Loading...
Minutes 02-07-11 MINUTES OF THE FINANCIAL ADVISORY COMMITTEE MEETING HELD IN CONFERENCE ROOM A, AT THE LIBRARY, 208 S. SEACREST BLVD. BOYNTON BEACH, FLORIDA, AT 6:00 P.M., ON MONDAY, FEBRUARY 7, 2011 PRESENT : Don Scantlan, Chair Barry Atwood, Director of Finance Michael Madalena, Vice Chair Tim Howard, Deputy Director of Finance (Arrived 6:05) George Feldman Dave Madigan Merline Pamplona William Shulman Terry Lonergan, Alternate (Arrived 6:05) Chair Scantlan called the meeting to order at 6:00 p.m. Roll was taken and a quorum was present. Motion Mr. Madigan moved to approve the agenda. Mr. Feldman seconded the motion. The motion passed unanimously. Introduction of Tim Howard, Deputy Director of Finance 1. Mr. Atwood introduced Tim Howard the Deputy Director of Finance and commended Mr. Howard for his indispensable contribution assisting him. Approval of Minutes – January 24, 2011 2. Motion Mr. Madigan moved to approve. Mr. Feldman seconded the motion. The motion passed unanimously. Discussion of Golf Enterprise (The Links) – George Feldman/Dan Hager & 3. Scott Wahlin Mr. Feldman had invited Dan Hager, Golf Course Manager for The Links, to more fully explain the operations and projections for the large enterprise. Mr. Feldman was hopeful the enterprise could remain a viable asset for the City. Any reduction in the operation would be detrimental to the enterprise in view of the economy. Mr. Hager did 1 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 7, 2011 have good ideas that should be taken into account before any determination is made on the future of the golf course. Mr. Hager made a presentation on the golf course operations and financial standings. The Golf Digest magazine had rated the course with four and a half stars, out of a maximum of five stars, for several years. The ratings are based on public input and consider the value, pace of play, course condition and service among others. In 2009 the course was rated the best municipal course in Florida. It is also a certified Audubon sanctuary. (Ms. Lonergan and Vice Chair Madalena arrived at 6:05 p.m.) Mr. Atwood added he had found many municipal golf courses are not self-sufficient and supplemented by other funds. The Boynton Beach course is totally self-sufficient. They do contribute some dollars to the General Fund. Mr. Hager continued that the goal was always to increase revenues and control costs. There was a projected cost to resurface the paths for $100,000 and Mr. Wahlin found a way to use patching at a cost of $2,000 using the City streets department and their personnel to supervise the process to assure its success. When Mr. Hager got the position, there was a re-organization with three divisions, Administration, Operations and Maintenance, resulting in a $50,000 savings in salaries by operating as a team. One of those positions was subsequently eliminated and currently Mr. Hager is the head of golf operations and Mr. Wahlin is manager of maintenance operations. A head professional or golf assistant was then eliminated and a maintenance superintendent was eliminated for considerable savings also. Mr. Wahlin added another savings was using mowing units that are re-buildable and remain very productive. Mr. Hager indicated there are 27 holes on 150 acres with 40 of those acres being under water or lakes. With the Audubon certification $30,000 a year was saved on trimming the lake beds and labor. A computerized irrigation system had been installed and the projected costs were reduced by $100,000. Operating expenses have been reduced by 14.5% over the past ten years in spite of the increased cost for fuel, sand and fertilizer. There is an 18 hole, par 71 championship course and 9-hole, par 30 executive course and family course. The rounds of play on the championship course increased from 48,000 to 53,000. The greens had to be resurfaced that were designed to last ten years and had gone 16 years. The same project was done in-house on the family 9 and the numbers differed from 28,000 down to 18,000. In the course’s heyday, early 80s, there were 110,000, 18-hole equivalents at The Links. The change can be attributed to the fact in a five mile radius there are now 12 additional golf courses available to the public. The game is not growing at this time and is on the decline. Supply outruns demand and some golf courses will have to close. 2 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 7, 2011 Chair Scantlan noted courses within private developments, but open to the public, would not close because they are supported by other equities. Mr. Hager advised the projection included those types of courses. It is a difficult situation. The first quarter compared to last year revealed the championship course rounds are down 8.4% which is comparable to other courses in the area. Some courses are down as much as 23%. The family course, typically for beginners and older people, is down 17%. A gap survey was done to find out what is important to the customers and then assess how the golf course is meeting the needs of the customers. The bigger the gap is the areas to address immediately. The survey is sent out with the annual renewals. There are over 900 patrons who have a Links Club Card, a customer loyalty card and 70 who have an annual permit. Memberships fill the prime times when the inventory is the most expensive. Memberships are not recommended for public courses. Private courses also have assessments that assist in covering the expenses that public courses do not have. The trend in golf courses is that the expenses exceed the revenues. Reserves have accrued during good times enabling the budget to be cut by 8% rather than the 6% requested last year. Projections anticipate a $98,000 to $119,000 shortfall this budget year. Some purchases will be pushed back. For instance, $122,000 for an excellent maintenance program will defer the purchasing of new golf carts for two and possibly three years. Ways to increase revenues are still being sought. Approximately $200,000 a year total is spent on City expenses for things such as computer support, telephones, payroll, finance and other expenses. Promotional campaigns have been undertaken and some are successful. There is a strong association with the Executive Women’s Golf Association (EWGA), the top ladies association of amateur golfers. However, the greens are too long and it takes most ladies too many strokes. The number one enemy is too many courses. There are more golf facilities within the United States than there are McDonald’s restaurants. Palm Beach County alone has over 200 golf courses. Mr. Shulman asked what APH dues for the County and Boynton Beach. Mr. Hager replied APH is Annual Permit Holders. By Charter, since the County owns the land and leases it to the City, one stipulation is County and City people are treated the same. The City could not have control of more than 70% of the annual permits. In 1993 there was a decision to discontinue the permits and it has now dwindled from 800 to 69 and that is split between the County and City. The surcharge improvement fee was addressed. It was instituted around 1986 as a fund based on a charge of $2 per tee-off for capital improvements and purchases. If you play more, you pay more and play less, pay less. The fees were raised last year in the 11 a.m. to 1 p.m. slot from $39 to $44. The prices change at 11:00 am, 1, 2:30 and 3 p.m. Mr. Shulman had compared Boynton to Boca and Delray and the fees were comparable. Mr. Hager annually considered fee increases. Mr. Feldman inquired if the 3 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 7, 2011 prices were reduced and the rounds increased, would it increase the maintenance costs. Mr. Hager cautioned the fees have to be comparable to others in the area. Mr. Shulman suggested raising fees may be an option worth pursuing. Mr. Hagar expected the number of golfers and rounds would decrease. Chair Scantlan pointed out there are no transfers from the General Fund and no tax dollars contributed to The Links. Although there is a projected shortfall this budget year, there are reserve funds to cover the loss. Mr. Wahlin corrected the statement, the reserve funds would not be affected because the purchase of new golf carts has been deferred. Chair Scantlan emphasized the enterprise does pay its share of the cost for City services. Mr. Hager indicated $45,000 is given to the General Fund to cover support services from the City and Mr. Atwood felt the amount was sufficient to cover those costs. Mr. Madigan requested a figure for the golf course to become a first-class operation and what would be the return on the investment. Mr. Hagar explained for 27 years the profits were returned to the golf course, a benefit of being an enterprise fund rather than a drain on the General Fund. Mr. Shulman emphasized the course had a very good rating as a top-notch operation and inquired what additional improvement could be made to increase profitability. Mr. Hager’s wish list included building a new clubhouse, but it would not increase revenue for the golf course. Until a significant cushion can be established, the first monies earned would return to the golf course or in a reserve to cover unforeseen expenses such as hurricane damage. The long term debt, a $4 million bond for 20 years, was paid off one year early. Chair Scantlan noted the restaurant operations are franchised and all employees are City employees with the same benefits. Full-time employees that have left through attrition have been replaced with part-time employees saving 30% on their benefits with a lower position and less salary saving roughly $17,000. Vice Chair Madalena asked if tournaments would be an area for further growth and development. Mr. Hager acknowledged there are courses that do have corporate outings and tournaments. The course has four tournaments a year as promotional tools such as the Play-for-Pink Breast Cancer Tour. The tournaments want shot gun so they can play and eat together. The restaurant seats only 48 people. Generally tents are borrowed from Recreation and Parks and the tournaments are catered. It is not the courses mantra. Other courses are drifting away from tournaments because it downplays the course on the busiest days. Vice Chair Madalena also inquired if there was any consideration to becoming a first-tee junior golf course. Mr. Hager boasted the junior program had won awards. Once a month a junior tournament is done using a 300 name database of 6 though 17 year olds. Growing the course through women is more lucrative because they have the money to spend. Ms. Pamplona confirmed that gift certificates were available. 4 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 7, 2011 Chair Scantlan thanked Mr. Hager and Mr. Wahlin for making their presentation. Review and discussion of Citizen Survey cumulative responses to date 4. (Handout) Chair Scantlan asked that this item be discussed after project updates. Motion Mr. Madigan so moved. Vice Chair Madalena seconded the motion. The motion passed. Discussion of Committee Report Format 5. Chair Scantlan had created a straw format for discussion. Each member had been assigned an area to investigate and make a report and recommendation. The form submitted included the following sections which were discussed: Subject/Topic  Review By  Recommendation  Pros of Recommendation  Cons of Recommendations  References  Impact on 2011/12 Budget  Impact on out Year Budgets  Impact on Citizens  Impact on City Staff  Committee Vote Results: For or Against  It was agreed the same format should be used by each Board member on their topic. Motion Mr. Feldman moved to accept the form as submitted. Vice Chair Madalena seconded the motion to keep the format. Mr. Shulman compared the proposed format with the final report submitted in Delray Beach and felt theirs was very comprehensive and easy to follow. Chair Scantlan advised the recommendations would be the basis for the report. He stressed each recommendation should have a vote and the results recorded. Mr. Feldman disagreed feeling the recommendations would be presented from the group rather than individuals. Chair Scantlan argued the role of the Committee is to provide advice to the Commission in context and the voting results would be indicative of the weight to be given to each subject. Mr. Feldman countered that all the items assigned should have equal weight 5 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 7, 2011 and should not be divided based on the vote on the item. Ms. Lonergan stressed the Committee was providing the Commission with information and not making any type of decision on the priority of any or all of the topics. Chair Scantlan wanted everyone’s efforts included in the report whether the Committee accepted the report or not. A final or executive summary would be given to the Commission. Each topic will have a recommendation submitted and the Committee will vote on the recommendation. Vice Chair Madalena proposed each topic should either be recommended to go forward or recommended not to go forward as a budget cut in the best interest of the City. Mr. Madigan suggested each member grade their own areas. Vice Chair Madalena felt there should be some consensus on each topic and reporting the vote would give them an idea of the overall debate on the topic. Chair Scantlan voiced his opinion that the final report would have to be voted on and either accepted in its entirety or any disagreements put in a minority report. The draft version should be ready by March st 21. Mr. Atwood explained staff attempts to get direction from the Commission on big line items. It is the responsibility of the City Manager to recommend a budget to the City Commission. The City Manager would review the report and respond to each recommendation. Ms. Lonergan sought direction on the scope of her responsibilities to address the Shopper Hopper issue. Vice Chair Madalena thought contacting other municipalities would be important or discussing the issue with the Chamber of Commerce to obtain the corporate or business view of the service. Mr. Atwood agreed discussion in general would be enough, but it would depend on the subject matter. Another source would be the survey. The financial impact to have the fares cover the cost would be another approach to calculate. Mr. Atwood cautioned the City cannot solicit funds. Vice Chair Madalena indicated Ms. Lonergan should have data available to support her recommendation whatever it may be. The motion passed unanimously. Progress update on assigned projects by each Member 6. David Madigan Mr. Madigan began with the topic of merging the Community Redevelopment Agency (CRA) with the City to eliminate any redundant services or programs and capabilities. Commission action added only two members to the present board. The topic is essentially on hold until the stabilization of the CRA takes place. Mr. Madigan felt it was a political issue that the Financial Advisory Committee should avoid. The topic of a Voluntary Separation Program was resolved when it was presented and accepted by the City Commission. A cost savings would be realized after the second quarter of this fiscal year. Mr. Atwood indicated most employees would be eligible. 6 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 7, 2011 City staff did not suggest a hiring freeze be evaluated, but the Financial Advisory Committee thought it should be investigated and recommended the hiring freeze be continued through 2011/2012. The total cost savings for 2009/2010 could be $1.4 million and could carry through 2011/2012 with $1 million savings each year. Mr. Madigan's last topic was selling City assets as suggested by City staff. Selling City surplus physical property and selling real property were the two areas identified. Mr. Atwood pointed out the City does sell used equipment every year. Mr. Madigan proposed selling real property would be the higher rate of return. The City owns 311 land parcels including 58 buildings. There are 25 land parcels that could be sold and would be discussed with City staff. The financial impact would be determined at a later date. Merline Pamplona Ms. Pamplona advised she had met with the department heads and would be compiling her report on the three areas. Bill Shulman Mr. Shulman had prepared a sample letter to be sent out to all 200 homeowner associations. He had also met with Police, Fire, Library and Recreation personnel to determine what type of equipment or programs lack funding and prepared a list of those items. He also submitted a sample thank you letter to be sent to the homeowner associations that contributed. Methods and sources for increasing revenues was another topic and Mr. Shulman had compiled a list he would be submitting of 49 sources. They would generate $2,683,483 with the biggest contributor being an increase in the fire assessment for $2.2 million. Mr. Atwood stressed the survey would support that recommendation. Several items would require further discussion and research such as soliciting contributions from not - for- profits and religious organizations. Mr. Shulman's other project related to cell phones and usage cards that he would be evaluating. Mr. Madigan suggested name recognition should be attached to any donations whether it is a building or piece of equipment. Mr. Shulman agreed and changed his program to indicate so, but felt there may be some complications that would require a legal opinion also. Several forms of recognition were debated. Vice Chair Madalena advised he was following all the bills going through the legislature. House Bill 303 had been tabled that proposed changing pension plans for all levels of government. The Governor did submit his budget to the House and Senate for review. 7 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 7, 2011 The legislative session starts in March and ends in June. Vice Chair Madalena would make his report the end of March, noting the law may change after his report had been submitted. Chair Scantlan’s project was the survey and he reviewed the latest results. It would be available for responses through the end of February. Mr. Feldman wanted clarification on the scope of the terminology “revenue streams”. Mr. Atwood replied it would be property taxes, fire assessment, or fees depending on the type of revenue. He surmised it was areas of revenue that other municipalities were receiving that the City of Boynton Beach was not receiving at all. Mr. Shulman thought it may involve revenues from Briny Breezes for police and fire protection or Ocean Ridge for fire protection that he had included in his report. It appeared both Mr. Feldman and Mr. Shulman were working on the same issue. Other Business 7. Mr. Madigan questioned if age could be cross referenced with some of the questions in the survey. Mr. Atwood agreed to research that possibility. Chair Scantlan reported he had been approached about the solid waste division and whether it should be franchised. Mr. Feldman considered it two questions; whether the City should franchise out their services or turn the operation over to a private entity. The topic had been approached two years ago. Motion Mr. Madigan moved to eliminate Item 12 for Mr. Feldman and add Item 35. Vice Chair Madalena seconded the motion. The motion passed unanimously. Adjournment 8. Motion Mr. Madigan moved to adjourn. Vice Chair Madalena seconded the motion. The motion passed and the meeting adjourned at 7:53 p.m. Judith A. Pyle, CMC Deputy City Clerk 8