City staff say that the golf course has been losing money ever since 2006, but has been getting by on its own reserve funding. City projections show that the course's $813,000 deficit will swallow the last of its reserves this year and begin eating into the city's cash-strapped general fund in fiscal year 2011-12.
Despite significant concern over the high cost of city employees who run the golf course, council members Margaret Abe-Koga, Jac Siegel and Laura Macias opposed outsourcing the operation Tuesday. Siegel said he feared that all of the course's workers would be laid off and then re-hired by a city contractor at half the pay. Council members Mike Kasperzak, John Inks and Tom Means all favored outsourcing the golf course as the only way to cut substantial staffing costs, which include city pensions and retirement health benefits.
Mayor Ronit Bryant was absent because she had broken her arm earlier that day, which left the council opinion split 3-3 during the study session.
"I think we really have to look at the outsourcing model as the way to make it viable," Kasperzak said. "Unless we think, as a body, we should be subsidizing golf."
Despite cutting six full-time positions, the cost of paying the union-organized employees at the golf course rose from $1.4 million to $2.1 million from 2000 to 2009, with average pay per employee increasing from $46,100 to $86,900 a year. Maintenance workers are organized under the Service Employees International Union, while managers and pro-shop employees are organized under the EAGLES.
If outsourced, the consequence may be a decrease in maintenance of the course and poorer service. Longtime golfers said the course was designed by a world-class course designer to be a relatively difficult course, which appeals to more experienced golfers who might be seeking quality service.
"We aren't going to have a higher-quality golf course with lower-quality service and that is going to happen if we contract out," Macias said.
In an e-mail, SEIU president Chris Costanzo opposed outsourcing the golf course.
"Residents remember that we contracted out Shoreline Golf Links before," Costanzo said. "The cost was greater than expected and the quality was less than desired. We don't want to rehash the same mistakes again with outside groups that are not invested in our community."
In terms of being busy, the city-run Shoreline Golf Links is doing relatively well compared to numerous other Bay Area golf courses and operates at 77 percent capacity.
"We have not identified a disproportionately low amount of play as an issue," said City Manager Kevin Duggan Tuesday.
But compared to the golf courses in Palo Alto and Sunnyvale, Shoreline had the biggest decline in revenues from 2005 to 2009. Revenues remained flat in Palo Alto, declined by 5 percent in Sunnyvale and declined by 9 percent in Mountain View.
The report by senior analyst Rochelle Kiner says the city is considering a marketing campaign to bring in new players and more revenue. And according to the report, golf course employees are hopeful that recent efforts to reduce the numbers of geese and ducks on the course may bring in more players over the next year as well. The birds are known for tearing up the turf and fouling it with their feces.
"There isn't a golfer in Northern California that isn't aware of Shoreline's bird problem," said one golfer at Tuesday's meeting.
While the city concludes that the only real way to keep the operation from costing the city money is to cut expenses, there are also some accounting maneuvers being discussed to fill the nearly $1 million gap. The city could fold in $155,000 in lease revenue for Michaels at Shoreline, an eatery at the golf course. The city could cover the course's $431,000 costs for water, as other cities do. And the city could also stop charging the course $359,000 for "administrative overhead" to help fund the salaries of city management. These options were unpopular with the outsourcing proponents.
"This is a commercial enterprise and it should pay for itself," Kasperzak said. "Giving it free water means we'll have to charge that cost to somebody."
Shutting the course down wouldn't exactly save the city $813,000, some pointed out Tuesday. Much of its administrative overhead is "fixed costs" that would have to be a paid anyway, and the city still would have to pay for maintenance of that portion of Shoreline Park.
Council member Abe-Koga said the city "could justify" a subsidy for the golf course "coming from our Shoreline fund," a fund that collects property taxes from the businesses in the Shoreline area, including Google. The golf course is currently connected to the city's general fund, which funds core city services like firefighting and police.
The golf course was operated by a private company when it first opened in the 1980s and was taken over by the city in 1995 because of concerns about the course's care and the landfill underneath. After building up reserves, the golf course was a money-maker for the city for only three years up to 2005, making the city's general fund a total of $600,000 in revenue after paying its own bills.
Of 11 city-owned golf courses surveyed in the area, only Sunnyvale's golf course was entirely city-run, with the rest being almost entirely outsourced. Palo Alto is an exception — it employs its own maintenance workers, although that city has recently proposed outsourcing those employees to save $450,000.