SDMGA: Mark Woodward, Golf Operations Manager Responds to questions raised at the May 17 NR&C Committee meeting.
In response to questions raised during the Natural Resource and Culture Committee on May 17, 2006 the Golf Operations staff has prepared a summary of the key Business plan recommendations along with responses to the various questions raised by committee members, by Michael Jakes a member of the community and by John Beaver and Paul Spiegelman of the SDMGA.
There are 2 documents given below. The first is a transmittal letter to the City which lists our primary concerns with the City's Golf Plan. The second is Mark Woodward's response memorandum which includes SDMGA comments to Golf Operations recommendations and responses.
______________________________________________________________________
San Diego Municipal Golfer’s Alliance
P.O. Box 22575
San Diego, CA 92192
June 16, 2006
To: City Councilmembers Tony Atkins, Kevin Faulconer, Donna Frye, Ben Hueso, Jim Madaffer, Brian Maienschein, Scott Peters (President), Tony Young.
From: John Beaver, Joe Burwell, Paul Spiegelman, Co Founders of SDMGA.
Subject: Response to Mark Woodward’s memo “Questions from the Natural Resources and Cultural Committee” Dated June 13, 2006.
Dear Councilmembers,
Enclosed is our detailed reply to City staff’s response to certain questions raised at the May 17 NR&C meeting. While headway has been made in working out a 5-year plan we can all live with, there are several areas that still need your diligent action. Our response is intended to help you evaluate both sides. Our primary concerns rest in the following areas:
Information Transparency concerning tee times, costs of golf operations and contracts with outside entities.
Maintenance of lower green fees for residents. Previously provided analysis has shown we can increase resident fees at 4% or less annually and cover operating costs and capital improvements. The need for greater fee increases on residents has not been demonstrated.
Implementation of the advanced reservations system for residents which gives a complete preference to residents with the resources to pay $100 per foursome fee and reduces the tee times available in the phone lottery well below current levels. Instead, use existing 7-day system for residents without biasing the system with fees. Or at the least, cut the size of this program to a manageable 4% of tee times, not the huge 12% which would freeze the average daily resident golfer out of all desirable tee times.
Establish that the 70-30 ratio is to be applied separately to 18-hole rounds, audit 70/30 ratios monthly and post tee time sheets daily. Annual report is too open to imbalance.
Drop the artificial $1.7 million rent fee and keep all necessary golf revenue in the Golf Enterprise Fund.
Do not let the Century club Support Building sneak through the system, not being mentioned, to date, in the 5-year plan or in any notice of any of the hearings held thus far.
Rather than eliminate so many Men’s Club and Women’s Club tournaments entirely, move all or some of those proposed for elimination to the afternoon.
We thank the Mayor for restoring a diluted senior rate. Let’s build on this progress and create a workable consensus on the other vital issues listed above. We look forward to working with you at the June 26 meeting. Thank you.
__________________________________________________________________________________________
CITY OF SAN DIEGO
MEMORANDUM
DATE: June 16, 2006
TO: City Council
FROM: Mark Woodward, Golf Operations Manager, Park and Recreation Department
Subject: Questions from the Natural Resources and Culture Committee
In response to questions raised during the Natural Resource and Culture Committee on May 17, 2006 staff has prepared a summary of the key Business plan recommendations along with responses to the various questions raised by committee members.
This document includes SDMGA comments to Mark Woodward’s recommendations and responses – June 16, 2006
Key Plan Recommendations:
- Increase access for all city residents at Torrey Pines. The proposed tee time allocations will allow Golf Operations staff to better control and proactively manage the sale and use of tee times at Torrey Pines. The proposed changes will also result in an increase of approximately 15,000 rounds available for equitable distribution to all City residents via the advanced reservation and phone systems.
Summary of Returned Rounds
Lessees
TPCC
13750
Lodge
2800
Hilton
2800
Clubs
Men's
4900
Women's
1800
Total Returned Rounds Annually
26050
SDMGA RESPONSE: The figures in the table are misleading. Only the Men’s, Women’s Club tee times go into the residents time pool. The tee times from the TPCC, Lodge and Hilton go to the 30% non-resident time pool and are not available to local residents. This means there are no additional total tee times available to the public from this “return of rounds”. In fact, as discussed below, if the resident advanced reservation system were implemented, there would a loss of 19,320 rounds (12% of 161,000) to the daily public golf lottery. (if the 6,700 times taken from the Men’s and Women’s clubs are subtracted from this, this still leaves a loss of 12,600 rounds to the public lottery.)
Improve each of the golf complexes through a comprehensive Capital Improvement Program. As part of this program, the Mayor supports focusing capital improvements at Balboa Park and Mission Bay. The Clubhouse at Torrey Pines will not be funded through this business plan and only the parking lot improvements are scheduled to occur within the next five years.
SDMGA RESPONSE: We strongly agree with focusing capital improvements on Balboa and Mission Bay and praise the Mayor and Golf Operations for this decision. A question remains: if $6,500,000 in clubhouse construction money is not being spent, why isn’t the capital improvement budget being reduced to reflect this?
Golf should not be subsidized. Green fees at each facility should be based on the cost associated with operating and maintaining the facilities. Capital Improvements at all three facilities will be funded through non-resident rates at Torrey Pines.
SDMGA RESPONSE: SDMGA agrees that golf should not be subsidized. The Golf Enterprise Fund has been running a surplus for years and the City has been draining off $1.7 million each year in “rent”; thus, municipal golf, in an incongruous manner, is instead subsidizing the City. The focus on individual facilities or individual user groups is misdirected. It is the bottom line of the Golf Enterprise Fund that counts and SDMGA’s plan, like the City’s, generates $6 Million per year profit to be used where needed in all golf facilities.
Allow residents and non-residents to purchase tee times through an advance tee time reservation process. This will allow golfers to plan an event at Torrey Pines and increase the access to City residents.
SDMGA RESPONSE: SDMGA supports the advance reservation system for out of town golfers (they need a system that meets their needs to plan vacations in San Diego), but opposes it for local golfers. As long as the out of town advance reservation system counts is part of the non-resident 30%, it takes nothing from the resident golfer. On the other hand, the City’s proposed advance reservation system for residents takes away 12,600 rounds from the phone lottery system (see comments to recommendation 1). In addition, charging an additional fee undermines affordability for residents. The advance reservation system biases the tee time allocation process in favor of those who can afford the extra fee and provides them the option of dropping out of the lottery simply by paying $100 more per foursome. This is a benefit that only some citizens can afford. For this reason, SDMGA opposes the advance reservation system for locals. However there may be some benefit to making this opportunity available in a much more limited number, say 4% of total tee times. This is comparable to the tee time allocation proposed for the Men’s and Women’s Clubs.
Following public input regarding Senior rates and the proposed Low Income Fee Waiver (LIFW), the Mayor reexamined the programs and has determined that more city residents will benefit from the Senior rate than the LIFW. Therefore, the Mayor supports the creation of a senior rate program that gives qualifying seniors a 30% discount over standard city rates.
SDMGA RESPONSE: SDMGA vigorously supports the Mayor’s decision to reinstate the senior rate. We can accept the 30% discount (as opposed to the current 50% discount) if resident fee increases are limited to what is needed to support the projected total budget including capital expenditures. The SDMGA projected revenues show that the City can turn a gross profit of more that 6 million and still hold resident greens fees to an increase of 4% per annum.
Comments from NR &C Committee Members
Councilmember Atkins General Comments
Agrees w/ Mayors principle ideas
Fees should be on costs
We need to invest in CIP
We should have a 5 Year Plan
Provide more information about the Fee calculation-Directed the IBA
Respond to Mr. Jakes suggestions.
Respond to some of Paul Spieglemen’s 21 questions
Councilmember Atkins’ questions:
In reference to the tee times that TPCC have given back, what happens to these times
The five tee times given back by TPCC will go back into the 30% non-resident allocation because they have been sold to non-residents. It is envisioned that these times will typically be made available through the new advanced reservations process and the automated system.
SDMGA RESPONSE: We fully agree.
Eliminating the Brokers (Part of the 70% or the 30%)?
The elimination of brokers will add back times to the non-resident allocation. A majority of those that use brokers are non-residents.
SDMGA RESPONSE: We agree that if brokers are eliminated, about 5,000 non-resident tee times could be freed up and would remain as part of the non-resident 30%. The question is how can brokers be eliminated? They can still use the phone system to book times from the phone lottery, even if they can be eliminated from the advanced system.
With the Mayor’s proposal concerning the Men’s and Women’s Clubs (2 times per month), how many rounds does this free up?
By limiting the clubs to two events per month, residents will regain approximately 6,700 rounds. Any resident in San Diego would have access to these rounds, not just those that join either the Men’s or Women’s club. However, Men’s and Women’s club members will also have access to these tee times.
SDMGA RESPONSE: We agree that reducing club times as described would add 6,700 tee times to the resident lottery pool. But the advanced reservation system would take away 19,320 rounds resulting in a net loss of 12,600 rounds in the resident lottery pool. This built in bias favoring those with the means to pay $100 more per foursome over most of the regular resident players is an unfair allocation of tee times, inconsistent with the basic purpose of a municipal golf course to make golf affordable and accessible to the resident golfer.
In reference to comments from the Lodge regarding Supplemental tee times, Is this in writing any where?
Deputy City Attorney, Shannon Thomas has reviewed the existing documents and has made the following statement.
The letter agreement for the daylight savings times stated that “The term of this agreement shall expire on October 31, 2005.” (Section 1.b.) The agreement does not reference any “perpetual” right. In fact, it states “The provisions contained above shall be subject to renegotiation 3 years from the date of execution of this agreement, provided both City and Lodge wish to extend the term.” (Section 4.A.) I was not part of the negotiations of this agreement and cannot speak to any intent that is not apparent from reading the document.
SDMGA RESPONSE: The Lodge is asking for the additional tee times as “compensation” because it claims that it lost $4 million by not getting the refreshment concession for the Open. In fact, during the period from 2001 when it was built to the present the Lodge’s value has increased over $50 million dollars (it has been reportedly been offered for sale for $123,000,000) in large part because of its location at the site of the U.S. Open. Rather than losing money on refreshment concessions, the Lodge has made a windfall profit of at least $50,000,000 (based on Mr. Evans un-audited claims that the Lodge cost him $70,000,000 to acquire and construct). Instead of demanding compensation from the City, the Lodge should be making a contribution to the City out of its windfall profits.
In reference to the Clubhouse Chart we showed- We’ve spent $2 million, will we continue to spend money even if we don’t do the clubhouse? What is the value of the documents if we don’t proceed?
City Council has previously appropriated $2,500,000 to CIP No. 25-009.0, the Clubhouse Replacement project, which included schematic design of the clubhouse, redesigned parking lot and circulation routes, utility upgrades and associated user amenities. Only a portion of these funds have been spent to date. The complete project must continue to be processed together through the discretionary review process. Following approval of these permits the tournament support building and the parking lot improvements can proceed with construction prior to the US Open. The discretionary permits for the clubhouse will be secured as part of the overall process and would have a three year life. Prior to expiration of the permits, staff could seek an extension which may allow for the construction of the clubhouse to proceed at some time in the future without additional discretionary review.
SDMGA RESPONSE: There are 2 troublesome points being made here that need to be clarified. The first - If the clubhouse is not being built why aren’t the expenditures being cut off now? The second is that there has been no mention of tournament support building construction in the 5 Year Plan or in any notice of any hearings held to date why is it being mentioned in the City’s response to Atkins’ question 5 above? The tournament support building is not on the City Council Agenda at this time - is it? Will the tournament support building come before the council?
6. Data Base-Does twilight start at 11:00 am?- Twilight starts at 2:00 during the months of November through March, and 3:30 April through October. Mr. Jakes, during his review of documents from Golf Operations, found a transaction that appeared to charge a twilight rate at 10:30 am.
Staff has reviewed this item. All non-resident reservations booked through the automated system require a credit card to secure a tee time. Currently the cards are charged through a process called IC Verify. On the day of play, all IC Verify transactions are batch processed. As part of procedure, the Starters are required to have all the IC Verify transactions throughout the day kept together for records and accounting purposes. By processing the transactions early in the POS/Fairways System, the Starter is prepared to have the customer sign the receipt as soon as they show up. This system allows the Starter to keep up with the flow of customers and transactions. In this case, the receipt was printed at 10:30am, but the actual round of golf was during twilight.
SDMGA RESPONSE: SDMGA has no basis to comment on the merits here.
7. Can we have LIFW and Senior Rate?
As indicated in the Mayors recommendation 5# above, the Mayor has revisited the senior rate issue and supports a 30% discount for seniors. If both programs were offered, the discounts available to each group would have to be reduced (20% for seniors rather than 30%) in order to offset the LIFW discounts and preserve the financial stability of the Enterprise Fund.
SDMGA RESPONSE: Given the fact that the clubhouse has been shelved and none of the 1.2 million debt service projected in the budget will be expended, it does not seem impossible to have a low income waiver program. SDMGA sees no reason to pit senior against low income people. The overall bottom line is the issue and here, the SDMGA projected revenues shows that $6,000,000 in profits is available. That is a source that could fund the low income waiver without seniors having to pay for it. Moreover, providing a partial fee waiver for low income golfers (if not on Torrey, then on Balboa and/or Mission Bay) seems a perfect fit for additional proceeds from the Buick and/or the U.S. Open.
o Councilmember Faulconer’s Comments
1. He sees some compromise and movement
2. Wants more information on cost per round calculation
3. Agrees that the clubhouse should be out of the plan
4. Agrees that separate CIP for Clubhouse should be established
5. Agrees that a round of golf should be paid for by itself
Councilmember Faulconer’s Questions:
1. Does Golf Operations have any SLA’s ?
o Golf Operations has one SLA with the Auditor’s office for general services such as review of direct payments, purchase requisitions, 1472’s, and various consultant agreements, maintenance of fixed asset records, and review of funds to ensure transactions are processed correctly.
SDMGA RESPONSE: We do not know what SLA’s are.
2. Does Golf Operations pay rent to the General Fund? If so, how much and why? Specifically how much does Torrey Pines pay?
o In Fiscal Year 2006, Golf Operations will pay the general fund $1,621,792. Based on the rent formula, Torrey Pines portion is $1,166,003. The Golf Operations pays a land use fee to the General Fund for use of the land to operate the golf courses. If a private entity were to run the golf operations for the City, they would be required to pay a land use fee for operating on City land.
SDMGA RESPONSE: We disagree that rental payments are appropriate from the Enterprise Fund to the general fund. A private entity is not running golf operations – paid city staff is running the golf operations as part of the Parks and Recreation Department. This arrangement has the appearance of some sort of hanky-panky accounting gimmick to transfer funds; a sort of shell game. Is this “rent” included in the “per round costs”? Other recreational facilities like tennis courts, dog parks, and softball fields do not pay rental fees. We do not believe that golfers should either. If an exception is being made so that golf is the only city-operated park facility required to pay rent, then at least the City should drop the rhetoric about subsidizing golf.
3. Thinks we should look at the Senior Rate rather than LIFW.
o As indicated in the Mayors recommendation 5# above, the Mayor has revisited the senior rate issue and supports a 30% discount for seniors.
SDMGA RESPONSE: SDMGA vigorously supports the senior discount. (See above). With the elimination of the clubhouse, LIFW may be affordable as well, without asking seniors to fund it with a reduction in their discount. Again the PGA tour or the USGA might be interested in funding such a program out of receipts from the Buick or U.S. Open.
4. Wants written plan for Advance Tee Time procedures including staff resources
o Under the direction of the Mayor, staff has developed a plan to administer the advance reservation system and will continue to refine the process with review by the Mayor.
SDMGA RESPONSE: The City has not provided enough detail to assure that the advance reservation system can be adequately staffed and marketed. Even with the proper staffing and marketing the advanced reservation system would take away 19,320 rounds from the resident lottery pool resulting in a net loss of 12,600 rounds. The built in bias favoring those with the means to pay $100 more per foursome over most of the regular resident players is an unfair allocation of tee times, inconsistent with the basic purpose of a municipal golf course to make golf affordable and accessible to the resident golfer.
5. Is there any way to have both a Senior rate and a LIFW program?
o As indicated in the Mayors recommendation 5# above, the Mayor has revisited the senior rate issue and supports a 30% discount for seniors. If both programs were offered, the discounts available to each group would have to be reduced (20% for seniors rather than 30%) in order to offset the LIFW discounts and preserve the financial stability of the Enterprise Fund
SDMGA RESPONSE: We believe that both may be possible without reducing the senior discount. See comments above.
Councilmember Frye’s Comments
NR and C agrees and voted on the 70/30 split for residents and non-residents
SDMGA RESPONSE: SDMGA submits that at various meetings the City staff has agreed that the 70-30 split must be applied to 18 hole rounds (started from 6:30 a.m. to any time up to 5 hours and 15 minutes before sunset). This should be made clear in writing in the Five Year Plan.
NR and C agrees that the clubhouse should be a separate CIP project
SDMGA RESPONSE: If the clubhouse is being shelved, the cost savings should be reflected in the 5 Year Plan as reduced greens fees for residents
Councilmember Hueso’s Comments
Wants to address Brokers seperate from the Plan
Generally does not support outlawing Brokers
SDMGA RESPONSE: SDMGA has a flexible position on brokers. Properly used, they may be an asset to the City in marketing its long-term reservation system for non-residents. Indeed, a yield management system (similar to a Treasury bill auction) run by an experienced broker may be the best way to market all non-resident tee times. However, residents should not have to compete with brokers for tee times in the resident lottery.
Response to Jake’s suggestions:
Eliminate or reduce starter times- Starter times on the South Course have already been added back to the allocation. The North Course will have times added back on occasion but due to the shorter tee time interval it is not feasible to do so on a permanent basis.
SDMGA RESPONSE: We support the City’s position. One question though - starter times are not listed or shown in the 5 year plan – how are they accounted for and where?
Shift some Men’s and Women’s events to afternoons-Mayor agrees with this concept. Shifting some of their times to the afternoon would allow other residents access during prime time.
SDMGA RESPONSE: We could support the shift as a way of reallocating rather than reducing club times (e.g. take the tee times that are proposed for elimination and move them instead to late morning early afternoon times still allowing the completion of 18 holes).
Shift some Hotel allocations and events to afternoons-The hotel tee time allocations are bound by lease agreements.
SDMGA RESPONSE: Lease agreements are modifiable by mutual agreement. Certainly if the hotels ask for additional tee times, granting any additional privileges of any kind could be conditioned on moving times to the afternoon.
Require brokers to report daily activity- If an ordinance is not passed, the City would have little ability to require brokers to report daily activity because we don’t have any contract or agreement with any of these entities.
SDMGA RESPONSE: As a suggestion - an ordinance which regulated rather than prohibited brokers could require this.
Require brokers to book a % of times in afternoon- Since brokers are accessing the system like any other customer, we can’t regulate the times they secure via the reservation system.
SDMGA RESPONSE: Same suggestion as given to 4.
Raise Non-Resident fees to market value-It is likely that there are some individuals willing to pay the high end of the market scale. However, not all visitors are willing to pay these rates. Fees must be targeted to allow a majority of our non-resident rounds to be sold in order to protect the Enterprise Fund and cover proposed capital improvements for all golf complexes.
SDMGA RESPONSE: The City’s reluctance to charge full market rates points out the dangers of a fixed schedule of fees for five years. A yield management system run by an experienced golf reservations business may be preferable. In a fixed fee schedule there is a danger in setting fees too low allowing windfall profits for hotels, brokers and others who control the tee times. Those with preferred access to tee times will always find a way to exploit it, whether by increased charges for tee times or by increased charges for hotel rooms. A yield management system on the other hand, would keep abreast of prevailing rates and by marketing appropriately could produce optimum revenue. If setting fees below market would attract tourists that would be one thing, but as we have discussed, low rates would benefit others, not the tourists and even if it did, it would not produce optimum revenue.
Charge events at full non-resident fees (Premiums?)-All tournaments, with exception to the Men’s and Women’s clubs events are charged tournament rates. Men’s and Women’s club tournaments receive up to a 74% discount over applicable tournament charges.
SDMGA RESPONSE: Adjust the tournament fee charges to fully reflect the disruption to the course, including costs of buffer zones in which additional starter times are left between a tournament group and regular play.
Collect hotel allocation surcharge in winter too- City staff will review this recommendation. For consistency, all entities should pay the same rates however this issue is tied to lease agreements with the hotels
SDMGA RESPONSE: We agree with Mr. Jakes and the City that hotels should pay a surcharge (at least equivalent to long term reservation fee for non-residents) year round.
Hotels should pay for no-shows just like other N-R’s-The hotels are required by their leases to return their unsold tee times within specified time frames or pay for times not returned per the agreements.
SDMGA RESPONSE: We agree with the process – how is it monitored?
Spiegelman’s Questions
1. Under what circumstances, if any, can money from the Golf Enterprise Fund be removed and spent for general fund purposes? The Golf Enterprise Fund was established by the City Council. Any transfer of monies to support General Fund purposes must be approved by the Council.
2. Are there any plans in current city budget to remove money from the Enterprise Fund for expenses other than for golf enterprise matters? No.
SDMGA RESPONSE (applies to questions 1 & 2 above): The Golf Enterprise Fund is now paying rent to the general fund and is thereby subsidizing the general fund. If no other subsidies are intended, the Golf Operations budget should be scrutinized to assure that excessive revenues are not being collected. The general public is under the misimpression that Torrey Pines revenues can be used to pay down the pension deficit. In the absence of a further raid on the Enterprise Fund, there is no justification for the Fund to profit other than to fund capital improvements.
3. Does any written statement exist which shows in one place the revenues projected under the city plan for each of the 5 years of the plan and the operating expenses projected for that year? No
SDMGA RESPONSE: It is an unusual practice that the most basic of accounting documents, (the operating revenue and expense statement) has not been provided. SDMGA submits that without a reliable projected P&L statement for each year of the 5 year plan, there is no basis for raising resident fees at all.
4. By what means does the city track and project revenues? The City reviews revenues during the 13 accounting periods each fiscal year. Departments are required to report current revenues and year end projections multiple times per year to the Finance Department via the Current Year Monitoring process.
SDMGA RESPONSE: It appears that all of the elements are in place to assemble a profit and loss statement after each of the 13 accounting periods. Where can this information be found?
5. What measures does the City plan to assure transparency of tee time allocations?
a. Will it post tee sheets daily on internet? No
SDMGA RESPONSE: SDMGA submits that daily posting is a simple thing to do, is inexpensive, and an easily accessible way for the public to monitor the 70/30 tee time allocation process. What is the reason for not doing something so easy to accomplish and so transparent to the public?
b. How will it audit tee time allocations to assure compliance with the 70-30 ratio? Tee times will be audited on a routine basis. If the 70-30 ratio is going to be affected, adjustments will be made to maintain the 70/30 split. Golf Operations will report to the Mayor’s Office annually on the number of rounds and the distribution of play.
SDMGA RESPONSE: As discussed in 5.a above posting a daily tee sheet on the web is not a very difficult thing to do and provides the transparency the golfing public deserves. The City’s answer does not provide enough detail to assure reliable auditing exposing any immediate bias or unacceptable trends. SDMGA suggests a monthly audit to verify the ratio is being adhered to. If not, things can get totally out of control and then excuses not to provide remedy become the word of the day. By keeping on top of things, as you would in any important endeavor, the Golf Operations report to the Mayor at year’s end would be much more accurate and much easier to produce and along the way the community has participated.
6. What percentage of tee times will be given as starter times? In order to maintain flexibility and control pace of play, one tee time every two hours on the South Course and up to one every hour on the North Course. A majority of these times will be sold to walk up players who are primarily residents.
SDMGA RESPONSE: The limitation of starter times to 1 per 2 hours on the South and 1 per hour on the North, seems like a step in the right direction. However if the intent is to control the pace of play it would seem that a more active marshaling system would be put into use. What does flexibility mean in terms of tee times? How are these times accounted for? They are not mentioned in the 5 year plan – why?
7. What net percentage of tee times will be available to the daily resident golfer under the phone lottery system? This percentage will vary on a daily basis based tournament play ie. Men’s and Ladies Club and resident advanced purchase sales.
SDMGA RESPONSE: It is true that daily results could vary, but assuming the City sells all its advanced reservations, the public lottery which is last on the totem pole would yield only 41.5% (North) and 45.3% (South) available rounds in the public lottery as follows:
South Course North Course
Non-resident allocation 30.0% 30.0%
Men’s and Women’s Clubs 04.0% 04.0%
Starter times 08.3% 12.5%
Advanced Reservations 12.0% 12.0%
Total outside lottery 54.3% 58.5%
This assumes that brokers do not enter the public lottery. If they do, the resident percentage of the public lottery could go down below 40%
8. How will the lottery system separate resident tee times from non-resident tee times? Currently, staff is investigating the installation of a new software upgrade and the new system will be able to distinguish between the two categories.
SDMGA RESPONSE: Because Golf Operations Staff is still investigating a possible solution there is not sufficient detail of how this separation will be done. Distinguishing between residents and non-residents is only the first step, the next step is allocating specific tee times to residents and non-residents. The most equitable way to do this is to earmark a given number of tee times each hour to each group reflective of the 70-30% ratio. The City’s answer does not specify if it will do this or use some other method for allocating tee times. Whatever method is used, it is a requisite that the results be posted daily on the web for transparency to the public and be audited on a monthly basis so the allocation process can be kept under control.
9. What percentage of all tee times will be reserved for the advanced reservation system proposed by the City? A total of 24% of tee times may be made available for advance reservation. 12% would be available for a resident to schedule and 12% would be available for non-residents. If the times are not booked, the remaining times would be made available through the automated system and would be go back to which ever category they were originally intended for.
a. Of these, how many will go to non-residents?
b. Of these, how many will go to residents?
c. If either of the resident category or the non-resident category does not use the allotted times will it go to the other category or to the daily public golfer?
SDMGA RESPONSE: As previously stated, the 12% to non-residents (as part of the non-resident 30%) makes sense, but the 12% to residents allocates far too many prime starting times to the most financially well-heeled, leaving the average Joe public golfer at the end of the queue.
10. Who will administer the advanced reservation system? What costs are projected for the system? City staff will administer the advanced reservation system. We anticipate marketing and promoting the new advanced purchase system via revenue generated from the surcharge.
SDMGA RESPONSE: The City has not provided enough detail to assure that the advance reservation system can be adequately staffed and marketed. Even with the proper staffing and marketing the advanced reservation system would take away 19,320 rounds from the resident lottery pool resulting in a loss of 12,600 rounds net of the times taken away from the clubs. The built in bias favoring those with the means to pay $100 more per foursome over most of the regular resident players is an unfair allocation of tee times, inconsistent with the basic purpose of a municipal golf course to make golf affordable and accessible to the resident golfer.
11. What measures have been planned to prevent abuse, favoritism, and/or corruption of the advanced reservation system? Are we going back to the future? (The current phone lottery system was put in place twelve years ago to respond to a continual public outcry concerning the trustworthiness of the system and the individuals running it.) Under the previous system, tee times were taken over the phone and written into the tee sheet by one person. This provided no accountability with which to audit the system. Under the new advanced reservation system each person authorized to make reservations will have a user login. This will be attached to each reservation and will be tracked and audited on a routine basis by Golf Operations Management to ensure that abuse, favoritism, and/or corruption is not taking place.
SDMGA RESPONSE: Sounds helpful, but not enough detail to assure that abuse will be detected if it occurs. The system will do nothing to insulate hardworking City staff from allegations of abuse by disappointed tee time seekers. How often will it be audited? Since you don’t plan on posting daily times on the web where does transparency to the public come into play? Abuse, favoritism and corruption have taken place in the past with the same promises of “Golf Operations Management” oversight – it didn’t work without the necessary public transparency.
12. What is the purpose of proposing the elimination of the senior rate? This is to be consistent with other Park and Recreation programs.
a. Revenue raising? How much revenue does it raise?
b. Pricing seniors off the courses?
c. Other? Please specify.
Following public input regarding Senior rates and the proposed Low Income Fee Waiver (LIFW), the Mayor reexamined the programs and has determined that more city residents will benefit from the Senior rate than the LIFW. Therefore the Mayor supports the creation of a senior rate program that gives qualifying seniors a 30% discount over standard City rates.
SDMGA RESPONSE: SDMGA supports the senior discount. LIFW could be funded out of out of extra Buick fees, U.S. Open fees etc.)
13. What is the purpose of proposing weekend rates on Friday? It is common practice to include Friday as a weekend day in many industries including golf and other travel and leisure businesses. Beth-Page, Harding Park, and Patriot Hills were included in the benchmarking in the draft business plan count Friday as a weekend day. In addition, TPCC was already charging weekend rates on their Friday tee times.
a. Revenue raising? How much revenue does it raise?
b. Pricing seniors off the courses and/or limiting their play?
c. Other? Please specify.
SDMGA RESPONSE: Torrey Pines is a municipal golf course purportedly for the use and benefit of the municipal resident. It seems that at every intersection there is an attempt to unnecessarily increase fees. SDMGA submitted a comparative revenue analysis which demonstrated that fee increases such as these were not required to balance the Enterprise Fund. There has been no comment or criticism of that analysis so why is it not being considered as a good, workable model?
The City does not answer the question of why it is being used. Maximizing revenues is not the goal of an Enterprise Fund. Why not maintain weekday resident and senior rates on Friday?
14. Why are increases in non-resident rates back-loaded, but increases in resident rates front-loaded? Wouldn’t the reverse be more appropriate? Rates are neither back-loaded nor front-loaded. All non-resident fees are based on a percentage of the resident fees. That percentage is consistent throughout the life of the business plan.
SDMGA RESPONSE: SDMGA’S question was poorly worded. Our concern is that the non-resident rates are way below market levels and rise evenly over the life of the Five Year Plan so that by 2011, they start to approach 2006 market rates (at least on the South Course). This leaves rates perpetually below the market and provides a windfall for hotels, brokers and other non-city agents who market tee times to non-residents. Thus, as noted in question 15 below, the Lodge is currently in 2006 charging its guests on weekdays $225 including cart (equivalent to $209 without cart) on the South and $169 with cart (equivalent to $153 without cart on the North). The Plan calls for the non-resident rate on the South to be $130 weekdays without cart on the South in 2007, some $79 per round less than the Lodge is now charging. Even the 2011 the South non- resident rate is under market levels at $183 without cart (though it approaches current market levels if you add in the long term reservation fee). Because 2007 and 2008 are so close to the U.S. Open, they will be years of peak demand. SDMGA believes that the plan should immediately raise the non-resident South rates to the 2011 level.
The situation on the North is even further below market levels: the hotels are currently charging the non-cart equivalent of $153 for non-residents on weekdays, but the Plan calls for a 2007 rate of only $80 and rises only to $100 in 2011. This is $73 below market in 2007 and still $53 below market in 2011. The non-resident rate should go to at least $125 in 2007 (with long term reservation fee it would then approach market level of $155.)
As the City’s answer suggests, the barrier to such adjustments is the Plan’s insistence on a fixed ratio between resident and non-resident rates. There is no sound market-based reason for holding to such a ratio: from a revenue perspective, as non-resident rates increase, there is less need to raise resident rates. Indeed, differences between the City Plan and the SDMGA plan could be bridged if the 2011 rates for non-residents were implemented in 2007 while keeping resident rates at the levels suggested in the SDMGA plan (4% per annum increases). In other words it would be revenue beneficial for the City to take a pragmatic approach to fees and set them at levels which accommodate all the interests: being accessible and affordable by residents, being available to tourists, and producing revenue. The approaches suggested by SDMGA are designed to accomplish all three. The City plan seems to focus more on abstract formulas of the relationship between resident and non-resident times and less on the practical, real-world goals of the golf complexes.
15. The hotels are charging market rates for tee times ($169 w/cart week-days on the north and $225 w/cart weekdays on South) and are making huge profits that could go to the City. Why doesn’t the City charge the hotels full market rates and bar them from reselling tee times for profit? Robert Gleason from the Lodge at Torrey Pines provided a detailed explanation into their rates and indicated that they are not marking up golf to any of their customers.
SDMGA RESPONSE: Did Mr. Gleason provide an auditable, written explanation of their rates? Is this information available for public scrutiny? If not, Mr. Gleason’s assertions should be examined and not taken at face value. He explained to Paul Spiegelman, for example that the Lodge may charge its guests “rent” (an additional charge equivalent to the lease percentage that the Lodge pays to the city on all revenues). Gleason also asserted that Lodge guests pay a mandatory $30 per head cart fee, double the cart fee that all others pay. Where is this extra money going? Most importantly assertions that the Lodge is not profiting from tee times ignore the possibility that additional profits could be reflected in increased hotel room fees. If the Lodge is not making a profit on tee times, why is it seeking additional tee times?
16. Is the City getting adequate compensation for hosting the Buick Invitational? From an economic impact perspective, yes. Tom Wilson from the Century Club has indicted that the Tournament has more than a 25 million dollar annual benefit to the San Diego economy. Charities also profit as does the City through national exposure.
SDMGA RESPONSE: SDMGA agrees that the Buick has an economic benefit to the San Diego area and that the Century Club is to be commended for the charitable contributions it channels from the Buick. But this begs the questions of what compensation the golf courses should get for the additional maintenance, lost revenue, additional wear and tear and other expenses associated with tournament. Just as golfers should pay their own way for golf operations, the PGA should pay the full cost of staging the Buick Invitational here. Money from the PGA could assure that courses were in the same shape during the rest of the year. To rephrase the question; how much money does the city government get for the use of its Torrey Pines Municipal Golf Complex for the Buick Invitational; how much of what the city gets will go back into the courses? What is appropriate?
17. Is the City getting adequate compensation for hosting the U.S. Open? The City is getting only $500,000, but the Friends of Torrey Pines are taking $3,500,000 in corporate tent sales. Is this a fair arrangement? The City signed into the agreement in 2001 and based on past U.S. Open experiences in other cities, San Diego can expect an economic impact of more than 100 million dollars due to the 2008 U.S. Open at Torrey Pines.
SDMGA RESPONSE: This answer also begs the question of how fees from the Open should be allocated. Why are the Friends of Torrey Pines getting the lion’s share of those fees? With all the money that is supposedly coming to the community, why are local golfers being asked to pay more? Shouldn’t some of the money from the Open go to defraying the increased maintenance costs of the South? We understand that you meant the business community of San Diego will benefit by an estimated $100 Million and that some will filter down throughout the non-business community as well; but the questions not answered are: how much money does the city government get for the use of its Torrey Pines Municipal Golf Complex for the U.S. Open; how much of what the city gets will go back into the courses; how much do The Friends of Torrey Pines get and what is the justification for the Friends getting this money?
18. When will the City release a detailed and audited statement of operating expenses at the golf courses? Why is Balboa more expensive to maintain than Torrey North? The City does not have audited financial statements for FY 03-05. Until those are completed, audited statements for Golf Operations can not be published.
SDMGA RESPONSE: Without audited statements, there is no assurance that the costs per round claimed by the City staff are accurate and fairly allocated to the cost of a round. To lock resident rates into these un-audited cost figures for five years is inappropriate.
There are economies of scale due to the fact that Torrey Pines has two 18-hole courses while Balboa has one 18-hole and one 9-hole course. The number of rounds played on each course also contributes to the costs. The North Course rounds were projected to be slightly over 91,000 while Balboa 18-hole was projected at only 78,000. In addition, Balboa 18-hole has a higher number of dedicated staff. The Balboa 18-hole cost accounts for a higher percentage of shared staffing with the 9-hole course than the percentage the North Course assumes of the shared staff with the South Course.
SDMGA RESPONSE: The answer illustrates that cost per round figures can be affected by accounting assumptions which are as yet untested for appropriateness. Until a clearer, audited statement of costs than provided in the Plan is provided, the City Council should not saddle local golfers with fees based on these unsupported claims about costs. The City has seen inflated cost figures being used in the Sewer Enterprise Fund. The Council should not base increased costs to the consumer on unexamined cost claims.
19. Why is the City spending so much more to maintain golf courses than Coronado whose per round cost is under $25 per round? We have not seen any published numbers that demonstrate Coronado’s cost to produce a round of golf. However, a few key factors my help explain some differences between rates charged. The first factor is the number of rounds played. Coronado has between 105,000 and 112,000 rounds annually. Another factor is Coronado only pays $1 for use of the land versus $1.6 million. Coronado has also been losing money the last two years so their rates are not covering their costs.
SDMGA RESPONSE: Coronado’s $1 rent charge illustrates what SDMGA has maintained all along; that the “rent” payment from the San Diego Golf Enterprise Fund is an arbitrary way of having the Golf Enterprise Fund subsidize the general fund. The rent at Torrey and Balboa should be reduced to the same $1 as Coronado charges. This would allow for substantial reductions in resident fees.
20. When will the City correct its benchmarking study which has numerous mistakes such as stating that Harding Park municipal course charges $125 when the actual rates are $35 resident and $21 senior? In the benchmarking of other municipal golf courses it was imperative to find courses with similar non resident fee structures. The $125 rate stated at Harding Park is the standard weekday rate. On weekends their rate increases to $138. This makes the course comparable with Torrey Pines. If the benchmarking was done with courses that were $35 respectively, they would not be a true comparison, which is why Coronado is not comparable.
SDMGA RESPONSE: The City benchmarking analysis compares apples and oranges. It uses the non-resident fee at Harding Park as a benchmark for the resident fee here. The resident fee at Harding Park is the applicable benchmark and it is $35 resident and $21 senior resident.
21. Has the City considered moving some of the club tee times at Torrey to the afternoon rather than ending them? The Mayor has established the proposed allocation and would support moving a portion of their proposed allocation to the afternoon.
SDMGA RESPONSE: SDMGA has suggested moving some tee times rather than ending them. This would ameliorate the sharp 50% to 60% cuts in our resident Men’s and Woman’s Club tee times while still gaining some morning tee times for the resident lottery.