Golf Course Study...Where do we go now?

[council4_vaughan]

Now that we have a draft of the study, we have to decide what we are going to do with the information.

To summarize, the National Golf Foundation (NGF) seems to think our golf course is well run and doing better financially than most golf courses. It has some improvements that are needed to maximize revenue, for which NGF is concerned they will not be able to afford on their own (requiring a subsidy).

However, if we break down their numbers, I disagree with their conclusion. First we need to break down the financial projections they provide into operations and capital. On page 70/71 of their report, they have a 5 year financial projection that mixes the two together. If we take out the capital costs, add in the hotel tax to pay for their marketing (as we have traditionally done), and remove the venue tax, the financial results would be this:

As you can see, the golf course revenue covers its costs with a surplus in excess of $400k for years 2027-2029. This is without the venue tax.

NGF recommends capital improvements (primarily focused on the course) to increase play. Those improvements are somewhere between $3.278 million and $4.214 million per their estimates. But only $1.657 million to $2.034 million are high priority. If the golf revenues cover their operating costs, then we would need to discuss how to pay for these capital improvements. Below adds their available reserves from the 2024 audit to what NGF recommends they will generate above.

This means over 5 years, the golf course will have around $2.8 million available to it for capital costs. This would not cover all the capital improvements NGF has recommended but would cover all the high priority items and then some. Again, this is with no venue tax. This also assumes the golf course gets all the staff that NGF recommends they add.

Bottom line: NGF has given us a road map to remove the taxpayer subsidy from the golf course while still providing additional staffing and high priority capital items. The time to end subsidies for the golf course is now.

 

[council5_bulman]

I think the golf course should be self sufficient and off the burden of the tax payers. If this road map gets us there then I think we should take it. This way the golf course is getting improvements it needs but not at a huge expense to the tax payers. This report from an outside consultant gave us the numbers and if those numbers show it can stand on its own then I believe it should. Since this message board is public I would love to hear from our residents, how they felt about this report? Please email me residents if you have thoughts.

 

[council3_rubal]

Where do we go now?

Fellow Councilmembers, find attached documents that help define where we are by the path that has taken us here. Find attached documents previously presented by Councilmember Buck, Council minutes from 2005 (especially pages 42-75), Hoffman’s History of Universal City (link: https://www.hoffmanhistory.com/universal-city-history, and links to posted audits (2017-2024) demonstrating $3.3M deficit for these years when earned revenue is compared with operation expenses(link: https://www.universalcitytexas.gov/1175/Audits).

1993: A 1037 to 920 vote defeat of the golf course proposal.

1997: With the assurances of the Mayor and others that the golf course was the “last best chance for the city to move into the 21st Century with a bona fide vehicle to provide a source of revenue for years.” The residents approved building the Golf course/Convention center that year by 1706 to 839 vote. (See Buck Review and Hoffman’s History)

2000: Council fired Granite Golf for failure to manage the GC at a profit and hired Kemper Sports for overall management.

Under Kemper Sports, the GC failed to generate money to pay its bill and Council ask residents for a half-cent sales tax increase to cover debt service and principal interest payments for the course. The half-cent could mean an extra $360,000 a year. The voters approved by a y a 316 to 146 margin. Yes, only 170 votes from a total of 460 voters brought us the venue tax.



2005: Kemper Sports was fired for failure to manage profitably. City manager proposed 6 options: (1) UC takes over the operation of the course and center; the center stays open, but the course closes for 10 months for repairs, (2) same as option 1, but course stays open during repairs; (3) convert course to 9-hole, plus a park or no park; (4) sell course “as is,” (5) sell developable land (145.24 acres), retain remainder (80.77 acres) as park; (6) lease the course. See attached In that year the City modified the budget by a 10% cut (across-the-board all services!!!!) to pay for the repair of flood-damaged holes 8&9, and the City assumed total management responsibilities. In that year the IDC (Now EDC) helped the financial situation when it forgave $900,000 in promissory golf course notes.

The venue tax alone was insufficient to support the GC operations and $1.9-2.2M in what was recently termed inter-fund loans from the General Fund were used to supplement expenses. Only recently have these “inter-fund loans” been repaid, but details have yet to be provided by open records request.

Furthermore, in City Audits: 2008, 2019, and 2020 had the following statements appeared in three times: “During a prior fiscal year, the City changed the management of the golf course from contracted service to City employees. With the improved management of the golf course, the deficit is expected to be eliminated over time”. How could our City say this since City began managing the golf course in 2005 and not the prior FY for these audits.

The report by the consultant does have some useful suggestions. However, it falls short of providing a business plan for operating our municipal golf course with “earned income” from user service fees and without the additional continued sales tax burden on the residents. This is the heart of the definition of an enterprise/ business-type fund (See page 6 on nearly all audits approved by Council). It falls short of comparisons with cities of similar population, median income, and high property tax rates.

Where do we go now?
Considering the millions of dollars in sales tax revenue spent on the golf course to date, will our Council again ignore our City’s long deferred infrastructure needs and high property taxes in favor of using sales tax money for a continuation of a 20 year “sunken cost fallacy”? Or will our Council agree that for our golf course to be successful and City to move forward, it must be self-supporting and large-scale capital improvements should be funded through voter-approved bonds, not backdoored by the Council. It is not unreasonable to revisit at least some of the options presented by the City Manager in 2005 and other options presented by our good citizens in prior Council meetings with the consideration that alternatives would protect property values and the quality of neighborhoods surrounding the Golf Course.

 

[council3_rubal]

Fellow Council Members,
Attached please find items 1 and 2 (Requested 28 Feb before the consultant presentation but not provided until after the meeting) and Item 3 which was brought to Council's attention previously.

1) Bond Payment Schedule for Golf Course Convention Center: Note that this report includes payment from 1998 to 2023. The combined principal in the bond payment schedule =$ 6.425M with principal and interest = $11.501M.

Note: The reason for bond was GC operational revenue could not cover both expenses and loan payments for the build.

2) History of Venue tax – Report shows $21.595 million collected in venue tax from 2022-2024. When this is corrected for admin fees returned to the general fund and bill board fees for the Golf course, approximately 97.9% of the venue tax that has gone to the GC and only about 2.6% was recently directed to parks..

3) 2018 Easement agreement suggests "rights to construct, and profit from the proceeds of a billboard" were conveyed to the City of Universal City (Grantee). No additional responsive documents were provided.

Now consider how much of the venue tax of the $2.145M has been used by the GC in EXCESS of bond payments [with correction for administrative fees returned to the general fund and bill board fees] ($10.485M). [Note: Adjusted Venue corrects for admin fees returned to the general fund, funds directed to parks, and billboard fees.

 

[council3_rubal]

Oops, I forgot to attach. Find attachments for the above-posted reply.

 

[council3_rubal]

Small typo in a big number:
Now consider how much of the venue tax adjusted for admin fees returned to the general fund and parks ($20.592M) has been used by the GC in EXCESS of bond payments [with correction for administrative fees returned to the general fund and billboard fees] (Excess of GC bond payment $10.485M). [Note: Adjusted Venue corrects for admin fees returned to the general fund, funds directed to parks, and billboard fees.

Bond payment data and Historical Venue Tax data were provided by the City, and adjustments for 2023 and 2024 were based on data provided in the consultant presentation or City Audits.