERMS AND. CONDITIONS
A. ACCEPTANCE. The Contractor accepts and agrees to the general terms and conditions of this
Agreement, Sections A through AA, inclusive. This Agreement includes Sections 1 through 6 above, these
general terms and conditions, and the attached exhibits and any amendments thereto.
B. QUALIFICATIONS. the Contractor represents and warrants that (1) it has the expertise and
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qualifications to perfonn and complete the Services and (2) every individual acting on behalf of the
Contractor who is charged with the perfonnance of the Services has sufficient skill and experience and is
duly licensed or certified, to the extent such licensing or certification is required by law, to perfonn the
Services. The Contractor acknowledges and agrees that the City expressly relies on .the Contractor's
representations .. and warranties regarding its and its employees' skills, know ledge, and certifications in
entering into this Agreement
C. INDEPENDENT CONTRACTOR. It is understood and agreed that in the performance of this
Agreement, the Contractor and any individual or other person employed by it shall at all times be deemed
or considered an independent contractor to, and not an agent or employee of, the City. The Contractor shall
be responsible for employing or engaging all persons necessary to complete the work required under this
Agreement.
D, SUBCONTRACTORS. The Contractor may not employ, hire or otherwise use any subcontractor to
perform any of the Services, unless the Contractor obtains the prior written consent of the City Manager or
designee. The Contractor shall be solely responsible for directing the perfonnance of any approved
subcontractors and for any compensation due to those subcontractors.
E. TAXES, FEES AND CHARGES. The Contractor shall pay and shall be responsible for.the payment of
all taxes, fees, and charges that are applicable to the conduct of the Contractor's business, including any
income or other remuneration or compensation paid by the City in accordance with the provisions of this
Agreement. .
F. COMPLIANCE WITH LAWS. The Contractor shall in the performance of the Services comply with all
applicable federal, state and local laws, ordinances, rules, regulations, and orders.
G. DAMAGE TO PUBLIC OR PRIVATE PROPERTY. The Contractor shall, at its sole cost and expense,
repair in kind, and shall, as the City Manager or designee shall direct, pay any damage to public or private
property that may be incurred as a result of or in connection with the Contractor's performance of the
Services, including, but not limited to, damage to or destruction of the Golf Course storage and
maintenance facilities (the "Facilities"). The City may decline to approve and may withhold payment, in
whole or in part, as may be necessary to protect the City from any liability, loss or damage arising in
connection with or otherwise due to any defective perfonnance not remedied and occurring during the
Contractor's performance of the Services. Upon the receipt of the Contr~or's request, the City shall
submit to the Contractor any written documentation in support of such decision to withhold payment.
Whenever the City determines that the failure of performance of Services is otherwise remedied, then the
City.shall make payment of the amount or amounts withheld.
H. SERVICE WARRANTIES. The Contractor expressly warrants that the Services that it shall provide under
this Agreement shall be performed in a professional and workmanlike manner in accordance with generally
accepted business practices and performance standards of the golf course maintenance services industry,
including all federal, state, and local operation and safety regulations, and the requirements of this
Agreement. The Contractor expressly warrants that all materials, goods and equipment provided by the
Contractor under this Agreement shall be fit for the particular purpose intended, shall be free from defects,
and shall conform to the requirements of this Agreement. The Contractor agrees to promptly replace or
correct any material, good· or equipment that is defective or otherwise not in compliance with these
warranties at no additional cost to the City. The warranties set forth herein shall be in effect for a period of
one (1) year from the date of completion of the Services, and shall survive the expiration or earlier
termination of this Agreement.
I. MONITORING OF SERVICES. The City may monitor the Services performed under this Agreement to
detennine whether the Contractor's performance is rendered in a satisfactory manner and otherwise
complies with the provisions of this Agreement.
J. CITY'S PROPERTY. Any reports, information, data or other material (including copyright interests)
developed, collected, assembled, prepared, or caused to be prepared under this Agreement will become the
property of the City without restriction or limitation upon their use and will not be made available to any
individual or organization by the Contractor or its subcontractors, if any, without the prior written approval
of the City Manager. '
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K. AUDITS. The City and its authorized representatives may audit, at.any reasonable time during the Term
. and for three (3) years after the date of final payment, the Contractor's records pertaining to matters
covered by this Agreement. The Contractor shall maintain accurate books and records in accordance with
generally accepted accounting principles for at least three (3) following the expiration or earlier termination
of this Agreement.
. L. NO IMPLIED WAIVER. No payment, partial payment, acceptance, or partial acceptance by the City shall
operate as a waiver.on the part of the City of any of its rights under this Agreement.
M. INSURANCE. The City, at its sole cost, sliall purchase and maintain in full force during the Term, the
insurance coverage described in Exhibit "D". Insurance must be provided by companies with a Best's Key
rating of A-:VII or higher and which are otherwise acceptable to the City's Risk Manager .. The Risk
Manager must approve deductibles and self-insured retentions. In addition, all policies, endorsements,
. certificates and/or binders are subject to approval by the Risk Manager as to form and content. The
Contractor shall obtain a policy endorsement naming the City of Palo Alto as an additional insured under
any general liability or automobile policy. The Contractor shall obtain an endorsement stating that the
insurance is primary coverage and will not be canceled or materially reduced in coverage or limits until
after providing thirty (30) days' prior written notice of the cancellation or modification to the Risk
Manager. The Contractor shall provide certificates of such policies or other evidence of coverage
satisfactory to the Risk Manager, together with the required endorsements and evidence of payment of
premiums, to the City concurrently with the execution of this Agreement and shall during the Term provide
current certificates evidencing the required insurance coverage and endorsements to the Risk Manager.
The Contractor shall include all subcontractors as insured under its policies or shall obtain and provide to
the City separate certificates and endorsements for each subcontractor that meet all the requirements of this
section. The procuring of such required policies of insurance shall not operate to limit the Contractor's
liability or obligation to indemnify the City under this Agreement.
N. HOLD ~ARMLESS. To the fullest extent permitted by law and without limitation by the provisions of
Section M relating to insurance, the Contractor shall indemnify, defend and hold harmless the City, its
officials, officers, employees and agents from and against any and all damages, demands, claims, injuries,
losses, or liabilities of any nature, includfug death or injury to any person, property damage or any other
loss, including, without limitation, damages, penalties, fines and judgments, associated investigation and
administrative expenses and defense costs, including, but not limited to reasonable attorney's fees, courts
costs and costs of al~rnative dispute resolution), arising out of, or resulting in any way from or in
connection with the performance of this Agreement. The Contractor's obligations under this Section N
apply regardless of whether or not liability is caused or contributed to by any negligent (passive or active)
act or omission of the City, except that the Contractor shall not be obligated to indemnify for liability
arising from the sole negligence or 'willful misconduct of the City. The acceptance of the Services by the'
City shall not operate as a waiver of the right of indemnification. The provisions of this Section shall
survive the completion of the Services or the earlier termination of this Contract.
O. NON-DISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, the Contractor
certifies that in the performance of this Agreement, it shall not discriminate in the employment of any
person.because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual
orientation, housing status, marital status, familial status, weight or height of such person. The Contractor
acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto
Municipal Code, relating to Nondiscrimination Requirements and the penalties for violation thereof, and it
agrees to meet the requirements of Section 2.30.510 pertaining to nondiscrimination in employment.
P. WORKERS' COMPENSATION. The Contractor, by executing this Agreement, certifies that it is aware
of the provisions of the California Labor Code, which require every employer to be insured against liability
for workers' compensation or to undertake self-insurance in accordance with the provisions of that the
Labor Code, and certifies that it will comply with such provisions, as applicable, before commencing and
during the performance of the Services. .
Q. TERMINATION. The City Manager may terminate this Agreement without cause by giving ten (10)
days' prior written notice thereof to the Contractor. If the Contractor fails to perform any of its material
obligations under this Agreement, in a4dition to all other remedies provided by law, the City Manager may
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tenninate this Agreement immediately upon written notice of termination. Upon receipt of such notice of
termination, the· Contractor shaH immediately discontinue performance. The City shall pay the Contractor
for services satisfactorily performed up to the effective date of termination. If the termination is for cause,
the City may deduct from such payment the amount of actual damages, if any, sustained by the City due to
the Contractor's failure to perform its material oblig!\tions under this Agreement. Upon teimination, the
Contractor shall immediately deliver to the City Manager any and all copies of studies, sketches, drawings,
computations, and other material or products, whether or not completed, prepared by or given to the
Contractor, in connection with this Agreement. Such materials shall become the property of the· City. IIi
addition, the Contractor may terminate this Agreement in the event the City fails to pay compensation to
the Contractor, as pr!)vided by SectiQn 5 of this Agreement and Exhibit "C," provided the Contractor
provides the City with written notice of termination, which becomes effective thirty (30) days of the date of
notice.
R. ASSIGNMENTS/CHANGES •. This Agreement binds the Parties and their successors and assigns to all
covenants ofthis Agreement: This Agreement shall not be assigned or transferred without the prior written
consent of the City. No amendments, changes or variations of any kind are authorized without the written
cOnsent of the City.
. .
S. CONFLICT OF INTEREST. In accepting this Agreement, the Contractor.covenants that it presently has
no interest, and will not acquire any interest, direct or indirect, fmancial or otherwise, which would conflict
in any manner or degree with the performance of this Agreement. The Contractor further covenants that, in
the performance of this Agreement, it will not employ any person having such an interest. The Contractor
certifies that no City officer,. employee, or authorized representative has any fmancial interest in the
business of the Contractor and no person associated with the Contractor has any interest, direct or indirect,
which could conflict with its obligation of faithful performance of this Agreement. The Contractor shall
inform the City whenever a conflict may arise.
T. GOVERNING LAW. This Agreement shall be governed and interPreted by the laws of the State of
California.
U. ENTIRE AGREEMENT. This Agreement, including all exhibits,.·represents the entire agreement
between the Parties with respect to the Services. Any variance in the exhibits does not affect the validity of
the Agreement and the Agreement shall control over any conflicting provisions in the exhibits. This
Agreement super~edes aU prior agreements, representations, statements, negotiations and undertakings
whether oral or written .
. V. NON-APPROPRIATION. This Agreement is subject to the flScalprovisions of the Charter of the City of
Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the
end of any fiscal year in·the event that funds are not appropriated for the following fiscal year, or (b) at any
time within.a fIscal year in the event that fimds are only appropriated for a portion of the fiscal year and
funds for this Contract are no longer available. This Section shall take precedence in the event of a conflict
with any other covenant, term, condition, or provision of this Contract.
. W. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS.
The Contractor shall comply with the City's Environmentally Preferred Purchasing policies, which may be
obtained from the City's Purchasing division; the policies are ·incorporated by reference and may be .
amended by the City from time to time. The Contractor. shall comply with waste reduction, reuse,
recycling and disposal requirements of the City's Zero Waste Program. Zero waste best practices include
fITst minimizing and reducing waste; second, reusing waste and third, recycling or composting w.aste. In
particular, the Contractor shall comply with the following zero waste requirements:
• . All printed materials provided by the Contractor to the City generated from a personal computer
and printer, including, but not limited to, proposals, quotes, invoices, reports, and public education
materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer
content paper, unless otherwise approved by the City's Project Manager. Any submitted materials
printed by a professional printing company shall be a minimum of 30% or greater post-consumer.
material and printed with vegetable based inks. .
• Goods purchased by the .Contractor on behalf of the City shall be purchased in accordance with the
City's .Environmental Purchasing Policy, including, but not limited to, Extended Producer
Responsibility requirements for products and packaging. A copy· of this policy is on file and
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available for inspection at the Purchasing Division.
• Reusable/returnable pallets shall be returned by the Contractor, at no additional cost to the City,
for reuse or recycling. The Contractor shall provide documentation from the facility, which
accepts the pallets, verifying that pallets are not being improperly disposed. .
x; AUTHORITY. The individual(s) executing this Agreement represent and warrant that they have the legal
capacity and du~ authority to do so on behalf of the Contractor.
Y. CONTRACT TERMS: All unchecked boxes do not apply to this Agreement.
Z. STORAGE AND MAINTENANCE FACILITIES. The City hereby grants a license and right of entry to
the Contractor to access, occupy and use the site of the Facilities (the "Site"), which comprise several
building facilities, including sheds and shops, and the two surrounding areas that are bounded by chain-link
fencing and that straddle the Golf Course holes and the Palo Alto airport, which the City shall make
available to the Contractor during the Term at no additional cost to the Contractor. The Contractor shall
maintain the Site and the Facilities in the same condition existing' as of the date· when the Contractor is
takes possession thereof, ordinary wear and tear excepted. The Contractor shall use due care and caution
with respect to (1) whenever its employees. agents. representatives, contactors or subcontractors use the
equipment maintenance shop, depic!ed in Exhibit "G"· and located closest to the Palo Altp airport above
ground jet fuel storage tanks (the "Fnel Tanks"), for purposes of performing equipment repairs as a part of .
the Services, (2) the fertilizer storage shed. in which fertilizer and other potentially hazardous materials are
stored, and (3) the oil storage shed, to ensure that the potential for accidental ignition and resulting frre
related damage and hazardous materials losses will be substantial mitigated. The Contractor will exercise
such due care as, for example, the Contractor shall close the roll-down door of the equipment maintenance
shop, located closest to the Fuel Tanks, whenever an ignition source such as an acetylene torch is used
therein for equipment welding purposes, and whenever using and ensuring the utility and integrity of sand
bags and other materials that are located around catch basins in the event of a chemical spill. Th<l City will
conduct quarterly inspections of the Site and the Facilities, including the Fuel Facility, upon prior
reasonable notice given to the Contractor.
AA.FUEL FACILITmS. Nothing in this Section AA 0.1 other provision of this Agreement shaH be deemed or
. construed to require the Contractor to purchase from the City any fuel for sue by any equipment or vehicle
or other instrument that the Contractor uses to provide the Services. The City shall retain ownership and
control of the card reader, fuel pump and fuel tank (collectively, the "Fuel Facility") located at the Site. The
Contractor acknowledges and agrees that, if the Contractor uses the Fuel Facility to withdraw fuel, then it
shall compensate the City for the quantities of fuel at the charges then in effect. The Contractor
acknowledges and agrees that the City currently imposes a fuel charge, which inCdrporates the cost of fuel
delivery, fuel commodity charge, based on the Oil Price Information Service Index) and direct overhead
costs (the "Fuel Price"). For Fuel Price e~ate disclosure purposes only, the City represents that the Fuel
Price for August 2010 was $3.43 for unleaded gasoline and $3.12 for diesel fuel. Notwithstanding any
provision in this Agreement to the contrary, the Contractor further acknowledges and agrees that .the City
shall access the Fuel Facility for its own purposes and it has permitted the golf course operator and Pro
Shop tenant, currently Brad Lozares, to enter upon the Site and use the Fuel Facility, and that the City will
not require the Contractor to assume any such fueling obligation with resPt:ct to the operator-tenant
Lozares.
IN WITNESS WHEREOF, the Parties hereto have by their duly authorized representatives executed this Agreement
on the date first above written. .
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CITY OF PALO ALTO
City Manager or Designee
(Required on contracts. $85,000 and over)
Approved as to fOnD:
Senior Assistant City Attorney
VALLEYCREST GOLF .COURSE
MAINTENANCE, INC.
By ~A,&< .
Name G-'CjfltCY A. Pte.s"\...Q;l~
Title Pruilh t=
Telephone~ K \3"''''' 3, .. ) I'~
.~
5 ~ev.1aouery II, 2010
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Agroement FlNALIO 12 2010.doc
EXHIBIT "A"
SCOPE OF SERVICES
SPECIFICATIONS & REQUIREMENTS
Contract No. C11136681
GOLF COURSE MAINTENANCE PROJECT
Specifications for the Services to be provided by the Contractor
of the Golf Course: .
I. SCOPE OF WORK-Golf Course Maintenance
The Contractor shall provide the highest quality of Golf Course maintenance
services and materials: The Contractor agrees to provide the highest quality
commercially accepted methods, procedures and. scientific controls for Golf
Course maintenance. The term "scientific controls" means the practices based
upon the recommendations of the University of Califorrl'ia, the U.S. Forest
Service, or similarly qualified experts, a'nd the recommendations set forth in the
University of California Cooperative Extension Publications, the Consumer
Products Safety Commission Playground Guidelines and information in standard
landscape industry references. The obligations set forth herein shall include the
use of proper .knowledge, skills, materials and equipment of a timely basis to
maintain all areas in a clean, safe, healthy, and aesthetically acceptable manner
during the Term.
The Contractor agrees to be continuously alert in locating and defining problems
and agrees to exercise·prompt and proper corrective action. Action times will be
prioritized, and. low priority items will be given a time line for corrections. A
PRELIMINARY WRITTEN REPORT SHALL BE SUBMITTED FOR MAJOR
CORRECTIVE PROBLEMS NOT COVERED IN THE AGREEMENT. The
Contractor shall communicate to the City ALL hazards that are seen while on
site.
II. GOLF COURSE MAINTENANCE SERVICES SPECIFICATIONS
1.0 GENERAL REQUIREMENTS
The following specifications shall apply to the Golf Course.
The Contractor shall furnish all labor, equipment, materials, tools, services and
special skills required to perform the Services as set forth in these specifications
. and in keeping with the highest industry standards of quality and performance.
NOTE: Any and all· references to the role or duties of the Golf Services Manager
(GSM) in this Agreement shall not be deemed or construed to relieve the
Contractor of any duty or obligation to maintain the Golf Course in conformance
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to the specifications of Exhibit "A".
1.1 SAFETY
1.1.1 The Contractor shall perform all work outlined in these specifications in
such a manner as to meet all accepted standards for safe practices
.. dur.ing the maintenance and operation and to safely maintain equipment,
machines, and materials or other hazards consequential or related to the
work; ~nd agrees additionally to accept the sole responsibility for
complying with all·local, County, State or other legal requirements,
including, but not limited to, full compliance with the terms of the
applIcable OSHA and CAL OSHA Safety Orders, and at all times
protecting all persons, including the Contractor's employees, vendors,
members of the public or others from foreseeable injury or damage to their
property. On and after the Effective Date, the Contractor shall identify and
inspect all potential hazards existing or subsequently occurring at the Site
and the Facilities, and shall create and maintain a written log, indicating
the ·dates of inspection and actions taken.
. 1.1.2 The Contractor shall ensure that all required certifications and training
methods are adhered to and current. Evidence of the same shall be
maintained at the Site or as otherwise approved by the City.
1.1.3 For the safety of the general public at the Golf Course and the Palo Alto
airport and its employees, agents, representatives, contractors and
subcontractors, the Contractor shall adhere to the appropriate handling
and use requirements for hazardous materials, pesticides, chemicals and
fungicides used in connection with the rendering of the Services. The use
of the aforementioned items will require proper certification of applicators,
evidence of which shall be maintained at the Site or· as otherwise
approved by the City. Notices will be prominently posted in public areas
for the use of hazardous chemicals or pesticides ..
·1.1.4 When its employees are performing the Servic~s, the Contractor shall
make every effort to keep sidewalks, vehicle travel lanes and driveways
open and unobstructed at all times, and shall honor standard golf etiquette
by performing maintenance tasks within acceptable golf play conditions.
1.1.5 The Contractor shall inspect and identify any condition(s) that renders
unsafe.anY portion of the. areas of the ~olf Course or the Site under its
care and maintenance, as well as any unsafe practices occurring thereon.
The Contractor shall notify the GSM immediately upon the discovery or
knowledge of the existence of any l:lnsafe condition that will require
remedial action, attention or other appropriate correction. The Contractor
shall be responsible for making corrections, including, but not limited to,.
filling holes and replacing valve box covers so as to protect golfers and·
other members of the public from injury. The Contractor shall cooperate
fully with the City in the investigation of any accidental injury or death by
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the public, the Contractor's employees, agents, representatives, contractor
and subcontractors as well as by any other entity present or occurring in at
the Golf Course or the Site, including a complete written report thereof to
the GSM within twenty-four (24) hours following the occurrence of such
event.
1.2 PROTECTION OF PROPERTY
1.2.1 During Periods of Inclement Weather:
The Contractor will provide supervisory inspection of the Golf Course
during regular hours to prevent or minimize possible damage. The
Contractor shall submit a report identifying any storm damage to the GSM,
which shall be attached to a site map" that identifies the location of
damage." The Contractor's employees shall continue to perform the
Services that are or will not be affected by such inclement weather (e.g.,
"clean-up a·nd. facility maintenance, as well as work caused by the
inclement weather). ""
1.2:2 The Contractor shall exercise due care during the performance of the
Services in protecting from damage all existing facilities, structures and
utilities, including both aboveground and underground City property. Any
damage to. the City's property that is determined to be caused by the
" Cantractor's act or omission shall be corrected and paid far by the
Contractor, upon request, at no cost to. the City.
1.2.3 If the City requests or directs the Co.ntractar to. perfarm Services wark in a
specified area, then the Contractor shall be responsible for verifying and
locating (and markin"g by USA) any underground utility systems and far
taking reasonable precautians whenever its employees are or will be·
working in these areas. Any damage or problems shall be reported
immediately to the GSM.
1.3 INTEGRATED PEST MANAGEMENT.
1.3.1 The Contractor shall satisfy and athelWise comply with the follawing IPM
provisians:
a. T\1e Cantractar must wark clasely with the GSM and the City's IPM
Coordinatar (the "IPMC") to achieve annual IPM goals which strive
to. reduce the amaunt and taxicity of pesticides that are used while
maintaining the health and aesthetics of the Golf Course. The
Cantractar must attend annually City IPM meeting, caordinate with
the IPMC an annual goals, and meet quarterly to track progress on
annual gaals and troubleshaot IPM problems and respond to public
requests.
b. Within thirty (30) days of the Effective Date and annually on the
anniversary date (Navember 1st or as othelWise specified) af this ,
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Agreement, the Contractor shall submit to the GSM and the IPMC,
an Integrated Management Plan (the "Plan") that compli~s with the
City's IPM Poiicy. The Plan ·shall be reviewed annually for currency
. updates and modifications. Frequent and thorough site inspections
on foot will be needed to ensure no major fungal or insect
infestations shall occur.
c. Fungicides, insecticides and herbicides will be approved prior to
use by the GSM with IPMC consultation. New pesticides may not
be used without the GSM's prior written authorization. Pesticides
·win·be selected in accordance with the City's goal to minimize the
use of ecotoxic "Tier 1" pesticides and the total amount of
pesticides (active ingredient) as defined in the CitY's annual pest
report ..
d. The Contractpr must maintain any pre-existing IPM strategies used
at the Golf Course, unless it is otherwise determined by the GSA in
conSUltation with the IPMC.
e·. The Contractor acknowledges that the City believes and is informed
that the reduction in use of Tier 1 fungicides at the Golf Course has
been a key component of the reduction of pesticide toxicity at the
Golf Course. Whenever the use of fungicides is deemed necessary
by the Contractor, Tier 2 fungicide use shall be maximized prior to
the Contractor's use of Tier 1 fungicides. If Tier 1 fungicides must
be used, then Tier 1 fungicides that are not ecotoxic (a subset of
Tier 1 pesticides) must be used first. Attachment 3 contains a list of
current fungicides that are used, which includes the preferred Tier 2
products. The City's Environmental Compliance Program will
provide technical assistance in· determining product toxicity and Tier
rankings.
f. The City reserves the right to disallow and otherwise prohibit the
Contractor from using any pest control measure that the City
determines may jeopardize the public health, safety and welfare at
the Golf Course or threaten the environment or which conflicts with
the intention of the City's IPM policy ..
g. Rodent control will be performed by trapping. Baiting or fumigant
use is prohibited unless authorized by the GSM in consultation with
the IPMC. Trapping will be performed using devices that are
preapproved .by GSM using humane trapping procedures in order
to minimize stress or animal discomfort.
h. For. insect or other invertebrate control in, on or about the Golf
Course, Golf Course buildings and other structures, the
Contractor's first priority will be to address conditions that are
conducive to insect pests' infestation and conserve naturally·
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beneficial insects (or other invertebrates). Selective applications of
the least-toxic pesticides may be used only when non-chemical
control measures have been exhausted. The following products
shall not be used for insect control:
i. Products labeled with the signal word "danger"
ii. Organophosphate products (e.g.,diazinon or
chlopyrifos) . .
iii. Carbamate products (e.g., carbaryl)
iv. Pyrethroid-containing products
Biological controls will be based upon sound information such as
that provided by the University of California. The CSD staff will
provide Site-specific historical data for known infestations. .
i.. The Contractor must provide regular pesticide reporting information
in electronic format using the City's Contractor's Pesticide
Application Form (Attachment 2) and to be emailed to the GSM and
the IPMC by the 15th day of each month for the previous month's
work, unless it is otherwise agreed to and approved by the IPMC.
The Contractor must also have internet access and the ability to
ehter pesticide use information online if the City provides that·
reporting mechanism. "
j. For the City's Annual Pest Management and IPM Report, the
Contractor must also provide information confirming appropriate
training of staff, an annual inventory of hazardous materials and
hazardous wastes to ensure expired or prohibited products are
appropriately disposed and a written summary of the ·challenges
and successes of IPM program efforts annually. The brief report
format (Attachment 2) shal~ be provided by the City, and shall be
. due to the IPMC by December 3.1 of each year.
k. In accordance with the City's shared Municipal Regional Storm
water permit, IPM training must be provided to the Contractor's staff
at a minimum of once every three (3) years, or at a minimum of one
time during the Term, as shall be established by the GSM.
I. . Requests for information from the GSM or IPMC must be
responded to within 48 hours .
. All materials used shall be in strict accordance with and applied within the
standards set forth in the EPA regulations and the California Food and
Agricultural Code.
The Contractor is responsible for obtaining a'lI required permits and maintaining
the required usage documentation and to comply with all requests from the Santa
Clara County Agricultural Department to fnspect records, licenses, training
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certificates, equipment and storage facilities. All applicable regulations shall ~e
strictly adhered to, and all required reporting shall be the responsibility of the '
Contractor.
1.3.2 Pesticide Application Timing: Pesticides shall be applied at times that limit
the possibility of contamination from weather, irrigation or other factors.
Early morning or evening application shall be used when possible to avoid
contamination from drift. If applicable', drift control skirted booms must be
used when golfers are present if applicable. Small backpack applications
may be performed based on weather protection and with provisions made
for the safety of golfers. The applicator shall monitor and forecast weather
conditions. to avoid making application prior to the occurrence of inclement
weathet in order to eliminate the potential for the runoff of treated areas.
Irrigation water applied after treatment shall be reduced to eliminate
runoff. Whenever water shall be required to increase pesticide efficiency, it
shall. be applied only in quantities specifi~d on the label requirements and
of which each area is capable of receiving without excessive runoff.
1.3.3 Handling of Pesticides: Care shall be taken in transferring and mixing
pesticides to prevent contaminating areas outside the target area.
Application methods shall be used which ensure that materials·are
confined to the target area. Spray tanks containing leftover materials shall
not be drained on or about the Site to prevent contamination. Disposal of
pesticides' and tank-rinsing materials shall be handled in accordance With
the guidelines established in the California Department of Food and
Agricultural Code and/or EPA regulations, whichever imposes the higher
~uty of care on the Contractor.
1.3.4 Equipment and Methods:' Spray equipment shall be in good operating
condition, quality, and design to efficiently apply material to the target
area. The Contractor shall avoid the use of high pressure applications,
but it will be permitted to use water soluble drift agents that will minimize
drift.
1.3.5 Recommendations: All pesticide applications shall be made jn
accordance with written recommendations provided by a licensed Pest
Contro'l Advisor (PCA); a copy of each written recommendation of the PCA
will send to the GSM. A licensed Qualified Applicator (who possesses a
Qualified Applicator Certificate) shall be kept at the Site during application.
1.3.6 Selection of Materials: Pesticides shall be selected from those approved
for golf course use by California Department of Food and Agriculture and
in compliance with Section 1.3, which lists the prohibited pesticides.
1.4 SOUND CONTROL REQUIREMENTS
1.4.1 The Contractor shall comply with all local sound control and noise level
rUles', regulations and ordinances, which apply to any work performed , .
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· . pursuant to the contract.
1.4.2 Each internal combustion engine used for any purpose on the job or
related to the job shall be equipped with a 'muffler of a type recommended
by the manufacturer of such equipment. No .internal combustion engine
shall be operated on the project without said muffler.
1.5 EQUIPMENT AND ACCESSORIES
1.5.1 The Contractor shall provide all necessary equipmentneeded to perform
the Services as set forth in this Exhibit "A".
1.5.2 As of tlie Effective Date, the Contractor shall purchase from the City the
equipment, listed in Attachment A, in the "as-is", "where-is" condition in the
amount of $125,000, which sum shall be paid to the City on or before the
Effective Date. The Contractor will assume all rights and obligations
relating to the equipment as of the Effective Date. To the extent that the
City will require the Contractor to execute a bill of sale for such equipment,
the Contractor will execute and deliVer the same promptly to the City.
1.5.3 A third party 'furnishings, fixtures and equipment' consultant will value the
remaining supplies, materials and minor tools and equipment (not the
subject of the .sale and purchase) at the Site that is related to Golf Cours~
maintenance. The Contractor shall pay the City for the cost of the .'
independent consultant's valuation by the Effective Date or as soon as
practicable as agreed to by the City.
1.5.4 The Contractor shall take all necessary precautions for safe operation of
purchased equipment and the protection of the public from injury and
damage from such equipment.
1.5.5 All accessory equipment must be maintained in a clean, safe, functioning
condition at all times and repainted as required to present an aesthetically
pleasing appearance. .
1.5.6 The Contractor shall be responsible for the repair and repl.acement of Golf
Course signage, shoe brushes, trash receptacles, ash urns, greens cups,
NCGA tee markers, benches, s~nd rakes, flags and poles, ball washers,
fairway yardage poles, and sprinkler yardage markers.
1.6 INQUIRIES AND COMPLAINTS .;
1 ~6.1 The Contractor shall have at the Golf Course and the Site designated
responsible management personnel who will be authorized to take the
necessary action regarding inquiries and complaints that may be received
by the City, the golf course management services professional and/or
patrons during regular business hours. Copies of any and all public
correspondence will be provided to the GSM.
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1.6.2 Whenever immediate action is required to prevent impending injury, death
or property damageto the Site and/odhe Facilities and the Golf Course
facilities to be maintained or serviced by the Contractor, the City may. after .
reasonable attempt to notify the Contractor,cause such action to be taken
by the City's employees, agents, representativ~s, contractors and
subcontractors and shall be permitted to charge the full cost thereof to the·
Contractor .. The Contractor shall reimburse the City for such .costs and
expenses within ten (10) days of demand. . .
1.6.3 . All complaints shall be abated as soon as possible after notification to the
satisfaction of the City. If-any complaint is not abated within a reasonable
time, the Contractor shall notify immediately the City of the reason for not
abating the complaint, which shall be followed ·by a ·written report. sent to
the GSM within three (3) days of the incident giving rise to the complaint.
1.6.4 Monthly golfer surveys will be conducted; golfer satisfaction of Golf·
Course conditions, indicating 'good' or 'excellent' is expected from 80% or
more of responses. The City reserves the right to consult with the
Contractor in the event the responses fall below such threshold. .
1.7 MAINTENANCE EMPLOYEES/UNIFORMSNEHICLES
1.7.1 Employees: The Contractor shall designate a full-time Class "A" Golf
Superintendent and Mechanic (the "Superintendent"), who shall be
assigned to full-time service at the Golf Course. There shall be present at
the Golf Course an English-speaking supervisor,who shall be fully trained
in all maintenance responsibilities and who sh~1I remain on-site at all times
while the Services are being performed at the Golf Course. The
Contractor shall provide to the City on or before the Effective Date, all job
classifications and descriptions for personnel who will be assigned duties,
responsibilities and services to be performed at the Golf Course in
'furtherance of the Con~ractor's obligations under the Agreement.
A minimum .of ten (10) full-time equivalent maintenance employees,
between March 1st and October 30th, and eight (8) full-t.ime equivalent
maintenance employees, between November 1st and February 28th, shall
be assigned to work solely at the Golf Course and shall not be assigned
duties or responsibilities at other sites nor shall they be rotated between .
other sites that are maintained by the Contractor. The Contractor may use
temporary employees in case of absences or emergencies, if those
employees are trained in golf course maintenance, etiquette, and are in
uniform in accordance with applicable standards.
The Contractor may use temporary employees in case of absences or
emergencies if those employees are trained in golf course maintenance,
etiquette, and are in uniform and as otherwise will comply with industry
standards.
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All maintenance employees shall present a neat, well-groomed
appearance at all times.
The Contractor's employees shall act in a courteous, professional manner
at all times. Every effort shall be made to perform the work while creating
minimum disturbance to the golfers. Any Contractor employee, who is
determined by the GSM to be incompete-nt, disorderly, and intemperate or
otherwise behaves objectionably, upon request of the G8M, shall be
immediately removed by the Contractor from the Golf Course crew and
replaced with a satisfactory replacement.
The Superintendent will attend and participate in bi-weekly Golf Course
management/tenant meetings, monthly Golf Advisory Committee meetings
and other Golf Course-related meetings, whenever the subject of Golf
_ Course maintenance will be a topic or related topic of discussion.
The Superintendent shall play the Golf Course in order to be able to
discuss-the Golf Course conditions with the golf course services
professiOnal and golfer patrons and experience first-hand the playing
conditions. Rounds shall be limited to the weekdays, and in no event more
than four (4) complimentary rollnds a month, subject to space availability,
and no advance reservations will be permitted. All other Contractor
maintenance staff assigned to duties at the Golf Course may play two (2)
complimentary rounds a month, weekdays only, subject to space
availability, and no advance reservations.
The Contractor's staff, who will be assigned to duties at the Golf Course,
shall be fingerprinted before they will be permitted to commencing work on
behalf of the Contractor at the Golf Course. The Contractor will confirm, in
writing, of such fingerprinting, upon request of the G8M.
1.7.2 Uniforms: The Contractor shall pay for and bear the maintenance cost of
uniforms for all employees working on the Golf Course.
The uniform shall be worn as a complete unit and be fitted properly. The
uniform shall be cleaned and pressed with no rips, tears or permanent
stains present. The uniform shall include an inSignia or logo that refers to
"City of Palo Alto Municipal Golf Course."
In cool weather when a jacket or sweatshirt is needed, the jacket or
sweatshirt shall be worn as the outer garment. All shirts and jackets shall
have the golf course logo and the worker's first name on them.
Protective golf staff equipment shall be determined by the Contractor
when working on the golf Gourse. When working elsewhere at the facility,
but not within the actual field of play, a cotton uniform cap with either of
the golf course logos may be worn, but must be worn with the bill facing
forward at all times.
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1.7.3 ,vehicles: All vehicles owned, controlled or used by the Contractor afthe
Golf Course shall be maintained in good mechanical and body repair. The
vehicles shall be in clean condition, both inside and outside at all times.
The vehicles driven on public roadways shall bear the Contractor's
, company name or seal, which shall be visible on both sides of the
vehicles. The,vehicles used on the Golf Course will also display an
adopted insignia or logo that refers to "City of Palo Alto Municipal Golf
Course." '
Each vehicle shall be equipped to hold all necessary tools and equipment
in a neat and orderly fashion.
1.8 THE CITY'S RIGHT TO DO WORK
The City reserves the right to perform work as required on the Golf
Course, including all areas, grounds, buildings and structures, and to
access the Site to use any building or shed thereon and perform
maintenance or other work on City-owned lighting and other facilities on or
about the Site. The work referenced herein may include, but is not limited
to, capital improvements and/or alterations intended to improve the Golf
Course facilities and infrastructure. If such project(s) will affect the
Contractor's cost to provide the 'Services as agreed to in the Agreement
and the Contractor desires to seek compensation fpr ,addjtional costs, then
the Contractor shall be required to submit, in writing, justification to
support the additional costs before incurring any such costs. The. Parties
will review the justification .in order to be able to address any desired
modifications to the compensation provisions of this Agreement.
2.0 SPECIFIC MAINTENANCE REQUIREMENTS
2.0.1. The Contractor shall notify the City prior to use of a subcontractor on the
Golf Course. All subcontractors shall obtain and maintain appropriate
insurance alid comply with safety requirements and shall be trained in golf
course etiquette procedures prior to any work being performed.
2.0.2 The Contractor shall provide to the golf course services professional and
Pro-Shop tenant upon request any fuel located at the Site and Facilities in
connection with the operator-tenant's golf course-specific equipment, such
as a ranger vehicle and one or more smick carts. As set forth in Section Z
and in Section AA of the General Terms and Conditions, the Contractor
and operator-tenant shall collaborate on an agreement relating to fueling
operations and compensation for fuel.
2.0.3 All Golf Course-related plans, blueprints, and drawings are the property of
the City and shall not be removed from City property. The Contractor shall
be permitted to make copies as required, to ensure the original set of
plans, blueprints and drawings remain in good condition.
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·2.0.4 The Contractor shall perform any required maintenance activities,
including, but not limited to, ropes, stakes, traffic control, turf aerification,
and overseeding as a result of golf cart use on the Golf Course. .
2.0.5 The Contractor shall-meet weekly with the golf professional to coordinate
golf events and maintenance activities.
2.1 MAINTENANCE RECORDS
The Contractor shall provide the GSM with a written schedule of the work
to be performed during the following month, which shall include, but is not
limited to: general Golf Course maintenance, aerification, tree trimming,
pond maintenance, herbicide/insecticide application, fertilization and
replacement of plants with ~right colors. The report shall be provided in a
format developed by the Contractor and approved by th~ GSM. If the
Contractor finds that it is not possible to maintain the submitted .schedule,
the GSM shall be advised, and arevised schedule shall be submitted.
2.1.1 The Contractor shall maintain and keep current a log that records all on
going, seasonal and additional work, and maintenance functions
performed on a daily basis by the Contractor's personnel. The report shall
be in a form and content acqeptable to the GSM and shall be submitted to
the City concurrent with the monthly invoicing. The monthly payment will .
not be made until such rep'ort is received by the City. .
2.2 TREES'
2.2.1 Trees trimmed as needed. All tree trimming activities shall be performed
on a schedule approved by the GSM and in accordance with the tree,
shrub and other wood plan maintenance pruning practices outlined by the
American National Standards Institute, Inc. (ANSI) and International·
Society of Arboriculture (ISA) Best Management Practices standards.
However, such trimming and pruning is a minimum level and shall not
relieve the Contractor of other responsibilities set forth herein. The
Contractor shall consult with the City's Managing Arborist on issues
concerning the removal or treatment of trees at the Golf Course.
2.2.2 Trees shall be kept in healthy condition and pruned as required to remove
broken or diseased branches. The Contractor shall develop a pruning .
program, which will promote proper tree scaffolding, strength, and
. appearance consistent with its intended use. The Contractor shall prune
trees to allow wind to pass through the tree, reducing and preventing B
"sail" effect when needed.
2.2.3 Trees located adjacent to vehicular and/or pedestrian traffic ways shall be
maintained so as not to obstruct vehicle and/or pedestrian visibility and
clearance. Trees interfering with airport tower vision must be trimmed and
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lowered a~ needed.
2.2.4 Fertilization shall be scheduled as often as required to keep trees in a
healthy and desirable condition per soil analysis and identification of.
nutrient deficiencies as outlined in the pruning specifications. The
Contractor shall not apply fertilizer to the root ball or the base of the main
stem, but shall spread evenly in the area of drip zone.
2.2.5 Tree stakes, ties, and guys shall. be checked and corrected as neede~.
Ties will be adjusted toprevent girdling. Remove unneeded stakes, ties,
and guys as required. Re-stake trees as required using lodge pole stakes.
2.2.6 Prune trees along sidewalks and cart paths to allow a ten (10) foot
clearance for pedestrians and golf carts and fifteen (15) feet above curb
and gutters for vehicular traffic.
2.2.7 Ailing or stunted trees which fail to meet expected growth will receive
additional nutrient treatments to correct any deficiencies. Terminally
diseased trees are to be removed per the City's removal policy and
procedures. .
2.2.8 . Surface roots, which become maintenance or appearance problems, will
be removed or additional soil and sod cover shall be placed as required to
prevent damage to adjacent areas, mowers and golf carts. No weed whip
marks or herbicides around exposed roots or trunks.
2.2.9 Any trees that are blown over shall either be removed and replaced or
topped and righted at the Contractor's expense. .,'
2.2.10 The Contractor shall develop a tree management plan within six (6)
months of the Effective Date, which shall be approved by the GSM, for
maintenance of existing trees, removal of dead or diseased trees, and
replacement of aging trees. The Plan will be reviewed by the City's
Managing Arborist for comments and amendments before being accepted
by the City.
2.2.11 Any dead tree that exists through no fault to the Contractor shall. be
removed (with the City's prior approval), including stump grinding and
repair of such area at the Contractor's expense.
2.2.12 Any dead tree that is present through the fault of the Contractor shall be
removed (with the City's prior approval) and replaced per the City Tree
Ordinance at the Contractor's expense.
2.2.13 The Contractor shall plant and care for up to 50 new trees each year of
the contract. Trees will be provided by the Contractor. Salt tolerant trees,
recycled water tolerant, wind breaks, maximum height requirements
(airport) will be considered when selecting trees.
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2.2.14 The Parties agree that the annual compensation provided her~in includes
an amount not to exceed $13,000 annually, allocated for the arbor care,
including tree planting, stump grinding and major tree trimming, and
associated green waster disposal for ~rees above 15 feet from the ground.
2.3· SHRUBS The Contractor shall:
2.3.1 Pr~ne shrubs to retain as much of the natural informal appearance as
possible.
2.3.2 Shrubs used as formal hedges or screens shall be pruned as required to
present a neat, uniform appearance. .
2.3.3 Remove any spent blossoms or dead flower stocks as required to present
a neat, clean appearance.
2.3.4 Plants growing over curbing and/or sidewalks shall be trimmed on a
natural taper rather than vertical so as not to appear to be hedged.
2.3.5 Schedule the application of a commercial fertilizer as often as required to
promote optimum growth and healthy appearance to all shrubs.
2.3.6 Any plant requiring removal shall be replaced by the Contractor.
2.4 GROUND COVER -NATIVE GRASSES
2.4.1 Apply all chemical control (e.g. pesticides) as required and in
conformance with the Golf Course Integrated Pest Management Plan that
will be approved each year (Section 1.3) to contro"l or prevent pest
infestations to protect ornamental planti~gs.
2.4.2 Trim ground cover adjacent to walks, walls and/or fences as required for
general containment to present a neat, clean appearance.
2.4.3 Cultivate and/or spray herbicide to remove broad-leafed and grass weeds
as required (and in conformance with the Golf Course Integrated Pest
Management Plan that will be approved each "year (Section 1.3). Shrub
beds shall be maintained in a weed free condition.
2.4.4 Keep ground cover trimmed back from all controller units, valve boxes,
quick couplers, or other appurtenances or fixtures. Do not allow ground
covers to grow up trees·, into curbs, or on structures or walls. Keep
trimmed back· approximately 4 inches from structure or walls.
2.4.5 Fertilization: Schedule fertilization of all ground cover areas with a
commercial fertilizer as often as required to promote healthy appearance.
Any fertilizer or chemicals must be applied is strict adherence with
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manufacturer's directions to avoid contamination of waterways or
disturbance of natural resources. Fertilizers that contain pesticides must
be reported to the IPMC on the Contractor's Pesticide Application Form.
2.4.6 Ground cover plants shall be added as needed to ensure a solid mass
planting in conformance with the original intent.
2.5 PEST CONTROL ON PLANTS
, .
2.5.1 The Contractor shall provide complete and continuous control and/or
eradication of all plant pests or diseases in conformance with the Golf
Course Integrated Pest Management Plan (Section 1.3):
2.5.2 The Contractor shall supply the proper chemical designated for the pests
to be controlled. Any pesticides or chemicals must be applied in strict
adherence with manufacturer's directions to avoid contamination of
waterways or disturbance of natural resources and be in conformance with
the Golf Course IPM Plan that will be approved each year.
2.5.3 The Contractor shall obtain all necessaiy regulatory permits and assume
responsibiJity for the use of all chemical controls.
2.6 . IRRIGATION SYSTEM
The Contractor will assume all responsibilities for maintenance and repair .
of all 2 inch and smaller pipe and all components of the irrigation system
such as sprinkler heads, valves, valve boxes, restraints, gaskets, swing
joints, quick couplers, saddles, electrical, controller satellites, and
hardware of the Golf Course irrigation system. All expenses for parts and
labor will be paid for by the Contractor. When replacing steel nuts and
bolts the Contractor will use only highest grade stainless steel. All
components will be replaced with same manufacture and models as
components being replaced unless otherwise approved by GSM.
2.6.1 EFFICIENT USE OF WATER:
2.6.1.1 Considerations must be given to soil texture, struCture, porosity, water
holding capacity, drainage, compaction, preCipitation rate, run off,
infiltration rate, percolation rate, evapotranspiration, seasonal
temperatures, prevailing wind condition, time of day or night, type of grass,
. plant and root structure. This may include syringing during the day and
watering during periods of windy weather.
2.6.1.2 The Contractor shall be responsible for daily monitoring all systems within
premises and correcting for coverage, adjustment, clogging of lines and
sprinkler heads, .removal of obstacles, including plant materials which
obstruct the spray.
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2.6.1.3 The soil moisture content on greens, tees and fairWays shall be checked
regularly and appropriate adjustments made. Adequate soil moisture shall
" be determined by visual observation, plant resiliency, and turgidity,
examining cores removed by soil probe, moisture sensing devices and
programming irrigation controllers accordingly.
2.6.1.4 The Contractor shall obserVe and note deficiencies occurring from the
original design of facilities and review these find ings with the "GSM so
necessary improvements can be considered.
2.6.1.5 All" leaking or defective valves, lines, sprinkler heads, and quick cquplers
shall be repaired within twenty-four "(24) hours at the expense of the
Contractor. A report of such repairs shall be given to the GSM weekly.
2.6.1.6 The Contractor shall turn off all controllers when it is not necessary to
irrigate due to adequate rainfall.
2.6.1.7 The Contractor shall monitor reclaimed water and potable water.
Reclaimed water shall not exceed 65% and potable water costs shall not
exceed $250,000. The Contractor shall notify GSM if these costs exceed
$225,000. As conditions dictate GSM may approve additional potable
water use.
2.6.1.8. The City acknowledges that the adequacy of water supply and quality
cannot be guara~teed for water irrigation purposes and that, after the
Effective Date, the City may adopt water usage restrictions and take other
measures that could impact the amount of water available for irrigation
purposes at the Golf Course. In the event that the City becomes aware of
a decrease in the water supply, then the City will inform the Contractor of
such occurrence, and the Parties promptly will use reasonable efforts to
ascertain the effect, if any, of the decrease in water supply on the
standards of maintenance to which the Contractor is required to adhere in
t~e performance of the Services. To the extent practicable, the City will
endeavor to prioritize water usage in order to cause the least impact to the
water supply available to the Golf Course, and the Contractor's obligation
to adhere to the standards of maintenance will be evaluated by the City
under then prevailing conditions of a decrease in water supply for irrigation
purposes.
2.6.2 SYSTEM MAINTENANCE
" The Contractor is aware of the current location and general condition of
the Golf Course's water irrigation system and accepts the system in its
"as-is" "where-is" conditions, and agrees to be fully responsibility for the
repair and maintenance of the system. Any required replacements,
repairs, and maintenance to existing components of the system to ensure
the system remains in operation are the sole responsibility of the
Contractor. Appropriate personnel shall be trained in the use of the master
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irrigation computer.
2.6.2.1 All controllers are to be kept pest-free, clean and visible. All parts and
, repairs necessary to maintain the operation are the responsibility of the
Contractor.
2.6.2.2 The computer and software (including annual service agreements)
necessary to operate and maintain the irrigation control system shall be
maintained by the Contractor. The Rainbird Support Agreement, a copy of
which shall be made available to the Contractor by the City, shall be kept
current by the Contractor at all times during the Term. Computer and
Controller information will be properly kept.
2.6.2.3 Any repairs made by the operator shall be made in accordance with the
industry stand~rds and conforming to all related codes and regulations.
2.6.2.4 The Contractor shall be responsible for adjusting the t)eight of sprinkler
risers necessary'to compensate for growth of plant materials.
2.6.2.5 Automatic controllers and/or enclosures shall be locked while
unattended.
2.6.2.6 All controller enclosures must be painted or replaced as needed to
maintain a good appearance.
2.6.2.7 Sprinkler heads and valve boxes shall be kept clear of overgrowth which
may obstruct m'aximum operation. Missing or broken valve boxes will be
replaced by The Contractor.
2.6.2.8 Repairs and/or upgrades made to the irrigation system must be made in
accordance with the system's original design with products equal to or
higher quality th~n currently provided.
2.6.2.9 The GSM shall be promptly notified of any interruption in water service to
the Golf Course.
2.6.2.10 All irrigation repairs and maintenance including, but not limited to,
sprinkler heads, piping, fittings, valves, controller boxes, controller
supplies, and controller face plates must be performed utilizin'g the same
manufacturer and type of product as existing materials. Any change to
existing materials must have the prior approval by the GSM.
2.7 ANIMAL AND RODENT CONTROL
The Contractor shall continuously, at a minimum on a weekly basis;
control and eradicate rodents and other animal pests as necessary to
prevent hazards, holes and destruction of plantings on golf course
property in accordance with the Golf Course IPM Plan which will be
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drafted annually and following specifications for rodent control. Damage to
public or private property due to"erosion "as a result of rodent activity shall"
be repaired at the Contractor's expense.
The Contractor will use reasonable" efforts to several times daily remove
the geese from the Golf Course. The Contractor shall contact the Palo Alto
Airport Tower for their approval whenever there are attempts to remove
the geese from the Golf Course. Goose guano shall be cleaned on an as
needed basis on the Tees, Greens, Approaches, Fairways, and Cart
Paths, using best management practices.
2.8 WEED CONTROL OF PAVED SURFACES
The Contractor shall control all weeds growing in cracks, expansion joints
and other hard surfaces by the use of mechanical weed control or with
limited use of chemicals in accordance with the Golf Course IPM Plan.
2.9 WEED CONTROL IN LANDSCAPE AREAS
Weed control in landscaped areas shall be accomplished by mulching and
the use of mechanical weed eradication.
2.10 STRING TRIMMERS
Care shall be exercised with regard to the use of string trimmers to
prevent damage to building surfaces, walls, header board, light fixtures,
signage, etc. A minimum of 12" bare soil or mulched buffer zone shall be
maintained around the circumference at the base of all trees in
I"andscaped areas.
2.11 GREENS
Maintain all turf in accordance with playability and industry wide standards
as determined by the GSM, observing the following minimum "
requirements:
2.11.1 Greens shall be mowed daily in the s!Jmmer (March 1 -o.ctober 31) and a
minimum ofthree (3) times per week during the winter (November 1 -
February 28) with an approved greens reel type mower at a height of 130
or as recommended by the superintendent and approved by the GSM.
Frequencies and height of cut may be modified from time to time as
deemed necessary by the golf course superintendent with the prior
approval of the GSM. All grass clippings must be" collected and removed
from the site during each mowing operation, including dispersed in a
method to prevent unplayable conditions. Greens must be mowed, and
rolled if performed, prior to first golfer of day reaching each respective
green, including the putting green. Care will be given on clean-up lap
mowing to reduce turf loss and playability.
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2.11.2 Ball cups are to be relocated daily to USGA Standards to enable worn
turf spots to recover. Putting green cups to be changed every other day.
Hole positions will be rotated using front, middle, and back locations for
each three hole sequence. Pin placement shall be in healthy turf area
according to rotation plan. Hole plugs set at proper grade.
2.11.3 Verticutting of greens shall be scheduled bi-weekly or more including
double verticutting during periods of active turf growth. Each verticutting
shall be at 90 degrees to the previous cut. Verticutting activities should
match the agronomic requirements of plant growth. This function shall
be coordinated to compliment the aerification and topdressing schedules.
Combing or brushing may also be done. Verticut depth should be .
appropriate to playing conditions and agronomic needs. If play
conditions are such that greens are not smooth for ball roll (bumpy), the
Contractor shall utilize verticutting and 'other agronomic 'methods to
improve golf ball roll.
2.11.4 Aerify greens at least two (2) times per year in spring, either March or
April, and fall, either September or October, or more frequently if needed.
Plugs will be removed the same day. Aerification shall be carried out
with a minimum of interference to play. Aerification shall be scheduled at
least 6 months in advance with the GSM and golf professional. All
aerification hole sizes with a minimum of 5/8 inch hollow tine utilized, and
spoil locations shall be pre-approved by the GSM. Aerification holes shall
penetrate to a depth of three inches. Care should be taken to have as
minimal disturbance to green surface from manual and eqUipment
applications during aerification process. Aerification of greens for
agronomic purposes, other than annual regularly scheduled aerifications,
shall be reviewed and scheduled with the golf professional and GSM to
reduce golfer impact.
2.11.5 Following all annual regularly scheduled aerifications, 'a topdressing sand
material approved by the GSM shall be applied and brushed into the turf
. with follow applications performed as needed. Application shall be done';
with an approved topdressing spreader or blown in with walking blowers.
Spot topdressing may be applied to repair damage from ball marks or
any other damage. Light topdressing will be done every two weeks
during the active growth season to maintain turf playability and
agronomic conditions. Turf irrigation requirements shall be adjusted
during process to ensure proper agronomic conditions are met.
2.11.6 The Contractor shall have the soil analyzed after the start of the term of
the contract and once every year thereafter on dates preapproved by the
GSM. Apply fertilizer and nutrients in the quantity and type
recommended by soil analysis and growing conditions at the time of
treatment and in a manner to provide uniform growth of turf. Under
normal conditions, 0.5 to 1.2 pounds of actual nitrogen per thousand
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square feet shall be applied per growing month. Typically, a variety of
granular slow release types of material or liquid sprayable fertilizer may
be utilized. Use of materials to control salt damage and water infiltration
shall be applied to meet the requirements of the turf and playable
conditions. Fertilizer shall be applied every 3-4 weeks during the active
growing season and every five (5) weeks for the remainder of the year.
2.11.7 Treat greens with proper chemicals to control insects, disease, weeds
and other pests in conformance with the City's IPM Plan.
2.11.8 Greens shall be kept free of non-native and/or invasive grasses and/or
broadleaf weeds that tend to creep in from the edges. A threshold level of
0-2% has been set for weeds and disease: Insect threshold has been set
at 0-5%. No foreign grass encroachment from collars.
2.11.·9 EC readings should be taken during spring and fall to determine salts
levels and if they are above normal, corrective action taken to reduce to
appropriate levels to promote optimum health of the turf.
2.11.10 Green speed should be consistent daily on all greens with the difference
between the lowest green speed and the highest green speed no more
than one (1) foot in variance on the stimp meter through out golf course.
G'reen speeds should be no lower than 8 feet in average daily during the
months of May, June, July, August, September, and October, and no
lower than 8 feet 6 inches daily for the other months. Green speeds
should be maintained as high as agronomic conditions and play
conditions allow.
2.11.11 Debris from trees shall be cleared prior to mowing and .during day as
needed, no standing water or severe turf loss areas, pest and vandal
damage to be repaired, and bare and stressed areas sodded or plugged
to ensure quality playing conditions.
2.11.12 Ball marks shall b~ repaired daily.
2.12 COLLARS, APPROACH, BANKS AND GREEN SURROUNDS
Maintain all turf in accordance with playability and industry wide
standards as determined by the GSM observing the following minimum
requirements:
2.12.1 Collars shall be mowed a minimum of two (2) times each week during the
summer (March 1 -October 31) and one (1) to two (2) times each week
during the winter to (November 1 -February. 28) maintain a height of %
. inch, mowing with a triplex mower.
2.12.2 Green surrounds shall be mowed a minimum of two (2) times each week
in the summer (March 1 -October 31) and one (1) to two (2) times per
week in the winter (November 1 -February 28) to maintain a height of 1
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inch to 1-114' inches or a height as recommended by the Superintendent
and approved by the GSM. If a rotary mower is" used, it shall be
specifically designed to prevent scalping of the turf.
2.12.3 Fertilization frequency, types of material, and analysis shall be
determined from results of annual soil nutrient level testing and growing
conditions at the time of treatment. Under normal conditions, 0.50 to 0.75
pounds of actual nitrog"en per thousand square feet shall be applied every
6-8 weeks duririg the active growth season and every 8-10 weeks for the
remainder of the year. Typically combinations of granular slow release
. typ.e of materials may be utilized. .
2.12.4 Mowing directions should be changed to prevent turf depressions and turf
loss.
2.12.5 Approach shall be mowed a minimum of two (2) to three (3) times each
week in summer (March 1 -October 31) and one (1) to two (2) times per
week in the winter (November 1 -" February 28) to maintain a height of %
inch or a height as recommended by the superintendent and approved by
the GSM, cut with a greens-type triplex mower.
2.12.6 Grass clippings shall be removed and dispersed properly to avoid
affecting golf play. "
2.12.7 Bunker banks shall"be mowed to ensure no rutting occurs and proper turf
heights are maintained. If rutting occurs, areas shall be sodded for repair.
2.12.8 Verticutting shall be performed at least two (2) times per year. All other
provisions of section 2.11.3 shall be followed .
. 2.12.9 Aerify at least two (2) times per year in spring and fall, or more freqLiently
if needed, and remove plugs the same day. Aerification shall be carried
out with a minimum of interference to play. Aerification shall be scheduled
each year for the following year in :conjunction with the GSM and golf
professional. All aerification hole sizes, with a minimum of 5/8 inch hollow
tine utilized, and spoil locations shall be pre-approved by the GSM.
Aerification holes shall penetrate to a depth of three inches. Care should
be taken to have as minimal disturbance to the turf surface from manual
and equipment applications during aerification process. Aerification for .
agronomic purposes other than annual regularly. scheduled aerifications
shall be reviewed and scheduled with the golf professional to reduce
golfer impact.
2.12.10 Following all annual regularly scheduled aerifications, a topdressing sand
material approved by the GSM shall be applied as needed. Application
shall be done with an approved topdressing spreader. Turf irrigation
requirements shall be adjusted during process to ensure proper
agronomic conditions are met.
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2.13 TEE MAINTENANCE
Maintain all turf in accordance with playability and industry-wide standards
as determined by the GSM observing the following minimum
requirements:
2.13.1 Service tees daily by moving tee markers, removing trash and checking
benches and ball washers. Change tee towels and water weekly and .
keep ball washers filled to proper level with wate(andappropriate
cleaning agent. Tee markers shall be moved daily to healthy turf areas,
placed at appropriate direction to play. Tee markers placed in healthy
areas with tee markers .set flat to ground and direction of play .•
2.13.2 Mow tees two (2) times weekly in the summer (March 1 -Octob~r 31) and
one (1) to two (2) times weekly in the winter (November 1 -February 28)
with reel type mower, with baskets, at height of 112 inch or a height as
recommended by the superintendent and approved by the GSM. All grass
clippings will be collected and dispersed properly for playable conditions.
2.13.3 Aerify and topdress tees, with sand and mulch pre-approved by the GSM,
at least two (2) times per year, or more frequently if needed, using the
appropriate equipment with the minimum of inte'rference to play.
Aerification shall be carried out with a minimum of interference to play and
plugs removed the same day. Aerification shall be in conjunction with the
golf professional and the GSM. All aerification hole sizes, with a minimum
of 518 inch utilized, and spoil locations shall be pre-approved by the GSM.
Care should be taken to have as minimal disturbance to tee surface from
manual and equipment applications during aerification process. Bare
areas sodded and leveled.
2.13.4 Fertilization frequency, materials and analysis shall be determined·from
results of annual soil nutrient level testing and growing conditions at the
time of treatment. Under normal conditions, 0.50 to 0.75 pounds of actual
nitrogen 'per thousand square feet shall be applied every 6-8 weeks during
the active growth season and every 8-10 weeks during the remainder of
the year. Typically combinations of granular slow release type of
materials may be utilized.
2.13.5 Repair worn and damaged turf areas as they occur by topdressing.
overseeding or resoddingto ensure playability at all times. No standing
water or mud holes and pest and vandal damage repaired. .
2.13.6 Tees shall be overseeded, with approved perennial rye seed by the GSM,
following aerification and before topdressing at a rate of 9 Ibs. per
thousand square feet of tee area.
2.13.7 Treat tees for control of insects, disease, weeds and other pests as
necessary to maintain healthy turf. All treatments shall be in compliance
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with the City's IPM Plan. A threshold level of 25% has been set for weeds
and disease. Insect threshold is 33%. Spot spraying by location basis
only when thresholds are exceeded.
2.13.8 Trash receptacles are to be' emptied daily.
2.13.9 A sand and seed container, approved by the GSM, must be available on
all Par 3.holes, for use in repairing divots. A container must be set at each
respective set of tee markers for each hole. Tee divots shall be filled with
sand and seed at a minimum of once per week on all holes and twice per
week on Par 3 holes.
2.13.10 Sufficient scorecard and pencil supplies shall be kept in stock at the
scorecard station betwe~n the No. 1 green and the No.2 tee.
2.13.11 Tee yardag.e plaques, stations and signs shall be maintained and edged
at all times.
2.13.12 Tee station items, such as markers·, signs, trash cans, ball washers, etc.
shall be in good condition and repaired or replaced as needed. All tee
station equipment cleaned and painted and ball washers operational.
2.13.13 Recycle trash containers shall be utilized and all recyclable glass, paper,
plastic, aluminum and other recyclable material shall be collected arid
turned into appropriate recycle centers.
2.14 FAIRWAY MAINTENANCE
Maintain all fairways in. accordance with playability arid industry wide
standards as determined by the GSM, observing the following minimum
requirements:
2.14.1 Mow fairways two (2) times weekly in the summer (March 1 -October 31)
and one (1) to two (2) times weekly in the winter (November 1 -February
28) at height of 5/8 inch or at a height as recommended by the
superintendent and approved by GSM.
2.14.2 Aerify all fairways at least one (1) time a year. The equipment used to
aerify the fairways shall be Power Take-Off (PTO) or self engine powered
to enable a three (3) to five (5) inch coring depth (John Deere2000
. Aercore Aerator or equivalent) utilizing hollow coring, with a minimum of
3/4 inch hollow tine, as recommended by the superintendent and . .
approved by the GSM and cores shall be removed from the fairways.
Aerification shall be scheduled in conjunction with the golf professional
and. the GSM. All aerification hole sizes and spoil locations shall be
preapproved by the GSM. Care should be taken to have as minimal
disturbance to turf surface from manual and equipment applications during
aerification process. Slicing of the fairways at various intervals is
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recommended to promote turf growth, improve water infiltration, and
improve salt damage. .
2.14.30verseed all fairways.once per year, in fall and at a preapproved date with
the GSM and golf professional, with perenial rye grass, pre-approved by
the GSM, at a minimum rate of 400 Ibs. per acre. All seed shall be slit
seeded into the soil to ensure adequate soil and seed contact. A post
seed application offertilizer (15-15:-15 or equivalent) shall be applied with
four (4) weeks of the overseed process at a rate of one (1) Ib per thousand
of nitrogen. Overseed andtopdress (or re-sod) of worn or bare areas of
fairways as necessary.
2.14.4 Treat turf to control weeds, invasive grasses (Le. Kikuyu), diseases,
insects, and other pests as necessary to maintain fairway threshold level.
A threshold level of 35% for weeds, 50% for disease and 40% for insects
has been set. Spot spraying by location basis as needed when thresholds
are exceeded. All treatments shall be in compliance with the IPM Plan.
2.14.5 A proper fertilizing and nutrient program shall be performed per soil testing
recommendations each calendar year. Fertilization shall be performed a
minimum of every 8-10 weeks during the active growth season and every
10-12 week during the remainder of the year.
2.14.6 Policing to control litter shall be done on a regular basis for the removal of
all paper, leaves, cans, bottles, tree branches, etc.
2.14.7 Excessive turf clippings shall be dispersed by a method of dragging,
baskets, vacuumed or blown to ensure proper playable conditions are·
provided. Grounds under repair painted with appropriate white turf paint
and roped off neatly and consistently throughout the golf course. Grounds
under repair include those under repair by the Contractor and those areas
where turf is at a level that is not consistent with other associated turf
areas. Yardage markers and sprinkler head yardage markers in place and
maintained. Cart traffic management devices in place; bare or stressed
areas properly addressed. No standing water or mud holes. Pest and
vandal damage repaired.
2.14.8 Excessive turf clippings shall be dispersed by a method of dragging,
baskets, vacuumed or blown to ensure proper playable conditions are
provided. Grounds·under repair painted with appropriate white turf paint
and roped off neatly and consistently throughout the golf course. Grounds
under repair include those under repair by the Contractor and those areas
where turf is at a level that is not consistent with other associated turf
areas. Yardage markers and sprinkler head yardage markers in place and
maintained. Cart traffic management devices in place; bare qr stressed
areas properly addressed. No standing water or mud holes. Pest and
vandal damage repaired.
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2.15 ROUGHS MAINTENANCE
Maintain all turf in accordance with playability and industry wide' standards
as determined by the GSM, observing the following minimum standards:
2.15.1 Mow one (1) time per week in the summer.(March 1 -October '31) and at
least biweekly during the winter (November 1 -February 28) at ~ height of
. 1-1/2 inches or a height as recommended by the superintendent and
approved by the GSM. .
2.15.2 Rodent control and repair as needed, All rodent control shall be in
compliance with the IPM Plan. Pest and vandal damage repaired.
2.15.3 Overseed and topdress (or resod) worn or bare turf areas as necessary.
2.15.4 Fertilization frequency, materials and analysis shall be determined from
results of biannual soil nutrient level testing and growing conditions at the
time of treatment. Fertilization shall be performed a minimum of every 8-
. 10 weeks during the active growth season and every 10-12 week period
during the remainder of the year.
2.15.5 Treat turf to control we~ds, disease, insects and other pests as necessary
to maintain rough threshold. All treatments shall be in compliance with the
IPM Plan: A threshold level of 100% for insects and disease. Weed
threshold has been set at 50%. Spot treatment by location basis only
when'thresholds are exceeded.
2.15.6 Grounds under repair painted with appropriate white turf paint and roped
off neatly and consistently throughout the golf cou·rse. Grounds under
repair include those under repair by the' Contractor and those areas where
turf is at a level that is not consistent with other associated turf areas. No
standing water or mud holes, hazards properly marked, and free of debris
that affects play.
2.16 OTHER TURF AND MAINTENANCE AREAS
These areas consist of areas not detailed above,
2.16.1 All debris such as litter and branches shall be removed from the course
daily.
2.16.2 All yardage, course markers, ropes and stakes, and signage shall be
straight and damage free, and repaired and replaced as needed.
2.16.3 Any item that is a safety hazard shall.be repaired or replaced immediately,
2.16.4 The Contractor shall submit annually to the GSM a written report for the
preceding .12 months detailing annual fertilizer, pesticide, fungicide and
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other related applications for the golf course. The report will conform to
the requirements of the IPM Plan.
2.16.5 The Contractor shall flush drainage inlets once a year.
2.16.6 The Contractor shall utilize wood chipping machinery to produce wood
chips from tree pruning and care. Wood chips may be spread throughout
golf course in preapproved areas by the GSM. No permanent dumping of
course debris such as branches, wood stumps, etc. is approved on the
property. The Contractor is responsible for costs associated with any
removal of debris. Any other course-generated debris such as earthen
spoils shall be dispersed at locations and with methods preapproved by
the GSM.
2.16.7 Turf areas surrounding the clubhouse shall be mowed one (1) time per
. week at a height of 1-1/4 inches ..
2.16.8 The Contractor shall provide, at its sole expense, an effective goose
control program to mitigate goose activities, including, but not limited to,
the use of control dogs, motorized hand controlled boats, noise makers,
and other methods.
2.17 SAND BUNKERS
2.17.1 Sand bunkers shall be cleaned and raked by mechanical method or by
hand a minimum of three (3) times per week with Fridays being one of the
three days. No eXCeSS sand buildup on high side.
2.17.2 Sand depth shall be randomly checked monthly for depth of sand and
shall be maintained no less than four inches (4") deep. Additional sand
will be added at the Contractor's expense.
2.17.3 Turf shall be mechanically edged along sand bunker edges monthly, or
more frequently if required, to ensure a neat appearance. Care shall be
taken to maintain the design outline of the bunkers to insure the integrity
of the bunker shape. Bunkers should have 1" lip on lower side. Chemical
control of sand edges through use of a non-selective herbicide or growth
regulator around sand bunkers shall be allowed with preapproval of GSM.
2.17.4 Excess sand in the turf surrounding the trap shall be removed on a regular
basis.
2.17.5 A minimum of two (2) to five (5) rakes are to be available, depending on
bunker size, at all sand bunkers at all times. Rakes properly maintained.
(Color and style are subject to GSM approval.)
2.17.6 Bunker sand shall be cultivated as needed, or at a minimum of once per
. month, to ensure sand is not compacted. Methods should be used to not
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disturb existing soil below the sand.
2.17~ 7 All debris such as pine needles and cones, branches and other debris
shall be removed as needed to ensure playable conditions and redu~e
sand contamination. No animal boroughs.
·2.17.8 Excessive water ponding and silt accumulated by rain falls· and irrigation
applications shall be removed prior to bunker raking.
2.18 CLUBHOUSE AREAS
2.18.1 SHRUB BEDS
2.18.1.1 Clean-up shall occur on a regular basis to ensure that beds are kept·
free of trash and debris such as paper, cans and bottles, fallen
branches, excessive leaves and weeds. Mulch in proper areas, beds ! to be weed free, properly trimmed, and watered properly; not overly dry
or wet.
2.18.1.2 A fertilizer program shaH be a minimum of three (3) applications per
year or as needed for health and color. ,
2.18.1.3 . Spent flowers, leaves, dead or diseased plants, and other landscape
debris shall be removed from plant areas daily, or as required.
Flowers changed by schedule or as needed.
2.18.2 SEASONAL COLOR BEDS
2.18.2.1 Annual flowers in place and healthy and missing plants replaced in
kind and number. All color beds shall be regularly cleared of paper,
bottles and cans, fallen branches, excessive leaves and weeds.
2.18.2.2 Weed control shall be accomplished by hand weeding, mulching, by
the use of mechanical equipment or by the selective use of herbicides.
A prescribed pest control spray program may be done as often as
necessary for pest control in accordance with the IPM Plan.
2.18.2.3 Beds shall be cultivated by mechanical means on a. regular basis or as
required, or as directed by the GSM.
2.18.2.4 Color plants shall be replaced a minimum of twice annually and shall
be performed on a schedule submitted to and approved by the GSM.
The replacement plants shall be 4-inch potted size spaced per industry
standards and planted with the appropriate soil amendments.
2.18.3 PERIPHERY AREAS (Including the Planted Traffic Island on
Embarcadero Way)
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2.18.3.1 All periphery areas shall be maintained in a manner consistent to
industry standards to ensure a healthy and aesthetically pleasing
appearance at all times.
2.18.3.2 Areas shall be mowed, weeded, cleared of litter and other debris on a
regular basis (a minimum of once per week). Watering should occur if
the area is covered by the irrigation system.
2.18.3.3 Special attention shall be given to periphery areas adjacent to public
roadways since these areas are highly visible to the general public and
constitute a "first impression" of the overall service level of the course:
. 2.18.3.4 All areas are to be inspected for erosion problems and repaired as needed.
2.19 PARKING LOTS
2.19.1 Parking lots shall be maintained in a safe condition for use by both
vehiCles and pedestrians, and Cleaned each day to ensure.a clean, crisp.
appearance free from litter, debris, ano weeds including all landscaped
planters on or adjacent to the lots (including the traffic island on
Embarcadero Way near the primary entrance to the Golf Course) ..
2.19.2 All parking lot lighting shall be inspected daily and repaired as needed or
reported to the City's PW Facilities Maintenance Division.
2.19.3 "Disabled Parking" signage and other signage shall be rllaintained in
accordance with all City, County, and State regulations.
2.19.4 All parking lot signage shall remain in place, maintained and readable.
2.19.5 Parking lot asphalt shall be inspected daily by the Contractor. The City's
PW Facility Maintenance Division shall be called for the performance of
repairs .. The lots shall be generally ·maintained free of debris, litter, leaves,
and trimmings. The Contractor shall inspect and clean the lots daily.
2.20 GRAFFITI.
2.20.1 The Golf Course shall be inspected daily for evidence of graffiti. Special
attention shall be given to restrooms, signs, markers, block walls, curbing,
paving, tees, utility poles/boxes and/or any other structures or fixtures.
2.20.2 All graffiti shall be removed within twenty-four (24) hours of detection.
2.20.3 Graffiti requiring paint over shall be painted over with a color consistent
with ·that of the original surface.
2.20.4 Graffiti on non-painted surfaces shall be removed by sand or water
blasting and area returned to the preexisting condition.
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2.21 CART PATH/STEPS/RAMPSIWALKWAYSI BREEZEWAY
2.21.1 Cart paths to be swept or blown clear of debris every Friday or more often
as needed. No standing water.
2.21.2 Concrete paths to be edged and scraped clean a minimum of one (1) time
per month or as needed. Cart paths weed. free. See IPM Plan.
2.21.3 The Contractor shall identify all potholes and/or other surface damage or
defects on concrete cart paths and report to the City for repair. If damage
is the fault of the Contractor the repair cost will be the responsibility of the
Contractor. Base Rock utility roads on holes #9, #12, and #13 will be
graded smooth weekly. Additional base rock added as needed at the
expense of the Contractor.
2.22 RE'STROOMS AT HOLE #5
2.22.1 Inspected daily by the Contractor, clean and stocked daily by the City's
PW Facility Maintenance Division .
. 2.22.2 Inspected daily by the Contractor, sinks, toilets, walls, screens, and floors
shall be sanitized daily by the City's PW Facility Maintenance Division.
2.22.3. Paper supplies shall be checked and restocked daily or as needed.
2.22.4 Inspected daily by the Contractor for odor and operation. PW will be
contacted for corrections and repairs.
2.22.5 Leaking or malfunctioning fixtures shall be reported to the City's PW
Facility Maintenance Division immediately upon detection.
2.22.6 Lighting fixtures are to be checked daily with repairs of faulty fixtures
provided as needed at time of detection. The City's PW Facility
Maintenance Division will be contacted for repairs.
2.22.7Restroom floors which are wet for any reason, including mopping, shall be
so indicated with proper temporary signage.
2.22.8 No graffiti. The Contractor will inspect daily and contact the City's PW
Facility Maintenance Division for graffiti removal.
2.22.9 No worn spots in concrete, wood walls, or corrugated fiberglass barriers.
The City's PW Facility Maintenance Division will be contacted for repairs ..
2.23 MAINTENANCE FACILITIES
2.23.1 To the extent not otherwise addressed in Section Z of this Agreement, the
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City shall make available for use by the Contractor, at no charge to .
. the Contractor, the Site and Facilities for the storage Qf golf courseMrelated
equipment, materials and/or supplies. The Facilities will be available to the
Contractor on an "as is" basis. The Contractor will conform its use of the
Facilities to all applicable laws, rules and regulations regarding the storage
of materials on the City's premises, including, but not limited to, the .storage
of hazardous, toxi·c or flammable materials. The City assumes no
responsibility for any theft, .
destruction or damage to the Contractor'.s personal property that is stored
at the Facilities. The Contractor will return the facility to the City in its
original condition as of the date of commencement of the contract
between the City and the Contractor, normal wear and tear excepted.
2.23.1.1 Permitted Usage: The Contractor may use the Site and the
Facilities .
for the following uses: Storage, Files, Office area or other similar
uses. The Facility may not be used for any other purposes
without the City Manager or designee's prior written consent,
which may be granted or denied at the City's sole discretion.
2.23.1.2 Prohibited Uses. The Contractor shall not use the Site and the
Facilities for any purpose not expre~sly permitted hereunder.
The Contractor shall not create,. cause, maintain or permit any
nuisance or waste in, on, or about the Site or the Facilities, or
permit or allow the Site or the Facilities to be used for any
unlawful or immoral purpose. The Contractor shall not do or
permit to be done anything in any manner which unreasonably
disturbs the users of the City's property or the occupants of
. neighboring property. Specifically, and without limiting the
.. above, the Contractor shall not cause the emanation of any foul
odor or excessively loud noise,·vibration, power emission, or
other item to emanate from the Site or the Facilities. No
materials or articles of any nature shall be stored outside of or
upon any portion of the Site or the Facilities. The Contractor will
riot use the Site or the Facilities in a manner that will increase
the risk of fire, cost of fire insurance or improvements thereon.
No unreasonable sign or placard shall be painted·, inscribed or
placed in, on or about the Site or the Facilities and no tree or
shrub thereon shall be destroyed or removed or qther waste
committed at the Site or the Facilities. No bicycles,
motorcycles, automobiles or other mechanical means of
transportation shall be placed in stored facilities at the Site,
except for the garage or driveway. No repair, overhaul or
modification of any motor vehicle shall take place in the
Facilities or the surrounding property or the street in front of
Facilities. The Contractor, at its sole cost and expense, shall
keep the Site and -the Facilities in as good as the condition as of
the Effective Date, excepting damage resulting from ordinary
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wear and tear, and except damage to the roof, sidewalks and
underground plumbing, which is not the fault of the Contractor.
2.23.1.3 Condition, Use of Premises. The Contractor acknowledges
that it has conducted a physical inspe,ction of the Site and the
Facilities prior to executing this Agreement. In that regard, the
City makes no warranty or representation of any kind
concerning the condition of the Site or the Facilities, or the
fitness of the Facility for the use intended by the Contractor, and
hereby disclaims any personal knowledge with respect thereto,
itbeing expressly understood by the parties that the Contractor
has personally inspected the Facility, knows its condition, finds it
fit for the Contractor's intended use, accepts it as is, and has,
ascertained that it can be used exclusively for the limited
, purposes as have been specified in Section 2.23.1.1.
2.23.2 The Facilities shall be kept clean and neat at all times with all material
inventories and supplies stored in a manner in keeping with CAL-OSHA
regulations, the City's Fire Department regulations, and all City, County
and State regulations. Fire extinguishers must be operational and
inspected by the Fire Department.
, 2.23.3 Maintenance buildings and surrounds inspected daily. Report needed
repairs to GSM within 24hrs.
2.23.4 The Site shall be locked or otherwise secured when unattended to
, discourage unauthorized entry.
2.23.5 Office and lunchroom floors are to be vacuumed or swept five times per
week and mopped at least once a month at the Contractor's expense.
2.23.6 Rain gutters shall be kept clear of debris and cleaned a minimum of once
per year prior to fall rainfall period at the Contractor's expense.
2.23.7 Any security system shall be maintained and utilized at the Contractor's
expense.
2.23.8 The Facilities shall be maintained by performing required daily, monthly
and annual maintenance of garage doors, inside and outside doors, inside
and outside windows, air conditioning or heater unit, lighting, shelving, etc.
All repairs to such facility are the responsibility of the Contractor. The City
shall be responsible for roof repairs and repairs to the external surfaces of
the building structures. The Contractor shall obtain and be responsible for
quarterly service to airconditioner and heating unit, and any subsequent
repair or service costs, and shall supply copy of written agreement to the
GSM.
2.23.9 All facility and associated Golf Course maintenance utility costs are the
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responsibility of the Contractor, including telephone, gas, potable water,
sewer, and trash, except as otherwise agreed to, in writing, by the City ..
The City will provide electrical service to the Site and the Facilities without
an additional charge to the Contractor in excess of the compensation
payable under Section 5 and Exhibit "C".
2.23.10 Adherence to all City, County, and State regulations for proper storage
and disposal of materials is required.
2.24 CLUBHOUSE AND FACILITY LIGHTING
All lighting systems shall be inspected by the Contractor on a regular basis
for faulty bulbs, fixtures or other malfunctions repaired and/or replaced as
needed by the City's PW Facility Maintenance Division.
2.24.1 Walkways, breezeway, surroundings, ramps, driving range walkway and
tees cleaned of litter, dirt, and landscape debris daily. All garbage
containers at clubhouse and surrounding area must be emptied daily.
2.24.2 Exterior lighting working and scheduled properly. Report needed repairs
to the City's PW Facility Maintenance Division.
2.24.3 All signage accurate and readable.
2.24.4 A threshold of 50% has been set for disease and weeds 60% for insects .
. Spot spraying by location basis only when thresholds are exceeded. Any
use of pesticides must conform to the IPM policies and procedures.
2.25 NETS/FENCES/GATES
2.25.1 The Contractor will be responsible for net repair and material costs on
. holes 3,6,10, and Driving Range.
2.25.2 All fences and gates shall be inspected regularly with repairs made as
needed to ensure a safe, secure and aesthetically pleasing condition at all
times, no holes in fences. Repairs and materials are the responsibility of
the Contractor.
2.26 POND MAINTENANCE
2.26.1 Algae and cattail control program shall be maintained as approved by the
GSM.
2.26.2 Pond shall be inspected daily with all visible litter/trash removed upon
detection.
2.26.3 Pond water levels shall be maintained to ensure bank stability and
aesthetic.
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2.26.4 Properly marked as water hazard ..
2.26.5 A threshold of 25% on Aquatic weeds.
2.27 CONSTRUCTION ANDIOR REMODELING OF GOLF COURSE
Any and all changes in the physical characteristics of any portion of the
course or structures such as aqdition or removal of sand traps; trees,
water hazards, native vegetation or other features shall require prior
approval by the GSM.
The Contractor will be paid for time and-materials for any golf course
renovat!on or construction work not listed in this scope of work.' Quotes will
be submitted to the GSM for approval with itemized list of individual job
classifications, their time and hourly rate expense. (Complete Table 3,'
Attachment C-1). Material will also be added along with any. other
expenses to complete the Project.
Time and Material rates to be included within bid proposal. (Include on
Attachment C-1; Table 3, Schedule of Rates) .
2.28 PRACTICE AREA I DRIVING RANGE MAINTENANCE
2.28.1 Turf shall be mowed weekly or as required at agreed-upon height by the
.' GSM. .
2 •. 28.2 General turf maintenance shall conform to procedures outlined in
Sections 2.11/Greens, 2. 13/Tee Maintenance, and 2.15/Roughs
Maintenance.
2.28.3 All Artificial Turf will be inspected weekly and repaired at the designated
Range closure time which is 5:00am -8:30 am every Thursday or at a time
which is approved by the Pro Shop Manager.
2.28.4 Light topdressing will be done once annually followed by brushing to
maintain integrity of Artificial' Turf. Supplemental brushing required every 6
months.
2.28.5 Practice Bunker will have at least 4 inches of sand and kept trimmed and
edged. Bunker edges that are raised due to excessive sand build up will
be lowered by the Contractor when they reach one and a half feet over
original grade. Practice Bunker will be raked daily.
2.29 EXTERIOR OF THE CLUBHOUSE, RESTROOM BUILDINGS, and
STORAGE FACILITY
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The City will be responsible for the repairs and maintenance of the building
. exteriors and interiors of the Clubhouse, Restrooms and Storage Facility .
. 2.30 GOLF COURSE WETLAND AREAS
Wetland areas shall not be disturbed by vehicular traffic, fertilizers,
pesticides and equipment. Litter and debris must be removed daily.
Wetland signage must be clean, readable and placed along both sides of
Wetlands. Replacements 9f all signage will the responsibility of the
Contractor.
V. GENERAL CONDITIONS
A. Permits/Parking
The Contractor shall be issued a free maintenance permit from the City's
Department of Transportation. This will allow the Contractor's crews to
use City parking facilities at no charge during the term of this contract and
only while dOing landscape maintenance work for the City's Open Space
and Parks Division.
B. Payments and Inspection
Payment will be made for work satisfactorily completed as called for in this
contract. The City's Representative shall inspect and notify the Contractor·
of any unsatisfactory work. Unsatisfactory work shall be corrected within
24 hours. The Contractor or the Contractor's representative shall. meet
with a representative from the City at least once a month during the life of
this contract to inspect Work performed ..
The Contractor will bill the City by the 5th of the month following service.
The City will pay the Contractor on a monthly basis for labor, eqUipment
and materials provided during the monthly billing period.
C. Use of Sanitary Landfill
The refuse disposal facilities of the city of Palo Alto Sanitary Landfill
located adjacent to East Embarcadero Road in said City will be made
available to the Contractor through the 2011 calendar year for the disposal
of all trees, rubbish and construction debris generated on work site. The
Contractor shall pay all dump fees. The Contractor shall at its sale
expense load, haul and deposit said rubbish and debris during normal
landfill operating hours. All landfill regulations will apply to all debris
deposited by the Contractor. Any questions regarding landfill rules and
regulations shall be directed. to the Landfill Supervisor. A digest of the
refuse disposed area rules and regulations have been appended to this
contract. At the end of the 2011 calendar year, the Contractor shall at is
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sole expense load, haul and deposit all rubbish, debris and green waste to
a transfer station located at the City of Sunnyvale.
D. Spare the Air Days
The Contractor must comply with regional "Spare the Air"
recommendations on designated "Spare the Air Days" that occur
throughout the year. At aminimum, no gasoljne :j:>owered equipmentshall
be used after 10 a.m. on "Spare the Air Days". The Project Manager Will
notify the Contractor when a "Spare the Air" alert has been designated.
The Contractor must coordinate work schedules to accommodate "Spare
. the Air" recommendations.
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EXIllBITB
SCHEDULE OF PERFORMANCE
The Contractor Shall perfonn the Services so as to. complete each task within the time
period sp·ecified in the Scope of Services, attached to this Agreement as Exhibit "A".
The Contractor shall provide the specified services according to the frequency and
schedule specified in Exhibit "A". . .
the Contractor shall execute the use of proper knowledge, skills, materials and equipment
of a timely basis to maintain all areas in a clean; safe, healthy, and aesthetically
acceptable manner during the entire term of this contract. The Contractor agrees to be
continuously alert in locating and defining problems and agrees to exercise prompt and
proper corrective action,. Action times will be prioritized, and low priority items will be
given a time line for corrections. .
Upon request, the Contractor shall provide a detailed schedule of work consistent with
completing the required Services as needed.
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EXHmITC
SCHEDULE OF FEES
The City shall pay the Contractor for the completion of Services performed to the reasonable satisfaction of
the City, a not-to-exceed sum in accordance with the schedule below. Any Services provided or hours
worked for which payment would result in a total exceeding the maximum amount of compensation set
forth herein, without the prior authorization of the City, shall be provided at no cost to the City:
A. Schedule of Payment:
The City shall pay the ·Contractor a maximum compensation amount of One Million Eight Hundred
and Fifty Thousand Dollars ($1,850,000.00), payable over the Term, for the Services performed, based
on the current Golf Course configuration as of the Effective Date, as follows:
Year One, November I, 2010 through April 30, 2011: $350,000.00, in monthly
increments of $58,333.33. ' .
Year Two, May 1,2011 through April 30, 2012: $750,000.00 in monthly increments of
$62,500.00. '
Year Three, May 1,2012 through April 30, 2013: $750,000.00 in monthly increments of
$62,500.00 ..
If the City fails to make any monthly payment within thirty (30) days of the receipt of the same, then the
Contractor may give the City thirty (30) days' pdor notice of termination, in writing; provided, however, if
the City makes payment to the Contractor before the ,effective date of the notice of termination, then the
notice of termination shall be deemed cancelled, the Contractor shall continue thereafter to perform the
Services, and the notice of termination shall be deemed rescinded.
B. Equipment Purchase
Compensation for equipment purchased by the Contractor shall be based on the Contractor's purchase
of the City's existing Equipment as listed on Attachment 5 ofRFP 136681and attached herein as
Attachment 1, for a Lump Sum Total Payment of$125,000.OO, to be paid November 1'~ 2010.
Contractor will be solely responsible for the equipment as of~ovember 1St, 2010.
CONTRACTOR shall purchase from CITY, all other usable equipment, materials, tools and supplies at
the City's Cost, based on inventory taken at transition. A third party Furniture, Fixtures and Equipment
consultant will value the remaining supplies, materials and minor tools and equipment at the Golf
Course that are related to Golf Course maintenance. ValleyCrest agrees to pay the City for the usable
equipment, materials, tools and supplies, in the amount of the independent Furniture, Fixtures and
Equipment Consultant valuation by November 1 't, 2010. '
C. Additional Services
Additional work not defined in the Scope of Services, on a Time and Materials basis, will be agreed
upon by the Contrac~or and the City at the following hourly rates:
• Project Manager $60
• Foreman $40
• Irrigation Technician $30
• Equipment operator $25
• Truck Driver $25
• Laborer $20
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EXHIBITD
INSURANCE REQUIREMENTS
CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM
OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE
SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST'S KEY RATING OF A-:VII, OR
HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF
CALIFORNIA.
AWARD IS CONTINGENT ON COMPLIANCE WIlli CITY'S INSURANCE REQUIREMENTS, AS SPECIFIED,
BELOW'
MINIMUM LIMITS
REQUIRED TYPE OF COVERAGE REQUIREMENT EACH
YES
YES
YES
YES
NO
YES
OCCURRENCE AGGREGATE
WORKER'S COMPENSATION STATUTORY
EMPLOYER'S LIABILITY STATUTORY
BODILY INJURY $1,000,000 $1,000,000
GENERAL LIABILITY, INCLUDING
PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE $1,000,000 $1,000,000
PROPERTY DAMAGE BLANKET
CONTRACTUAL, AND FIRE LEGAL B9DIL Y INJURY & PROPERTY $1,000,000 $1,000,000
LIABILITY DAMAGE COMBINED.
BODILY INJURY $1,000,000 $1,000,000 -EACH PERSON $1,000,000 $1,000,000
AUTOMOBILE LIABILITY, -EACH OCCURRENCE $1,000,000 $1,000,000
INCLUDING ALL OWNED, HIRED, PROPERTY DAMAGE $1,000,000 $1,000,000 NON-OWNED
BODILY INJURY AND PROPERTY $1,000,000 $1,000,000
DAMAGE, COMBINED
PROFESSIONAL LIABILITY,
INCLUDING, ERRORS AND
OMISSIONS, MALPRACTICE (WHEN
APPLICABLE), AND NEGLIGENT
PERFORMANCE ALL DAMAGES $1,000,000
THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT
ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND
EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE
INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND
ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS'
COMPENSATION, EMPLOYER'S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS
ADDITIONAL INSUREDS CITY· ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES.
I. INSURANCE COVERAGE MUST INCLUDE:
A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE
IN COVERAGE OR OF COVERAGE CANCELLATION; AND
B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE
FOR CONTRACTOR'S AGREEMENT TO INDEMNiFY CITY.
C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY'S PRIOR APPROVAL.
II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED
COVERAGE.
III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO
"ADDITIONAL INSUREDS"
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A. PRIMARY COVERAGE
WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED,
INSURANCE AS AFFORDED BY THIS POLICY IS PRlMARY AND IS NOT ADDITIONAL TO OR
CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE
ADDITIONAL INSUREDS.
B. CROSS LIABILITY
THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE
POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RlGHTS OF THE INSURED
AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS,
SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY.
C. NOTICE OF CANCELLATION
1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY
REASON OTHER THAN THE NON·PAYMENT OF PREMIUM, THE ISSUING
COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN
NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.. .
2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON·
PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT
LEAST A TEN (10) DAY WRIITEN NOTICE BEFORE THE EFFECTIVE DATE OF
CANCELLATION.
NOTICES SHALL BE MAILED TO:
PURCHASING AND
CONTRACT ADMINISTRATION
CITY OF PALO ALTO
P.O. BOX 10250
PALO ALTO, CA 94303
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EXHIBITE
BONDS
[ATTACH BOND FORMS IF BONDS ARE REQUIRED]
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EXHIBIT:F
LIQUIDATED DAMAGES'
It is mutually agreed by the Contractor and the City that if completion of the
Services by the Contractor under this Agreement is delayed beyond the date and
time specified in the Schedule of Perfonnance, plus any authorized extensions of
time, the City will suffer damages and will incur other costs and expenses of a
nature and amount, which the Parties agree will be difficult or impractical to
detennine. Accordingly, the Parties agree, as.a method to fix the damages and not
as a penalty, that in the' event of any such failure to perf orin, the amount of
damage which shall be sustained by the City will be the sum of $250.00 for each
and every calendar day during which the Services remain uncompleted beyond
the time specified for completion, plus any authorized extension of time. If the
Contractor fails to pay the liquidated damages to the City, the Contractor agrees
that the. City may deduct and withhold the amoUnt of the . unpaid liquidated
damages from any amounts th~n due or that may become due and payable to the
Contractor under this Agreement. .
BY PLACING THEIR INITIALS BELOW, THE CITY AND THE
CONTRACTOR ACKNOWLEDGE THAT THE AMOUNT SET FORTH
ABOVE HAS BEEN AGREED UPON AS THE PARTIES' REASONABLE
ESTIMATE OF THE CITY'S DAMAGES.
CITY CONTRACTOR
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Rev, January 11,2010
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Unit Year Manufacturer Model
2203 1997 JOHN DEERE 5200
2206 2000 FORD RANGER
2209 1997 JOHN DEERE 5310
2210 1986 CASE 480LL
2213 1997 TY-CROP TD460 TOP DRESS
2215 1997 JOHN DEERE 5300
2216 2008 TORO GREENSMASTER
2217 2008 TORO GREENSMASTER
2221 1992 TORO HYDROJECT 3000
2241 2005 TORO WORKMAN 2110
2242 2005 TORO WORKMAN 2110
2243 2005 TORO 3280-0
2248 2006 TORO PROCORE648
2250 1996 CHEVROLET C3500
2252 2001 JOHN DEERE TURF GATOR
.2253 2001 .JOHN DEERE TURF GATOR
2254 2001 JOHN DEERE PROGATOR 2020
2255 2000 JOHN DEERE PROGATOR 2020
2256 2000 JOHN DEERE PRO GATOR 2020
2257 2001 JOHN DEERE 1200A
2258 2003 TORO GREENSMASTER
2259 2000 TORO GREENSMASTER
2262 2000 TORO GREENSMASTER
2263 2003 LASTEC 721XR
2264 2003 JOHN DEERE 3235
2265 2002 JOHN DEERE 3235
2266 2007 TORO REELMASTER
2267 2008 LASTEC 721XR
2275 1965 FMC (BEAN) FG1010
2276 1980 GANDY N/A
2280 1999 TURFCO SP-1530
2281 1988 TORO GROUNDMASTER 62
2282 1990 TURFCO METERMATIC II
2283 1987 FORD 786A
2295 2001 JOHN DEERE AERCORE 2000
Attachment 1
City Equipment List
Description
UTILITY TRACTOR -FOUR WHEEL DRIVE
XCAB
TURF TRACTOR
TRACTOR LOADER
TD-460 TOP DRESSER
UTILITY TRACTOR -lWO WHEEL DRIVE .
3100 GREENS MOWER W/8 BLADE CUTTING
3100 GREENS MOWER W/8'BLADE CUTIING
WALK-BEHIND TURF AERIFIER
UTILITY VEHICLE (TURF)
UTILITY VEHICLE (TURF)
ROTARY TURF MOWER
WALKING GREENS AERATOR
lWO YARD DUMP TRUCK
UTILITY VEHICLE
UTILITY VEHICLE
UTILITY VEHICLE
WI2WD CARGO BOX
UTILITY TRUCK WIHD200 SPRAYER
BUNKER RAKE
3100 GREENS MOWER W/11 BLADE CUTIING·
3100 GREENS MOWER W/8 BLADE CUTTING
3100 GREENS MOWER WI11 BLADE CUlTlNG
TRACTOR-MOUNTED ROUGH MOWER
FAIRWAY MOWER
FAIRWAY MOWER
TRIPLEX TRIM MOWER (3100-Dt
TRACTOR-MOUNTED ROUGH MOWER
SPRAY RIGy TRAILER MOUNTED (200 GALLON)
SPREADER BOX
TOWABLE TOP DRESSER
TURF MOWER
TOWABLE Top DRESSER
THREE-POINT FLAIL MOWER ATTACHMENT
FAIRWAY AERIFIER
Current Mtr ·OrlgCost
5,456 18,935
32,597 17,717
5595 23748
2993 52317
0 18,048
5796 ·24,520
852 0
637 0
590 25,000
1747 8725
1,558 8,725
523 18654
58 18426
15220 32391
24,560 6,917
20602 6917
3927 23196
3435 17,215
446 20,582
4577 11,929
3,141 18895
3911 20,297
3,433 20297
0 17861
2,685 39,817
3,992 40,602
1134 26659
0 0
out of service 0
out of service 5,000
0 0
0 0
out of service 5,500
out of service 0
0 27014
Division contact/ext:
Date: October 1,2010
2010
ATTACHMENT 2
Annual Division IPM Summary and
Prohibited Pesticide Inventory Report
Please complete the/ollowing information and submit to Julie Weiss by December 31,2010
.1) Please list and describe the pest problem trends your division dealt with this year, including peak season
problems and non-chemical/structural/landscape solutions that were used ..
2) Which IPM pesticide alternatives were considered and tested? What was their effectiveness?
3) Were any new rPM plans created or revisions made to existing plans? (IPM plans that were submitted last year
will be annexed in this year's Amiual Report unless divisions submit.revised versions).
4) What training programs are you interested in receiving for your staff or program this year?
5) Per new 2009 Stormwater Permit requirements, please answer the following:
a. How many of your employees apply pesticides?
b. Please confirm that these employees will have been informed of and read the City's rPM Policy by
December 31, 2009 (see policy statement below).
D Yes DNa
Per CMR 343-01:
The City of Palo Alto will carry out its pest management operations using reduced-risk [PM techniques to reduce or
eliminate chemicals to the maximum extent. Chemicals will be used only as a last resort/or pest management
problems. Each division that applies pesticides will maintain an active IPM plan to ensure the long-term prevention or
suppression of pest problems with minimum negative impact on human health, non~target organisms, and the
environment.
The City will actively pilot non-toxic alternatives for structural and landscape pest control, seeking to use tile most
recent technology, best management practices and lea$ttoxic methods for all pest control measures.
The City will use appropriate venues to educate staff and the public about its [PM commitment in an effort to role
model less toxic approaches to structural and landscaping pest controL
c. Please confirm that these employees have been trained in some form of IPM practices in the last
three years (please submit training agendas or training description).
DYes DNo
(See attached)
6) Annual storage locker cleanout: Please inventory and remove any restricted pesticides (signal word Danger),
unwanted or expired pesticides from your division's storage lockers." List below only those products that were
removed, if any, and then bring products to the Household Hazardous Waste Program staff (x6980).
None
Amount.
(gallons,
Division Storage. Location Product Formulation
pounds,
ounces)
EPA
ID#
Active
ingredient:
0/0 Active
Ingredient:
Formulation (e.g.,granules,
liquid):
r-'--
Attachment 3
Monthly Report
L ............. ____ , ____ .. _____ . __ ._._1 --.i-._.c.-...• _ .. , ........... _ ..... __ L ...L_. _____ . __ .--L---._. __ l
TO: CITY COUNCIL
FROM: CITY MANAGER
ATTACHMENT C
CITY OF PALO ALTO
Memorandum
DEPARTMENT: CITY MANAGER
DATE: OCTOBER 18, 2010
SUBJECT: Item 16 -Approval of a General Services Agreement with ValleyCrest Golf
Course Maintenance, Inc. in the Amount of $1,850,000 for Maintenance Services and Sale of
Used City Golf Course Maintenance Equipment for $125,000; and Referral of Golf Course
Financial Planning Issues to the Finance Committee
Recommendation
Staff recommends that the Council only discuss item 16 at its regular meeting on October 18,
2010, and that it defer approval of the proposed contract with ValleyCrest until its regular
meeting on October 25, 2010. The form of contract recommended for approval is at variance
with the form of contract that was submitted to the Cou,ncil on October 13, 2010; staff
recommends that the Council considers the most current terms and conditions before it will take
action on staff s recommendation to award a contract to ValleyCrest.
BackgroundfDiscussion
The contract included III the packet has had several updates; the substantive changes are
referenced below:
1. CMR 382:10 title has the incorrect dollar amount negotiated with ValleyCrest for the
General Services Agreement, the amount is $1,850,000.
2. Additional language was added to item 5 "Compensation for Original Term" page 2 to
further define expectations should San Francisquito Creek Flood Control work begin
during the term of this agreement.
3. An additional Exhibit (Exhibit G) has been added and new language -item Z "Storage
and Maintenance Facilities" (page 6) was added to better define the terms and conditions
related to storage and facilities to be accessed and used by the Contractor.
4. Item "AA Fuel Facilities" is new, City staff and ValleyCrest have agreed that the City
retain more oversight over the fueling station than originally envisioned, language to that
affect can be seen on page 6 "AA Fuel Facilities" and 2.0 "Specific Maintenance
Requirements" page 16.
5. Additional language has been added to Exhibit C "Schedule of Fees" allowing
ValleyCrest to terminate the contract if the City does not pay for services provided after
60 days.
Page 1 of2
6. Additional language related to "Efficient use of Water 2.6.1.8" has been added to
acknowledge the city's obligation to ·supply sufficient water to :the Golf Course and that
in the event water restrictions do occur, the City and Va1leyCrest will work together to
mintage impacts.
ATTACHEMENTS:
cR~~fuvrul~m
ROBDEGEUS· '.
Recreation Manager
) City Manger
\l
Attachment 8
Page20f2
ATTACHMENT D
City Equipment List
Unit Year Manufacturer Model Description Current Mtr Orig Cost
2203 1997 JOHN DEERE 5200 UTILITY TRACTOR -FOUR WHEEL DRIVE 5,456 18,935
2206 2000 FORD RANGER XCAB 32,597 17,717
2209 1997 JOHN DEERE 5310 TURF TRACTOR 5,595 23,748
2210 1986 CASE 480LL TRACTOR LOADER 2,993 52,317
2213 1997 TY-CROP TD460 TOP DRESS TD-460 TOP DRESSER 0 18,048
2215 1997 JOHN DEERE 5300 UTILITY TRACTOR -TWO WHEEL DRIVE 5,796 24,520
2216 2008 TORO GREENSMASTER 3100 GREENS MOWER W/8 BLADE CUTTING 852 0
2217 2008 TORO GREENSMASTER 3100 GREENS MOWER W/8 BLADE CUTTING 637 0
2221 1992 TORO HYDROJECT 3000 WALK-BEHIND TURF AERIFIER 590 25,000
2241 2005 TORO WORKMAN 2110 UTILITY VEHICLE (TURF) 1,747 8,725
2242 2005 TORO WORKMAN 2110 UTILITY VEHICLE (TURF) 1,558 8,725
2243 2005 TORO 3280-0 ROTARY TURF MOWER 523 18,654
2248 2006 TORO PROCORE 648 WALKING GREENS AERATOR 58 18,426
2250 1996 CHEVROLET C3500 TWO YARD DUMP TRUCK 15,220 32,391
2252 2001 JOHN DEERE TURF GATOR UTILITY VEHICLE 24,560 6,917
2253 2001 JOHN DEERE TURF GATOR UTILITY VEHICLE 20,602 6,917
2254 2001 JOHN DEERE PROGA TOR 2020 UTILITY VEHICLE 3,927 23,196
2255 2000 JOHN DEERE PROGATOR 2020 W/2WD CARGO BOX 3,435 17,215
2256 2000 JOHN DEERE PROGATOR 2020 UTILITY TRUCK W/HD200 SPRAYER 446 20,582
2257 2001 JOHN DEERE 1200A BUNKER RAKE 4,577 11,929
2258 2003 TORO GREENSMASTER 3100 GREENS MOWER W/11 BLADE CUTTING 3,141 18,895
2259 2000 TORO GREENSMASTER 3100 GREENS MOWER W/8 BLADE CUTTING 3,911 20,297
2262 2000 TORO GREENSMASTER 3100 GREENS MOWER W/11 BLADE CUTTING 3,433 20,297
2263 2003 LASTEC 721XR TRACTOR-MOUNTED ROUGH MOWER 0 17,861
2264 2003 JOHN DEERE 3235 FAIRWAY MOWER '2,685 39,817
2265 2002 JOHN DEERE 3235 FAIRWAY MOWER -3,992 40,602
2266 2007 TORO REELMASTER TRIPLEX TRIM MOWER (3100-0) 1,134 26,659
2267 2008 LASTEC 721XR TRACTOR-MOUNTED ROUGH MOWER 0 0
2275 1965 FMC (BEAN) FG1010 SPRAY RIGy TRAILER MOUNTED (200 GALLON) out of service 0
2276 1980 GANDY N/A SPREADER BOX out of service 5,000
2280 1999 TURFCO SP-1530 TOWABLE TOP DRESSER 0 0
2281 1988 TORO GROUNDMASTER 62 TURF MOWER 0 0
2282 1990 TURFCO METERMATIC II TOWABLE TOP DRESSER out of service 5,500
2283 1987 FORD 786A THREE-POINT FLAIL MOWER ATTACHMENT out of service 0
2295 2001 JOHN DEERE AERCORE 2000 FAIRWAYAERIFIER 0 27,014
TO:
FROM:
DATE:
City of Palo Alto
City Manager's Report
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: COMMUNITY SERVICES
DECEMBER 6, 2010 CMR: 440:10
REPORT TYPE: CONSENT
SUBJECT: Approval of Amendment Number 5 to the Management Agreement
With Brad Lozares for Golf Professional Service~ at 1875
Embarcadero Road, Extending the Term for 28 Months to April 30,
2013.
EXECUTIVE SUMMARY
In response to uncertain economic conditions, Council authorized a Golf Course study to
examine the Bay Area golf market and conditions of the Palo Alto Golf Course facility;
and the current and alternative operating models available for the Golf Course. The study
was conducted in 2008.
The study recommended several actions for future success of the Golf Course. The
recommendations included making relatively minor but strategic investments in the. Golf
Course infrastructure and operating structure. The study also recommended that staff
actively participate in the planning of flood control alternatives for San Francisquito
Creek by the Joint Powers Authority in order to find a balanced flood control/recreational
use solution that would benefit the Golf Course. Additional recommendations include
aligning tenant contracts to expire concurrently, and to evaluate options to enhance Golf
Course maintenance, including the advantages and disadvantages of private versus public
maintenance.
Council and staff have acted upon several of the recommendations from the Golf Course
study including actively participating in the planning of flood control alternatives for San
Francisquito Creek that would also' benefit the Golf Course and the transition to private
Golf Course maintenance, which will save the City approximately $200,000 annually. At
this time staff recommends aligning the expiration term of the Golf Course Management
Agreement with Brad Lozares with the Pro Shop Lease Agreement with Mr. Lozares to
CMR: 440:10 Page 1 of7
.. •
expire concurrently on April 30, 2013 (Attachment A). This recommendation IS
consistent with the recommendations in the 2008 Golf Course study.
RECO~~NDATION. .. .
Sta,f, recoiiifnends that the CounCIl approve and authorIze the CIty Manager or hIS
de~g'I;lee to execute the attached Amendment No.5 to the Management Agreement with
Brad Lozares (Golf Professional) for golf course professional services at the Palo Alto
Municipal Golf Course, 1875 Embarcadero Road (Golf Course), to extend the term of the
contract for 28-months to April 30, 2013 (Attachment A).
BACKGROUND
On March 16, 1998, the City issued tax-exempt bonds to finance Golf Course
improvements. Prior to the bonds being issued, the City and the Golf Professional had
operated under one lease agreement for both professional management services and the
lease of the City-owned Pro Shop facility. When the bonds were issued in 1998, IRS
regulations required that there be two agreements: a management agreement for Golf
Course professional services and a separate lease to operate the golf retail establishment
(Pro Shop).
In 1998, Council approved a 20.;.month management agreement and a 15-year lease with
the Golf Professional. The original management agreement was amended three times
prior to Council approval of a new restated management agreement (Agreement) on
January 27, 2003. The new Agreement set the fixed fee to be paid to the City Contractor
at $322,251 and removed the annual CPI adjustment. Cart rentals and driving range fees
were split, with the Golf Professional receiving 40 percent of the revenue and the City
receiving 60 percent. The agreement also provided a productivity reward equal to a stated
dollar amount based on increases of golf rounds, power golf cart rentals 'and driving
range sales. The agreement has been extended 4 times since 2006 as summarized below:
1. Amendment No. 1 -May, 2006. Council approved an agreement which: 1)
extended the term for an additional eighteen months; 2) increased the fixed fee
compensation by three percent to $27,333.00; and 3) reimbursed the Golf
Professional for 60 percent of the bank's credit card merchant charges attributed to
the golf cart rentals.
2. Amendment No 2 -May 2007. Council approved an agreement which: 1)
extended the term for one year to December 31, 2008; and 2) increased the fixed
fee compensation by two percent to $28,213.46.
3. Amendment No 3 -October 2008. Council approved an agreement which: 1)
extended the agreement for one year to December 31, 2009; 2) increased the fixed
fee by two percent to $28,777.73; and 3) adjusted the Golf Professional's
productivity reward to reflect current market conditions.
CMR: 440:10 Page 2 of7
4. Agreement No 4 -November 2009. Council approved an agreement which: 1)
extended the term for one year to December 31, 2010 at the same monthly fixed
rate as 2008 of$28,777.73.
The short term amendments to the Golf Professional contract have been a factor of
uncertain economic conditions over the past several years. In response to the uncertain
economic conditions, Council authorized a Golf Course study to examine the Bay Area
golf market and conditions of the Palo Alto Golf Course facility as well as the current and
alternative operating models available for the Golf Course. The study was conducted in
2008.
As stated in the Executive Summary the study recommended several actions for future
success of the Golf Course that included making relatively minor but strategic
investments in the Golf Course infrastructure and operating structure along with actively
participating in the planning of flood control alternatives for San Francisquito Creek to
find a balanced flood control/recreational use solution that would benefit the Golf
Course. Additional recommendations include aligning tenant contracts to expire
concurrently and to evaluate options to enhance Golf Course maintenance, including the
advantages and disadvantages of private versus public maintenance.
DISCUSSION
Staff have been working on the recommendations from the Golf Course study and have
made progress on several fronts. Regarding the San Francisquito Creek flood control,
Council has requested that the Joint Powers Authority (JPA) retain a golf course design
consultant to work with the JP A and City staff to design an environmentally friendly
flood control project that will balance flood control and recreational use solutions that
will also benefit the Golf Course. The JPA has been very supportive of the City's need
for fair and reasonable mitigation measures to the Golf Course for levee improvements.
The known impacts to the Golf Course at this time will include the need to redesign four
to six holes due to levee realignment and encroachment onto the Golf Course.
The Golf Course study also recommended the City consider contracting out Golf Course
maintenance to improve cost recovery and the overall standard of maintenance. In the
2011 Budget process Council approved the contracting out of Golf Course maintenance
and a contract with ValleyCrest was approved on October 25, 2010, to assume Golf
Course maintenance responsibilities CMR: 390: 10. Recognizing that Brad Lozares would
participate in the RFP process for the Golf Course maintenance contract, staff postponed
recommending the alignment of Brad Lozares' Golf Professional agreement with the Pro
Shop lease pending the outcome of the Golf Course maintenance contract.
With the contracting of the Golf Course maintenance complete, staff now recommends
aligning the two tenant contracts with Brad Lozares to expire concurrently. Aligning the
CMR: 440:10 Page 3 of7
Golf Professional agreement to expire on April 30, 2013 would align three of the four
principal agreements the City has to operate at the Golf Course:
1. Pro Shop Lease (expires April 30, 2013)
2. Golf Course Maintenance (expires April 30, 2013)
3. Golf Professional Services (will expire April 30, 2013 if approved)
4. Restaurant Concessionaire (expires 2018)
The fourth principal agreement the City has to operate the Golf Course is between R&T
Restaurant Corporation and the City to operate the Bay Cafe; the current term of this
agreement expires in 2018.
Aligning the City contracts that keep the Golf Course operational gives the City
flexibility in bidding more than one element of the Golf Course operation when the terms
expire. This mayor may not be of interest to the City in April 2013, but the alignment of
the various Golf Course contracts provides the opportunity to consider alternative
operating models
Regarding the Golf Course budget, in Fiscal Year 2010 revenues exceeded expenses by
$76,000. It is estimated that Fiscal Year 2011 revenues will exceed expenses by
$300,000.
Compensation for Brad Lozares' services includes a fixed management fee of $28,777. 73
per month for a total of $805,776 for the 28-month term and percentage fees based on
Golf Course productivity. The fixed fee has not increased since 2008 and no increases are
recommended for this amendment. The percentage fees also remain unchanged in this
agreement. The percentage fees are a revenue share between the City and Brad Lozares
for Driving Range revenue at 62% to the City, and 38% to Brad Lozares; and Cart Rental
revenue at 60% to the City and 40% to Brad Lozares. Revenue to Brad Lozares in
percentage fees over the term of the contract is estimated to be $681,333 in addition to
the fixed management fee.
The service level the Golf Professional and his staff provide is very professional and
greatly appreciated by our golfing patrons. The Golf Professional is very well regarded
throughout the golf community for outstanding customer service. The drop in the number
of annual rounds played, from a high of over 100,000 in. the late 1980's to its current
level of approximately 70,000 rounds in Palo Alto, echoes a national trend in the decline
of rounds of golf due to the proliferation of new courses in the 1980's and 1990's and
other economic factors. The Palo Alto Golf Course still ranks financially in the top ten
municipal golf courses in the Bay Area.
The current Management Agreement will expire on December 31, 2010. In order for the
Golf Professional to manage the Golf Course and receive compensation, IRS rules
CMR: 440:10 Page 4 of7
require that there must be an agreement in place. Under IRS regulations, the management
agreements must be for no more than 60 months. Each of the agreements and
amendments between the City and the Golf Professional have been for less than 60
months in order to allow both parties -to make refinements to the agreement that reflect
economic conditions and needs of the Golf Course.
RESOURCE IMPACT
The annual impact on the resources for this agreement is ·estimated to be the same as
2010. The cost of overall compensation to the Golf Professional including fixed and
percentage payments is estimated to be approximately $1,487,110, and this artiount is
included in the Community Services Golf Course budget.
POLICY IMPLICATIONS
The proposed 28-month extension is consistent with prior Council direction and will keep
the Golf Course operational under the current management conditions to April 30, 2013.
ENVIRONMENTAL REVIEW
Approval of, the amendment does not constitute a project under the California
Environmental Quality Act (CEQA); therefore, no environmental assessment is required.
/ATTACHMENTS
Attachment A: Amendment No.5 to Management Agreement
PREPARED BY: 42tJ~
ROBDEGEUS
Division Manager, Recreation Services
DEPARTMENT HEAD APPROVAL:
GREGBE S
Director, Community Services Department
CITY MANAGER APPROVAL: . ~,-w.~
~JAMESKEENE .
City Manager
cc: Golf Professional
CMR: 440:10 Page 5 of7
AMENDMENT NO.5 TO MANAGEMENT AGREEMENT
C3150541A, BETWEEN THE CITY OF PALO ALTO AND BRAD
LOZARES GOLF SHOP FOR PROFESSIONAL SERVICES AT 1875
EMBARCADERO ROAD, PALO ALTO
THIS AMENDMENT NO.5 to the Management Agreement C3150541A,
between the City of Palo Alto and Brad Lozares Golf Shop for Professional Services at
the Palo Alto Municipal Golf Course, ("Agreement,") is made and entered into this 7th
day of December, 2010, by and between the City of Palo Alto, a municipal corporation
(the "CITY") and Brad Lozares ("GOLF PROFESSIONAL").
RECITALS
A. GOLF PROFESSIONAL has assumed responsibility for and continued the
operation and management of course play for the Golf Course facility on behalf of
the CITY on the terms and conditions set forth in the Management Agreement
dated January 28,2003.
B. On May 15, 2006, the parties amended the Agreement to extend the term
December 31, 2007, and to increase the fixed fee to $27,660.25 per month and
reimburse GOLF PROFESSIONAL for sixty percent (60%) of finance charges
associated with the payment of service charges for golf carts by credit card.
C. On May 15, 2007, the parties amended the Agreement to extend the term to
December 31, 2008, and to increase the fixed fee to $28,213.46 per month.
D. On October 20, 2008, the parties amended the Agreement to extend the term to
December 31, 2009, and to increase the fixed fee to $28,777.73 per month.
E. On December 7, 2009 the parties amended the Agreement to extend the term for
one year to December 31, 2010 at the same fixed level of compensation
established in 2008 of $28,777.73 per month.
F. The parties now wish to amend the Agreement to extend the term of the
agreement to April 30, 2013 at the same fixed level of compensation as
established in 2008 of $28,777.73 per month.
NOW, THEREFORE, in consideration of the terms, conditions, and
provisions of this Amendment, the parties agree as follows:
SECTION 1. Section III ("Term") is amended in its entirety to read, as follows:
"III. TERM
The term of this Agreement shall commence on January 8, 2003 and end on April
30,2013.
SECTION 2. Section IV, A ("Compensation"), is amended in its entirety to read
as follows:
"IV. COMPENSATION
During the term of the Agreement, GOLF PROFESSIONAL shall receive a fixed
fee and percentage fees, as defined below (collectively the "Management Fee").
A. Fixed Fee
GOLF PROFESSIONAL shall receive a fixed fee during the term of this
Agreement for GOLF PROFESSIONAL's Golf Course and driving range
management, Golf Course marshaling and starting and cart rental services.
The fixed fee for the term of this agreement will be $805,776.44. The
fixed fee will be paid in twenty-eight equal monthly installments.
During the eighteen-month extension term from July 1, 2006 to
December 31, 2007, GOLF PROFESSIONAL shall receive
a fixed fee payable monthly in the amount of $27,660.25.
During the twelve-month extension term from January 1, 2008 to
December 31, 2008, GOLF PROFESSIONAL shall receive a
fixed fee in the amount of $28,213.46, monthly.
During the twelve-month extension term from January 1, 2009 to
December 31, 2009, GOLF PROFESISONAL shall receive a
fixed fee, in the amount of $28,777.73, monthly.
During the twelve-month extension term from January 1, 2010 to
December 31, 2010, GOLF PROFESISONAL shall receIve a
fixed fee, in"the amount of $28,777.73, monthly.
During the twenty-:eight month extension term from January 1,
2011 to April 30, 2013, GOLF PROFESISONAL shall receive a
fixed fee, in the amount of $28,777.73, monthly.
The CITY shall forward the fixed fee by the 5th working day of
the CITY's working month for the amount due for that month to
the GOLF PROFESSIONAL. If not received within ten calendar
days after the fifth working day of the month, a late charge of one
percent of monthly payment due and unpaid plus an administrative
fee of $45.00 shall be added to the payment due and unpaid, and
the total monthly sum shall become immediately due and payable
to GOLF PROFESSIONAL. The parties agree that such late
charges represent a fair and reasonable estimate of the costs that
GOLF PROFESSIONAL will incur by reason of the CITY's late
payments and that acceptance of such late charges in no event
constitutes a waiver of the CITY's default with respect to such
overdue payment, nor prevents GOLF PROFESSIONAL from
exercising any of the other rights and remedies granted hereunder
or by any provision oflaw."
B. Percentage Fees
In addition to the fixed fee, GOLF PROFESSIONAL shall receive
38% percent of the gross revenues of the driving range and retain
40% of the gross revenue of the golf carts, golf club and pull cart
rentals. Percentage fees for each month will be <;alculated and paid
no later than the lOth day of the following month. In no event,
-however, shall the cumulative percentage fees paid to GOLF
PROFESSIONAL for a single calendar year exceed the total fixed
fee payments described in section IV-A herein for that same
calendar year.
C. GolfCart Fuel Reimbursement
GOLF PROFESSIONAL shall reimburse the CITY quarterly for
fuel supplied to gas golf carts. Reimbursement shall be at the
current retail full service pump price on the date of billing for
unleaded . fuel, determined quarterly by the CITY. GOLF
PROFESSIONAL shall reimburse the CITY by no later than by the
20th day of the month following the close of
each quarter.
D. Productivity Reward (Incentives)
In order to enhance overall golf division business incomes,
customer service and golf professional revenues, a productivity
reward equal to a stated dollar amount based on increases of golf
rounds, gross power golf cart rentals and driving range sales
becomes effective with this agreement. In addition to the fixed and
percentage fees, the golf professional shall receive the following
productivity rewards based on exceeding the following baselIne
golf rounds and gross sales:
PAID GOLF ROUNDS: (FEE, DISCOUNT CARD & REPLAY ROUNDS)
* Greater than 72,000 rounds $3.00 PER ROUND
, FAX NO. :6023912992 Nov. 29 2010 09:06PM Pi
POWER GOLF CART RENTALS: * Greater than $300,000
DRIVING RANGE SALES:
Ij< Greater than $400,000.
$100 PER $1,000 INCREASE
$200 PER $1,000 INCREASE
SECTION 3. Except as herein modified, all other provisions of the Agreement,
including any exhibits and subsequent amendments thereto, shall remain in full torce and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No 5 to Management Agreement on the date first written above.
CITY OF PALO ALTO BRAD LOZARES GOLF SHOP
BY:f}t&V . £OJ~
Name: BY'ctcl. F. La1...Qre. ~ City Manager
Purchasing Manager Title: OI.U N-t..-I jo J r-~ra t'€SS;oJl q l
APPROVED AS TO FORM:
Senior Asst. City Attorney
4
091 12(),ib 0073262
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
April, 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
Recent HistoricalPalo AltoGCPerformance.....................................................................20
Projections Basedon“Option A”........................................................................................22
KeyAssumptions.........................................................................................................................22
ProFormaEstimatefor ‘Option A’Scenario–FY2012 –FY2021..............................................26
Projections Basedon“Option D”........................................................................................29
KeyAssumptions.........................................................................................................................29
ProFormaEstimatefor ‘Option D’ Scenario –FY2012 –FY2021..............................................32
Projections Basedon“Option F”........................................................................................35
KeyAssumptions.........................................................................................................................35
ProFormaEstimatefor ‘Option F’ Scenario –FY2012 –FY2021..............................................36
Projections Basedon“Option G”........................................................................................39
KeyAssumptions.........................................................................................................................39
ProFormaEstimatefor ‘Option G’ Scenario– FY2012 –FY2021.............................................42
FinancialProjectionsSummary..........................................................................................45
Summaryof Options....................................................................................................................45
SummaryResults........................................................................................................................46
Justifications for Revenue Projections........................................................................................47
Other Considerations Regarding ImprovementOptions.............................................................48
Option“G”SensitivityAnalysis...........................................................................................49
Option“G” SensitivityAnalysis - Summaryfor 2017...................................................................49
OptionG SensitivitySpreadsheets..............................................................................................50
OTHERISSUES ANDCONSIDERATIONS..............................................................................56
Market Position /Re-Branding Opportunity........................................................................56
Economics of PotentialLong-Term/ AdditionalImprovements...........................................58
CartStorage Building..................................................................................................................58
Expanded Meeting Space...........................................................................................................59
RangePerformanceCenter ........................................................................................................59
Management Structure.......................................................................................................60
Long RangeConcerns.......................................................................................................61
PotentialEconomicDevelopmentOfTheAirport& Golf “Baylands Gateway” Area............64
Private Funding Possibilities..............................................................................................65
APPENDICES...........................................................................................................................66
AppendixA – Comparative SupplyRatios – PaloAlto GC& KeyMunicipal Competitors...67
AppendixB – Comparative Scoring of Reconfiguration Options.........................................68
AppendixC–Water &Power Use Discussion &Assumptions...........................................71
AppendixD– ReviewOf Probable Cost Estimates............................................................73
AppendixE – PotentialLong-Term MasterPlan Improvements..........................................75
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 sixormoreholes atthe Palo AltoGolf Course. NGF’s objective
was to help theCityidentifythe expectedfinancialimpactfromtheimprovementsrelatedtothe
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 (6additionaltothose 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,butto an evengreaterextent,virtuallyallareas of
the existing course would bereconstructed,enhanced and improved.
Thehighlightsof changes in thisoption include:
18golf holesrelocated
18 newgreens constructed
Par 71
6,600/ 6,100/ 5,000 yards
Allbunkersreconstructed and/or new
43 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)
Reconstruction andfeatures atthe existing practicegreenarea
Construction of anewon-courserestroomfacility
Temporarypreparation ofthefield/recreation area(notfield development or
improvement)
The totalprojected cost forthisoptionis$7,573,262,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 (3additionaltothose covered)
Re-turfing of allexistingfairways (21.5 acresadditional)
Replacement ofthebalance of theexisting irrigation system
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –9
Projected Costfor AdditionalItems: $1,675,236
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 D,this alternate costmaybe prudentto
examine closer asconditions cannotdramaticallyimprove course-wide without aplan toreplace
the system.Ifthesystemis allowed to runfor along 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 MunicipalGolfCourse 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 milesfrom subject site,roundedtohalf-mile; actual drivingdistances will likelybegreater.
Type: DF–DailyFee; MU–Municipal
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –17
Thetable belowshows summaryfacilityinformation regarding Palo Alto MunicipalGolf Course andits primarycompetitors.Reported
roundsfor2007 arefromthe2008 Economic Research Associatesreportto theCity. Averagegreen/cartrevenue perroundfor San
Jose and SantaTeresaare estimated basedonERA 2007 numbers.
SummaryOperating Data –Palo Alto MunicipalGolf CourseandPrimaryCompetitors
Golf Facility
Total 2007
Rounds
Total 2011
Rounds
Average
Green / Cart
Fee per
Round
18-Hole
Resident
Green Fee
(WD/WE)
18-Hole
Non-
Resident
Green Fee
(WD/WE)
PerPerson
18-Hole Cart
Fee
18-Hole
Twilight
Green Fee
(WD/WE)
18-Hole
Senior
Resident
Green Fee
(WD/WE)
18-Hole
Super-Twi
Green Fee
(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,we estimate thefacility’s
economic performance based on aset of assumptions thatmayormaynot becomereality.We
feelthattheseestimatesrepresentthe besteffortto createa“fairestimateof performance”for
thisfacilitybased on ourunderstanding ofthegolffacilityoperation, itsplace in themarket and
the changesproposed inthevarious renovation options.
ThePalo Alto Municipal GCperformancehasbeen projectedunderthe assumption thatthe
operation iscontinued‘as-is’with threeseparatecontractsformaintenance, pro shopand
food/beverage.The basic contractterms inplacein FY2012 areassumedto continuethrough
FY2021.TheNGFhas also assumed a“standard”setof externalassumptionsforregional
economic performance,consumerdiscretionaryincome,and weather, with neithersevere
declines nor increases inanyof thesemeasuresthrough 2021.
RECENT HISTORICAL PALO ALTOGC PERFORMANCE
In ordertoputtheproforma projections incontext, we have summarized thefive-year
performancehistoryof Palo Alto GCin thetable below.
Palo Alto MunicipalGolfCourse
HistoricalRevenue Performance(2008-2011)
Revenues FY2008 FY2009 FY2010 FY2011
GreenFees $2,169,230 $2,073,809 $1,958,234 $1,859,473
CartFees 345,656 313,224 339,090 302,815
Driving Range 346,447 365,908 399,773 343,878
MonthlyPlayCards 161,368 161,544 135,848 154,933
Tournament/LeagueFees 2,227 2,651 1,921 2,190
Class Program /Other Fees 0 0 0 11,844
TotalGolf CourseRevenues $3,024,928 $2,917,136 $2,834,866 $2,675,133
OtherRevenue
Merchandise Sales 718,450 737,050 684,725 663,400
Food Sales 667,000 0 610,725 637,800
Liquor Sales 172,000 0 141,850 149,000
F &BConcession Payments
FixedLease $0 $43,811 $0 $0
Variable Portion $58,730 $0 $52,680 $55,076
UtilityPayment $25,920 $19,440 $28,080 $25,920
TotalF &BConcession Payments $84,650 $63,251 $80,760 $80,996
Pro Shop Concession Payments
FixedLease $0 $0 $0 $0
Merchandise(4%) $28,738 $29,482 $27,389 $26,536
TotalPro Shop Concession Payments $28,738 $29,482 $27,389 $26,536
TotalGrossMargin to City $3,138,316 $3,009,869 $2,943,015 $2,782,665
RoundsPlayed 77,989 75,511 69,791 67,381
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –21
Palo Alto MunicipalGolfCourse
HistoricalExpense andNetIncomePerformance (2008-2011)
Expenses FY2008 FY2009 FY2010 FY2011
Salaries & Benefits $951,786 $929,335 $721,596 $259,455
RangeFees 138,579 152,745 142,267 130,152
CartFees 131,789 127,836 121,630 117,529
ClubFees 6,473 6,198 5,424 5,576
FixedLozares ManagementFee 373,435 409,989 388,898 381,544
Contract Maintenance ---475,000
Repairs &maintenance 34,791 39,295 33,321 21,943
Advertising & Publish 5,560 6,583 4,299 10,765
Supplies and Materials 129,891 144,037 119,458 43,742
Gen.,Rents,Fac. & Equip 5,959 2,736 944 675
Water Expense 279,326 409,132 271,495 361,870
Other DirectCharges 36,998 39,255 38,882 45,263
IndirectCharges 108,641 132,072 110,343 102,571
TotalCityOperating Expenses $2,203,228 $2,399,213 $1,958,557 $1,956,085
Net Income From Operations(Loss)$935,088 $610,656 $984,458 $826,580
Incomefrom Sale of Property $35,230
D/SIncome $33,629 $32,855 $32,200 $0
TotalNon-Operating 33,629 32,855 32,200 35,230
TotalIncome(Incl.Non-operating)$968,717 $643,511 $1,016,658 $861,810
Debt Service $559,795 $555,686 $560,674 $559,539
PaymenttoGeneralFund $94,849 $94,849 $47,684 $94,849
CostPlan Charges $337,590 $318,969 $332,155 $41,455
TotalDebt /OtherCharges $992,234 $969,504 $940,513 $695,843
Net Income or(Loss)($23,517)($325,993)$76,145 $165,967
Source: Cityof PaloAlto
Rounds played at Palo Alto GCdecreased steadilyfromFY2008to FY2011,falling bya
totalof 10,608,or13.6%. During thesametime,bothgolf revenues andnet incomefrom
operations declined by11.6%.
Despite thesignificantdecline in rounds andrevenues, net income afterdebt service,
generalfundpaymentsand costplan chargesimproved bynearly$500,000 between
FY2009 and FY2011 due toareductionin operating expenses andasignificant
decrease incostplan charges associated withthe conversion toprivatizedgolf course
maintenance.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –22
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$2.8million in totalgrossfacilityrevenue to theCity(from allsources)by2016.
KeyAssumptions
TheBase assumptions in preparing theprojectedfinancialperformanceestimates covers
severalcategories, including rounds activity, greenfees, averagerevenues (carts,range,
concessions,etc.),totalrevenue, expenses, capitaland debt. Under allscenarios, we have
assumeduse ofmorecomplimentaryand discountrounds intheinitialyears afterreopeningfor
the purposesofgaining back lostcustomers,stimulatingtrial, andgeneralpromotions.
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 50%off historicalroundsforthe corresponding month isassumed.All
roundsfrom April-June 2013 areassumedto be9-hole rounds.
Rounds in FY2014 assume operation on9holesforthefirst6months,then
operation with an upgraded 18 holesfor January-June 2014.Allroundsfrom July-
December2013 are assumedto be9-holerounds with a reduction of 50% off
historicaltotalsforthecorresponding month.
Rounds projectionsassume increasesto astabilized levelof 68,200by2017.
Theoveralldistribution ofrounds bycategoryis shown in the table below:
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –23
Palo Alto MunicipalGolfCourse(Baylands GC)
Projected Activityfor Option A(2012-2021)
As-Is
9-Mos.18-H/
3Mos.9-H
6-Mos.18-H/
6Mos.9-H
Operateon 18-holeswith
modest upgrade
to thegolf coursedesign
FY2012 FY2013 FY2014 FY2015 FY2016
FY2017
-2021
Weekday
18-Hole 5,400 3,500 2,200 5,200 5,300 5,600
Senior Non-Resident 6,300 4,200 2,300 5,850 6,200 6,500
9-Hole 1,500 6,400 11,500 1,500 1,600 1,700
Senior 900 600 500 900 1,000 1,000
Junior 1,400 1,000 600 1,350 1,400 1,500
EarlyBird 700 500 300 600 700 700
Twilight 11,300 7,800 4,500 10,800 11,000 11,600
Specials 7,500 5,400 3,500 9,400 7,600 8,000
Junior Card 1,100 800 500 1,050 1,200 1,200
Senior Card 800 600 400 900 1,000 1,000
Non-ResidentSenior Card 4,000 2,600 1,500 3,750 4,000 4,200
Sub-TotalWeekday 40,900 33,400 27,800 41,300 41,000 43,000
Weekend
18-Hole 10,200 7,000 4,000 8,550 9,800 10,300
9Hole 1,900 8,700 12,500 1,850 2,000 2,100
Junior 800 600 400 800 900 900
Twilight 6,200 4,100 2,400 5,800 6,000 6,400
Sub-TotalWeekend 19,100 20,400 19,300 17,000 18,700 19,700
ComplimentaryPlay 2,500 1,700 1,200 2,500 2,500 2,500
Tournaments 2,200 1,500 1,000 2,000 2,500 3,000
TOTAL ROUNDS 64,700 57,000 49,300 62,800 64,700 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 18holes (assumedJanuary1, 2014),averagefees ineach
categoryareincreasedapproximately5% over FY2012 (rounded).
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
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –24
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/3
Mos.9-H
6-Mos.
18-H/6
Mos.9-H
Operateon 18-holeswith
modest upgradeto thegolf
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 $17.00 $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 –25
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 isincreasedby4.5% 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 permonthin FY2015,growing at1.5% annuallythrough2021.
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 isassumedtoincreaseto$45,000to accountfor enhanced
marketing ofthe upgradedfacilityand re-themeas “Baylands GC.”Advertising and
publishing expense is then reducedin subsequent yearstoa“standard”of around
$17,000 per year.
Water expense hasbeenhighlyvariable and NGFprojectionsarebasedon the4-
year average(2008-2011),with assumptions of reductions in useasdescribed
previously:
25%reduction during construction
28%reduction uponre-opening
Annualincreases are assumed at 20%for 2013,15%for2014,9%for 2015,
3%for2016,2%for 2017 and 4.5%for FY2018through FY2021.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –26
Other directcharges(including electric) arebased on actualfiguresforFY2011 with
20%reduction inFY2013 and 30%reductionin FY2014. Aslightreductionexpected
upon re-opening thegolfcourse inFY2015 (as described bythearchitect).Annual
increase of 1.5%is assumedfrom FY2015through FY2021.
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.
There is anewpaymentof ± $107,000totheGeneralFundfrom FY2015–FY2019
forrepaymentof aloanforthe difference between theestimatedcapitalcostfor
Option Aandthe expected reimbursementfromthe SFCJPA.
TheCostPlan Chargesare basedon actual2011 chargeswith historical3%growth
throughtheend of FY2021.
TheNGFhas addeda new“Operating & CapitalReserve” line totheproforma
beginning in FY2015, setat10%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 $690,000to $950,000(before debt,cost plan and reserve) throughthetermof thecurrent
debt program.AftertheCityis no longerresponsible for debt payments(beginning in FY2020),
thefacilityis expected toproducenetincometothe City, afterallexpenses and charges, inthe
range of±$620,000,althougha one-timeexpense of $750,000is projectedfor 2020toupgrade
the irrigation system.Asthis is aprojection, allfigures after FY2012have been roundedtothe
nearest$100forsimplicity.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –27
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 $1,605,200 $1,313,900 $1,967,700 $2,090,000 $2,233,100 $2,255,400 $2,278,000 $2,300,700 $2,323,800
Cart Fees 302,799 293,500 206,900 156,600 284,900 296,500 315,600 318,800 322,000 325,200 328,500
Driving Range 343,911 333,400 235,000 177,800 323,600 336,700 358,500 362,100 365,700 369,400 373,100
Tournament /League Fees 2,196 2,100 1,900 1,600 2,100 2,100 2,200 2,200 2,200 2,200 2,200
Other 11,813 11,500 8,100 6,100 11,100 11,500 12,300 12,300 12,600 12,600 12,800
Total Golf Course Revenues $2,677,256 $2,600,600 $2,057,100 $1,656,000 $2,589,400 $2,736,800 $2,921,700 $2,950,800 $2,980,500 $3,010,100 $3,040,400
ConcessionPayments
FoodandBeverage Concession
Variable Portion $55,076 $53,400 $37,600 $28,500 $51,800 $53,900 $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 &B Concession $80,996 $79,300 $64,000 $54,900 $78,700 $80,800 $84,800 $85,400 $86,500 $87,100 $88,200
ProShop Lease
Merchandise (4%) $26,536 $25,700 $18,100 $13,700 $25,000 $25,700 $27,700 $27,700 $28,200 $28,200 $28,800
Total FromProShop Concession $26,536 $25,700 $18,100 $13,700 $25,000 $25,700 $27,700 $27,700 $28,200 $28,200 $28,800
Total Gross toCity $2,784,788 $2,705,600 $2,139,200 $1,724,600 $2,693,100 $2,843,300 $3,034,200 $3,063,900 $3,095,200 $3,125,400 $3,157,400
OperatingExpenses
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 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500
Range Fees 130,152 126,700 89,300 67,600 123,000 127,900 136,200 137,600 139,000 140,400 141,800
Cart Fees 117,529 117,400 82,800 62,600 114,000 118,600 126,200 127,500 128,800 130,100 131,400
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 28,800 23,200 36,300 38,300 40,900 41,300 41,700 42,100 42,600
Contract Maintenance 475,000 750,000 675,000 625,000 800,000 812,000 824,200 836,600 849,100 861,800 874,700
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 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500
Supplies and Materials 44,417 45,100 36,100 31,600 45,100 45,800 46,500 47,200 47,900 48,600 49,300
WaterExpense 361,870 246,000 277,400 207,000 195,000 200,900 204,900 214,100 223,700 233,800 244,300
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –28
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
Other DirectCharges (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 $1,994,800 $1,831,700 $1,683,700 $2,024,100 $2,051,000 $2,096,900 $2,133,100 $2,170,100 $2,208,400 $2,247,800
Net IncomeFromOperations (Loss)$828,703 $740,700 $333,200 $66,600 $694,700 $818,100 $963,200 $956,700 $951,000 $917,000 $909,600
Non-operating
Incomefrom Sale ofProperty 35,230
D/SIncome $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 Income(Incl.Non-operating)$863,933 $656,200 $299,900 $30,700 $651,700 $770,300 $908,200 $899,200 $890,900 $854,200 $844,000
DebtService $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $432,200 $432,300 $431,200 $0 $0
PaymenttoGeneral Fund $94,849 $94,800 $0 $0 $107,600 $107,600 $107,600 $107,600 $107,600 $0 $0
NewDebtService $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Additional Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $750,000 $0
Reserve for Replacement $0 $0 $0 $0 $196,800 $209,000 $223,300 $225,500 $227,800 $230,100 $232,400
CostPlan 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 $779,300 $795,500 $812,600 $816,400 $819,100 $1,034,200 $288,100
Net Incomeor (Loss)$168,090 $104,200 ($139,000)($407,700)($84,600)$22,600 $150,600 $140,300 $131,900 ($117,200)$621,500
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –29
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 $3.0million in
totalgrossrevenue (fromallsources)totheCityby2016.
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 50%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
50% 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 –30
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
Operateon 18-holeswith upgraded
golf design and moreappealing
features
FY2012 FY2013 FY2014 FY2015 FY2016
FY2017
-2021
Weekday
18-Hole 5,400 3,500 1,800 5,500 5,800 6,100
Senior Non-Resident 6,300 4,200 2,100 6,200 6,550 6,900
9-Hole 1,500 6,400 11,000 1,600 1,600 1,700
Senior 900 600 300 1,100 1,150 1,200
Junior 1,400 1,000 400 1,350 1,400 1,500
EarlyBird 700 500 200 800 850 900
Twilight 11,300 7,800 3,700 11,200 11,750 12,400
Specials 7,500 5,400 3,000 7,550 8,000 8,400
Junior Card 1,100 800 400 1,150 1,250 1,300
Senior Card 800 600 300 1,000 1,050 1,100
Non-ResidentSenior Card 4,000 2,600 1,200 3,950 4,200 4,400
Sub-TotalWeekday 40,900 33,400 24,400 41,400 43,600 45,900
Weekend
18-Hole 10,200 7,000 3,500 9,900 10,450 11,000
9Hole 1,900 8,700 11,900 2,000 2,150 2,200
Junior 800 600 300 900 950 1,000
Twilight 6,200 4,100 2,100 6,000 6,350 6,700
Sub-TotalWeekend 19,100 20,400 17,800 18,800 19,900 20,900
ComplimentaryPlay 2,500 1,700 1,000 2,500 2,500 2,500
Tournaments 2,200 1,500 800 3,000 3,500 4,000
TOTAL ROUNDS 64,700 57,000 44,000 65,700 69,500 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 –31
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/3
Mos.9-H
5-Mos.
18-H/7
Mos.9-H
Operateon 18-holeswith
upgraded golf design and more
appealing 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 $17.00 $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 –32
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 permonthin FY2015,growing at1.5% annuallythrough2021.
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
32%reduction uponre-opening
Annualincreases are assumed at 20%for 2013,15%for2014,9%for 2015,
3%for2016,2%for 2017 and 4.5%for FY2018through 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
There is anewpaymentof ± $223,700totheGeneralFundfrom FY2015–FY2019
forrepaymentof aloanforthe difference between theestimatedcapitalcostfor
Option Dandthe expected reimbursementfromthe SFCJPA.
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 $930,000to $1.27million (beforedebt, costplan andreserve)through
theterm ofthecurrentdebt program.AftertheCityis no longerresponsiblefor debt payments
(beginning inFY2020),thefacilityis expectedtoproduce net incometothe Cityin therangeof
$915,000 per year,althoughthere is aone-timeexpense of $500,000forirrigation in 2020.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –33
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 $1,605,200 $1,213,500 $2,204,500 $2,361,900 $2,522,200 $2,547,500 $2,572,900 $2,598,700 $2,624,600
Cart Fees 302,799 293,500 206,900 139,700 298,100 318,500 339,200 342,600 346,100 349,500 353,000
Driving Range 343,911 333,400 235,000 158,700 338,600 361,700 385,300 389,200 393,100 397,000 401,000
Tournament /League Fees 2,196 2,100 1,900 1,400 2,200 2,300 2,400 2,400 2,400 2,400 2,400
Other 11,813 11,500 8,100 5,500 11,600 12,300 13,200 13,200 13,500 13,500 13,800
Total Golf Course Revenues $2,677,256 $2,600,600 $2,057,100 $1,518,800 $2,855,000 $3,056,700 $3,262,300 $3,294,900 $3,328,000 $3,361,100 $3,394,800
ConcessionPayments
FoodandBeverage Concession
Variable Portion $55,076 $53,400 $37,600 $25,400 $54,200 $57,900 $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 &B Concession $80,996 $79,300 $64,000 $51,800 $81,100 $84,800 $89,100 $89,700 $90,800 $91,500 $92,700
ProShop Lease
Merchandise (4%) $26,536 $25,700 $18,100 $12,200 $26,100 $27,600 $29,700 $29,700 $30,300 $30,300 $30,900
Total FromProShop Concession $26,536 $25,700 $18,100 $12,200 $26,100 $27,600 $29,700 $29,700 $30,300 $30,300 $30,900
Total Gross toCity $2,784,788 $2,705,600 $2,139,200 $1,582,800 $2,962,200 $3,169,100 $3,381,100 $3,414,300 $3,449,100 $3,482,900 $3,518,400
OperatingExpenses
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 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500
Range Fees 130,152 126,700 89,300 60,300 128,700 137,400 146,400 147,900 149,400 150,900 152,400
Cart Fees 117,529 117,400 82,800 55,900 119,200 127,400 135,700 137,000 138,400 139,800 141,200
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 28,800 21,300 40,000 42,800 45,700 46,100 46,600 47,100 47,500
Contract Maintenance 475,000 750,000 675,000 595,800 852,000 864,800 877,800 891,000 904,400 918,000 931,800
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 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500
Supplies and Materials 44,417 45,100 36,100 31,600 45,100 45,800 46,500 47,200 47,900 48,600 49,300
WaterExpense 361,870 246,000 277,400 204,000 161,000 165,800 169,100 176,700 184,700 193,000 201,700
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –34
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
Other DirectCharges (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 $1,994,800 $1,831,700 $1,635,600 $2,055,500 $2,090,300 $2,138,000 $2,173,500 $2,210,100 $2,247,800 $2,286,400
Net IncomeFromOperations (Loss)$828,703 $710,800 $307,500 ($52,800)$906,700 $1,078,800 $1,243,100 $1,240,800 $1,239,000 $1,235,100 $1,232,000
Non-operating
Incomefrom Sale ofProperty 35,230
D/SIncome $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 Income(Incl.Non-operating)$863,933 $740,700 $333,200 ($27,100)$932,400 $1,104,600 $1,268,500 $1,266,700 $1,264,900 $1,235,100 $1,232,000
DebtService $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0
PaymenttoGeneral Fund $94,849 $94,800 $0 $0 $223,700 $223,700 $223,700 $223,700 $223,700 $0 $0
Additional Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $500,000 $0
Reserve for Replacement $0 $0 $0 $0 $220,500 $236,200 $252,200 $254,800 $257,300 $259,900 $262,500
CostPlan 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 $919,100 $938,800 $948,600 $961,800 $964,700 $814,000 $318,200
Net Incomeor (Loss)$168,090 $104,200 ($139,000)($501,400)$13,300 $165,800 $319,900 $304,900 $300,200 $421,100 $913,800
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –35
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.
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 totalsreducedby50%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
Operateon 18-holeswith nearly
completerenovation
FY2012 FY2013 FY2014 FY2015 FY2016
FY2017
-2021
Weekday
18-Hole 5,400 3,500 1,000 5,500 5,800 6,100
Senior Non-Resident 6,300 4,200 1,100 6,200 6,550 6,900
9-Hole 1,500 6,400 12,800 1,600 1,600 1,700
Senior 900 600 200 1,100 1,150 1,200
Junior 1,400 1,000 300 1,350 1,400 1,500
EarlyBird 700 500 200 800 850 900
Twilight 11,300 7,800 2,000 11,200 11,750 12,400
Specials 7,500 5,400 2,200 7,550 8,000 8,400
Junior Card 1,100 800 300 1,150 1,250 1,300
Senior Card 800 600 200 1,000 1,050 1,100
Non-ResidentSenior Card 4,000 2,600 800 3,950 4,200 4,400
Sub-TotalWeekday 40,900 33,400 21,100 41,400 43,600 45,900
Weekend
18-Hole 10,200 7,000 2,100 9,900 10,450 11,000
9 Hole 1,900 8,700 13,700 2,000 2,150 2,200
Junior 800 600 200 900 950 1,000
Twilight 6,200 4,100 1,000 6,000 6,350 6,700
Sub-TotalWeekend 19,100 20,400 17,000 18,800 19,900 20,900
ComplimentaryPlay 2,500 1,700 1,100 2,500 2,500 2,500
Tournaments 2,200 1,500 500 3,000 3,500 4,000
TOTAL ROUNDS 64,700 57,000 39,700 65,700 69,500 73,300
Averagegreen andancillaryfees in“OptionF”areidenticaltothose presentedfor
“Option D.”
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –36
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 permonthin FY2015,growing at1.5% annuallythrough2021.
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
32%reduction uponre-opening
Annualincreases are assumed at 20%for 2013,15%for2014,9%for 2015,
3%for2016,2%for 2017 and 4.5%for FY2018through 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 $2,855,400in additionalcost neededto complete
Option F,over and above theamount estimatedto bereimbursed bytheSFCJPA,
willbe fundedvia the issuance of a newdebtprogram(revenue orGeneral
Obligation Bond), with termsof 4.5% interestfor20 years, with paymentsbeginning
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 $960,000to $1.34million (beforeexisting and
newdebt, cost planandreserve)throughtheterm ofthe currentdebtprogram. Afterthe Cityis
no longerresponsibleforits older(1999 issue) debt payments,beginning in FY2020,thefacility
is expected toproduce net incometothe Cityinthe rangeof $720,000per year,althoughthere
is a one-timeexpense of $250,000for irrigation in2020.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –37
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 $1,605,200 $969,500 $2,204,500 $2,361,900 $2,522,200 $2,547,500 $2,572,900 $2,598,700 $2,624,600
Cart Fees 302,799 293,500 206,900 126,100 298,100 318,500 339,200 342,600 346,100 349,500 353,000
Driving Range 343,911 333,400 235,000 143,200 338,600 361,700 385,300 389,200 393,100 397,000 401,000
Tournament /League Fees 2,196 2,100 1,900 1,300 2,200 2,300 2,400 2,400 2,400 2,400 2,400
Other 11,813 11,500 8,100 4,900 11,600 12,300 13,200 13,200 13,500 13,500 13,800
Total Golf Course Revenues $2,677,256 $2,600,600 $2,057,100 $1,245,000 $2,855,000 $3,056,700 $3,262,300 $3,294,900 $3,328,000 $3,361,100 $3,394,800
ConcessionPayments
FoodandBeverage Concession
Variable Portion $55,076 $53,400 $37,600 $22,900 $54,200 $57,900 $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 &B Concession $80,996 $79,300 $64,000 $49,300 $81,100 $84,800 $89,100 $89,700 $90,800 $91,500 $92,700
ProShop 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 FromProShop 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 toCity $2,784,788 $2,705,600 $2,139,200 $1,305,300 $2,962,200 $3,169,100 $3,381,100 $3,414,300 $3,449,100 $3,482,900 $3,518,400
OperatingExpenses
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 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500
Range Fees 130,152 126,700 89,300 54,400 128,700 137,400 146,400 147,900 149,400 150,900 152,400
Cart Fees 117,529 117,400 82,800 50,400 119,200 127,400 135,700 137,000 138,400 139,800 141,200
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 28,800 17,400 40,000 42,800 45,700 46,100 46,600 47,100 47,500
Contract Maintenance 475,000 750,000 675,000 537,500 800,000 812,000 824,200 836,600 849,100 861,800 874,700
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 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500
Supplies and Materials 44,417 45,100 36,100 21,700 45,100 45,800 46,500 47,200 47,900 48,600 49,300
WaterExpense 361,870 246,000 280,400 217,600 182,400 187,900 191,700 200,300 209,300 218,700 228,500
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –38
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
Other DirectCharges (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 $1,994,800 $1,834,700 $1,529,900 $2,023,900 $2,058,500 $2,105,800 $2,141,500 $2,178,200 $2,216,100 $2,254,900
Net IncomeFromOperations (Loss)$828,703 $710,800 $304,500 ($224,600)$938,300 $1,110,600 $1,275,300 $1,272,800 $1,270,900 $1,266,800 $1,263,500
Non-operating
Incomefrom Sale ofProperty 35,230
D/SIncome $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 Income(Incl.Non-operating)$863,933 $740,700 $330,200 ($198,900)$964,000 $1,136,400 $1,300,700 $1,298,700 $1,296,800 $1,266,800 $1,263,500
DebtService $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0
PaymenttoGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0
Additional Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $250,000 $0
NewDebtService $0 $0 $0 $0 $219,500 $219,500 $219,500 $219,500 $219,500 $219,500 $219,500
Reserve for Replacement $0 $0 $0 $0 $220,500 $236,200 $252,200 $254,800 $257,300 $259,900 $262,500
CostPlan 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 $914,900 $934,600 $944,400 $957,600 $960,500 $783,500 $537,700
Net Incomeor (Loss)$168,090 $104,200 ($142,000)($673,200)$49,100 $201,800 $356,300 $341,100 $336,300 $483,300 $725,800
NOTE:OptionFwould likelyinclude additional revenue fromsoccerfieldsofapproximately$78,000per field peryear.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –39
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.Subsequentto theinitialdraftreport,the CityFinance Committee recommendedthat
this optioninclude rebuilding of all18greens,re-turfing of allfairways, construction of anon-
courserestroom,andrebuilding thepracticegreen area.Thesechangesshouldfurtherenhance
the product’smarketabilityand thegolferexperience.
TheNGFrevenue estimate hasbeencombinedwith thepresent operating structuretoprovide a
fullestimate of BaylandsGCperformanceforthenext 10 years,assumingsuccessful
completion ofthe proposed “OptionG” upgrades.TheNGFhas projectedgrowth to almost$3.2
million in totalgrossrevenues (from allsources)to theCityby2016.
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,roundsareassumedtogrowto67,900 in FY2015, stabilizing at
75,700rounds by2017.
Theoveralldistribution ofrounds bycategoryis shown in the table below:
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –40
Palo Alto MunicipalGolfCourse(Baylands GC)
Projected Activityfor OptionG(2012-2021)
As-Is
9-Mos.18-
H/3Mos.
closed
3-Mos.18-
H/9Mos.
Closed
Operateon 18-holeswith maximum
renovation and upgrade
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017-2021
Weekday
18-Hole 5,400 4,000 1,000 5,500 5,800 6,100
Senior Non-Resident 6,300 4,700 1,300 6,200 6,550 6,900
9-Hole 1,500 1,100 400 1,550 1,600 1,700
Senior 900 600 250 1,100 1,150 1,200
Junior 1,400 1,000 400 1,450 1,500 1,600
EarlyBird 700 500 200 800 850 900
Twilight 11,300 8,400 2,800 11,500 12,150 12,800
Specials 7,500 5,600 2,200 7,650 8,050 8,500
Junior Card 1,100 800 300 1,150 1,250 1,300
Senior Card 800 600 200 1,000 1,050 1,100
Non-ResidentSenior Card 4,000 3,000 1,000 4,000 4,300 4,500
Sub-TotalWeekday 40,900 30,300 10,050 41,900 44,250 46,600
Weekend
18-Hole 10,200 7,600 2,500 10,050 10,650 11,200
9Hole 1,900 1,400 500 2,000 2,100 2,200
Junior 800 600 200 900 950 1,000
Twilight 6,200 4,600 1,500 6,050 6,350 6,700
Sub-TotalWeekend 19,100 14,200 4,700 19,000 20,050 21,100
ComplimentaryPlay 2,500 1,800 650 3,500 3,500 3,500
Tournaments 2,200 1,600 600 3,500 4,000 4,500
TOTAL ROUNDS 64,700 47,900 16,000 67,900 71,800 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 –41
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
Operateon 18-holeswith
maximum renovation and
upgrade
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 isincreasedby4.5% 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 –42
Contractmaintenanceexpense totheCityof Palo Alto assumes:
$62,500 permonthfor FY2012
$62,500 permonthforthefirst 9monthsof FY2013
No contractmaintenanceexpenseforApril2013through March 2014
$68,750 permonth(fixed) uponre-opening in April2014 (3monthsin
FY2014),then$68,750permonthin FY2015,growing at 1.5%annually
through2021
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 isassumedtoincrease$45,000 toaccountforenhanced
marketing ofthe upgradedfacilityand re-themeas “Baylands GC.”Advertising and
publishing expense is then reducedin subsequent yearstoa“standard”of around
$17,000 per year.
Water expense hasbeenhighlyvariable and NGFprojectionsarebasedon the4-
year average(2008-2011),with assumptions of reductions in useasdescribed
previously:
60%reduction during construction
32%reduction uponre-opening
Annualincreases are assumed at 20%for 2013,15%for2014,9%for 2015,
3%for2016,2%for 2017 and 4.5%for FY2018through 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 $4,570,000in additionalcost neededto complete
OptionG, over andabove theamountreimbursedbythe SFCJPA,willbe funded via
the issuanceof a newdebt program(revenue orGeneralObligation Bond),with
terms of 4.5%interestfor 20years, 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 $1.07to $1.42million (beforeexisting and newdebt,costplan
and reserve) throughthetermof thecurrent debtprogramthatendsin 2019. Afterthe Cityis no
longerresponsibleforitsolder(1999 issue) debtpayments,thefacilityisexpected toproduce
net incometothe City, afterallexpenses and other charges,intherangeof $740,000 per year.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –43
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 $1,445,100 $544,300 $2,341,500 $2,510,600 $2,680,900 $2,707,800 $2,734,800 $2,762,200 $2,789,800
Cart Fees 302,799 293,500 173,900 72,600 311,100 332,300 353,900 357,400 361,000 364,600 368,200
Driving Range 343,911 333,400 197,500 82,400 353,400 377,400 401,900 405,900 410,000 414,100 418,200
Tournament /League Fees 2,196 2,100 1,600 500 2,200 2,400 2,500 2,500 2,500 2,500 2,500
Other 11,813 11,500 6,800 2,800 12,000 12,700 13,700 13,700 13,900 13,900 14,200
Total Golf Course Revenues $2,677,256 $2,600,600 $1,824,900 $702,600 $3,020,200 $3,235,400 $3,452,900 $3,487,300 $3,522,200 $3,557,300 $3,592,900
ConcessionPayments
FoodandBeverage Concession
Variable Portion $55,076 $53,400 $31,600 $13,200 $56,600 $60,400 $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 &B Concession $80,996 $79,300 $58,000 $39,600 $83,500 $87,300 $91,800 $92,400 $93,600 $94,200 $95,500
ProShop 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 FromProShop 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 toCity $2,784,788 $2,705,600 $1,898,100 $748,600 $3,130,700 $3,351,200 $3,575,400 $3,610,400 $3,647,100 $3,682,800 $3,720,300
OperatingExpenses
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 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500
Range Fees 130,152 126,700 75,100 31,300 134,300 143,400 152,700 154,200 155,800 157,400 158,900
Cart Fees 117,529 117,400 69,600 29,000 124,400 132,900 141,600 143,000 144,400 145,800 147,300
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 25,500 9,800 42,300 45,300 48,300 48,800 49,300 49,800 50,300
Contract Maintenance 475,000 750,000 562,500 206,300 825,000 837,400 850,000 862,800 875,700 888,800 902,100
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 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500
Supplies and Materials 44,417 45,100 36,100 13,500 45,100 45,800 46,500 47,200 47,900 48,600 49,300
WaterExpense 361,870 246,000 250,900 133,000 183,000 188,500 192,300 201,000 210,000 219,500 229,400
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –44
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
Other DirectCharges (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 $1,994,800 $1,575,100 $759,400 $2,061,600 $2,097,500 $2,146,000 $2,182,300 $2,219,400 $2,257,900 $2,297,400
Net IncomeFromOperations (Loss)$828,703 $710,800 $323,000 ($10,800)$1,069,100 $1,253,700 $1,429,400 $1,428,100 $1,427,700 $1,424,900 $1,422,900
Non-operating
Incomefrom Sale ofProperty 35,230
D/SIncome $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 Income(Incl.Non-operating)$863,933 $740,700 $348,700 $14,900 $1,094,800 $1,279,500 $1,454,800 $1,454,000 $1,453,600 $1,424,900 $1,422,900
DebtService $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0
PaymenttoGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0
NewDebtService $0 $0 $0 $0 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300
Operating& Capital Reserve $0 $0 $0 $0 $234,200 $251,100 $268,100 $270,800 $273,500 $276,200 $279,000
CostPlan 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 $1,060,400 $1,081,300 $1,092,100 $1,105,400 $1,108,500 $681,600 $686,000
Net Incomeor (Loss)$168,090 $104,200 ($123,500)($459,400)$34,400 $198,200 $362,700 $348,600 $345,100 $743,300 $736,900
NOTE:OptionG would likelyinclude additional revenue fromsoccerfieldsestimated byCityatapproximately$78,000per fieldper year ($234,000 for 3fields).
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –45
FINANCIAL PROJECTIONS SUMMARY
SummaryofOptions
Comparative tablefor options in 2015and 2020are shown below:
Summaryin 2015
Summaryin FY2015
ModestUpgrade
Option
A
More
significant
upgrade /nicer
features
Option
D
Nearly
complete
renovation
Option
F
Maximum
renovation
Option
G
TOTAL ROUNDS 62,800 65,700 65,700 67,900
ANNUAL ROUNDS REVENUE $1,967,709 $2,204,512 $2,204,512 $2,341,455
AVERAGE GREENFEE PER ROUND $31.33 $33.55 $33.55 $34.48
Revenues FY2015
Projected
FY2015
Projected
FY2015
Projected
FY2015
Projected
Total Golf Course Revenues $2,589,400 $2,855,000 $2,855,000 $3,020,200
Concessions
Total fromF & B Concession $78,700 $81,100 $81,100 $83,500
Total FromPro Shop Concession $25,000 $26,100 $26,100 $27,000
Total Gross to City $2,693,100 $2,962,200 $2,962,200 $3,130,700
Expenses
Water 195,000 161,000 182,400 225,600
Maintenance Contract 800,000 852,000 800,000 825,000
Total to Pro Shop Contract 618,600 633,200 633,200 646,300
All Other Expenses 410,500 409,300 408,300 407,300
Total CityOperating Expenses 2,024,100 2,055,500 2,023,900 2,104,200
Net Income From Operations (Loss)$669,000 $906,700 $938,300 $1,026,500
Total Income (Incl. Non-operating)$694,700 $932,400 $964,000 $1,052,200
Total Debt/OtherCharges $779,300 $1,501,100 $914,900 $1,016,600
Net Income or (Loss)($84,600)($568,700)$49,100 $35,600
Footnotes Partial irrigation Partial irrigation Potential for
additional
$78,000Soccer
revenue
Potential for
additional
$234,000
Soccer revenue
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –46
Summaryin 2020
Summaryin FY2020
ModestUpgrade
Option
A
More
significant
upgrade /nicer
features
Option
D
Nearly
complete
renovation
Option
F
Maximum
renovation
Option
G
TOTAL ROUNDS 68,200 73,300 73,300 75,700
ANNUAL ROUNDS REVENUE $2,300,746 $2,598,658 $2,598,658 $2,762,185
AVERAGE GREENFEE PER ROUND $33.74 $35.45 $35.45 $36.49
Revenues FY2015
Projected
FY2015
Projected
FY2015
Projected
FY2015
Projected
Total Golf Course Revenues $3,010,100 $3,361,100 $3,361,100 $3,557,300
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 $3,682,800
Expenses
Water 233,800 193,000 218,700 219,500
Maintenance Contract 861,800 918,000 861,800 888,800
Total to Pro Shop Contract 657,900 683,100 683,100 698,300
All Other Expenses 454,900 453,700 452,500 451,300
Total CityOperating Expenses $2,208,400 $2,247,800 $2,216,100 $2,257,900
Net Income From Operations (Loss)$917,000 $1,235,100 $1,266,800 $1,424,900
Total Income (Incl. Non-operating)$917,000 $1,235,100 $1,266,800 $1,424,900
Total Debt/OtherCharges $1,034,200 $814,000 $783,500 $681,600
Net Income or (Loss)($117,200)$421,100 $483,300 $743,300
Footnotes Partial irrigation Partial irrigation Potential for
additional
$78,000Soccer
revenue
Potential for
additional
$234,000
Soccer revenue
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.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –47
Keyobservations regarding projected“BaylandsGolf Club at PaloAlto”financialperformance:
NGF hasestimatedthattotalrevenuestothe Citywilldecrease byvarying amounts
during constructionforthefour options evaluated.Forinstance, underOption A,the
totaltwo-year cumulative reduction ingrossrevenue totheCityis nearly$1.5million.
This isbased onestimated FY 2012grossrevenues. However, becauseof expense
reductions(e.g.,range and cart payments,contractmaintenance, water, indirect
charges)during thetimeof construction,netincomefrom operations(before debt,
othercosts)is estimatedto decrease by±$1.08million over thetwo-year period,
based on actualestimated FY 2012netoperatingincome.
OptionG, which involves a 12-month closure of all18 holes,naturallyresults inthe
greatestreductionin revenue, with only$748,600grossincomefrom operations in
FY 2014,when the course is closedfor9months.Thetwo-year cumulative loss in
grossrevenue totheCity, using FY2012 as abase, is estimated atnearly$2.7
million, while the loss innet income is estimateat±$1.1million.
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,
reserve, andcost plan) is projectedto behighestunderOptionG,with 2021 NOI
projected at about$1.42million. OptionF issecond with ±$1.26million,followed
closelybyOption Databout $1.23million.
Afteradditionaldebt associated with improvements isconsidered,OptionG is
projectedto produceoverallNetIncometothe Citythat ismoderatelylowerthanthat
of OptionD. However,further down theroadwhen thedebtforOption Gis paid off,it
is expected toproducethe highest NetIncomeforthe Cityof Palo Alto.
Justificationsfor Revenue Projections
NGF isconfident,given the inputs(e.g., expectedqualityand appealfollowing improvements)
foreach option,thattherounds,fees,revenues, and expenses projected under eachscenario
arereasonable andachievable. The higheststabilized rounds activity we have projected under
anyscenario was less than 76,000totalrounds,alevelthat was achieved as recentlyas 2007-
08 (andwasfarexceeded in thepast)with a productthatwas inferiortowhat areconfigured
and re-brandedgolf course willbring tomarket.Also, wefeelwe have been conservative in
terms ofthefeeincreases thatthe improvedfacility willbe able tosustain.Likewise, we believe
it ismoredifficulttoestimatetheimpact onrevenues during thetimeof construction,asthere
aremanyvariables, notthe least of which aregolfer behavior and preferences.
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:
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –48
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”.Maintenance conditionsthat willposition thefacilityin the
mid-to-uppertierofmunicipalgolf courses inthismarket.
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.
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
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.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –49
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.
OPTION “G” SENSITIVITY ANALYSIS
As noted, proforma projections have beenmadeundera set of assumptions thatmayormay
not cometofruition. Also, projections are subjectto severaluncontrollablefactorssuchas
yearlyweather variations, economic conditions,and thenature ofthecompetition.Therefore, in
the interestof conservatism we have preparedasensitivityanalysis forOption G(identified by
the Cityasthepreferredoption) oftwo keyvariables relatedtorevenues –rounds played and
averagegreenfee.Specifically, we have run three scenariosthat presentdeviations fromthe
“base”modelpresentedabove: (1)Roundsreduced tomoderatelylower than projectedFY 12
performance,continuingdownward trend;(2) Averagegreenfee increasing over currentbyjust
less thanhalf the 15% projectedincreasein basemodel; and(3) Roundsand averagegreen
fees both lower, incombination. Because ofthe virtuallylimitless number of combinations,other
variables, such asfixedoperating expenses,remain the sameas inthebase scenario.
Thesensitivityscenarios revealthatthe lower than projected(base)greenfeegrowth would
result inareduction innet income of approximately47% over thebasecase. Reducedrounds
result ina±$500,000reduction in net income,while the“worst case”– both roundsandgreen
fee increases belowtheprojected basemodel–produces about$640,000 lower net income.
Option “G” Sensitivity Analysis -Summaryfor 2017
Summaryin FY2017
Expected Case
Option G
Reduced
Rounds
Option G
ReducedFees
Option G
Reduced
Rounds +Fees
Option G
TOTAL ROUNDS 75,700 63,100 75,700 63,100
ANNUAL ROUNDS REVENUE $2,680,949 $2,221,879 $2,487,511 $2,062,380
AVERAGE GREENFEE PER ROUND $35.42 $35.21 $32.86 $32.68
Revenues FY2017
Projected
FY2017
Projected
FY2017
Projected
FY2017
Projected
Total Golf Course Revenues $3,452,900 $2,865,400 $3,259,500 $2,705,900
Concessions
Total fromF & B Concession $91,800 $81,100 $91,800 $81,100
Total FromPro Shop Concession $30,700 $25,600 $30,700 $25,600
Total Gross to City $3,575,400 $2,972,100 $3,382,000 $2,812,600
Expenses
Total CityOperating Expenses 2,146,000 2,088,800 2,143,300 2,086,600
Net Income From Operations (Loss)$1,429,400 $883,300 $1,238,700 $726,000
Total Income (Incl. Non-operating)$1,454,800 $908,700 $1,264,100 $751,400
Total Debt/OtherCharges $1,092,100 $1,046,200 $1,072,800 $1,030,200
Net Income or (Loss)$362,700 ($137,500)$191,300 ($278,800)
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –50
Option G SensitivitySpreadsheets
Palo Alto Golf CourseRevenue / Expense -OptionG(ReducedRounds Sensitivity)
FY2011
Actual
FY2012
Projected
FY2013
Projected
FY2014
Projected
FY2015
Projected
FY2016
Projected
FY2017
Projected
FY2018
Projected
FY2019
Projected
FY2020
Projected
FY2021
Projected
Total Rounds 66,740 64,700 47,900 16,000 53,150 58,100 63,100 67,900 67,900 67,900 67,900
Golf Course Revenues
Green Fees (Incl. Cards) $2,016,537 $1,960,100 $1,445,100 $544,300 $1,810,100 $2,013,600 $2,221,900 $2,424,700 $2,448,900 $2,473,400 $2,498,200
Cart Fees 302,799 293,500 173,900 72,600 243,600 268,900 295,000 320,600 323,800 327,000 330,300
Driving Range 343,911 333,400 197,500 82,400 276,600 305,400 335,000 364,100 367,700 371,400 375,100
Tournament /League Fees 2,196 2,100 1,600 500 1,700 1,900 2,100 2,200 2,200 2,200 2,200
Other 11,813 11,500 6,800 2,800 9,400 10,300 11,400 12,300 12,500 12,500 12,800
Total Golf Course Revenues $2,677,256 $2,600,600 $1,824,900 $702,600 $2,341,400 $2,600,100 $2,865,400 $3,123,900 $3,155,100 $3,186,500 $3,218,600
ConcessionPayments
FoodandBeverage Concession
Variable Portion $55,076 $53,400 $31,600 $13,200 $44,300 $48,900 $53,700 $58,300 $58,900 $59,500 $60,100
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 &B Concession $80,996 $79,300 $58,000 $39,600 $71,200 $75,800 $81,100 $85,700 $86,800 $87,400 $88,600
ProShop Lease
Merchandise (4%) $26,536 $25,700 $15,200 $6,400 $21,100 $23,100 $25,600 $27,500 $28,100 $28,100 $28,600
Total FromProShop Concession $26,536 $25,700 $15,200 $6,400 $21,100 $23,100 $25,600 $27,500 $28,100 $28,100 $28,600
Total Gross toCity $2,784,788 $2,705,600 $1,898,100 $748,600 $2,433,700 $2,699,000 $2,972,100 $3,237,100 $3,270,000 $3,302,000 $3,335,800
OperatingExpenses
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 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500
Range Fees 130,152 126,700 75,100 31,300 105,100 116,100 127,300 138,400 139,700 141,100 142,500
Cart Fees 117,529 117,400 69,600 29,000 97,400 107,600 118,000 128,200 129,500 130,800 132,100
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 25,500 9,800 32,800 36,400 40,100 43,700 44,200 44,600 45,100
Contract Maintenance 475,000 750,000 562,500 206,300 825,000 837,400 850,000 862,800 875,700 888,800 902,100
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 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500
Supplies and Materials 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 –51
Palo Alto Golf CourseRevenue / Expense -OptionG(ReducedRounds Sensitivity)
FY2011
Actual
FY2012
Projected
FY2013
Projected
FY2014
Projected
FY2015
Projected
FY2016
Projected
FY2017
Projected
FY2018
Projected
FY2019
Projected
FY2020
Projected
FY2021
Projected
WaterExpense 361,870 246,000 250,900 133,000 183,000 188,500 192,300 201,000 210,000 219,500 229,400
Other DirectCharges (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 $1,994,800 $1,575,100 $759,400 $1,995,900 $2,036,000 $2,088,800 $2,146,600 $2,183,300 $2,221,400 $2,260,600
Net IncomeFromOperations (Loss)$828,703 $710,800 $323,000 ($10,800)$437,800 $663,000 $883,300 $1,090,500 $1,086,700 $1,080,600 $1,075,200
Non-operating
Incomefrom Sale ofProperty 35,230
D/SIncome $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 Income(Incl.Non-operating)$863,933 $740,700 $348,700 $14,900 $463,500 $688,800 $908,700 $1,116,400 $1,112,600 $1,080,600 $1,075,200
DebtService $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0
PaymenttoGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0
NewDebtService $0 $0 $0 $0 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300
Operating& Capital Reserve $0 $0 $0 $0 $181,000 $201,400 $222,200 $242,500 $244,900 $247,300 $249,800
CostPlan 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 $1,007,200 $1,031,600 $1,046,200 $1,077,100 $1,079,900 $652,700 $656,800
Net Incomeor (Loss)$168,090 $104,200 ($123,500)($459,400)($543,700)($342,800)($137,500)$39,300 $32,700 $427,900 $418,400
NOTE:OptionG would likelyinclude additional revenue fromsoccerfieldsofapproximately$78,000per field peryear ($234,000 for 3fields).
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –52
Palo Alto Golf CourseRevenue / Expense -OptionG(ReducedFeesSensitivity)
FY2011
Actual
FY2012
Projected
FY2013
Projected
FY2014
Projected
FY2015
Projected
FY2016
Projected
FY2017
Projected
FY2018
Projected
FY2019
Projected
FY2020
Projected
FY2021
Projected
Total Rounds 66,740 64,700 47,900 16,000 67,900 71,800 75,700 75,700 75,700 75,700 75,700
Golf Course Revenues
Green Fees (Incl. Cards) $2,016,537 $1,960,100 $1,445,100 $503,800 $2,172,600 $2,329,500 $2,487,500 $2,512,400 $2,537,500 $2,562,900 $2,588,500
Cart Fees 302,799 293,500 173,900 72,600 311,100 332,300 353,900 357,400 361,000 364,600 368,200
Driving Range 343,911 333,400 197,500 82,400 353,400 377,400 401,900 405,900 410,000 414,100 418,200
Tournament /League Fees 2,196 2,100 1,600 500 2,200 2,400 2,500 2,500 2,500 2,500 2,500
Other 11,813 11,500 6,800 2,800 12,000 12,700 13,700 13,700 13,900 13,900 14,200
Total Golf Course Revenues $2,677,256 $2,600,600 $1,824,900 $662,100 $2,851,300 $3,054,300 $3,259,500 $3,291,900 $3,324,900 $3,358,000 $3,391,600
ConcessionPayments
FoodandBeverage Concession
Variable Portion $55,076 $53,400 $31,600 $13,200 $56,600 $60,400 $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 &B Concession $80,996 $79,300 $58,000 $39,600 $83,500 $87,300 $91,800 $92,400 $93,600 $94,200 $95,500
ProShop Lease
Merchandise (4%) $26,536 $25,700 $15,200 $6,400 $27,000 $28,500 $30,700 $30,700 $31,300 $31,300 $31,900
Total FromProShop Concession $26,536 $25,700 $15,200 $6,400 $27,000 $28,500 $30,700 $30,700 $31,300 $31,300 $31,900
Total Gross toCity $2,784,788 $2,705,600 $1,898,100 $708,100 $2,961,800 $3,170,100 $3,382,000 $3,415,000 $3,449,800 $3,483,500 $3,519,000
OperatingExpenses
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 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500
Range Fees 130,152 126,700 75,100 31,300 134,300 143,400 152,700 154,200 155,800 157,400 158,900
Cart Fees 117,529 117,400 69,600 29,000 124,400 132,900 141,600 143,000 144,400 145,800 147,300
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 25,500 9,300 39,900 42,800 45,600 46,100 46,500 47,000 47,500
Contract Maintenance 475,000 750,000 562,500 206,300 825,000 837,400 850,000 862,800 875,700 888,800 902,100
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 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500
Supplies and Materials 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 –53
Palo Alto Golf CourseRevenue / Expense -OptionG(ReducedFeesSensitivity)
FY2011
Actual
FY2012
Projected
FY2013
Projected
FY2014
Projected
FY2015
Projected
FY2016
Projected
FY2017
Projected
FY2018
Projected
FY2019
Projected
FY2020
Projected
FY2021
Projected
WaterExpense 361,870 246,000 250,900 133,000 183,000 188,500 192,300 201,000 210,000 219,500 229,400
Other DirectCharges (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 $1,994,800 $1,575,100 $758,900 $2,059,200 $2,095,000 $2,143,300 $2,179,600 $2,216,600 $2,255,100 $2,294,600
Net IncomeFromOperations (Loss)$828,703 $710,800 $323,000 ($50,800)$902,600 $1,075,100 $1,238,700 $1,235,400 $1,233,200 $1,228,400 $1,224,400
Non-operating
Incomefrom Sale ofProperty 35,230
D/SIncome $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 Income(Incl.Non-operating)$863,933 $740,700 $348,700 ($25,100)$928,300 $1,100,900 $1,264,100 $1,261,300 $1,259,100 $1,228,400 $1,224,400
DebtService $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0
PaymenttoGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0
NewDebtService $0 $0 $0 $0 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300
Operating& Capital Reserve $0 $0 $0 $0 $217,300 $233,000 $248,800 $251,200 $253,800 $256,300 $258,900
CostPlan 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 $1,043,500 $1,063,200 $1,072,800 $1,085,800 $1,088,800 $661,700 $665,900
Net Incomeor (Loss)$168,090 $104,200 ($123,500)($499,400)($115,200)$37,700 $191,300 $175,500 $170,300 $566,700 $558,500
NOTE:OptionG would likelyinclude additional revenue fromsoccerfieldsestimated byCitytobe approximately$78,000 perfieldper year ($234,000 for 3fields).
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –54
Palo Alto Golf CourseRevenue / Expense -OptionG(ReducedRounds +Fees Sensitivity)
FY2011
Actual
FY2012
Projected
FY2013
Projected
FY2014
Projected
FY2015
Projected
FY2016
Projected
FY2017
Projected
FY2018
Projected
FY2019
Projected
FY2020
Projected
FY2021
Projected
Total Rounds 66,740 64,700 47,900 16,000 53,150 58,100 63,100 67,900 67,900 67,900 67,900
Golf Course Revenues
Green Fees (Incl. Cards) $2,016,537 $1,960,100 $1,445,100 $503,800 $1,680,700 $1,869,300 $2,062,400 $2,250,400 $2,272,900 $2,295,600 $2,318,600
Cart Fees 302,799 293,500 173,900 72,600 243,600 268,900 295,000 320,600 323,800 327,000 330,300
Driving Range 343,911 333,400 197,500 82,400 276,600 305,400 335,000 364,100 367,700 371,400 375,100
Tournament /League Fees 2,196 2,100 1,600 500 1,700 1,900 2,100 2,200 2,200 2,200 2,200
Other 11,813 11,500 6,800 2,800 9,400 10,300 11,400 12,300 12,500 12,500 12,800
Total Golf Course Revenues $2,677,256 $2,600,600 $1,824,900 $662,100 $2,212,000 $2,455,800 $2,705,900 $2,949,600 $2,979,100 $3,008,700 $3,039,000
ConcessionPayments
FoodandBeverage Concession
Variable Portion $55,076 $53,400 $31,600 $13,200 $44,300 $48,900 $53,700 $58,300 $58,900 $59,500 $60,100
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 &B Concession $80,996 $79,300 $58,000 $39,600 $71,200 $75,800 $81,100 $85,700 $86,800 $87,400 $88,600
ProShop Lease
Merchandise (4%) $26,536 $25,700 $15,200 $6,400 $21,100 $23,100 $25,600 $27,500 $28,100 $28,100 $28,600
Total FromProShop Concession $26,536 $25,700 $15,200 $6,400 $21,100 $23,100 $25,600 $27,500 $28,100 $28,100 $28,600
Total Gross toCity $2,784,788 $2,705,600 $1,898,100 $708,100 $2,304,300 $2,554,700 $2,812,600 $3,062,800 $3,094,000 $3,124,200 $3,156,200
OperatingExpenses
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 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500
Range Fees 130,152 126,700 75,100 31,300 105,100 116,100 127,300 138,400 139,700 141,100 142,500
Cart Fees 117,529 117,400 69,600 29,000 97,400 107,600 118,000 128,200 129,500 130,800 132,100
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 25,500 9,300 31,000 34,400 37,900 41,300 41,700 42,100 42,500
Contract Maintenance 475,000 750,000 562,500 206,300 825,000 837,400 850,000 862,800 875,700 888,800 902,100
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 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500
Supplies and Materials 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 –55
Palo Alto Golf CourseRevenue / Expense -OptionG(ReducedRounds +Fees Sensitivity)
FY2011
Actual
FY2012
Projected
FY2013
Projected
FY2014
Projected
FY2015
Projected
FY2016
Projected
FY2017
Projected
FY2018
Projected
FY2019
Projected
FY2020
Projected
FY2021
Projected
WaterExpense 361,870 246,000 250,900 133,000 183,000 188,500 192,300 201,000 210,000 219,500 229,400
Other DirectCharges (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 $1,994,800 $1,575,100 $758,900 $1,994,100 $2,034,000 $2,086,600 $2,144,200 $2,180,800 $2,218,900 $2,258,000
Net IncomeFromOperations (Loss)$828,703 $710,800 $323,000 ($50,800)$310,200 $520,700 $726,000 $918,600 $913,200 $905,300 $898,200
Non-operating
Incomefrom Sale ofProperty 35,230
D/SIncome $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 Income(Incl.Non-operating)$863,933 $740,700 $348,700 ($25,100)$335,900 $546,500 $751,400 $944,500 $939,100 $905,300 $898,200
DebtService $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0
PaymenttoGeneral Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0
NewDebtService $0 $0 $0 $0 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300
Operating& Capital Reserve $0 $0 $0 $0 $168,100 $186,900 $206,200 $225,000 $227,300 $229,600 $231,900
CostPlan 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 $994,300 $1,017,100 $1,030,200 $1,059,600 $1,062,300 $635,000 $638,900
Net Incomeor (Loss)$168,090 $104,200 ($123,500)($499,400)($658,400)($470,600)($278,800)($115,100)($123,200)$270,300 $259,300
NOTE:OptionG would likelyinclude additional revenue fromsoccerfieldsestimated byCityatapproximately$78,000per fieldper year ($234,000 for 3fields).
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –56
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 –Thedesign legacyof 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.
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –57
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
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 –58
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 –59
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 –60
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 –61
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 –62
“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 –63
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 –64
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 –65
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 –66
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 –67
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 –68
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 –69
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 –70
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 –71
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)$72,800(28%x$260,000)
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 $79,645/ annual
Option D
Totalirrigatedturffollowing reconfiguration: 92 acres
Water usereduction based on newirrigatedacreage: 32%
Approximate areaof reconfigured coursewith newirrigation system:40acres
Percentageof irrigated Area with NewIrrigation: 43%
Water usereduction of newusage basedon efficiencies of newsystem area: 4.3%
(10%efficiencyx43%=4.3%)
Water efficiencyof newusagegained duetofewer leaks/breaks: 2%(5%efficiencyx
43%= 2%)
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –72
Power efficiencyrealized with better watering times/duration:+10%
Conclusions
ReducedWaterCostEst.(effluent)$-0-
ReducedWaterCostEst.(potable)$83,200(32%x$260,000)
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 $92,858/ annual
Option F
Totalirrigatedturffollowing reconfiguration: 91.5acres
Water usereduction based on newirrigatedacreage: 32%
Approximate areaof reconfigured coursewith newirrigation system:58acres
Percentageof irrigated Area with NewIrrigation: 63%
Water usereduction of newusage basedon efficiencies of newsystem area: 6%
(10%efficiencyx63%=6.3%)
Water efficiencyof newusagegained duetofewer leaks/breaks: 3%(5%efficiencyx
63%= 3%)
Power efficiencyrealized with better watering times/duration:+12.5%
Conclusions
ReducedWaterCostEst.(effluent)$- 0-
ReducedWaterCostEst.(potable)$83,200(32%x$260,000)
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 $96,911/ annual
OptionG
Totalirrigatedturffollowing reconfiguration: 92acres
Water usereduction based on newirrigatedacreage: 32%
Approximate areaof reconfigured coursewith newirrigation system:92acres
Percentageof irrigated Area with NewIrrigation: 100%
Water usereduction of newusage basedon efficiencies of newsystem area: 10%
(10%efficiencyx100%= 10%)
Water efficiencyof newusagegained duetofewer leaks/breaks: 5%(5%efficiencyx
100%= 5%)
Power efficiencyrealized with better watering times/duration:+15%
Conclusions
ReducedWaterCostEst.(effluent)$- 0-
ReducedWaterCostEst.(potable)$83,200(32%x$260,000)
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 $109,840/ annual
National GolfFoundation Consulting,Inc. – Cityof Palo AltoReport –73
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 –74
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 –75
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 –76
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
FINANCE COMMITTEE
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Regular Meeting
Tuesday, March 5, 2013
Five-year Contract Extension for the Palo Alto Golf Course Management
Services Agreement with Brad Lozares (Lozares); Amendment to Golf Course
Pro Shop Lease with Lozares to Reduce the Term of the Lease From Ten
Years to Five Years; and Five-Year Contract Extension for the Golf Course
Maintenance Services Contract with Valley Crest Golf.
Daren Anderson, Division Manager for Open Space and Golf stated there
were four separate, but related contracts at the golf course; 1) Golf course
maintenance services with Valley Crest Golf, which expires in April 30, 2013, 2)
Golf course management services with Brad Lozares, expires April 30, 2013, 3)
Golf course pro shop lease, Brad Lozares is the tenant. This also expires on April
30, 2013, but Lozares had an option for a ten year extension which would until
2023 (through negotiations, Lozares had agreed to reduce the term to five years
pending this contract extension), and 4) Food and Beverage Services lease with
R&T Restaurant. This lease expires in 2018. Staff carefully considered the pros
and cons of conducting a Request for Proposal for the management and
maintenance services. The issue was vetted with the City Manager’s Office, with
the Administrative Services Division, and with the City Attorney’s Office. The
compelling reasons for extending the existing contracts rather than conducting an
RFP were; 1) The City was on the cusp of a major reconfiguration of the golf
course, 2) The timing of the reconfiguration had not been finalized, 3) The new
golf course performance was still undetermined in terms of number of rounds of
golf and revenue generation; which would make it difficult to evaluate submittals
to determine which is most favorable to the City, 4) The food and beverage
services lease was set to expire in April 2018. Food and beverage service is often
a central element of a golf course operation. If all the contracts were to expire on
April 2018, it would be more attractive to contractors bidding on an RFP that
included all the components of the golf course operation, 5) Lozares would
exercise his option for a ten-year extension on his lease of the pro shop. It would
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be exceedingly difficult to go out to bid for golf management services, because it
would require either a sublease out of the pro shop from Lozares, or operating
out of a mobile trailer, and 6) The independent consultant, The National Golf
Foundation, hired to perform the Golf Course Financial Pro Forma, as well as an
independent golf course financial consultant Richard Thorman, and Golf Course
Architect Forrest Richardson all agreed that because of the aforementioned
reasons the City should wait until the renovation is complete, and the improved
golf course has been up and running for a year, before considering a substantial
change in maintenance and operating structure. These consultants also
recommended extending the golf maintenance contract, citing how critical would
be to have the contracted superintendent involved and present for the
construction of the new course. If these contracts were extended for five years as
proposed, the Staff recommendation is to conduct a Request for Proposal (RFP) in
April 2018, when all four golf course contracts would be set to expire. This would
be the opportune time to conduct an RFP. The golf course reconfiguration would
have been completed likely giving at least two years to see how many rounds and
how much revenue the new course would generate. Having all the contracts
expire would likely attract more interest in bidding on an RFP because it could
include the entire golf course operation. The advantage of having one contractor
running the entire golf course operation is there would be a unified vision and
goal that was focused on the entire experience at the golf course. In negotiating
with both Brad Lozares and Valley Crest, Staff broke the terms of contract into
phases associated with the golf course reconfiguration; Phase I) Pre Construction
would take place from May 1, 2013 to the day construction starts, Phase II) During
Construction (anticipated to be 1 year), and Phase III) Post construction through
April 30, 2018. The City negotiating team negotiated a 5 year extension with
Lozares who agreed to reduce the term of his pro shop lease down from ten years
to five. During Phase I: Lozares would continue to provide the same services
previously provided and receive the same level of compensation, a fixed
management fee of $345,333 per year, 40 percent of the Driving Range revenue,
and 38 percent of the golf cart rental revenue. One hundred percent of the green
fees would still go to the City; and per the terms of his pro shop lease Lozares
pays $2,000 per month or 4 percent of the gross revenue from pro shop
merchandise sales, whichever is higher. The Impacts of Phase I include Fiscal Year
(FY) 2012 actuals, Lozares’s total compensation fixed fee, and the variable fees of
carts and range were $600,949. The budgeted amount for FY 13 is $641,533.
During Phase II: Lozares’ compensations changes significantly. The fixed fee
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Finance Committee Regular Meeting
Draft Excerpt 03-05-13, Item 2
would drop to $30,500 per year. The Driving Range would be the main source of
revenue because it will not close during the renovation. There will be no green
fee or cart revenue because the course will be closed. The percentage shifts on
the split on the Range to 15 percent for the City and 85 percent for Lozares.
Lozares would cover the full costs for maintaining and staffing the Range; and
spend approximately $90,000 per year to operate the driving range. This revenue
split will also help serve as incentive for Lozares to help encourage range activity.
The pro shop lease terms would change to $1,500 per month or four percent; and
during the slow months of November, December and January. Lozares would only
be required to pay four percent of gross revenue due to reduced visitation to the
course. Impacts of Phase II include the course closure leaving the driving range as
the only revenue source. Projections for revenue in FY 2014 were $82,400 (25
percent of FY 2012’s range revenue). If the revenue generated 35 percent of what
was earned in FY 2012, Lozares would make $105,789 and the City would make 15
percent or $18,668. For Phase III (post construction through April 2018) the City’s
negotiating team’s goal was to create an agreement to cover operational
expenses, generate a surplus, and unify the interests of the Contractor with that
of the City. The key element was to reduce the fixed management fee (the
money the contractor received regardless of how well business was going); and
include a small percentage of the green fees with a corresponding reduction in
the other variable compensation (cart rentals and driving range revenue)
including; 1) The fixed management fee was $300,000 (about $45,000 less than
the previous contract), 2) The Range revenue split would change to 80 percent
City; 20 percent for Lozares, 3) Cart rental 80 percent City; 20 percent for Lozares,
4) Green Fees would be 95 percent to the City; 5 percent for Lozares, 5) Pro Shop
rent was $3,000 per month or 5 percent of gross revenue of pro shop
merchandise whichever is greater. This would be a $1,000 per month increase
over the previous lease agreement. It was intended to reflect the increase in
value of the facility due to the City’s investment in the reconfigured course, 6)
Credit card fees will be split between the City and Lozares according to the
percentage split of all revenue sources, and 7) On site club rentals and pull cart
revenues will be considered part of the merchandise revenue from pro shop.
Impacts from Lozares Agreement included, compared to the current contract
(Phase I contract), an estimated savings to the City of at least $50,000 annually.
The overall compensation to Lozares in FY 2012 was $600,949. Lozares’s
estimated overall compensation in FY 2015 is $544,975 and in FY16 $562,470.
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Finance Committee Regular Meeting
Draft Excerpt 03-05-13, Item 2
Vice Mayor Shepherd pointed out that the proposal would decrease Lozares’s
income from $641,000 to $544,000 in 2015. She asked what his reaction to
that was.
Mr. Anderson said it was a tough negotiation. There were times when he was
ready to say, ‘we won’t bid on phase III, get someone else’. But the value
was that now if he over performs he had a chance to get extra money. It put
the risk and burden on him.
Vice Mayor Shepherd asked if there had been consideration that the contract
had been off balance to this point previously.
Mr. Anderson agreed the contract was generous and agreed that the recent
negotiation was better focused.
Lalo Perez, Director of Administrative Services said part of the reason that
Staff pursued this option, was prior to contracting out the maintenance of
the golf course, the compensation to Mr. Lozares maintained, and he had no
reductions, while the City made reductions and staffing and operating
reductions.
Council Member Schmid said this showed that Lozares wasn’t making a lot of
money, but still a substantial amount. He asked if Staff had considered what
action could be taken if Mr. Lozares simply cut back on services.
Mr. Anderson said they did. Lozares has been in his position for 31 years.
His reputation is top notch in the golf course community. He insisted the
contract would only be successful if he could still operate with the quality he
expects.
Council Member Schmid confirmed that Staff was comfortable that it would
still be quality experience.
Mr. Perez said Lozares provided the Staff at the Club House that checked
guests in, registered them to play, provided lessons, and the coins for the
range, but they were not the Staff on the golf course itself.
Council Member Schmid asked if his Staff picked up the balls on the range.
Mr. Perez replied yes, the Lozares Staff provided that service. He needed the
balls to be picked up otherwise he wouldn’t have buckets of balls available.
Council Member Schmid asked if there were a problem on the course who
would manage it.
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Finance Committee Regular Meeting
Draft Excerpt 03-05-13, Item 2
Mr. Anderson replied the Lozares team would. They also provided a
marshaling service. They follow the golfers and keep people on track. The
other, separate service is the maintenance, and they do all the things from
keeping the sand in the bunkers raked and not too hard.
Council Member Schmid asked if we would see the marshals disappearing.
Mr. Anderson answered no.
Chair Burt said that the marshals were volunteers. They did not receive out
of pocket pay.
Council Member Berman said he liked the idea of it being more incentive
based. That will give Lozares reason to make it a high quality golf course.
He said that credit card fees will be split in phase III between the City and
Lozares. He asked if the City was covering all of that now.
Mr. Anderson said the arrangement under the existing contract the City split
the fees for cart rental but not the driving range. Phase 3 incorporated all of
it.
Council Member Berman said he thought this was a great idea to get
everything aligned for 2018.
Chair Burt clarified that Lozares did not have responsibility for the quality of
the course. But there was an incentive with the new contract for him to
participate in the driving of play, the rounds, and the management part of
the front end.
Council Member Berman said somewhere in the report it said that during this
down year that he would set up tournaments, once the course was back on
line.
Chair Burt asked if they also would receive separate revenue from lessons
that is 100 percent theirs.
Mr. Anderson said yes. There was one other revenue stream during Phase II,
the Pro-shop, which would still be open, although it would be limited
capacity due to the construction on the course.
Chair Burt asked if lessons would still be offered during the down time.
Mr. Anderson said yes.
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Finance Committee Regular Meeting
Draft Excerpt 03-05-13, Item 2
Chair Burt asked to confirm that in the capital plan there was no plan to redo
the driving range.
Mr. Anderson said that is correct.
Chair Burt said they had to consider the future of the building as well as the
driving range which could potentially come out of the operating revenue.
Mr. Perez said Staff was discussing a reserve style process to accommodate
needs such as replacement of the range.
Mr. Anderson said Lozares was looking at making some improvements to the
range, such as adding bays and improvements to the teaching center, since
they have a vested interest. However, they wouldn’t do that unless they had
an extended contract that would allow them to recoup their investment.
Chair Burt asked if the range was perceived to be the best profit center.
Mr. Anderson said it was highly profitable, but not compared to the green
fees.
Chair Burt said not revenue, but profit.
Mr. Anderson said yes. The driving range made approximately $30,000 per
bay, per year.
Chair Burt said it was his understanding from other courses that often the
driving range was the largest net producer. He asked what percent of
rounds used carts.
Mr. Anderson said he didn’t have that information at the time.
Chair Burt said they had a moderate projection of an increase on 2013 over
2012 revenues. He asked if that seemed to be the current trend.
Mr. Anderson said those projections may not be on track. Staff had some
challenges with the golf course revenue. The unpredictability of when this
golf course reconfiguration was going to happen has scared away
tournaments and revenue has dropped.
Chair Burt said this as in 2013, which ended in June. That preceded the
earliest possible construction. He asked if FY 2013 was already being
affected.
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Finance Committee Regular Meeting
Draft Excerpt 03-05-13, Item 2
Rob DeGeus, Recreation Manager said there had been a decrease in play for
a number of reasons. One reason was that it was public knowledge that
construction would start. There was a very bad month last quarter, which
was a big golf month. There was a mosquito epidemic, and the geese
continued to be a challenge. They were down 10 percent from last year.
Mr. Anderson discussed the golf course maintenance contract. He said Staff
met numerous times with Valley Crest to negotiate the terms of a five year
extension. Phase I was the continuation of the same level of service as under the
previous contract and the annual fee of $750,000 was the same. In Phase II,
though the golf course would be closed for reconfiguration, Valley Crest would
continue maintaining the putting green and the associated irrigation, the driving
range turf areas, and the landscaping around the parking lot and pro shop. The
Valley Crest Golf Superintendant will also be on site daily to monitor and serve as
a consultant on the reconfiguration project. He explained that in Phase II Staff
estimated there would be seven months where Valley Crest would have the
aforementioned duties. The rate for those months would be $18,158 per month.
At the end of the seven months the construction contractor would begin to turn
over completed sections of established turf for Valley Crest to maintain, mow,
and grow-in. The cost for the five month grow-in would be $415,000. Almost half
this sum was materials. The newly established turf required a lot of additives and
fertilizers to get the turf healthy and fully established for play. The total
anticipated costs for Phase II is $542,106. In Phase III the negotiating team’s goal
was to control maintenance costs while making improvements in the level of
service to reflect the investment in the new and improved course. The levels of
service changes were designed to address the most frequent complaints at the
golf course. The most frequent complaint as the presence of Canada Geese and
their feces. The most effective technique has been the use of trained herding
dogs. The City hired a company to come for an hour every day. The cost has been
approximately $20k per year, and while it has helped to some degree, one hour a
day wasn’t sufficient to fully address the problem. In Phase III Valley Crest will
have their own trained dog on site. Another example of increased level of service
would be the decreased weed threshold levels in order to keep the new course
weed free. The annual Phase III fee would be $796,262 for the first 18 months,
and then it would increase by Consumer Price Index, which is approximately 1.34
percent. The total costs for Phase III (anticipated to be three years) would be
DRAFT EXCERPT
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Finance Committee Regular Meeting
Draft Excerpt 03-05-13, Item 2
$2,410,197. The total cost for all three phases for Valley Crest plus 10 percent
contingency would be $4,072,533.
Council Member Schmid asked if Staff was asking the Committee to sign off
on the contracts. There was a year in there when the revenues go close to
zero. And the losses were the first part of the 9 month period with a loss of
$460,000 and three months of the next year $23,000 he asked if that
amount was covered.
Mr. Perez said it was not. There were two concerns: one was the loss and
the second was concerning potential project delays. If there were delays to
this project the incremental increase would be significant. This was
considered an infrastructure project with the goal of paying for itself.
However, if the income was not coming in then the City would have to make
a determination on how to cover that.
Council Member Schmid asked if certificates of participation were being
issued prior work being started.
Mr. Perez said that would probably be the case.
Council Member Schmid confirmed this project would not be drawing on the
general fund at all.
Mr. Perez answered that was the intent. Staff would need to look at all the
alternatives and get a recommendation to Council.
Council Member Schmid said there will be big upfront payments both for
contractor and the ongoing payments.
Mr. Perez confirmed that was correct. Staff had done a great job trying to
maintain this contract to a reasonable level. Lozares had done a great job
over many years and had a great reputation.
Council Member Schmid said the issue was that Phase II was from April
2014 to April 2015 as it ended Phase III would start. So all of a sudden
there would be full costs, with revenues immediately at full revenues. It
seems that the golf course would need to be resold to the community and
ramped up.
Mr. Perez answered that Staff worked to add a sensitivity factor into the
numbers. Those factors were imbedded. Discussions with the consultant
indicated that the novelty of a new reconfigured golf course would cause
DRAFT EXCERPT
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Finance Committee Regular Meeting
Draft Excerpt 03-05-13, Item 2
people to want to come play.
Council Member Schmid said Rob DeGeus made the point that the
anticipation of construction was causing a 10 percent decline.
Mr. Perez said yes the financial concern was through 2018 because of the
original debt that would expire in 2018. There would not be relief until
2018, in the neighborhood of close to $400,000. So there was certainly a
period of concern.
Joe Saccio, Assistant Director of Administrative Services said when Staff
talked with Lozares about the contract the topic of ramping up became a
very important point. It was great keeping them there because they have
contacts in the community; they are respected by golfers in the community.
Also they intend to do a marketing campaign just before the course opens
again to attract everyone back. So that was a concern during the discussion,
and hopefully he ramps up slowly as well based on business. Staff definitely
included that point in the discussion.
Council Member Schmid discussed the potential for additional soccer revenue
at $230,000.
Mr. DeGeus said that the National Golf Foundation Report referenced the
10.5 acres that the City carved out of the golf course property. The City
would have the potential to build the athletic fields at some point in the
future. There is not funding for that at this time and there is no design for it.
But if was built, it could generate $200,000 in revenue to help offset the
costs of maintaining those athletic fields.
Council Member Schmid asked if soccer players pay substantial amounts.
Mr. DeGeus answered that they play a fee to use the fields. Any time there
was a group of 25 people or more they were required to get a permit to
participate.
Council Member Schmid said at the Baylands the City was giving park land
at no cost to the water treatment plant, yet the soccer users would be
paying. It seems inequitable to treat two different groups differently.
Chair Burt said the City did not charge park users out there.
Mr. DeGeus said they charged organized sports groups only.
Council Member Schmid said there might be a way of getting some rent from
DRAFT EXCERPT
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Finance Committee Regular Meeting
Draft Excerpt 03-05-13, Item 2
other users of the Baylands Park, and sharing the costs.
Chair Burt said he wanted to focus on the maintenance costs in Phase III. He
said they switched from Valley Crest from previously having in-house staff.
He asked if Staff found the quality of maintenance comparable, better or
worse to what we had before.
Mr. Anderson said it was better, largely because they could afford to have
more Staff.
Chair Burt said when the National Golf Foundation had projected a lowered
operating cost, as well as higher number of rounds and higher green fees.
The profit was three factors, and the lower costs were attributable to the
fewer acres to be managed, 8 or so acres that go to flood control, the 10 or
so acres that were for playing fields, and an additional 30 plus acres that
would move from turf to natural vegetation that would not only require
lower expenses in water, pesticide, and fertilizer, but he thought the labor
would be lower. He was expecting that as a result they would see the
maintenance costs go down. The Lozares contract looked good, counter to
his assumptions.
Mr. Anderson agreed. There as a turf reduction; there will be more
naturalized areas that will require less water. That is one of the big savings
that isn’t evident the contract itself. But there will be water savings from 35
acres that will no longer be manicured turf. So while there will be less
maintenance, the costs increase rather than decrease because the higher
level of service. The new course will be maintained at a higher level
Chair Burt said this course was going from moderate to low end of public
courses to one that will be a better public course on the peninsula. In some
ways it will rival some of the private courses. That in itself meant that it
must be maintained at a higher quality than in the past. That would mean
that the offset of higher quality maintenance versus quite a lot less, 50 acres
out of 160 something acres, almost 1/3 less acreage that needs active
maintenance of turf and greens. He was surprised that the maintenance
costs go up as a result of those two trade off factors.
Mr. De Geus said one of the challenges was that they don’t have the new
golf course yet. So Valley Crest was contemplating how much it was going to
cost, they were hedging their bet; not really sure what was going to be out
there and what would be involved in the maintenance. The current golf
course, although it was a lot more acres of grass to mow, was very flat, very
straight, and very easy. The new golf course had a lot of undulations and a
lot of natural areas that would require a different type of maintenance and a
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lot of time to maintain. That was a piece that added costs.
Chair Burt asked if Phase III went out to multiple bidders.
Mr. De Geus said it was only negotiated with Valley Crest.
Mr. Perez said this would allow Staff to prepare for the RFP process in 2018.
Staff can take advantage of this experience; and build requirements based
on this commitment. And that the good thing is that the City is not locked
into a long period of time.
Chair Burt asked why they needed three years to have a good sense of how
to go out for an RFP.
Mr. Perez answered that they will align all the services at the same time, so
they can have the comprehensive management of the golf course.
Chair Burt said so there was a negotiation, but it was with a single bidder.
That was always an odd negotiation. It seems to me that they would have
leverage that if they agree to not send this out to multiple bids, that they
might be able to negotiate more favorable maintenance terms. He expressed
concern with the maintenance contract. It was hard to judge based on the
limited information that the Finance Committee Members had. They had two
options: send it out for multiple bids for this Phase III, or have better terms
for Phase III based on a negotiated single bid.
Mr. De Geus said he recalled it a little differently. They anticipated that the
maintenance costs would remain the same and actually rise slightly. He said
that in 2015 there would be maintenance costs of $825,000, then it would
go to $837,000, and then $862,000.
Chair Burt said they anticipated higher maintenance costs in the contract.
Mr. De Geus agreed.
Chair Burt said they could choose to go out for multiple bids.
Mr. De Geus said there is an advantage to having them here. They want
someone who knew the golf course, the irrigation system, someone who has
helped Staff inspect and oversee the construction of the course.
Chair Burt said that they have resulted in a considerable cost savings to the
City which Staff said would be higher quality maintenance. He said they had
two options: Accept the maintenance agreement as it was, or ask Staff to go
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back and attempt to negotiate a better year one through three of Phase III
maintenance contact terms in exchange for granting a three year Phase III
contract.
Mr. Anderson said they were approximately $30,000 below the projected FY
2015 contract costs. They projected $825,000 for contract maintenance
services, come in at $796,000.
Council Member Berman asked if there was any time table backstop for
going back to them for negotiations.
Mr. Anderson answered no. Staff negotiated with them just like Lozares.
Chair Burt said Staff didn’t have the leverage of going out for bids. In
negotiations having a competitor mattered.
Mr. Anderson said with both Lozares and Valley Crest Staff discussed the
issue of going out for bids. Lozares was a little more challenging because he
had the Pro Shop lease, but with Valley Crest that specter was out there and
was voiced in the very beginning.
Vice Mayor Shepherd said Phase I is $750,000, which is the standard
contract; and then it went down to $542,000, but a lot of this went into
materials in order to feed the new system, so they actually do have a
course. She was concerned that this was just to get us to 2018 to go out for
the whole sweep of contracts. There would be a period of time with some
fragility, where there might be shifting months. There was a reliability of
being able to work with this contractor. She assumed that Phase II meant
they would have to shift their own workers or lay people off and then bring
them all back. So it was a volatile period. She noticed that there was an
increase of 6 percent over the $750,000, which was not out of the range of
cost of living. And then it went to a .06 percent for some reason, and then
1.3 percent in the last year.
Mr. Anderson answered it was the best deal they could offer.
Vice Mayor Shepherd said she was fine with this, understanding that in 2018
that it would be going out. She hoped that it is a good decision to go out for
all four bids at one time. And it would give Staff some experience so that
when dealing with all four.
Mr. Perez said that they would make it as the preferable option, but they
would not decline somebody from providing specific pieces, if they want to
just bid on the maintenance or just the management. Staff wanted to keep
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all options available
Chair Burt acknowledged that both parties had an interest in not changing to
a different maintenance supplier.
Council Member Schmid said he assumed that the $750,000 included the
$20,000 dog?
Mr. Anderson answered that the $20,000 dog service was picked up by the
City under the current contract. And the Phase III contract will include the
dog service.
Chair Burt asked if there was any interest in reconsidering the maintenance
contract that has been negotiated.
Council Member Berman said there was no down side to that, other than
May 1, 2013 was the beginning of the new contract. The City could ask them
to go back and try again, but they would have to come back pretty soon.
Chair Burt said with the clarifications that it is below the anticipated budget.
MOTION: Vice Mayor Shepherd moved, seconded by Council Member
Schmid to recommend the City Council approve:
1. The proposed five-year contract extension for the Palo Alto Golf Course
management services agreement with Brad Lozares (Lozares), and the
proposed amendment to the existing lease agreement for the Golf
Course Pro Shop with Lozares to reduce the term of the lease from ten
years to five years;
2. Review the proposed five-year contract extension for the Golf Course
maintenance services contract with Valley Crest Golf;
3. Recommend that Council approve, and authorize the City Manager or
his designee to execute, the amendment to the General Services
Agreement for Golf Course management services with Brad Lozares in
the amount of $2,058,073 and the amendment to lease of the Palo
Alto Golf Pro Shop premises with Brad Lozares for a term of 5 years,
beginning May 1, 2013 ending April 30, 2018; and
4. Recommend that Council approve, and authorize the City Manager or
his designee to execute, the amendment to the General Services
Agreement with Valley Crest Golf in the amount of $4,072,533 and for
a term of 5 years, beginning May 1, 2013 ending April 30, 2018.
MOTION PASSED: 4-0