CITY COUNCIL STAFF REPORT
November 5, 2024 {{section.number}}b
PUBLIC HEARING: ADOPTION OF A RESOLUTION IMPLEMENTING THE REVISION OF
GOLF GREEN FEES FOR THE CORONADO MUNICIPAL GOLF COURSE FOR CALENDAR YEARS 2025-2027
RECOMMENDATION:
Conduct a public hearing and adopt “A Resolution of the City Council of the City of Coronado Revising Fees for the Coronado Municipal Golf Course” effective January 1, 2025, implementing revised golf course green fees and tournament fees through December 31, 2027.
BACKGROUND:
The Coronado Municipal Golf Course is a public facility that resides on approximately 120 acres. 83% of this land is categorized as State of California tidelands property and is under the management of the San Diego Unified Port District. The land is leased to the City of Coronado for the operation and maintenance of the Coronado Golf Course for the use and enjoyment of the public. The remaining 17% of the land is City of Coronado property.
The administration of the golf course involves multiple entities. The maintenance of the golf course grounds is handled by City of Coronado employees. Brian Smock Golf serves as a contracted concessionaire responsible for pro shop operations, which encompass managing the tee sheet, collecting green fees, handling retail sales, offering driving range services, golf cart rentals, programming, and providing lessons. Feast & Fareway is a contracted concessionaire responsible for the food and beverage aspects of the golf course operations. Both contracted concessionaires and the maintenance employees are overseen by the Recreation & Golf Services Department with the City of Coronado.
The golf course’s budget operates from an enterprise fund, where all the revenue generated through its operations is utilized to offset the associated expenses. The sources of funding for the golf course enterprise fund include revenues from green fees, advanced booking fees, investment earnings, and concessionaire revenues. In addition, the General Fund provides support to overall operations.
ANALYSIS:
The Coronado Golf Course green fees were last updated on November 7, 2023. The fee revisions were based on a fee study that projected increases in costs related to personnel, utilities, supplies, and the impending replacement of the irrigation system, which is estimated to cost $9 million.
After the base fee reset in January 2024, minor annual adjustments were contemplated but not added to the fee structure approved by the City Council. This agenda item provides an opportunity for a report out on the fee shifts in January 2024 and present the annual adjustments for approval.
Expenses
The City of Coronado conducted an analysis to determine the full operational costs of running the golf course. A summarized overview of both current and projected costs extending through Fiscal Year 2028 can be found in Table 1 below.
Forecast
Expenditures (Budgeted)
FY25
(Budgeted) FY26 FY27 FY28
Personnel $1,826,567 $1,917,895 $2,013,790 $2,114,480
Services and Supplies $1,001,522 $1,015,537 $1,029,813 $1,044,354 Water $1,572,000 $1,722,912 $1,888,312 $1,655,672
Other Expenses $480,748 $4,095,275 $1,102,980 $1,110,867 Total Expenditures $4,880,837 $8,751,620 $6,034,894 $5,925,373 Dept. Overhead
(not budgeted) $269,893 $277,990 $286,330 $294,920
Table 1: Coronado Municipal Golf Course Operations Expenditure Budget In the operating budget, the two most substantial expenses are personnel costs for maintenance and water costs for irrigation. For the Fiscal Year 2025, the budget allocates $1.827 million for personnel and $1.572 million for water. Future projections are based on historical year-over-year averages, estimating a 5% annual increase for personnel costs and a 9.6% annual increase for water expenses.
Within the cost projections for golf course operations, a significant aspect is the redesign and complete replacement of the irrigation system, with an estimated cost of up to $9 million. The existing irrigation system, installed in 1957, has far exceeded a typical lifespan. The new system is expected to enhance water distribution efficiency, potentially saving about 20% of water usage through improved sprinkler head locations and upgraded equipment. To finance this irrigation project, staff will explore various options, including leveraging the existing fund balance and considering a potential inter-fund loan request. For Fiscal Year 2026, there will be a budgeted allocation of $3.6 million from the fund balance to establish a project account to help pay for the irrigation replacement project, with future annual allocations of $600,000 for 10 years to repay any potential loan obligation.
Other budgeted expenses include yearly golf course maintenance and renovation projects, encompassing tee leveling, bunker renovations, cart path restoration, and tree trimming. Supplies and services, such as fertilizer, fuel, and parts are also considered. Indirect overhead costs for City support, such as support from the Public Services & Engineering Department for facility maintenance, Information Technology staff assistance for phone and network systems, and Finance and Human Resources staff support for payroll and accounts payable are included.
Equipment and infrastructure depreciation continue to be included in cost projections, after not being included for many years.
Additionally, administrative support from the Recreation & Golf Services Department is not included as a budgeted expense but should be considered in the overall cost recovery for golf course operations.
Revenues
Staff continue to utilize the assumption of 92% continued use for golf course rounds compared to calendar year 2023, amounting to 91,895 rounds, even though the total number of rounds played for FY24 was 100,155. The assumption for concessionaire revenues includes a 1% annual escalator. A summary of current and projected revenues, based on proposed fees through Fiscal Year 2028, is presented in Table 2 below.
Forecast
Revenues
FY25
(Budgeted) FY26 FY27 FY28
Green Fees/Booking $4,374,699 $4,947,310 $5,138,680 $5,339,313 Golf Concession $350,000 $353,500 $357,035 $360,605
Food/Bev. Concession $310,000 $313,100 $316,231 $319,393 Other $265,036 $115,000 $115,000 $115,000
Total Revenues $5,299,735 $5,728,910 $5,926,946 $6,134,312 Table 2: Coronado Municipal Golf Course Operations Revenue Budget Recommended Adjustments
The recommended green fees, as outlined in Attachment 1 and discussed as part of the 2023 Fee Study, include annual increases for 3 years of $1 for resident rates, $2 for non-resident rates, and $5 for tournament rates, except for Junior rates, which will be adjusted only in 2026. These changes will take effect beginning January 1, 2025, with the final adjustment scheduled for January 1, 2027. This phased approach aims to balance revenue generation with maintaining affordability for users.
Solicitation of Input
During the October 24, 2024, Golf Course Advisory Committee meeting, the committee and public generally supported the proposed fee adjustments, viewing incremental increases in resident, non-resident, and tournament fees as a reasonable approach. The phased implementation of these changes will allow for a gradual adjustment to rising expenses.
FISCAL IMPACT:
Assuming all cost and revenue assumptions materialize, the proposed fee recommendations would achieve 65.5% direct cost recovery for Fiscal Year 2026, 98.2% direct cost recovery for Fiscal Year 2027, and full direct cost recovery for Fiscal Year 2028, enabling the Golf Course to continue to maintain a positive fund balance over the next 3 years. If the accumulated fund balance fails to adequately cover the full extent of costs, a request will be brought forward to the City Council to allocate funds from the General Fund to offset these expenses.
Forecast
FY25 (Budgeted) FY26 FY27 FY28
Direct Cost Recovery 108.6% 65.5% 98.2% 103.5%
TOTAL Cost Recovery Percentage 102.9% 63.4% 93.8% 98.6% Est. Enterprise Fund Balance $4,056,537 $1,033,827 $925,878 $1,134,818 Table 3: Coronado Municipal Golf Course Cost Recovery and Estimated Fund Balance ALTERNATIVE:
The City Council may decline to conduct the public hearing and provide further direction to staff.
CALIFORNIA ENVIRONMENTAL QUALITY ACT:
This activity is statutorily exempt from environmental review pursuant to CEQA section 15273 Rates, Tolls, Fees, and Charges.
PUBLIC NOTICE:
Legal notice of the Public Hearing was published in the Coronado Eagle & Journal on October 16, and October 23, 2024.
ATTACHMENTS:
1. Resolution No. 2024-64
2. Declaration of Publishing and Legal Notice
Submitted By: Recreation and Golf Services Department / Tim Farmer