Weekly comments from Dale Martin – ” The Golf Course focus at this time is about stabilizing its funding . . .”

By Dale Martin
City Manager
Fernandina Beach
February 18, 2021

City Manager Dale Martin

Earlier this week, the City Commission adopted Resolution 2021-25, that provided direction for two Golf Course related tasks following the expiration of the Golf Course management agreement between the City and Antares Golf (formerly and also known as both Billy Casper Golf and Indigo Golf Partners). One task is to operate the Golf Course with temporary City staff and the other task is to prepare a Request for Qualifications to solicit interest in a new management agreement. The foundation of these tasks can be traced back to actions and decisions over the past two years.

The Golf Course (like the Marina) is classified, from a municipal accounting perspective, as an enterprise fund: its revenues are primarily generated through user fees and charges. Historically, however, those fees and charges at the Golf Course (and Marina) have not been sufficient enough to cover operational and capital expenses. This regular and longstanding shortfall has led to an accumulated cash deficit: approximately $2,000,000 for the Golf Course and $3,000,000 for the Marina. For accounting purposes, these deficits are “balanced” by a series of “loans” from the City’s Water and Sewer Funds.

Following the City’s 2018 audit (presented to the City Commission in March, 2019), the auditors formally indicated that, due to the continuing increase of the accumulated cash deficit, the City should develop a plan to address (eliminate) those deficits. This direction from the auditors resulted in the development of the Stantec Integrated Fiscal Sustainability Report (2019).

The report recommended that the City, by utilizing existing cash reserves from the General Fund, could make annual payments to eliminate the accumulated cash deficit over approximately five years. It must be noted, however, that even with the elimination of the accumulated cash deficits, both the Golf Course ($130,000) and the Marina ($220,000) were still projected to require General Fund subsidies.

The Stantec plan, however, was predicated upon maintaining the same millage rate from year to year to continue to provide the reserve cash to support the plan. The City Commission did not support maintaining the current millage rate for the 2020/2021 budget, so the Stantec plan was rendered moot, and as a result, the accumulated cash deficit will grow again this year.

With the rejection of the Stantec plan, though, the City still had to illustrate to the auditors that an effort was being made to reduce the deficit. That effort included a review of the Golf Course management agreement that was slated to expire in December, 2020.

The original recommendation in November, 2020, to not renew the management agreement was solely based on a financial review that by not renewing the agreement with Indigo Golf Partners, a significant savings to the City could be realized through the elimination of the management fee and other duplicative costs (even with the recognition of added personnel costs to return the management and operations internally to the City). By not renewing the agreement, some of the contributing factors to the cash deficit would be eliminated, preventing further addition to the deficit.

That original financial basis for not renewing the management agreement was overlooked when the discussions of the management agreement shifted to operational issues at the Golf Course. Suddenly, dozens of golf course experts were offering their insight as to how to operate the golf course. The Golf Course, at its root, is a financial issue, not an operational issue.

Despite many comments and complaints as to how bad the Golf Course conditions are, the Golf Course continues to attract scores of players on a daily basis (although the un-Florida February weather has not been favorable). The City Golf Course has a niche market for local players and it will continue to serve that niche. Can certain aspects of the course be improved? Without any doubts, and those issues will be reviewed and addressed. But again, it revolves around money.

With the elimination of the management fees and duplicative costs (approximately $100,000), the final payoff of a loan (approximately $100,000), and the additional anticipated revenue from Toptracer (approximately $100,000), even with additional personnel costs, sufficient “new” money will be available to address the accumulated cash deficit or invest in other capital projects at the Golf Course. Some additional funding may also be made available in future budgets for capital improvements based upon the direction and priorities of the City Commission.

The Golf Course focus at this time is about stabilizing its funding: not reducing the Course to eighteen holes, not removing bunkers, not pruning/removing trees, not managing grass. Those are operational issues that will inevitably follow after the management of the Golf Course is determined.

The Golf Course is one of several City amenities afforded to City and other area residents. With continuing City Commission support, I believe that with the current efforts at the Golf Course (and the Marina), the accumulated cash deficits can be eliminated and it is even possible that the subsidies from other City funds can be reduced if not eliminated.

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Joseph M. Collins
Joseph M. Collins(@mike-collins)
3 years ago

Not everything has to operate at a profit, Mr. Martin.

Richard J Cain
Richard J Cain(@richardcain)
3 years ago

Since the Golf Course is an “Enterprise Fund” it is supposed to at least break even … so yes, not everything must show a profit … but the golf course does (or at least break even. Or stop the charade of operating it in the accounting records of the City as an Enterprise Fund.

Jim Adrian
Jim Adrian (@guest_60457)
3 years ago

Well written with clear message–improvements in the course will flow from fiscal corrections which take precedence. Without fiscal accountability, the golf course cannot function as intended.

Ron Barone
Ron Barone (@guest_60459)
3 years ago

Mr. Martin can’t be so near-sighted, but apparently he is! While there is a funding issue, as he notes, the necessity of removing bunkers, pruning/removing trees, managing grass (tee boxes, greens, etc) all will cost money. These are operational issues that will need to be funded. Fixing the operational issues will allow the golf course to charge more and provide the answer to the funding issue! Putting the funding cart before the operational horse is myopic. Without addressing the operational issues, the city will end up back where it started – with a funding problem.

Julie Ferreira
Julie Ferreira(@julie-ferreira)
3 years ago

I have never quite understood how many rounds of Top Tracer are necessary to cover the initial expenditure of $500,000 so that a positive cash flow can be recognized. And are there now additional expenses necessary to build bathrooms?

John Goshco
John Goshco (@guest_60461)
3 years ago
Reply to  Julie Ferreira

According to the city, TopTracer only contributes a small part of the income. The “big money” is derived from (non-existent) food & beverage service. The proposed solution is to have some sort of mobile snack bar or a waiter with a golf cart available.

It will be interesting to see how this all plays out.

DAVID LOTT(@dave-l)
3 years ago

I don’t understand how you can separate the “operational” issues being faced by the golf course from the “financial issues”. There clearly is a need to address some of the critical course condition deficiencies that aren’t going to be simply fixed with a rake and a shovel and two new groundskeepers. Maintaining and improving tee boxes, fairways and greens will take additional funds. Time will tell as to the financial impact of Toptracer but it is facing a number of financial challenges with the construction of the hitting bays and then there is the leasing and maintenance costs of the technology itself.

One would hope that with 7 months left in the fiscal year, the City will revise the Golf Course enterprise fund budget to provide a transparent metric for actual performance compared to expectations.