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HomeMy WebLinkAboutAgenda Packets - 1999/08/16 CITY OF MOUNDS VIEW WORK SESSION AGENDA August 169 1999 6:00p.m. Items Discussed Per Consensus 1. Golf Course Budget and Operations 2. Community Development Housing Inspector Options • C:UOANB\AGENDAS\CC\8-16-99.W S August 11, 1999 To: Honorable Mayor and City Council From: Chuck Whiting, City Administrator Re: August 16, 1999 City Council Work Session This is a reminder of our meeting on Monday night at 6 p.m., and I expect we should be able to be done by 9 p.m. John and Bruce have put together a golf course packet for you for discussion Monday. I will be meeting Monday with Rick Jopke to go over the housing inspector options and report to you at the meeting on the options we see for your consideration. One quick update, Jolyn Vegin(from Monday night's meeting) met with Mike and I today and now wants to simply have repairs done to her water service rather than replacing the whole thing. While cheaper, it raises the possibility of it happening to her a third time in the future. Mike•is getting estimates for the work and will be getting in touch with her next week. Also, you should be getting a copy of the letter to the Charter Commission reiterating possible changes to the Charter Scott Riggs relayed to me. Have a good weekend and see you Monday. CM OF 11liDS Phone: (612)717-4000 . Fax:Fax: (612)784-3462 A o�'ress PartnerS- t‘" August 12, 1999 Ms. Julie Ann Olson, Chair Mounds View Charter Commission 2663 Lake Court Circle Mounds View, MN 55112 Re: Request from the City Council for Review of Charter Provisions Dear Julie: At its July 26 City Council meeting,the Mounds View City Council discussed various charter provisions and directed me to draft this request for review of particular City Charter provisions. These provisions in the view of the City's counsel may be either unconstitutional or inconsistent within the charter or city codes. Suggested considerations are included. The Council would appreciate the Charter Commission's review and opinion of the following Charter provisions: • Charter Section 3.01 as to "council meetings" should be modified to strike out language which references calling special meetings upon at least 24 hours notice to each member. Thus, the second sentence of Section 3.01 should be revised to read as follows "The Mayor or any two members of the Council may call special meetings of the Council upon such reasonable public notice as may be prescribed by council rule in compliance with the laws of Minnesota." • The amendments adopted to Charter Section 4.02 as to "filing for office"which were adopted at the election held on November 8, 1994, should be removed from the charter, as such provision have been deemed unconstitutional by Minnesota Courts. Case law in Minnesota has held that charter amendments as to term limits for elected office are unconstitutional. Minnesota Term Limits Coalition v. Keefe, 535 N.W. 2d 306 (Minn. 1995). The adoption of subdivision 2 of Section 4.02 for the charter would appear to fall squarely within this holding. Thus, whether or not the new provision of the subdivision 2 are contained or printed in the charter, the amendment could not be implemented because it has been ruled unconstitutional. Removal of these provisions from the charter would appear to be the preferable course of action to avoid the possibility that a citizen of the city could be misled by including it or that a citizen of the city could force removal of the unconstitutional provision by judicial action should the provision be continued to be printed in the newly updated charter and city code. I have included city attorney Long's letter dated July 26, 1999, regarding this matter for your further reference. r PRINTED WITH 2401 Highway 10• Mounds View, MN 55112-1499 s.« it SOYINK TM recycled paper Equal Opportunity Employer • The provisions contained in Charter Section 5.05 as to "initiative", and in Charter Section 5.07 as to "referendums" should, as in the case of Section 4.02, be brought consistent with case law covering these topics. As such, these two sections of the charter should be revised to be consistent with the correspondence previously provided by city attorney Long dated June 28, 1998,which noted that initiative and referendum provisions contained within the charter as to resolutions were not appropriate. • The present city code language as to approvals for zoning contained at Code Section , 1125.01, subd. 1(j), wherein a 4/5 vote is required for a zoning amendment, is not consistent with the provisions and requirements provided for ordinance adoption contained in Section 3.04 of the charter. The charter only requires an affirmative vote of three or more members of the council for the adoption of all ordinances, etc.,unless, otherwise provided within the charter. The super majority requirement contained in Section 1125.01, subd. 1(j) is not effective since it is not in compliance with the language of the charter. Furthermore, state law sets forth a two-thirds majority requirement for zoning amendments, and there would be some question whether or not a charter could impose different requirements. These four points address suggested changes or matters for consideration by the City Council and the Charter Commission. Please bring these points to the Charter Commission for their and your review. Recognizing the Charter Commission meets only once a month,please notify me and/or the City Council prior to October 21, 1999 of the Charter Commission's review of these points. The City Council can accept the Charter Commission's review at their October 25 Council meeting and if need be schedule their own further review at work sessions and council members there after. If you have any questions, feel free to call me at 612-717-4001. Sincerely,(ger - s • Chuck Whiting Mounds View Clerk Administrator 08-09-99 18:12 From-KENNEDY £ GRAVEN +6123379310 1-693 P.05/08 F-230 470 Pillsbury Censer Kennedy 200 South Suds Street Mini polo MN 55402 GGraven (6)2) 337-9300 Telephone 1 aVen (612)337-9310 fa. CA r e R >= D hrrp�//www kcnr►cdy-craven cum ROBERT C.LONG Arrgrncy ar 1 yw Daect Dail(6 2)337-9202 email mons@kcnncay-gr vcn cum July 26, 1999 C 0y Mr. Charles S. Whiting 0 City Clerk-Administrator City of Mounds Vi:w 2401 Highway 10 Mounds View, MN 55112 Re: Term Limits Charter Amendment Dear Chuck: Pursuant to your request to review the status of the term limit amendments to the Mounds View City Charter that were voted on and adopted at the general election held on November S, 1994, please find the following discussion and my recommendations. As you are aware, .ase law in Minnesota has held that charter amendments as to term hams for elected office are unconstitutional. Minneapolis Term Limits Coalition v Keefe, 535 N.W.2d 306 (Minn. 1995). The adoption of Subdivision 2 of Section 4.02 for the Municipal Charter would appear to fall squarely within this unconstitutional holding by the Court. Thus, whether or not Subdivision 2 of the newly adopted Section 4.02 of the Charter is printed in the charter, the amendment could not be implemented because it has been ruled unconstitutional. Previous advice supplied by my office regarding the issue of the unconstitutionality of such a charter amendment dealt with the issue of' whether such an unconstitutional amendment should be printed at public cost in the Charter where such a provision is known to be invalid. In our judgment, such public expenditures would be improper. Based on materials supplied by the City to my office, as well as information learned from other sources, it appears that in early 1995 the new charter amendment adding subdivisions 2, 3 and 4 to Section 4.02 of the Charter was forwarded pursuant to statutory requirements to the Secretary of State for inclusion in the City Charter. Based upon the City's compliance with the filing requirements of an approved charter amendment pursuant to Minnesota Statutes Chapter 410, it appears that a few of the City's copies of the Charter have been amended to include the three new subdivisions of Section 4.02. Despite such printing of the unconstitutional charter amendment, the question remains whether or not the City, during the present recodification and SJR-166333 4210-t 08-09-99 18:12 From-KENNEDY & GRAVEN +6123379310 T-693 P.06/08 F-230 Charles S. Whiting July 26, 1999 Page 2 updating process of the City Code, should knowingly print an unconstitutional provision in its charter. It would appear that the following options are available to the City. First, it would appear that the most prudent course of action would be for the Mounds View Charter Commission to recommend removal of the unconstitutional amendment from the Charter. This course of action would appear preferable because there exists the distinct possibility that a citizen of the City could force removal of the unconstitutional provision by judicial action should the provision be printed in the newly updated charter and city code. Second, un alternative approach to responding to the issue of reprinting the unconstitutional provision in the Charter would be to include the adopted amendment, as appears to have been the case in some circunistances,' but to include a revisor's footnote which states that such provision has been deemed unconstitutional by the Minnesota Supreme Court. Such a footnote and printing would sati:.fy those who desire to have the charter reprinted with the unconstitutional term limit provision, but at the same time would prevent the public from being misled by the inclusion of an invalid provision in the Charter. Please let me know how the City Council and Charter Commission desire to proceed with this issue. Likewise, please feel free to contact me with any other questions or concerns you may have regarding this matter. Sincerely, C\ „14., Robert C. Long ./ed) '") Mounds View City Attorney SJR:sms it is not apparent from the information provided to us regarding the copies of the Charter containing thc amended Section 4.02,by whom or when such modifications to thc Charter were completed. Please note, however, that the modifications do contain various typographical errors, which at a minimum need to be revised at the time of the updaung and reprinting of the Charter and City Code. SIR-16b333 Mt1210 4 GOLF COURSE FUNDING REVISITED Breakdown of bond issue and pro-forma errors. (See attached copy) Assumptions: Actual: 50 station driving range 40 stations on cement or 30 on grass Bonds issued at 4.75% Bonds issued at 5.00% to 5.90% Does not include sales tax Sales tax at 6 1/2% cost of$40,000+ Costs of goods sold $18,000 Costs of goods sold $60,000 for for revenue of$58,000 (1999) revenues of$111,000 (1999) Mark up of 322% Mark up of 85% Depreciation and capital costs Depreciation is $79,000 and Vehicle not included in bond or bond pro- Replacement $35,000 for 1998 forma. Included in preliminary Capital costs for course projects pro-forma at $13,700 per year Vary from $30,000 on up per year Chemicals/Fertilizer $8,500 No accounting for sand, gravel, Parts, supplies, rental equipment, Pump electricity, fuel, etc. $60,000 Personnel as a % of revenue is 45% Personnel as a % of revenue is 44% Gross Revenues $499,265 Sales Tax $(32,452) Wages $183,096 Benefits $ 26,000 Industry` rules of thumb' that were disregarded. Greens fees need to be $10.00 for every $1,000,000 spent on course construction. (See attachment) Using this number, greens fees would have had to been $25.00 to $30.00 to make a profit on what was bonded. Fees set in 1995 were $7.00 weekday to $8.00 weekend. Net operating income is 20% of gross income. (See attachment) This 20% pays for mortgage, interest, taxes, and capitalization. Using this number on the projections made for 1999 by EGCS you would have only $100,000 to pay for the listed items. Our payments for these items are over $300,000 and escalating each year. Comments: Taking into account the actual from the misleading assumptions makes a difference of at least $250,000 per year. Using the original projections could have resulted in a debt of at least $1,000,000, plus lawsuit expenses. Those losses have been offset for the most part by unique operational techniques which have increased revenues in unforseen areas. • analysis of revenue and expense data and related factors from similar courses in the Twin Cities Metropolitan Area and from sources such as the National Golf Foundation. Selection of the final assumptions used in the pro-forma economic analysis was based upon these data coupled with the professional experience of the EGCS principals. Pro Forma Summary Five-Year Pro Forma Summary of Revenues, Expenses and Net Returns 1995 - 1999 Revenue Items 1995 1996 1997 1998 1999 9-Hole Executive Course: Rounds per Year 12,750 22,000 25,$00 27,000 29,000 Greens Fee $8.00 $8.50 $9.00 $9.50 $10.00 Course Annual Revenue $ 102,000 $187,000 $225,000 . $256,500 $290,000 Power Car Rentals: Annual Revenues $ 1,500 $ 2,380 $ 2,610 $ 2,850 $ 3,100 Driving Range: Annual Revenues 61,039 90,282 . 108,733 125,680 138,544 Club and Pull Cart Rentals: Annual Revenues 6,094 8,480 8,820 9,170 9,616 Golf Merchandise: Annual Revenues 4,219 6,150 6,525 .6,919 7,305 Food Concessions: Annual Revenues 34,453 28,251 48,263 49,463 50,700 Total Annual Revenues $ 209,305 . $322,543 $399,951 $450,582. $499,265 Expense Items Course and Grounds Maintenance: Total C & G Expense $ 86,330 $ 99,556 $102,893 $106,345 $109,915 Course Operations: . . Total Course Expense 71,853 82,214 84;791 87,453 90,209 Driving Range: Driving Range Expense 51,000 30,750 32,023 36,068 37,493 Total All Expenses $ 209.183 $212,520 . $219;707 $229,866 $237,617 Net Income Summary Total Gross Revenues $ 209,305 $322,543 $399,951 $450,582 $499,265 Net Debt Service 169,583 169,583 169,583 169,583 204,583 Income After Debt Service 39,722 152,960 230,368 280,999 294,682 Total Gross Expenses 209,183 212,520 219,707 229,866 237,617 Net Income(a) (169,461)(b) (59,560)(b) 10,661 51,133 57,065 (a) Average net income per year over a 20-year period equals$97,950. (b) The City will appropriate funds to cover the anticipated shortfall. - 7 - i ESTIMATES OF REVENUES, EXPENDITURES, AND NET RETURNS ORIGINAL DATE: 10/04/93 a PROPOSED MOUNDS VIEW 9-HOLE MUNICIPAL GOLF COURSE AND RANGE PREPARED BY: EFFECTIVE GOLF COURSE SYSTEMS, INC. - «.. REVENUE ITEMS: 1995 1996 1997 199& X1999 2000 2001 2002 2003 2004 4 9-HOLE EXECUTIVE COURSE: ROUNDS PER YEAR 12,750 22,000 25,000 27,000 29,000 30,000 31,000 32,000 33,000 34,000 GREENS FEE $8.00 $8.50 $9.00 $9.50 $10.00 $10.50 $11.00 $11.50 $12.00 $12.50 ;1 COURSE ANNUAL REVENUE $102000 $187000 $225000 $256500 $290000 $315000 $341000 $368000 $396000 $425000 kAAk****AAkA** AAAA POWER CART RENTALS: NUMBER OF RENTALS 188 280 290 300 310 320 330 340 350 360 4 COURSE RENTAL FEE $8.00 $8.50 $9.00 $9.50 $10.00 $10.50 $11.00 $11.50 $12.00 $12.50 GROSS CART RENTALS $1500 $2380 $2610 $2850 $3100 $3360 $3630 $3910 $4200 $4500 DRIVING RANGE: SEE NOTE 1 ' # OF BUCKETS 16,632 24,000 28,200 31,800 34,200 36,000 37,800 39,600 40,200 40,200 AVERAGE $ PER BUCKET $3.67 $3.76 $3.86 $3.95 $4.05 $4.15 $4.26 $4.36 $4.47 $4.58 GROSS REVENUE, RANGE ' $61039 $90282 $108733 $125680 $138544 $149482 $160880 $172754 $179756 $184250 kkAAAAAA*AAk*AAAAAAAk AAAAAAAkk*AAA*A*****Ic*************A***AAkAAAAAAAAAAAAAAk CLUB-AND PULL CART RENTALS `" ' GROSS REVENUES, CLUBS & PULL CARTS $6094 $8480 $8820 $9170 $9616 $9870 $10210 $10560 $10900 $11260 1 i AAA***!c**AAAAAAAAAAAAA***AAAA*AAAAAAAAAAAAAA**kAAAAWA*A*********A*k* ,1_ GOLF MERCHANDISE r GROSS REVENUES $4219 $6150 $6525 $6919 $7305 $7688 $8025 $8456 $8850 $9225 ***AAA*A***AAAAA*Ak**** `: FOOD CONCESSIONS j GROSS REVENUES $34453 $28251 $48263 $49463 $50700 $51900 $53265 $54600 $55965 $57368 4. ***Antic***********k****A* irkirkkink**********nht*****AA*AA ************************AAAAA*kA*AAAAA*A*A*AAAAAAAk :ri TOTAL GROSS REVENUES $209305 $322543 $399951 $450581 $499265 $537299 $577010 $618280 $655671 $691602 Ii **Ak*******AAk*AAAAAAA****AAAAAAAA*AAAA**A**k*AAAAAAAkAAAAAAAAAAAkA*k*AAAA* ****** ************ 1 CUMULATIVE GROSS REVENUES $209305 $531848 $931799 $1382380 $1881645 $2418944 $2995954 $3614234 $4269905 $4961507 '4- k. ;1 i1 . 1 I. I: i IV-34 T 4.. ;v EXPENSE ITEMS: 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1 COURSE AND GROUNDS MAINTENANCE '`i FULL TIME PERSONNEL: S/YR " ,w, 3 SUPERINTENDENT $39330 $40706 $42131 $43605 $5131 $46711 $48346 $50038 $51789 $53602 SEASONAL PERSONNEL: $40000 $51500 $53045 $54636 $56275 $57964 $59703 $61494 $63339 . $65239 �` CHEMICALS/FERTILIZER $7000 $7350 $7718 $8103 $8509 $8934 $9381 $9850 $10342 $10859 i TOTAL C&G EXPENSE $86330 $99556 $102893 $106345 $109915 $113609 $117429 $121381 $125470 $129700 it = ----- , . COURSE OPERATIONS . FULL TIME 9—MONTH MANAGER $20600 $21218 $21855 $22510 ,$23185 $23881 $24597 - $25335 $26095 $26878 SEASONAL PERSONNEL: $18500 $25750 $26523 $27318 $28138 $28982 $29851 $30747 $31669 $32619 . PHONES/UTILITIES _ $7000 $7210 $7426 $7649 $7879- $8115 $8358 $8609 $8867 $9133 BLDG MAINTENANCE $803 $1145 $1225 $1311 $1403 $1501 $1606 $1718 $1839 $1967 SUPPLIES. . $6000 $6180 $6365 $6556 $6753 $6956 $7164 $7379 $7601 $7829 .. .CART LEASE $1050 $1428 $1457 $1486 $1515 $1546 $1577 $1608 $1640 $1673 COST OF GOODS SOLD $11250 $15600 $16224 $16873 $17548 $18250 $18980 $19739 $20528 $21350 DUES, LICENSES $650 $683 $717 $750 $788 $827 $870 $915 $960 $1010 ADVERTISING $6000 $3000 $3000 $3000 $3000 $3000 $3000 $3000 $3000 $3000 . TOTAL COURSE EXPENSE ..•• $71853 $82214 $84791 $87453 $90209 $93057 $96004 $99051 $102200 $105460. DRIVING RANGE SALARIES/WAGES $25000 $25750 $26523 $27318 $28138 $28982 $29851 $30747 $31669 $32619 SUPPLIES BALLS . . . $20000 $5000 $5500 $6050 $6655 $7321 $8053 $8858 $9744 $10718. ' MATS $6000 $0 $0 $2700 $2700 $2700 $2700 $3000 ' $3000 $3000 TOTAL DRIVING RANGE EXPENSE $51000 $30750 .$32023 $36068 $37493 $39002 $40604 $42605 $44413 $46337 *AAAAAAAA*A*AAAAA�IAAAAAAAAAAAk*AAAA*A******AA*AA*AAAAAAAAAA******AAkA*A***AAAAAA*AA*AA*AAA*A**AWAAAAAAAAAAAAAAAAAA*AAk TOTAL— ALL EXPENSES $204183 $212520 $219707 $229866 $237617 $245668 $254037 $263037 $272083 $281497 -,t *AAAAAAkAkAA*AAA*AAAAAA**AAAAAAAkA**AAk CUMULATIVE GROSS EXPENSES $209183 _$421703 $641410 $871276 $1108893 $1354561 $1608597 $1871635 $2143718 $2425215 i. T.,. z 4 .e ti. .i t is k IV-36 . Operating Data (continued) Other Financial Data Net Opatio Lim glncom .; (total revenues�less total expenses, belare taxes, eb service nd dep eciatroh. Bottom Top 5 25 Percent Median Top 25 Percent Percent R Region 5 U.S. Region 5 U.S. Region 5 U.S. Region 5 U.S. E $33 $39 $66 $135 $102 $338 $661 $675 G 1 0 • N Average Operating Margin /net.dperafing'fr come.as a perne»tage of ippf*vepOo t 5 Region 5 18.2% U.S. 20.6% Capital Investment/Past FivelYears % of Facilities with Annual Average . "_ Capital Expense Expenditure Capital Expense Category Region 5 U.S. Region 5 U.S. Golf Course Renovation/Reconstruction/Expansion 91% 84% $152,500 $85,500 Clubhouse Renovation/Reconstruction 100% 77% $36,400 $65,300 Maintenance Building(s) Renovation/Reconstruction 91% 74% $28,800 $21,000 Maintenance Equipment/Golf Car Purchases 91% 84% $57,500 $53,300 Irrigation Installation/Upgrade 82% 79% $50,000 $31,100 Infrastructure Improvements 100% 79% $31,800 $21,700 Operating& Financial Performance Profiles of 18-hole Golf Facilities/Municipal Edition 37 Nk Wri 1 � 4�X ' ' d- 70.' � , 6` a 2747., #� 41 >: � w " e? ?A�' +f,.. x• .r p " q oa 447 „ V< .tea i, 1 4 , q2� • 4 • - .0 , va ` k. a T.,.....„12.r. } ....... % t �, > k . gs '4' r _. + a h -ay. i� „_ & s 1 , k.14,, rf i , ea a ' rt s Q ` 4L, , :4411;13:- i ;-:.e..04--:.: a4 '' - }y' . . ' t } .� 2' . ti t -',-,- 41_. '4 .x'+ e a�=,tsu -® 4.0" A x.t ....,‘,,e1 „F ,ee r_..._..^�. ...:. 1. „,A:.• y , aLyt m.ac,3 ,-A x rA i^ L . • .d . ( i � ar4Ar91";4113.:1 ""'4=1'k`,;°11 gp kd. '12!” } b -. ?-. . Nt �� � eV � 46:-A. - s 3 }.!, - " 7 �,'ta . r , R , � � � " " i. fiwtg 1;Tq'. t , 7.-M .4' `� _ Tr rx .^ r-..11, _ ', ? Current financial picture as result of lawsuit costs, capital costs, and no new revenue streams. Lawsuit costs Future costs Lawyers Fees $330,000 Soil $ 45,000 x 5 years Settlement (120,000) Bridge 40,000 Equipment 110,000 Pump 35,000 Labor 50,000 $300,000 Material 35,000 $405,000 Comments: The costs of the lawsuit has been paid to date out of the Bond reserve fund. We are currently at a deficit of$145,000. One result of this is we have lost interest income from the bond reserve and any contingency fund we should have, in the amount of 25,000+ per year. The last financial projection done (see attachment) was given out in Oct. of 1998. This clearly demonstrated the need for either new revenue sources or an influx of cash from some source. 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Course Lights $ 650,000 $140,000 $30,000 Course Expansion 1,500,000 400,000 20K-150K Range Expansion 1,000,000 400,000 50K-200K Billboards 0 50,000 50,000 Comments: We are having a wetlands study done on Outlot A to see how much mitigation needs to be done in order to put in another 9 holes. This option is the least speculative because of our current history with the existing 9 holes. If cost rise much above 1.5 million it may make the cash flow prohibitive. Course lights would be the most speculative because there is little data to go by other than the huge demand we currently experience. Billboards are out of our control and are unable to budget for. Range expansion holds the best return for money invested and best use for our facility that is open 9 months, could be open for 12 months. Suggested funding options for long term financial security. Bruce Kessel has done a spread sheet that I have attached. This is a plan to put the golf course on at least a break even schedule with a series of loans to be repaid at various times by the golf course. There is also the opportunity at some point in time to refinance the current bonds. Mr. Kessel has the information that will help explain what this entails. oo P. gen 7 N r,. �p g . r R en h en h en O.co^co N NO 0 O 8 VO•bi .Oe..co 0..N 0 0 vONi 0�. N O.T-. h. h 0 0 0 0 0 O m O O O Ln E b oi^V co h b .0 h O.r M o R O O N sO ppry.O Ol N O �p O .... co R a N v V b h b h h O r.r-. T 1� err. h 8 v ^ O I 00 N N 9 N. h r W en N W 8 p..�pD p 8 8 ', v v ''. V 8 vri.O M r fu N O O;,N n.. O O m N NO O O O O Off.^en O O O r-:. O O O O O�O b O�', O O O ee E N..M V T M O r R N O. e'el V h N r' V M N g g V b M I N w M.� N R Cr N v g N h h'V'h b -b r. 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With the long term planning needed to make both repairs to the soil and to carry out a financial plan that depends on maintaining or increasing revenues each year, a ten year contract, renewable in five would show the cities commitment to these plans. Since the second year of the golf course operations I have had to face a constant questioning of the golf courses purpose or value to the city of Mounds View. Every other month the question of selling the course or turning it into an industrial park for tax revenues come up. When time is actually given to address financial issues, I am told every thing is on the table including personnel, and contracting with someone else for maintenance service. This atmosphere hurts the moral of my staff and hurts motivation when I try to get commitments to buy into what we are doing long term. For the last three years we have had a stable andvery professional staff. It is this very stability that has given us a chance to have the success we are having. Note ,the 1 million plus that the city could have lost by now with little or no chance of finding a solution not involving the general fund. Note, the fact that we are producing almost 80% more gross revenue than comparable courses and 50% more than the inflated pro-forma. The current financial problems have been talked about for years. Our operation of the Bridges has made a reasonable business solution possible page 2 I have been told time and again what a great job has been done at the Bridges. In 1996 I was also told I would be compensated for the 600 hrs of comp. time that I had lost, this never happened because of city policy and not having a contract. In 1997-1999 my crew and myself spend at least twice the hours required by contract doing-in-house capital projects that could be contracted out at a huge cost to the city. I have more than proven not only my dedication to making the Bridges successful, but also profitable. I would hope the city would see that it is in their best interest to secure the same type of performance with a long term contract. I hear constantly at the council level that they want more service for what they pay. I think that if jobs are compared in this city or any city ,with my staff and myself, that our productivity gives you that exceptional bang for your buck. MEMO IMMEDIATE ACTION TO: Chuck Whiting FROM: John Hammerschmidt • TOPIC: Golf Course DATE: August 6, 1999 The following items currently have a negative impact on the operation of the golf course and have the potential to turn into a crisis that would significantly reduce revenue. I request a decision on how these items will be resolved before it becomes necessary to close the golf course for periods of time to mitigate any damage from inaction on these items. PUMP REPLACEMENT: The irrigation pump and automatic satellite stations have not functioned correctly since installed. The problems have been well documented during the lawsuit. A determination was made by our attorneys and the manufacturer to pay us a negotiated price for complete replacement of the pump station. I agreed to somehow make the system work for one more year, with the idea that if we expand to nine more holes we need to restructure the pumping system. The automatic system is no longer automatic and needs to be manually started at all times. It turns off and on at random and cannot reliably go through a complete cycle. This has made it necessary to be at the golf course almost all twelve hours the course needs to be watered. If the irrigation does not run or runs improperly we can lose large amounts of grass on our greens in a matter of hours. I need to know if I can go ahead and start designing and scheduling a new pumping system. The estimated cost was $35,000. If we are not going ahead with a new pump station, I will need to start mowing grass less frequently and at a much higher cut. I would also need to do the bulk of watering during the day so I can monitor it closely. Obviously a combination of these two will have a negative effect on the golfers and cost us business. NEW BRIDGE CART PATH: During the last three weeks we have had a twenty-four-foot section of the wooden bridge either collapse or separate. While repairing the damaged areas, I noticed how the welds on the cross beams have broken and how most of the deck boards are warped or unattached. As you know, this bridge joins one half of our course to the other and we cannot remain open for play without it. In order to put in an alternate smaller bridge for carts and reroute them around the wet lands I need a lead time of three months. Here we are facing two deadlines, one for winter and the other for the possibility of a bridge total collapse, or collapse I can't fix without closing the course. This entire subject is once again been covered extensively in the lawsuit documents. Full Time Assistant: In 1998 my assistant superintendent resigned to start his own business. This was a full time regular position. This spring when I brought up replacing this position, I was told that the council was not approving any full time new hires. Since I have had surgery on my left hand and soon will have surgery on my right, there will be many functions that only a full time assistant will be able to cover. When it comes right down to it I would think the city would want to be covered with some kind of backup incase I became ill or was hurt. The doctors told me I may have waited to long to have surgery on my left hand and that it may take a year if ever to recover. I do not want to take the same chance by putting off the procedure on my dominant right hand. My surgery is scheduled for the end of August, so I need to know now if a new assistant would be approved. Addendum: August 13, 1999 The 50 horsepower motor and several of the irrigation pump controls have burned out. I am currently watering the course with fire hoses and rain from mother nature. The closest matching motor was found in St. Louis and will arrive Saturday morning. The service tech from the previous pump company will help me install the new motor this weekend. The cost will be three to four thousand dollars. If the sun comes back out and we do not have the pump running I will have to close the course temporarily. Obviously, these situations need to be resolved in the future before they reach the crisis point. The new motor in no way fixes this pump station. It is a stop gap measure that may last a week, a month, a year. The pumps and the controls are still inadequate as shown in the lawsuit and the entire system needs to be replaced. MEMO TO: Chuck Whiting FROM : John Hammerschmidt TOPIC: Golf Course Funding Options DATE: August 5, 1999 Since the golf course has been built, it has been evident that either additional funding or expansion of the business to increase profits was going to be necessary to meet increasing debt payments and capital expenditures. Since no expansion has been seriously considered and since the lawsuit legal costs and course repair have taken place, there must be some infusion of cash to bring financing in line with bond covenants. The golf course committee has discussed several funding options, which I will summarize below. I need to point out that the overall financial picture of the golf course is not a five minute explanation and that any option that is used should also have with it a long term plan to expand the golf course business. This is so that a reserve of some type can be established to make up for fluctuations in business and pay back any loans that may be made directly by user fees. Option one: (spreadsheets attached) This is based on a series of loans from special projects. The bond is refinanced at the most favorable period in the next five years and repayment is extended two years to pay back the city loans. The $500,000.00 difference will be made up by interest savings when the bond is refinanced. Option two: (spreadsheets attached) The suggestion here is to take the entire cost of the lawsuit to date and repairs out of special projects. This amount would then be put back into the golf course fund. Along with refinancing the bond and extending the years for repayment we are back in line with the bond covenants. Option three: The third option has several parts to it. TIF money could possibly be used to pay for the lawsuit expenses and repairs. This obviously would need a legal opinion and is only possible until December 31, 1999. The other part of using TIF money, would be to pay for either range expansion, course lights, or course expansion. Revenue produced from any of these three projects would fund both increases in bond principal and any capital expenses in the future. TIF funds could possibly be used to pay the principal and interest for the course in years 1995-1999. For expansion with TIF funds even to be a possibility, the decision needs to made immediately due to the amount of time to do pro-formas, get bids, cost estimates, etc.