Four years ago the first outside financial analysis of the City of Manteca’s golf course in over a decade concluded the course would need an annual subsidy of $314,200 from the municipal general fund.
That study led to the first of two rate increases since then with the intent to make the golf course self-sufficient eventually.
That hasn’t happened.
Now Interim Finance Director Stephanie Beauchaine is asking the City Council to fund a new $20,000 study of the various golf fees in bid to identify a solution that will address the funding needs of the operation as well as potentially eliminate general fund subsides that go back at least the mid-1990s.
The subsidies started shortly after the city entered into a $2.2 million lease purchase agreement to build what some have described as a “country club style” two-story clubhouse. The lease purchase has been paid off but there are now other capital improvements projects needed for the golf course that was built on the former site of the municipal wastewater treatment plant along Union Road.
The 2017 outside analysis by Gene Krekorian Pro Forma Advisors put all costs of yearly maintenance on the table as well as adding a set aside of $100,000 a year for a capital improvement reserve. It also for the first time in at least two decades showed the true costs of operating the course although many critics of the city contend those charges shouldn’t be slapped against the golf course since the functions involved were handled by existing staff in city administration, finance, and parks and recreation. They noted in 2017 such charges aren’t made to other recreational facilities.
The big difference is the golf course is set up as an enterprise fund, much like water, sewer and solid waste. As an enterprise fund it is supposed to cover its own costs without tapping into the general fund.
The city for years has tapped into the general fund for $155,000 to help subsidize senior and youth play. Based on 2017 financial trends, the previous report concluded the annual golf course subsidy needed to more than double that regardless of the option the council takes. The ongoing $155,000 subsidy per se for senior and youth play was not broken out on the consultant’s tally sheet comparing the four options a previous council was presented in 2017 but was essentially collapsed into the city’s losses.
The net loss, according to the consultant in 2017, for the four options they presented was as follows:
*Leasing the golf course to an outside firm would result in a net annual loss to the city of $314,200. That is after factoring in a direct course subsidy of $174,700 that is essentially on top of the $314,200 loss. It also includes $100,000 in annual costs for the city to manage and monitor the lease.
*Going to a management agreement with an outside firm that would contract the golf pro services out and hire a private firm to maintain the course would result in a net loss to the city of $314,200. It would not, however, require a direct golf subsidy of $174,700. It also includes $100,000 for city lease management and monitoring.
*Switching to a slightly different version of the management agreement with an outside firm hiring a golf pro and overseeing city maintenance would result in a net annual loss to the city of $367,000.
*Keeping the existing “hybrid” model with the city contracting for a golf pro and the city overseeing their own maintenance crews would result in a loss to the city of $331,500. It included $215,000 for city management and monitoring costs.
*The city running the entire operation including the golf pro duties would result in an overall loss to the city of $429,000. It included $175,000 for city monitoring of the golf course.
All four options — as well as a slightly different version — included setting aside $100,000 annual in a capital improvement reserve.
That 2017 study showed if the golf course was not assessed a city lease management/monitoring charge — that is essentially the cost recovery charge for other city expenses that the council suspended as an expense for the golf course enterprise fund over 15 years ago — the losses for each option dropped including to $116,500 for the current model.
And if you continued the decades old general fund subsidy for youth and senior play based on the 2017 analysis the current model with a contracted golf pro and the city handling the maintenance was projected to show a $38,500 net gain even with the $100,000 capital reserve set aside.
Ninety percent of the green fees collected from golfers pay for course maintenance and upkeep. The balance goes to the golf pro to operate and manage the course.
Manteca is in much better shape than Stockton that in 2017 was considering converting Van Burskirk from a golf course to a regional sports complex and selling Swenson to allow up to 1,000 new homes to be built.
The two courses in 2017 were costing Stockton $850,000 a year in general fund support or $425,000 each compared to Manteca’s cost of $333,000 for the same year.
The real big difference is course conditions. Stockton in 2017 estimated it needed to spend $20 million to bring the two courses up to par with others in the region. Manteca in 2017 identified some $3.47 million worth of capital improvement projects as being needed and/or are a “wish list” of sorts they indicated should be addressed within 10 years. The biggest chunk was $1.8 million needed for the clubhouse that is now nearing 33 years in age.
The Manteca City Council meets at 7 p.m. on Tuesday at the Civic Center, 1001 W. Center St. The meeting can be viewed on Comcast Channel 97 or livestreaming via the city’s website.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com
