9.3. SR 11-07-2005
Item 9.3.
MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, Finance and Administrative Services Director
Interim City Administrator
DATE: November 7,2005
SUBJECT: Pinewood Golf Course Update
Mayor Klinzing is prepared to provide an update on her recent discussions with Pinewood
Golf Course owner Paul Krause regarding the possible purchase of the golf course by the
city. Staff will be prepared to discuss purchase and funding options in detail at the meeting.
Additionally, Parks and Recreation Director Bill Maertz has done some analysis to determine
whether the golf course could break even on an operating basis, excluding the land purchase.
He will be prepared to discuss this analysis and his expectations of use for the golf course if
it is purchased by the city.
Regarding the actual purchase of the property, the options available include a contract for
deed (5-year maximum term), lease with option to purchase, and outright purchase. The
most probable of these is a contract for deed since the city does not have funds available for
an outright purchase and the lease to purchase option would include an annual appropriation
requirement that may not be agreeable to Mr. Krause. City Attorney Peter Beck is reviewing
all possible options and will have written comments for distribution at the meeting.
Funding options for the possible golf course purchase will be discussed in detail at the
meeting. However, briefly, possible funding sources include reserve funds that are not
designated for other purposes such as funds from the RDF payment in lieu of taxes, the
government building reserve, the undesignated portion of the capital outlay reserve, and the
park dedication fund. Keep in mind that these are the same funds that would likely be used
to fund the YMCA contribution if the city does not opt for a referendum and possibly to
fund the upcoming Library expansion. The park dedication funds were programmed for
upcoming park capital improvements and land acquisition. The current balance available in
each of these funds and the annual cash flow projections will be presented so that the
Council may prioritize these three projects, determine if and when they will proceed, and
make decisions about funding.
s: \ Council\Lori\2005\PinewoodUpdate.doc
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Estimated Budget Prepared by Bill Maertz
Pinewood Summary
Total Clubhouse
Total Maintenance
Net Profit (Loss)
Suggestion for Breaking Even*
Part One
Approx. 50% of Time/Salary Applied to Ice Arena
Clubhouse Manager Natural Fit for Concession Manager
Superintendent Natural Fit for Ice Area Maintenance
Part Two
# of Rounds Needed to Break Even at $lO/Round Average
*Options do not include cost of benefits, utilities, insurance, etc.
I based it on 16,000 rounds a year which is equal the lowest
amount of rounds of the municipal courses we researched.
Without the numbers from Pinewood it is very much a guessing
game. You will need to add numbers for insurance/benefits and
utilities. I have not added depreciation.
This budget is lean and does not include capital items and any
potential upgrades of the facility. We would need to offer full time
employment to two people in order to get a quality product.
Other cities that I talked to stressed that there is too much
turnover if the job is not full time.
To summarize: We would need to grow the rounds to close to
20,000 per year and employ the two full time staff elsewhere 6
months a year in order to break even. The clubhouse manager
would be a good fit for the arena concessions stand and the
superintendent could work at the arena or work on ice rinks and
snowplowing.
$
$
$
3,900
93,500
(89,600)
$
$
22,500
30,000
3,710
Pinewood Maintenance Budget
Expenses
Salaries - Regular $
Seasonal Employees $
Benefits, FICA, PERA, etc.
Personal Services $
60,000
10,000
70,000
4219 Motor Fuel $ 2,000
Clothing $ 500
Operating Supplies $ 15,000
4321 Telephone $ 1,000
4361 Insurance
4389 Utilities
4401 Building Repair and Maintenance $ 2,500
4404 Equipment Repair and Maintenance $ 2,500
Depreciation
Maintenance Expenses $ 23,500
Furniture & Fixtures
Vehicles / Equipment
Other Improvements
Capital Outlay
Total Maintenance Expenses $
93,500
Pinewood Clubhouse Budget
Expenses
Salaries - Regular
Temp Employees
Benefits, PERA, etc.
$ 45,000
$ 35,000
Personal Services $ 80,000
4219 Office Supplies $ 800
Clothing $ 400
Operating Supplies $ 2,000
4259 Merchandise for Sale $ 7,000
Supplies and Materials $ 10,200
4321 Telephone $ 800
4349 Advertising $ 2,000
4361 Insurance
4389 Utilities
Depreciation
4438 Credit Card Fees $ 2,000
Other Services & Charges $ 4,800
Total Expenses $ 190,000
Revenues
Green Fees $ 160,000
Leagues and Camps $ 10,000
Equipment Sales $ 3,000
Rental Equipment $ 4,000
Concession Sales $ 11 ,000
Clothing Sales $ 1,000
Building Rental $ 1,500
Pop Commissions $ 400
Advertising $ 3,000
Miscellaneous
Total Revenues $ 193,900
Total Revenues
Total Expenditures
$ 193,900
$ 190,000
Netlncome (Loss) **
$
3,900
** Net income does not include maintenance.
See second worksheet