Phoenix Golf Enterprise Study, Ad-Hoc Committee Meetings

and RecommendationsJanuary 23, 2013

phoenix.gov/parks/golf/adhocgolf

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2012 Golf Enterprise Study

• Financial impact of various options to address the ongoing Golf Enterprise Fund deficit

• Does not include an analysis of any social or quality of life issues or Papago Golf Course

Aguila Golf Course

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Golf Supply and Demand

Phoenix Golf Average Rounds & Maricopa County Golf Courses

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Saturated Valley Golf Market

Golf Holes per 10,000 People by Metropolitan Statistical Area

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Phoenix Golf Financial History

• Rounds began declining in early to mid ’90s• Phoenix Golf began running annual deficits

in Fiscal Year 1998-99• Fiscal Year 2011-12 ended with an annual

deficit of $2.4 million

• Cumulative deficit at $14.8 million as of 6/30/12

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Phoenix Golf Financial History

• 2004 Refinanced Golf Fund debt to lower cost• 2005 Golf Staff Reductions• 2007 Refinanced Golf Fund debt to lower cost• 2009 Defeased (paid off) all outstanding golf

fund debt• 2009 Outsourced Papago Golf Course• 2012 Comprehensive Golf Study

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Operational Improvements

• Many efforts over the years to improve revenue, quality of play, and operational efficiency

• Representative examples:– Online booking of tee times– Volunteer assistants to improve pace of play– Driving range improvements at Encanto– Staff reductions that brought positions per hole

12% below national average

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Study Conclusions

• Phoenix Golf has been operating more like other General Fund recreation activities such as softball or swimming pools.

• Larger market forces have prevented Phoenix Golf from being self sustaining

• The Phoenix area golf market, similar to the national golf market, has experienced declining rounds in response to the increase in golf courses over the last 20 years

• Even with aggressive efficiency and revenue enhancement efforts, Phoenix Golf will not be 100% cost recovery over the next 5 years

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Cumulative Deficit

• If Phoenix Golf should continue operating like our other public recreation programs :

No change $2.0 – 2.4 million

Outsource grounds maintenance $1.4 million

Close Palo Verde $1.2 million

Close Maryvale and Palo Verde, convert Aguila to limited-use park

$800,000

Close Maryvale and Palo Verde $600,000

Close Maryvale, Palo Verde, & Aguila $412,000

Annual Cost to 3PI or GF*

* Does not include future major repair or infrastructure replacement costs.

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Golf Ad-Hoc Committee

• Parks and Recreation Board appointed 11 person Ad-Hoc Committee

• Process lasted approximately three months and involved: – Five public hearings were held at locations near

each city golf course– Two work-study sessions held

Encanto Golf Course

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Golf Ad-Hoc Committee Members

Name Affiliation

Mike Lieb, Chair Parks and Recreation Board Member

Cleve Lynch, Co-Chair CGAC Member

Trish Alston Encanto Ladies Club and Encanto resident

Jesse Bravo Palo Verde golfer and resident

Jim Carl Maryvale Men’s Club

Mark Gallegos Laveen resident

Curt Hudek Executive Director of the SW Section-PGA

Dave Maddox Cave Creek Men’s Club

Larry McLennan Save Papago Golf

Jim Miller John F. Long Properties, Inc.

Adreienne Wilhoit Resident and attorney

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Public Outreach

• Golf Ad-Hoc Committee webpage created• Direct emails to more than 65,000 addresses in

database• Post cards mailed to 5,000 households and

businesses• Meeting dates/schedule mailed to 95 HOAs• Two public hearings recorded and posted on

Committee webpage• Hotline established during process• Email link created for public comment

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Participation

• More than 500 residents attended the five public hearings– 86 spoke at hearings– 123 provided public comment via email link– 36 left voicemails on hotline

Cave Creek Golf Course

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Committee Recommendations

1. Keep all courses open

2. Eliminate Golf Enterprise Fund

3. Pay off cumulative $14.8M debt

4. Outsource course maintenance

5. Issue RFP to private sector to generate potential revenue through development

6. Expand food and beverage

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Committee Recommendations, cont.

7. Create advisory board of golf professionals and community advocates

8. Expand marketing plan/create marketing budget

9. Prepare five-year business plan

10.Explore deed restrictions

11.Develop five-year capital plan

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Recommended Action Plan

1. Revise 1982 Golf Enterprise Fund resolution

2. Pay down cumulative debt immediately

3. Issue RFPs for:I. Outsourcing maintenance

II. Development opportunities

III. New food and beverage concessionaire

IV. Firm specializing in golf course operations and creation of five-year business and capital plan

4. Issue RFP for management/operation of Papago

5. Establish annual Phoenix Golf Summit

6. Develop golf course deed restrictions