Council OKs outsourcing golf course
City hopes savings from new operator will pull course out of fiscal hole
Saying they were forced to do so by difficult circumstances, the City Council approved on Tuesday the outsourcing of Shoreline Golf Links management to Touchstone Golf, a Texas-based golf course operator.
The council voted 6-1 for the deal as the course was set to lose as much as $1 million this year alone, and as much as $6.3 million over the next five years if no changes were made. Council member Margaret Abe-Koga was the only opponent, saying it seemed arbitrary that the city couldn't subsidize golf when it subsidizes so many other recreational activities.
"I'm prepared to support this because we've run out of time," said Council member Ronit Bryant. "We've talked about it and talked about it. We're at the point where reserves are gone. We've possibly waited too long."
City staff said 14 golf course employees would lose their jobs at the course, but Mayor Jac Siegel said a big factor in his decision was that the city could absorb 12 of the employees into other vacant positions in the city. Touchstone also expressed interest in hiring the workers, but what they would be offered "does not mirror or come close to matching the salary and particularly the benefits," paid by the city, said Community Services Director Dave Muela.
City management believes that Touchstone could bring the city $237,000 in revenue next year and $2.5 million over the next five years with revenues increasing steadily, helping to fund core city services. The deal is structured so that the city receives all golf course revenue and pays Touchtone a percentage, depending on revenue levels. The city will retain control over the land as Touchstone won't be leasing the course.
Mark Luthman, Touchstone executive vice president, said the company would use an aggressive marketing and online presence to bring in more golf reservations, adding that revenues were growing at all 20 of Touchstone's courses around the country. User fees for the course will remain the same.
Touchstone will continue the city's fight against the flocks of Canada geese and American coots that are keeping golfers away. Council member Tom Means, a frequent golfer, said he's seen "foxes, coyotes and turkeys" at other courses, "but they don't sit there in the middle of the course and crap all over everything." The city has tried an array of methods to drive off the geese, including strobe lights, special sprinklers, fake alligator heads and remote control boats in the course's ponds.
Touchstone will also have to work with the city to preserve habitat for the rare burrowing owls that like to live on the golf course.
Council passes on alternative
City staff created an alternative involving pay cuts and accounting moves to keep the course city-run and bring in a modest profit of $200,000 over the next two years. But the course would begin losing money again in six years if fiscal trends continue, city management reported.
In that plan, $487,000 in savings were agreed to by the unions which represents the golf course workers, Service Employee International Union and the mid-level managers' union, the EAGLES. Employee pay and benefits would have been cut and two pro shop employee positions and two greens-keepers positions would have been eliminated.
The plan also relied on some accounting moves or "gimmicks," as council member Means called them. Michaels at Shoreline, a restaurant at the course, could pay for the course with $150,000 in revenue that normally goes to core city services. The city would also have to stop charging the course for administrative costs, which would pinch another $275,000 from the core services like police and the library. The city would also stop charging about $431,000 a year for water, a cost which would be spread among the city's water users, increasing water rates city-wide by 2 percent, according to a city staff report.
Those accounting measures would still mean that taxpayers would be subsidizing the course, said vice mayor Mike Kasperzak, echoing concerns of other council members.
Three local residents spoke about the issue, all of them in favor of keeping the course city run. One cited problems with a previous operator who leased the course in the 1980s, which resulted in a lawsuit that cost the city millions of dollars. Others said the course was never designed to make a profit and said the city's Shoreline Fund should cover its costs. One speaker said she was shocked that the city was charging itself for water on the course and said the city's recent marketing efforts showed promise.
Ultimately, Siegel said that the course just couldn't compete anymore with other privately run courses, which pay their employees less and are operated by companies that develop marketing expertise at courses around the country.
"We just can't compete with other golf courses at this rate," said mayor Jac Siegel. "Most other golf courses are doing the same thing."
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