Agenda Packets - 1997/07/07 - Laserfiche WebLink

Home Browse Search

, a it Item No. /1 Staff Report No. 97-a/5/ tc25 Meeting Date: July 7, 1997 IliType of Business: WK WK: Work Session;PH:Public Hearing; CA: Consent Agenda;CB:Council Business City of Mounds View Staff Report To: Honorable Mayor and members of the City Council From: Bruce A. Kessel, Finance Director Item Title/Subject: Consideration of management contract for operation of golf course Date of Report: July 2, 1997 Over the past year, there have been discussions relating to maximizing the revenues at the golf course while minimizing the long term financial risk to the City and insuring that the citizens of Mounds View have access to the golf course with reasonable green fees. Golf courses are somewhat unique to governmental entities in that they must compete with other public and private courses. In order to compete effectively, a course must keep abreast of its competition,both for the quality of the playing experience and the price of the product. Services provided in addition to the actual golfing include lessons, merchandise sales, food& beverage sales, repairs of customer equipment, etc. which are available from numerous businesses. The course must be open for business from sunrise to sunset for approximately seven months. • Maintenance must be performed seven days a week. Specialized knowledge of both the existing course and also general horticulture and mechanical equipment is needed to insure the course is maintained in top condition. Failure to perform required maintenance for even several days can result in damages that can be very costly and/or require a long period of time to correct. It is my opinion that the City needs to devise a mechanism to retain several key employees on a long term basis. As such, I obtained information from the National Golf Foundation relating to statistical operating information and methods used to structure operations. I also contacted other governmental entities with golf courses to obtain a better understanding of how they have structured their operations. It should be noted that no two golf courses are the same and as such, each course has to establish a structure that takes its unique characteristics into account. Due to the uniqueness of golf courses (seven days a week operation from sunrise to sunset for approximately seven months, with few full time employees, and the need to compete for business), contracting for the operation of the course appears to provide some advantage to the City. It should be noted that the operating margins at The Bridges are very tight due to the relatively high debt service costs and any additional costs resulting from a change in structure would be hard to absorb. Depending upon how a contract for the maintenance of the golf course was structured, there could be added costs including: • Increase in liability exposure. Claims against cities are generally limited to $600,000 while private businesses do not have any limit on their liability. We can generally • purchase insurance coverages at very reasonable rates and any private operator would likely have to pay a higher premium. In addition, the City would in all likelihood, also