Submitted by Suanne Z. Thamm
Reporter – News Analyst
City Manager Joe Gerrity sought guidance from his bosses during a workshop on June 17, 2013 devoted to discussion of the long-term debt being carried by two of the city’s enterprise funds, the city marina and the city golf course. For the current fiscal year, which ends September 30, 2013, the projected annual loss for the marina is $322,855, while the golf course will lose $91,078. These figures will increase the accumulating losses for each enterprise fund as follows: marina, $903,635; golf course, $680,571. The largest contributing factor to these losses is debt service, which for the current fiscal year involves $422,837 on marina debt and $241,842 on golf course debt. Without debt service, both enterprise funds would be operating in the black.
Unless the long-term debt can be eliminated or greatly reduced, the current operations of both funds will continue to show negative balances. The city incurred the debt before either Westrec or Billy Casper was retained to manage operations at the marina and the golf course respectively.
Gerrity presented options for dealing with the current fiscal year situation and touched upon solutions for the next budget year. The Fernandina Beach City Commission (FBCC) was receptive to Gerrity’s suggestion to use excess cash-carry-forward, resulting from higher than budgeted tax revenues, to pay down debt for the current year. Further discussions about enhancing revenue and reducing debt in the next fiscal year will include plans and ideas presented by the city manager, Westrec, Billy Casper, the city’s Golf Course Advisory Board (GCAB).
The 1.5-hour meeting was well attended by representatives of Westrec, Billy Casper, and the Golf Course Advisory Board. Additionally, Tom Shave and members of his golf course fact-finding committee attended. Public input was limited to Joe Springer, representing Westrec; Dan Zimmer, representing Billy Casper; and Doug Bailey, GCAB Chair.
The City Marina
According to information presented by City Comptroller Patti Clifford, in October 2005, the city issued $9,005,000 Capital Improvement Refunding Revenue Notes, Series 2005. The Marina’s share of this was $2.4M for new proceeds for capital improvements (BigP grant), plus $2.7M to refinance existing debt and cost of issuance. In October 2010, when the debt was refinanced, the Marina share was $3.7M. The interest rate for the $3.7M loan is 2.41%; the debt matures in 2020.
A $1.3M loan was issued in 2009. At 9/30/2012 the remaining Principal balance was $1,104,000. The interest rate on this loan is 4.4% and it matures in 2024.
The need to dredge the marina basin has been costly for the city both in terms of absolute dollars (Westrec is not responsible for dredging costs) and in lost revenue. This year the marina closed for dredging during the months of February and March.
Joe Springer, representing Westrec, told the FBCC, “Every time we dredge, we close. Slips and fuel—that’s it [for revenue sources]. We are contributing every year, but that debt kills us.” Springer told the FBCC that he is looking to recruit more groups, like the Marine Trawler Owners Association (MTOA) to visit the Marina. He said that he tries to piggyback on other city events like the blues festival and Sounds on Centre to attract boaters. He said that boaters want a destination and they like to travel in groups. He has worked with regional and local travel representatives and hotels to put packages together to provide boaters with discounts and favorable opportunities.
The city has been able to benefit from Westrec’s larger advertising efforts to attract new boaters. Springer says that his job is to maintain the image Westrec broadcasts when the boaters arrive to get the word out in the boating community. He cited the recent success of the first boat show recently at the Marina and said that it brought out local citizens who had not visited the waterfront for five years.
Commissioner Arlene Filkoff asked whether he and Billy Casper had tried putting together a package that would promote both golf and boating. Springer replied that these two activities attract their own followers and don’t marry well.
Filkoff asked Gerrity about the potential to avoid dredging charges by moving the marina basin to the north, as has been suggested in the past. Gerrity responded that such an action would involve potentially heavy-duty changes that would result in more debt. He added that he wants to keep the debt from growing larger at this time.
The City Golf Course
Most of the meeting was taken up by concerns and issues surrounding the golf course, where there are three outstanding loans requiring debt service. Comptroller Clifford reported that the Golf Course’s share of the 2005 revenue bond was $1.2M for new proceeds for capital improvement (irrigation) plus $484,194 to refinance existing debt and cost of issuance. In October 2010, when the debt was refinanced, the Golf Course share was $1,233,650. The interest rate for this debt is 2.41% and will mature in 2016. In 2011, the Golf Course acquired several pieces of John Deere equipment valued at $198,780. That debt has an interest rate of 4.25% and matures in 2016. In May 2012, the city loaned the Golf Course $250K from the General Fund to purchase golf carts. The 5-year loan pays the city 4% interest.
Gerrity presented some options to the FBCC: raise the city’s millage rate; sell some Golf Course land; close the Golf Course and sell all or portions of the land. He noted that any sale of golf course land would require approval by the voters via referendum.
Commissioner Ed Boner asked, “Is 18 or 27 holes the way to go [at the Golf Course]? Are we being premature in discussing this now when we are looking at the current fiscal year?” Mayor Sarah Pelican asked about converting the Golf Course from an enterprise fund to a city recreation program under the Parks and Recreation Department. Gerrity replied that such an action would not solve the debt problem. Commissioner Pat Gass reminded commissioners that the city is responsible for improvements at the Golf Course.
Commissioner Filkoff asked Dan Zimmer, representing Billy Casper, if he saw any other options to increase revenue to pay off the debt. Zimmer replied that Billy Casper is exploring fundraising programs like hole sponsorships and special games to bring in money for capital improvements. He said that fixing the greens is the number one issue. Because of work currently underway, he expects revenues to be up in 9-16 months with course fixes that will last 5-10 years. He acknowledged that the work is not comparable to a complete rebuilding of the greens, in accordance with U.S. Golf Association guidelines, because the price of doing that is too high.
Mayor Pelican asked if it would be possible to repair 18 holes using the current method but to use the “super deluxe” method on the final 9. Commissioner Boner said that if the Golf Course converts to 18 holes it would look more like a standard country club. He asked if Casper could cooperatively market with other local courses by offering things like dual memberships or golf packages. Zimmer replied that Casper is always looking at ways to improve revenue. Vice Mayor Charlie Corbett asked, “When are you going to start [instituting fundraising ideas]?” After a slight pause, Zimmer replied, “I assume tomorrow.”
In response to commissioner questions regarding memberships and rounds played, Zimmer reported the following. Currently there are 308 full members, 263 advantage card members, and 35 player development members for a total of 606 memberships. Of those, 155 are city residents. He estimated that there are about 10-15,000 unique Golf Course customers who play about 49,000 rounds annually. Whereas it is estimated that 8% of Floridians are golfers, Zimmer would like to see 10-12% of our local population playing because of the demographics of the local community.
Commissioner Filkoff asked about the impact of raising rates. Zimmer replied that the Golf Course currently charges a $22 cart fee, which is $4 higher than other local courses for members. He said that they could consider charging higher fees to non-residents and/or non-members next year.
GCAB Chair Doug Bailey informed the FBCC that the GCAB is in the process of surveying all current Golf Course members on ideas to improve the Golf Course and what they might be willing to do to help.
FBCC Discussion
Commissioner Filkoff suggested that the commission was doing what it always does, jumping straight into the weeds without first defining “what exactly is the problem we need to solve on this debt?” Comptroller Clifford said that auditors have raised concerns of the negative cash-carry-forward balances for both funds that are being covered by the Water and Waste Water enterprise funds. Filkoff said, “Then we either remove the debt or stop adding to it.” Gerrity said that the debt is there, but he wants guidance from the FBCC on how to keep it from growing.
Commissioner Gass said that she realizes that if you are a golfer or a boater, both these activities are “near and dear to your hearts.” However, not all city residents fall into these categories. She suggested that the city consider charging users of both services a $5-10 debt reduction fee that would sunset upon retirement of the debt. She suggested that such an action be combined with raising the millage “a touch” so that all residents contribute something toward solving the debt problem. Such actions, she believed, would demonstrate that “we are all one city.”
The Mayor seemed to achieve FBCC consensus in directing the City Manager to proceed with his suggestion to use unanticipated higher revenues from taxes toward covering current year losses for both the Marina and the Golf Course. Discussion of options for the future will continue in formulating the FY 2013/14 budget. Mayor Pelican asked Gerrity to look at “non-performing” property owned by the Golf Course, specifically land east of Simmons Cove off Simmons Road that is vacant and wooded.
Commissioner Filkoff said that she felt that no one on the commission is interested in closing and selling the Golf Course. No one disagreed. She asked, “How do we make the best possible use of the Golf course and the Marina? How do we distinguish ourselves [from other communities]?” She advocated a strategic plan or a vision for the Golf Course.
Commissioner Gass thanked the GCAB for taking it to the people for ideas. She said, “We need the citizens to assist us. This is a team sport. Talk, think and submit wonderful ideas to us.”
Commissioner Boner also thanked Tom Shave and his committee for their efforts to improve the Golf Course.