HomeMy WebLinkAbout2000-12-11 City Council (9)TO:
City of Palo Alto
City Manager’s Re
HONORABLE CITY COUNCIL
ATTN:FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT: COMMUNITY SERVICES
DATE:
SUBJECT:
NOVEMBER 20, 2000 CMR: 425:00
APPROVAL OF AN AMENDMENT TO THE 2000-01 MUNICIPAL
FEE SCHEDULE TO AMEND GOLF COURSE SENIOR AND
GOLF COURSE GENERAL FEES
RECOMMENDATION
The Parks and Recreation Commission recommends that Council approve the following
amendments to the 2000-01 Municipal Fee Schedule:
1. Establish senior golf fees as outlined in Attachment A.
2. Establish remaining green fees and ancillary fees as outlined in Attachment A.
3. Revise the effective dates of fee changes to take place on January 1 of each year.
BACKGROUND
Each year, staff evaluates golf course fees and prepares a recommendation that is
consistent with City policy and budgetary goals. Two years ago, when the Golf Fee
Schedule was sent to Council for approval, staff proposed to raise the price of the Senior
Monthly Discount Card from $76 (the interim course rate imposed during golf course
construction) to $175. Council approved a fee of $120 and referred the issue to the soon
to be established Parks and Recreation Commission (PARC) for further study. During
discussion of the Municipal Golf Fee Schedule in June 2000, staff recommended no
change in the Senior Discount Fee pending PARC review. Council voted to reduce this
fee to $85 until the issue could be addressed by the PARC.
BOARD/COMMISSION REVIEW AND RECOMMENDATIONS
On September 26, 2000, the issue of senior golf fees was presented to the PARc. Staff
provided the Commission with background .information that described operating costs
and revenues; Council policy on cost recovery for the golf course; staffs fee-setting
process, which includes comparisons with other nearby public golf courses; and detailed
discussion of special fees that the City presently provides for senior golfers (Attachment
B).
CMR:425:00 Page 1 of 3
At this meeting, staff also asked the Commission to review the proposed 2001 fee
schedule for all users of the golf course. This review of general golf fees was undertaken
because staff was recommending that Palo Alto’s golf fees be adjusted on January 1 of
each year, rather than on July 1, in order to be consistent with other golf courses with
which the City competes. Traditionally, City of Palo Alto golf fees are approved in June
as part of the Municipal Fee Schedule and implemented in July. Other local golf courses
typically adjust their fees shortly after the first of the calendar year, thus allowing them to
have their new fees in place for the entire peak season of each calendar year.
After receiving testimony from four senior golfers, Commissioners discussed the fee-
setting process and asked questions about the level of revenue that is necessary to pay
operating costs, to repay the golf course’s bonded indebtedness and ensure some service
level of capital improvement. There was discussion about staff’s proposal to limit the use
of the Senior Monthly Discount Card to Mondays through Thursdays before 8:30 a.m.
and after 1:00 p.m. The commission supported this limitation but proposed that it be in
effect only during Pacific Daylight Savings, the time of year when tee times are most
difficult to reserve. Staff concurred with this compromise and revised Attachment A
accordingly. With this change, the PARC approved a recommendation that Council
approve the proposed changes to senior golf fees and general golf fees as detailed in
Attachment A.
RESOURCE IMPACT
Senior Golf Fees
Based on past and current golf course usage data, staff projects an increase in Senior
Monthly Discount Card purchases from 53 to 100 cards and a decrease in Senior 10 Play
Discount Cards from 98 to 50. This may result in a total decrease in revenue of $2,490.
However, increasing the amount of available primetime tee times paying full fee will
provide an increase in revenue. It is difficult at this time to predict the likely, offsetting
increase in revenue. Staff will continue to monitor and analyze golf rounds and card
sales data over the next. year, and if necessary, make recommendations for Council to
review.
Other Golf Fees.
The increase in revenue from the adjustment of other golf-related fees is projected to
produce approximately $104,000 in additional revenue for the 2000-01 fiscal year. This
revenue increase has been incorporated into the 2000-01 Golf Division budget as
projected revenues to meet debt service, and operating cost revenue requirements.
POLICY IMPLICATIONS
This recommendation does not represent any change to existing City Policies.
CMR:425:00 Page 2 of 3
ATTACHMENTS
Attachment A:
Attachment B:
Community Services Department/
June 19, 2000 Staff Report to PARC
Golf Services Fee Schedule
Prepared By: Paul Dias, Director of Parks and Golf
DEPARTMENT HEAD:
PAUL THILTGEN
Director, Community Services
CITY MANAGER APPROVAL~.HARRJ~S 0N~~
Assistant City Manager
CMR:425:00 Page 3 of 3
ATTACHMENT B
TO:PARKS AND RECREATION COMMISSION
FROM:PAUL THILTGEN DEPARTMENT: COMMUNITY SERVICES
DATE:JUNE 19, 2000
SUBJECT:GOLF COURSE SENIOR FEES FOR YEAR 2001
GOLF COURSE GENERAL FEES FOR YEAR 2001
REPORT IN BRIEF
This report provides background and analysis for establishing golf course fees for the
calendar year 2001. This report also discusses in detail, Senior Golf Fees as an issue that
the City-Council has forwarded to the Parks and Recreation Commission for review. The
criteria for establishing golf fees continues to be derived from a general policy adopted by
the Council in 1981. This general policy states that (1) the golf course revenues should
cover lease back (bond debt service) and direct operating costs of the golf course; and
(2) fee schedules should be developed annually to carry out that policy, incorporatiag
to the e~tent possible, adjustments for juniors, seniors, and residents, and also
remaining competitive with other golf courses (CMR 272.0). This report recommends
an adjustment in golf fees to increase the revenue to meet cost recovery goals.
Recommendations in this report were presented to and approved by the Golf Course
Advisory Committee.
RECOMMENDATION
Staff requests the Parks .and Recreation Commission to forward to the City Council the
following recommendations for approval:
2.
3.
4.
Establish senior Golf fees for the 2001 calendar year as outlined in Attachment A.
Establish remaining Green Fees and ancillary fees as seen in Attachments A and D.
Reaffirm the City Council’s 1981 policy for establishing golf fees.
Revise fee changes to a calendar year basis.
BACKGROUND
Every year the City evaluates the golf course fees and prepares a recommendation that is
consistent with the general policy (CMR 272.0) adopted by the City Council in 1981.
Two years ago, when the Golf Fee Schedule was sent to the City Council for approval, the
’ proposal was to raise the price of the Senior Monthly Discount card from $76 (interim
Page 1 of 4
ATTACHMENT B
course rate) to $120. After much discussion, the City Council approved staff’s
recommendation, but referred the issue to the Parks and Recreation Commission. This
past year, staff recommended no change in the present Senior Discount Fee pending Parks
and Recreation Commission review. However, a few senior golfers restated their
objections, and the City Council voted to reduce this fee to $85, until the Parks and
Recreation Commission review the issue.
Typically, fee increases have been implemented in July, the beginning of the City’s fiscal
year. However, the delay in the reopening of the golf course has caused our required fee
adjustment to be delayed. This, and the fact that our competition typically changes fees
on, or shortly after the first of each new year, has prompted the proposal to move fee
changes to a calendar year basis.
GOLF FEE SETTING PROCESS
Golf fees are established at a level that pays for all the golf course operating and debt
service obligations. Fees are reviewed annually and based on rates of other courses, using
the factors of course type and condition, weather factors, and other golf revenues (i.e., pro
shop, restaurant, driving ranges, etc. After reviewing this data, staff develops a fee
schedule that generally sets Palo Alto’s fees around the average of other golf courses in the
area.
An appropriate balance of fees with various tee times is necessary to generate the revenue
to meet our financial goals, and prime or non-discounted tee times are critical to
maximizing our revenue needs. Weekday and weekend prime time is from 6:00 a.m. to
1:00 p.m. It is essential that we protect this time to maximize the revenue stream. Tee
times before and after prime time periods are discounted to encourage off peak play, and to
provide opportunities for players looking for bargains. This is common not only to the
golf industry, but other businesses as well (i.e., movie theatres and restaurants - Figure 1).
Control of prime time play has major income implications, since it allows "new
customers" to gain access to the golf course. New customers’ spending patterns
significantly affect revenue, not only for green fees, but also the golf shop, driving range,
and food and beverage operations. Approximately 60 % of golf play is from prime time
play periods, and 72% of green fee revenue generation.
SENIOR DISCOUNT FEES
The Community Services Department/Golf Division has always been sensitive to serving
senior needs. The Senior Men’s Golf Club is given prime time starting times every
Monday between 8:00 a.m. and 10:00 a.m., with substantial discounts for green fees
accorded to r6sident seniors (minimum qualifying age of 62 years of age). Senior women
golfers get the same advantage during the Monday, Wednesday, and Thursday weekly golf
events. The golf shop and restaurant also make specials available on golf carts, and food
and beverage purchases.
Page 2 of 4
ATTACHMENT B
Senior Resident Daily Fee: Resident seniors are offered a discounted daily golf fee, valid
Monday through Friday, with no time restrictions. The average regional daily fee for
senior golfers is $22. Some golf courses offer lower than average senior rates, hut these
rates are tied to special hours of use (Attachment A - Golf Course Fee Survey).
Staff recommends a senior daily fee rate of $21, valid Monday through. Friday. The
proposed fee represents a discount of $7 or 25%from regular proposed daily fee.
Senior resident 10 play discount card: This discount card was initiated in 1999 in an
effort to replace the monthly discount (discussed later in this report), and is available to
senior residents. The card is valid for use anytime Monday through Friday, until ten golf
rounds are utilized. There is no expiration date or other restrictions with this card. The
proposed $185 fee represents a discount of $9.50 per round or 34% off the regular
proposed daily fee.
Staff recommends Senior Resident 10 Play Discount Card rate of $185.
Senior Resident Monthly Discount Card: A monthly resident discount card is available
for resident senior golfers. This card is valid for use Monday through Thursday, anytime
of the day.
Based on the golf fee survey (Attachment B), only two out of ten courses make this
discount fee available to their customers. This particular fee has been eliminated at a
majority of golf facilities because the monthly discount cards strongly impact the course’s
cash flow. For the Commission’s information, a nearby municipal golf course (with a
similar monthly play card) has experienced a substantial loss of revenue from discount
play cardholders filling up the prime tee times. As costs per round have steadily climbed,
golfers pay as little as $7-$9 per round with the discount card. This is not economically
viable, particularly when a tee time slot can be sold for substantially more.
A total of 53 monthly discount cards were sold during FY’ 1999/2000. This represents the
same four to five senior customers purchasing cards on a monthly basis (Attachment C -
Discount Card Sales). This small group plays 764 rounds annually (14 rounds per month/3
rounds per week) at an average of $8.34 per round, or a 68% discount offthe daily fee.
Since Council changed the $120 fee to $85 in July 2000, card sales have doubled
(Attachment C). Staff is projecting a doubling of card sales to 100, causing a subsequent
reduction in the 10-play/S175 discount card. Staff is also projecting monthly Card rounds
of 1,400 @ $6.42 per round (77% discount). To break even with last year’s revenues, the
card would have to cost $117.
Page 3 of 4
ATTACHMENT B
Staff recommends continuing the monthly discount card at a new rate of $90 and the card
be used for specified tee times to minimize potential saturation of prime revenue producing
tee times. This card will be valid Monday through Thursday before 8.’30 and after 1 p.m.
In an effort to accommodate men and women senior club members, the card will also be
valid during organized weekly golf events (i.e., Monday Senior Golf Group; Monday
Women’s 9-Hole Golf Club; Wednesday 9-Hole Women’s Golf Club, and Thursday
Women’s Golf Club.
Other Golf Green Fees: In addition to the Senior Golf Fees, staff will be presenting to
the City Council the full golf course fee schedule, which includes fees not previous
discussed (Attachment A), tournament fees, and ancillary fees developed through the golf
shop for Cart Rentals, Driving Range Fees, .and Club Rentals. (Attachment D). Adoption
of these fees will bring Palo Alto Golf Fees in line with the industry in our area.
RESOURCE IMPACT
Based on past and current data, staff projects the following changes to golf revenues based
on proposed senior golf fees:
An increase in senior discount cards purchases from 53 to 100 cards and a decrease
in Senior 10 play discount cards from 98 to 50. This will result in a decrease of
$2,490 in revenue.
POLICY IMPLICATIONS
This request is in accordance with existing City policy and there are no policy
implications.
ENVIRONMENTAL REVIEW
Not required.
ATTACHMENTS
A.Figure 1
B.Attachment A
C.Attachment B
D.Attachment C
E.Attachment D
PREPARED BY: Paul Dias, Director of Parks and Golf
DEPARTMENT HEAD:
Paul T. Thiltgen
Director of Community Services
Page 4 of 4
Attachment B
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