Submitted by Suanne Z. Thamm
Reporter – News Analyst
February 3, 2021
Effective February 10, 2021, Billy Casper Golf (re-branded as Indigo Golf Partners, or IGP, and now Antares Golf, LLC.) will no longer operate the Fernandina Beach Municipal Golf Course on behalf of the City. At the February 2, 2021 Regular Meeting of the Fernandina Beach City Commission (FBCC), Commissioners voted 4-1 not to renew their agreement with the management firm, instead opting on a 5-0 vote to issue an RFP to determine if other qualified companies might offer the City a better deal. Only Vice Mayor Len Kreger voted to continue with Antares Golf, LLC.
The current five-year agreement between Billy Casper Golf (re-branded as Indigo Golf Partners, or IGP, and now Antares Golf, LLC.) expired on December 13, 2020.
The Golf Course financial condition has been the subject of significant discussion, culminating with the 2019 Integrated Financial Sustainability Analysis (commonly referred to as the Stantec report). In that report, the authors recommended additional General Fund support to eliminate the Golf Course’s cumulative cash flow deficit (owed to other City funds) which was projected at approximately $1,264,000. Under the Stantec model, the cumulative cash flow deficit would have been eliminated within five years. As part of the City’s FY 2021 budget, the Stantec model was not incorporated, leaving the financial sustainability of the Golf Course unresolved.
The Golf Course’s existing debt (related to clubhouse renovations) is nearly eliminated, with the final payment of approximately $120,000 due this year. Although the elimination of the debt service payments improves the financial sustainability of the Golf Course on an annual basis, it does not address the cumulative cash flow deficit: the deficit is stabilized, but not reduced.
The additional projected revenue due to the introduction of Toptracer is expected to enhance the financial condition of the Golf Course. The Toptracer facility is currently under construction and likely to be available for use within sixty days. The additional anticipated revenue can be applied, in part, to reducing the cumulative deficit.
As part of the analysis of the financial viability of Toptracer, costs associated with the management agreement were also examined: without the additional General Fund support recommended by the Stantec report, alternatives to reducing the cumulative deficit had to be considered. The analysis of the management agreement indicated projected savings if the City resumed internal operations of the Golf Course. Ms. Jodi Henson, University of North Florida Small Business Development Center, prepared the attached document titles, “Getting the Fernandina Beach Golf Club to Profitability.” Some costs associated with a return to City operation (such as benefits and pension) would become the responsibility of the City, but overall costs would still be projected to be lower.
Antares and City negotiations
Representatives of Antares and the City have been in negotiations during the emergency 60-day extension of the contract that expired in December to resolve City concerns over costs and conditions of the greens. Antares representatives met individually with all Commissioners except David Sturges. The resulting contract which was put forward for FBCC consideration included reduction in Antares’ management fees and what Antares considered a structured path to profitability. It also included benchmarks that course management would be required to meet in order to be rated by a third party as meeting its obligations under the contract. Antares agreed to invest a portion of their profits into capital improvements as well.
The length of the contract proposed was 5 years with two 5-year renewals if performance was satisfactory. The contract provided for cancellation for cause or without cause.
Presentations
City Attorney Tammi Bach presented the revised contract to the FBCC, explaining the changes the parties had agreed to.
Tony Cianci, IGP Senior VP, and Dan Zimmer presented a detailed PowerPoint to the FBCC, showing how they planned to improve the golf course’s bottom line during the new contract.
Cianci and Zimmer also explained how the conditions of the course and general operations would be evaluated.
Zimmer explained that over time the City would reduce its need to subsidize the golf course.
Commissioner Ross attempted to get clarification on the City’s funding obligations. Zimmer indicated that the $200-300K annual subsidy would be eliminated as the greens improved and business increased. The break even point would be reached in 2026.
Commission discussion
Vice Mayor Len Kreger moved to approve the proposed contract, and Commissioner Bradley Bean seconded his motion, allowing discussion to begin.
Only three of the five City Commissioners are golfers: Mayor Mike Lednovich, Commissioners Bradley Bean and David Sturges.
Sturges reported that he has received 20-30 calls complaining about the course, likening the greens to “a cow pasture,” and only one person praising the current course. He admitted that he did not know whether such problems were attributable to a lack of funds or management. He expressed skepticism as to whether Antares had an action plan to improve the course or whether they were “just singing the song to sign the contract.” Sturges allowed, “I would just as soon see 6-8 local citizens hired to run the golf course. A lot of City residents have told me [the City golf course] is a disgrace.”
Vice Mayor Len Kreger said that his emails were running at 50-50 as to whether the golf course was good. He noted recent high use and suggested that the City course was probably in the mid level of public golf courses. He reminded Commissioners that capital improvements for the golf course are included in the City’s Capital Improvement Plan. “For the past 5 years,” Kreger said, “I have not heard much about the golf course at all, except for subsidizing operations. I don’t necessarily have a problem with subsidizing it a little bit, because it is a recreational opportunity, just like our ball fields. I don’t recall any big problems over the past 5 years. That’s why I’m recommending we continue with [Antares]. I think this whole thing has gotten out of hand. The problem is not going to go away unless we provide some capital investment, and we don’t have a lot of money to spend.”
Lednovich has been a vocal critic of the City Golf Course over the past 6 months. He said that the golf course is the most used city amenity, second only to the beach. “It is a $1.4M business,” he said. “After 10 years of holding the contract, I believe it is my responsibility to know what my alternatives are in order to make the best decision. The way to do that is to go out on RFPs. There are other golf management companies. The City doesn’t support this contract. The City supports self-management.”
Lednovich admitted that during the past 10 years under the existing contract mistakes were made on both sides. He said that the biggest mistake the City made was not conducting an annual review of operations and conditions, as required by the contract. “We never set metrics on the condition of the course,” he said. “That’s on us. We need to do a better job. The City Manager has indicated that there is an interim plan to run the golf course [should we end the contract with Antares this month] while we go through the RFP process, and we need to look at all of the alternatives and then make the best decision.”
Commissioner Chip Ross said that before he voted, he wanted to hear from Commissioner Bradley Bean who regularly plays the course. Bean said, “I’m seeing the winds in the room. I do like the golf course and playing it as it is now. To be honest, I’ll play it no matter what it looks like because it’s my golf course. I do appreciate the work that has been done by the current firm over the past 10 years, but maybe going out on RFP would not hurt. I will support the RFP route.”
When the vote was taken, all Commissioners except Vice Mayor Kreger voted against renewing the proposed revised contract.
At the request of the Mayor, City Manager Dale Martin explained how the City will proceed, following the expiration of the current contract on February 10. Martin said, “I will work with the contract holder on a transition and work to prepare an RFP. I will reach out to Indigo Golf to determine the status of their employees who will remain their employees until we are advised otherwise. We need to pursue [an interim] general manager. We will then determine how to staff and operate the facility to provide the best service, including Toptracer.”
Martin acknowledged that the golf course is an issue of high interest to Commissioners and that he will work with the City Attorney to bring a draft RFP forward for their input and consideration prior to publication. He said that realistically, allowing time for the RFP process, interviews, etc. the City would look toward bringing a new operator on board by the beginning of the new fiscal year (October 1, 2021).
Commissioner Bean moved and Vice Mayor Kreger seconded a motion to move forward with the RFP. The motion passed 5-0.
The current operator was not ruled out of consideration, should they choose to respond to the RFP.