Will increasing the golf pro’s cut of green fees boost play at the Manteca municipal golf course and generate more money for the city?
That’s the $65,583.11 question the Manteca City Council is being asked when they meet Tuesday.
Golf pro Alan Thomas is seeking an amendment to his contract that runs through Dec. 31, 2017 in what he contends is a way to provide him with incentives to increase play.
Those incentives are:
•Increasing Thomas’ share of green fees from 10 percent to 17 percent effective Jan. 1, 2013. If annual rounds have not increased by a minimum of 5,000 by June 30, 2015, Thomas’ share of the green fees would be reduced to 3 percent for the remaining 30 months of his contract.
•Eliminating Thomas’ payment of janitorial services at the pro shop.
•Eliminating Thomas’s requirement to pay for major repairs of the air conditioning unit or other equipment.
City Manager Karen McLaughlin in a report prepared for the council said staff determined that based on actual play in 2011-12 it would require an additional general fund contribution of $65,583.11 if rounds do not increase by 5,000. Should golf rounds jump 5,000, the general fund would have to be tapped for only an additional $2,755. Increases beyond 5,000 rounds could result in more revenue for the city or less contributions from the general fund.
The Manteca City Council in July adopted a budget for the golf course that includes $155,000 from the general fund to pay for the recreational benefit of the facility. The money has been designated in the past to pay for free youth play by high school students and reduced green fees for Manteca senior citizens. The only Manteca recreation facility that isn’t receiving an operating or maintenance subsidy from the general fund is the Big League Dreams sports complex.
The general administration and overhead charges that were suspended starting on July 1, 2007 are still not being assessed to the golf course. The council accepted McLaughlin’s recommendation to keep the charges suspended for the current fiscal year. Staff at the time said they were reviewing an allocation plan in conjunction with the 2013-14 budget that could lead to a recommendation to reinstitute some charges.
Critics in the past past have argued the blanket 20 percent cost recovery fee the city sought to impose on all enterprise accounts such as golf, water, sewer, and garbage collection was arbitrary and inflated and had the effect of staff expenses being paid for twice.
Staff pitched their own proposals to Thomas
McLaughlin’s staff report for Tuesday’s 7 p.m. council meeting noted that in limited discussions regarding potential contract amendments with Thomas that they suggested:
•exploring providing a greater percentage of green fees based solely on new growth.
•re-evaluating the various passes to receive greater return to both the city and Thomas.
•establish a minimal per-round capital improvement fund fee to pay for capital needs at the golf course.
A 2010 report by Economic Research Associates commissioned by the city evaluated Manteca Golf Course contract options. The consultant concluded that the contract with Thomas including its compensation structure “appears reasonable and equitable in the current market environment. A structure which allows somewhat greater upside participation by the city under improved market conditions may be appropriate.”
Thomas is hanging his proposal on that observation by ERA.
The golf pro also contends when his contract was amended in 2003 it resulted in reduced revenue for him which in turn decreased play by not allowing him to fund additional staff needed to make playing at the course even more appealing.
Manteca rounds at 59,110 last fiscal year
That ERA study in 2010 noted that nationally annual rounds declined 7 percent from 2001 to 2004 and that while market conditions have stabilized they haven’t recovered substantially. It also noted the San Francisco Bay Area and San Joaquin Valley markets “closely mirror” national trends. It also note public courses in the region, on average, have experienced a 20 to 30 percent decline in overall player from 1995 to 2010.
That same report also noted an increase in golf courses in the region and that the Manteca course led the area in rounds played.
Rounds played in Manteca increased from 54,770 in 2006 to 62,690 in 2008 and 62,085 in 2009 before declining to 59,110 in the fiscal year that ended June 30, 2012.
The course is expected to bring in $85,705 above the estimated expenses of $1,056,615 it is projected to cost to operate the facility during the current fiscal year that ends June 30, 2013. The previous fiscal year was projected to end with a $29,520 surplus in the golf enterprise fund.
The golf enterprise fund has been able to reverse deficit spending despite decreased consumer disposable income that is impacting play. It has been accomplished through cutbacks in the compensation of municipal employees that keep the course maintained plus the elimination of a large chunk of its debt service that at one time accounted for 22 percent of the annual expenses.
Twenty-eight months ago the final annual $175,000 payment was made on a lease-purchase arrangement to build the golf course clubhouse in the early 1990s.
Manteca took out a 25-year loan in 1978 to convert the old wastewater treatment plant to expand the golf course to 18 holes and built the tennis courts along Union Road.
The last payment will be made in 2013 to free the golf course of a $52,000 a year obligation. That debt accounts for 5 percent of the budget for the current fiscal year.
Up until two years ago the city had to make an annual loan averaging $140,000 from the general fund to the golf account to balance expenditures and revenue. That was on top of the $155,000 considered a subsidy for reduced senior and youth play.
McLaughlin in her budget message noted the general fund has loaned the golf course $1.4 million over the years. Various councils have never adopted any position on when - or if - the golf account should pay back those funds.