Submitted by Suanne Z. Thamm
Reporter – News Analyst
December 2, 2020
The Fernandina Beach City Commission (FBCC) met for two hours in regular session on December 1, 2020. This was the last business meeting for the current FBCC, which will hold its reorganization session on December 15, 2020 to swear in two new Commissioners who will replace term-limited John Miller and Phil Chapman, who did not seek a second term.
The agenda item that generated the most discussion related to the future management of the City Golf Course (Resolution 2020-175). The FBCC did not act on the Resolution proposed, but rather unanimously supported a recommendation from City Manager Dale Martin to defer action for 60 days during which he and City Attorney Tammi Bach would work with Indigo Golf Partners (IGP) — formerly Billy Casper Golf, LLC — in an attempt to resolve differences in calculating savings that the City might accrue by moving the operation in house.
IGP has agreed to continue operating the City Golf Course for the 60-day period, while balking at the City’s request to extend for 6 months.
FBCC discussion was wide ranging and not always on point. While Commissioner Mike Lednovich and Vice Mayor Len Kreger seemed focused on casting a wider net via RFP solicitation to identify companies interested in managing the City Golf Course, Commissioner Chip Ross was intent on finding ways to retire existing Golf Course debt and reducing or eliminating the annual taxpayer subsidy to the operation.
All Commissioners agreed that the City Golf Course is an amenity for City residents and should continue to exist under one form of management or another. Lednovich noted that although he is a golfer and plays 120 rounds each year, he does not patronize the City Golf Course because of the condition of the greens. Ross said that he is not a golfer, but he supports operating and maintaining a public course at a middle tier level. Kreger questioned the need for a 27-hole course and asked what savings could be obtained if 9 holes were to be converted to park land. Chapman sought IGP perspectives on Kreger’s suggestion.
Commissioners seemed in agreement that a level of support from the General Fund was justified, much as the City supports other recreational programs offered to residents such as ball fields and swimming pools. No specific amount of support was suggested.
As a result of the FBCC’s agreement to defer action for 60 days, the matter will be decided by the newly seated FBCC in February.
Background
The current five-year agreement between Billy Casper Golf (re-branded as Indigo Golf Partners, or IGP) expires 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 to ninety 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 City’s analysis of the management agreement indicated a projected savings of approximately $200,000 annually if the City resumed internal operations of the Golf Course. IGP disputes this savings.
Discussion
Commissioner Mike Lednovich led off the discussion, offering options to pay off current Golf Course debt. However, he differed with Commissioner Chip Ross over the amount of that debt. Lednovich maintained that in the early 2000s the City had borrowed approximately $1.7M from a then-profitable operation which had never been repaid. Although Ross claimed the Golf Course was $2M in debt, Lednovich maintained that the amount is closer to $300K, if the City acknowledges its debt and repays the Golf Course from the General Fund or reserves.
Ross and Lednovich agreed, however, that the City has “played a shell game” each year by legally but temporarily shifting funds to cover Golf Course debt at the end of each year. Auditors have advised that this situation should not continue and a plan should be adopted to retire the debt instead.
Ross asked whether the Golf Course should be considered a business or an amenity. He called for a policy decision from the new City Commission to clarify the Golf Course’s status and standing among other City amenities.
City Commission Candidate Genece Minshew addressed the FBCC, asking what they were charging the City Manager to accomplish in 60 days. City Attorney Tammi Bach followed Minshew’s question with another question: what does the FBCC want the City Manager to bring back to them.
Each Commissioner responded supporting to one degree or another the need to make the Golf Course as self sustaining as possible to lessen the burden on City taxpayers while maintaining a mid level course that provides a good golfing opportunity at a reasonable cost. They also asked for an assessment on the need for a 27-hole course, as opposed to 18 holes.
Mayor John Miller noted that the Golf Course appeared to be not taking advantage of other revenue generating opportunities, such as special events. He said that the clubhouse and course are not used consistently throughout the year. He believed that food and beverage services could be a revenue source to offset losses in other areas of the operation.
Lednovich and Kreger continued to advocate for a longer period of reflection on keeping IGP on contract, suggesting that issuing an RFP to solicit a wider field of interest in operating the Golf Course after 10 years with the current operator could yield savings. They noted the recent process that brought in Oasis Marinas to replace Westrec as City Marina operator.
However, the 60-day period agreed to with IGP is not sufficient time to issue an RFP and evaluate responses.
What is missing here is the annual cost to run the course(s). What is that cost? How much is spent on the course and how much on the ancillary operations? It seems the city would do well to reduce the course to 18 holes to save maintenance costs, make the course part of the city park system and run it with city employed employees, including an experienced golf industry manager (maybe a retired PGA section pro?). The city could use local students (low cost) to maintain the course and use it as an agronomy educational program. Students could also be used to run the F&B portion as educational program for that area, as well. There is no reason that a municipal course, with year round favorable climate, should be losing money….especially considering the large population in the area and the golf “boom” being experienced currently due to Covid. Done properly, this could be a terrific opportunity for the entire local community.