Submitted by Suanne Z. Thamm
Reporter – News Analyst
February 5, 2020
In an effort to discharge municipal golf course debt and return the enterprise to profitability, the Fernandina Beach City Commission (FBCC) unanimously approved Resolution 2020-23 at their February 4, 2020 Regular Meeting. By their action they directed the City Manager to move forward to acquire Toptracer technology and to move forward with other golf course improvements included in the City’s Capital Improvement Plan. The total expenditure approved: $495,000.
The vote followed a presentation by City Manager Dale Martin at the January 20, 2020 FBCC meeting.
Funds were not budgeted in the Golf Course FY 2019-2020 Budget for this purchase. The FBCC approved transferring $495,000 from the Reserve account to Golf accounts.
The Golf Course Advisory Board on January 8, 2020, unanimously recommended that the City Commission support the proposed golf course improvements and Toptracer implementation.
In introducing the item, Martin reminded Commissioners about figures showing the financial picture of the golf course presented last year (the “Stantec Report”). He said that if the City continues its current practice, by 2024 the golf course will achieve a positive financial balance. The current cash flow deficit is in the range of $2M. The Stantec Report recommended that in order to retire golf course debt and make the enterprise profitable, the City needed to increase subsidies from the General Fund or find additional sources of revenue.
In order to address the financial concerns, the City was recommending a one-time expenditure of $497K, broken down as follows:
Toptracer — $300K:
Driving range bay improvements (base and structure) : $150K
Furnishings (chairs, sofa, table, television, etc. — $20K
Administration/food service building (500 sf; includes furnishings) — $100K
Lighting (bays and first fifty yards of range) — $30K
North Course Green Renovation (not done for 60 years): $150K
Driving Range (drainage improvement): $30K
Clubhouse (restroom renovation): $15K
Martin went on to address the impact of the expenditure. By investing in Toptracer, the golf course will be in positive cash flow by 2023 and by 2027, the General Fund subsidy is completely eliminated. By 2028, the cumulative deficit (debt) is completely eliminated. Those figures could be further improved by increasing the General Fund subsidy to the golf course from $220K per year to $500K per year for 3 years. The choice: $220K for six years or $500K for three.
In response to a question from Vice Mayor Len Kreger, Martin said that Toptracer would be installed independent of Billy Casper Golf (BCG), the golf course management company. However, he added that BCG has installed Toptracer at other courses they manage, e.g. Rome, GA, and they have had an opportunity to weigh in on the City’s proposal. He reported that BCG has not disagreed with the numbers the City presented and that their personnel would run Toptracer.
The only resident to express doubts about the Toptracer acquisition at the meeting was City Commission candidate Genece Minshew, who had previously submitted a list of questions to which she had received answers about marketing plans, revenue projections, and related costs. She stressed that as a nearby resident to the course, she loved the golf course and wanted to see it financially healthy. “But,” she added, “I still don’t see how these numbers work.” She said that numbers provided by the city were helpful, but they only represented one year as opposed to projecting ten years out. “It’s not clear to me how these numbers are going to be sustained,” she said. She cited concerns over the marketing plan and her belief that the business plan was weak. “What are you going to do after a year if you don’t meet these revenue goals?” she asked. “How do you pivot and do something different? Who’s responsible?”
Minshew said she hated to raise the concerns without being able to provide five ways to address them. “But ,” she said, “I hope that it’s more successful than what I see on this piece of paper, but at this point I don’t see how it’s going to happen.”
Harry Kegler, Chair of the City Golf Course Advisory Board (GCAB), also addressed the FBCC. He reported that the GCAB had unanimously endorsed this proposal. “Our golf course needs help,” Kegler said. “I understand Ms. Minshew’s concern about what could happen if we don’t make the numbers. But I’ve been in business a long time. When you don’t make your numbers, you keep on going, striving and making adjustments until things work. I am totally convinced that [Toptracer] will help our golf course. It will be the first one on the island. … We believe it will bring us more memberships as well as more revenue from Toptracer. We’d appreciate it if you would approve it and let us move forward.”
Commissioner Chip Ross presented slides and tried to address several concerns about spending money on the golf course voiced to him by citizens. He said that the golf course, which is zoned Recreation, occupies more than 300 acres and has an appraised value of more than $7.5M. Adding in other neighboring open spaces, the land total rises to almost 360 acres with a total appraised value of $11.6 M.
Ross said that he considers the golf course a city asset. “A lot more people use the golf course than the City Marina,” he said, citing current membership at 286. Twenty percent of the property is in the runway protection zone for the airport, and cannot be built upon. Other non-golf concerns use the course or clubhouse as well throughout the year.
Ross identified options which had been put forward with respect to the future of the golf course over the years, explaining why they were not feasible. Continuing the status quo was not acceptable, because it did nothing to reduce golf course debt or improve revenue flow. Selling or leasing the land requires a positive vote of the FBCC that would be followed by a voter referendum, per the City Charter. Ross reminded the audience that the most likely use for the land to any buyer would be residential development. According to current zoning, 1200 houses could be built on the property, something that he ventured to guess most residents would oppose.
Changing part of the golf course into a Par 3 course would cost over a million dollars, according to Golf Course Manager Steve Murphy, and maintenance costs would remain the same. Murphy also reported that eliminating 9 holes would decrease efficiency and not lower costs. Ross said that converting the golf course to a park would be costly, adding that there is no revenue to cover the cost of maintaining a park. It would also cost 35 jobs, while doing nothing to pay off existing golf course debt.
“After comparing and contrasting all these options that have been discussed for years, finally we see something different [Toptracer] that I think will work, so I am going to vote for it,” Ross concluded.
Commissioner Mike Lednovich made a brief presentation showing that Toptracer currently exists in 83 locations across the country. “A quarter of these are on public courses,” he said. Lednovich said that the extent and popularity of Toptracer shows him that the activity has been embraced by the public and that it is growing as an entertainment venue for golfers and non-golfers. He said that revenue will be driven by food and beverage sales. “The idea is,” Lednovich said, “you are not going to Toptracer to play golf; you are going to an arcade game on a driving range, and you are going to play with other people. It’s entertainment, not golf.”
Lednovich added that this is the new trend for golf. Many people are not attracted to the sport today because it takes too long, it’s difficult, and it’s too expensive. “A group of four can spend $40 to play Toptracer for an hour, as opposed to a group of four playing a round of golf over 5 hours for $160.” Lednovich concluded by saying he would support the Resolution.
Vice Mayor Len Kreger agreed with Minshew that the marketing plan was insufficient. He also expressed concerns over BCG’s apparent lack of involvement in the development of the plan. He pointed to the elements that were part of the City’s Capital Improvement Plan, that would be done with or without Toptracer. “It’s a lot of money, but I’ll support it,” Kreger said. “Hopefully, we’ll be on top of it and it will work the way it has to or we’ll make appropriate adjustments.” He acknowledged that a half million dollars was a lot of money, but in comparison to the $11.7M that the City has spent on the marina, it seemed a reasonable investment.
Commissioners voted 5-0 to approve the Resolution.
When contacted by phone after the meeting City Manager Dale Martin advised that his goal is to get Toptracer up and running by July. He also explained that any further discussion of upping the City’s annual General Fund contribution to the Golf Fund from $220K to $500K would await the discussions during formulation of the FY2020-2021 Budget.