WHEREAS, the City Council and the Mayor are committed to high standards of financial management; and

WHEREAS, adopting financial policies is an important action that helps to assure consistent and rational financial management of City programs; and

WHEREAS, the City has worked intensively over the last several years to develop a Golf Program that is financially self-sustaining; and

WHEREAS, the City Council and Mayor desire to adopt proposed financial policies to assure that the Golf Program is operated in an efficient and effective manner and provides the resources needed to maintain its self-sufficiency; and

WHEREAS, the financial policies when implemented will allow the Golf Program to use net revenues to make much needed investments in its capital facilities which will help it achieve greater selfsufficiency over time; and

WHEREAS, the City Council and Mayor have reviewed the financial policies for the Golf Program and wish to adopt such policies; NOW, THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE, THE MAYOR CONCURRING, THAT:

Section 1. The Council adopts the attached financial policies (Exhibit A) for the Golf Program operated by the Department of Parks and Recreation.

Adopted by the City Council the ____ day of _________, 2006, and signed by me in open session in authentication of its adoption this _____ day of __________, 2006. _________________________________ President __________of the City Council

THE MAYOR CONCURRING: _________________________________ Gregory J. Nickels, Mayor

Filed by me this ____ day of _________, 2006. ____________________________________ City Clerk

Exhibit A: Golf Financial Policies 8/17/06 Version #1

Exhibit A

Golf Program Six-Year Development Plan & Financial Policies

INTRODUCTION 1 SLI 75-2-A-3 PRIORITIZE GOLF CAPITAL NEEDS 1 SLI 75-2-B-3 GOLF FINANCIAL POLICIES 1 GOLF COURSE PURPOSE 1 PROVIDE RECREATION OPPORTUNITY 1 ENVIRONMENTAL STEWARDSHIP 2 FINANCIALLY SELF-SUSTAINING 2 BACKGROUND 2 RECENT REVENUES AND EXPENSES 3 2006 FEES 4 ECONOMIC RESEARCH ASSOCIATES 2005 ASSESSMENT 5 GOLF FINANCIAL POLICIES 7 GOLF REVENUES TO SUPPORT DEPARTMENT PROGRAMS 8 REINVESTMENT OF GOLF REVENUES 9 ADDITIONAL CAPITAL INVESTMENT INTO GOLF FACILITIES 9 PRIORITIZE GOLF CAPITAL NEEDS 10 2006 Investments 11 2007 Investments 12 2008 Investments 12 2009 Investments 14 2010 Investments 14 2011 Investments 14 2012 Investments 15 REVENUE AND EXPENSE PROJECTIONS 16

Golf Program Six-Year Development Plan 2006-2012

INTRODUCTION

Over the past decade Seattle's municipal golf courses have undergone a series of performance reviews, transitions in management, and changes in staffing at all levels. Recent actions by Seattle Parks and Recreation, the Mayor and the City Council have stabilized the management of the golf courses and set the stage for addressing the long-term maintenance and improvement needs at the courses. In 2005, the City Council approved two statements of legislative intent (SLI) that provide an outline for this 6-year development plan for golf. After outlining basic principles and values for the golf courses and providing background information, this development plan provides a prioritization of golf capital needs and presents golf financial policies.

SLI 75-2-A-3 PRIORITIZE GOLF CAPITAL NEEDS

* The Department of Parks and Recreation is requested to conduct an assessment of the capital facilities at the City's golf courses (Jefferson, West Seattle, and Jackson Park) and the Interbay golf facility. This assessment will: 1) determine the current physical condition of these facilities; 2) prioritize the need for repairing, replacing or renovating such facilities; 3) include updated cost estimates with identified resources available for completing such work; and 4) include a timeline for completing such work based on availability of likely resources used to conduct such work.

SLI 75-2-B-3 GOLF FINANCIAL POLICIES

* The Council requests the Executive to develop and provide for review and adoption proposed financial policies related to the operation and maintenance of the City's Golf Facilities. These financial policies are to include, but are not limited to, the following: how much of net golf revenues are to be used to fund ongoing capital improvements at City's golf facilities; how much of net golf revenues is the Department of Parks and Recreation allowed to use for "general DPR overhead" and "general parks programs"; how much the City might consider investing other City funds such as REET I & II in capital improvements at the City's golf facilities.

GOLF COURSE PURPOSE

Seattle's golf courses are an important part of Seattle Parks and Recreation programs and facilities. They provide recreational opportunities, a unique circumstance to enhance Parks environmental stewardship ethic, and the prospect of providing revenues to support itself and other parks programs.

PROVIDE RECREATION OPPORTUNITY

Seattle's municipal golf courses provide a unique recreational opportunity for Seattle's residents and visitors. One of Parks' primary objectives is to provide affordable facilities that ensure a variety of safe and enjoyable outdoor recreational opportunities for community residents, patrons and employees. The golf courses provided over 256,000 recreation experiences, as measured by rounds of golf played, in 2005.

ENVIRONMENTAL STEWARDSHIP

The four golf courses encompass 420-acres of green space in Seattle's neighborhoods. The courses are recognized as distinct open space assets providing much needed green space in a dense urban environment. The courses are part of the Audubon Sanctuary Program and are managed with environmental stewardship as a key part of the mission. Recent reductions in use of pesticides, fertilizers, and water are examples of attention to environmental stewardship.

FINANCIALLY SELF-SUSTAINING

The golf courses are recognized as one of the few opportunities to balance the mandate to provide recreational opportunities and to generate revenue to support it and other recreation services. People who play golf accept the notion that there are fees associated with the privilege to play and there is a willingness to pay market rate fees in exchange for a quality golf experience. It is necessary, however, to maintain and improve the courses in such a way that the users are content paying the fees or they will exercise their option of golfing elsewhere in the Puget Sound region.

BACKGROUND

The City of Seattle owns three standard 18-hole golf courses (Jefferson, Jackson Park, and West Seattle), and one nine-hole course with a double-decker driving range (Interbay Golf Center). As the result of a competitive process, in 2005 the City hired Premier Golf Centers LLC to provide professional golf management for all the courses. Premier Golf provides management of the courses including operation of the clubhouses. Seattle Parks and Recreation is responsible for the maintenance of the golf course grounds.

Over the past decade Seattle golf course management has evolved and has struggled through several financial challenges. From 1995 to 2003, the three standard golf courses were operated by Municipal Golf of Seattle (MGS). MGS was a non-profit organization that was not able to effectively manage the courses and their contract was terminated. Family Golf Centers, a national golf development and management firm, developed Interbay Golf Center in 1996 on Seattle Parks property. By 2001, Family Golf operations nationwide declared bankruptcy and Seattle Parks took over the facility, contracting with Premier Golf to manage its operations.

The underlying cause of the recent financial challenges of Seattle golf courses can be seen in Figure 1, showing the total number of rounds of golf played at the City's three 18-hole golf courses. This shows rounds dropping from 275,000 in 1995 to a low of 193,000 in 2003, a decrease of 30% over an 8-year period. While this trend reversed in 2004, recovery is not coming as quickly as hoped due in part to the seven new public golf courses that have opened in the region since 1998.

FIGURE 1

Figure 1

RECENT REVENUES AND EXPENSES

In 2004, as part of the 2005/06 Budget Process, DPR submitted a Golf Financial Plan that included a rapid recovery of golf revenues from $7.8 million in 2003 to $9.4 million in 2004. DPR soon recognized that it would likely not reach this level of revenues for 2004 and revised its forecast to $8.8 million for 2004. DPR projected revenues would rise to $9.1 million in 2005 and increase at 2% per year thereafter. Unfortunately, the actual 2004 revenues didn't meet the revised forecast of $8.8 million; in 2005 golf revenues were $8.3 million and are currently projected to be 8.5 million in 2006 (Table 1). This compares with 2006 budgeted revenues of $9.1 million.

By closely managing the maintenance and operations of the courses Parks and Premier Golf were able to trim expenditures to offset the lower than expected revenues. This has allowed golf to maintain its net revenues at or above a sustainable level (Table 1).

TABLE 1: Revenues and Expenses

TABLE 1: Revenues and Expenses

GROSS REVENUE 2003 2004 2005 2006* Actual 7.8 8.4 8.3 Forecast 8.5

EXPENDITURES Actual 6.8 8.0 7.5 Forecast 7.6

NET REVENUE Actual 1.0 0.4 0.8 Forecast 0.9

*2006 forecasted revenues and expenditures differ from the budgeted revenues ($9.1M) and expenditures ($7.7M). The forecasted amounts used in this table are based on recent trends in revenues and expenses.

2006 FEES In 2006 a $2 increase in the fee for an 18-hole round of golf was implemented. Not all customers pay the full fee, as there are special discounts for seniors, youth, and frequent customers. As shown in Table 2, the fee increase brings Seattle courses up to a bit below the average fee for municipal courses in the region. It is only with this fee increase that Parks can realize the forecast revenues (Table 1).

TABLE 2 Fees per 18-Hole Round (listed by "weekend" rate)

Course Weekday Weekend Lynnwood Golf Course $25.00 $27.00 Everett Walter Hall $27.00 $30.00 Renton Maplewood $24.00 $30.00

Seattle -Previous $26.00 $31.00 Bellevue Municipal $27.00 $32.00 Kent Riverbend $30.00 $32.00 Snohomish Golf Course $25.00 $32.00 Tacoma -Lake Spanaway $27.00 $32.00

Seattle 2006 $28.00 $33.00 Auburn Golf Course $28.00 $34.00 Sumner Meadows $26.00 $34.00

Avg Non-Seattle (non-weighted) $29.43 $35.07 Everett Legion Memorial $37.00 $38.00 Snoqualmie Mount Si $29.00 $39.00 Tacoma North Shore $32.00 $40.00 Bremerton Gold Mountain $40.00 $42.00 Redmond Willows Run $35.00 $49.00

ECONOMIC RESEARCH ASSOCIATES 2005 ASSESSMENT

In 2005, Economics Research Associates (ERA) was contracted to help Parks develop a business and strategic plan for golf. The firm was also engaged by the City and Municipal Golf Seattle in 1999 and 2001 to review the performance of the golf operations managed by the nonprofit MGS. Given this history, ERA was a logical choice to assist Parks in reviewing the current operating models performance, outline a business and strategic plan for the future, and recommend a capital improvement strategy to enhance operating performance. This plan uses recommendations from the ERA report as its guide.

ERA wrote in its executive summary that the City's golf programs, now managed under the new operating model with Premier Golf, are turning the corner toward profitability. After suffering losses of approximately $250,000 annually at Jackson, Jefferson and West Seattle courses in 2002 and 2003, net operating income totaled $340,000 in 2004, an improvement of nearly $600,000. Interbay's net operating income for 2004 was $720,000 before debt service and offset to the Department. Total net operating income (gross income minus operating expenses, and not including capital investments or other costs) for all facilities was $1,067,000, which was almost 13% of total gross revenues. ERA recommended that the golf program's net operating income be between 15-20% of gross revenues (ERA, section II).

In the current management model the Department maintains the courses and Premier Golf provides golf services in the clubhouses. ERA concluded that each entity is performing at or above expectations, and the associated expenses for course maintenance and golf services are well within their understanding of industry norms. The Department reduced maintenance expenses in 2004 by almost $250,000, attributable to the reorganization of course maintenance staff. Premier Golf has reduced golf services expenses approximately $350,000, resulting in reduced payroll and other efficiencies (ERA, section II-4).

In the golf services arena, notable performance enhancements increased rounds of golf in 2004, albeit not to the level of the City's high expectations. The golfer loyalty program has over 6,000 enrolled members, who receive rewards and discounts for repeat play at the city courses. Our customer surveys indicate high levels of satisfaction with course maintenance and golfer services, despite the reduction in expenses (ERA, section II-5).

ECONOMIC RESEARCH ASSOCIATES 2005 RECOMMENDATIONS

After reviewing and endorsing the current operating model, ERA recommended an extensive Action Plan that contains a series of recommendations for moving Parks' golf program forward. Highlights of the Action Plan are as follows:

1. Continue current efforts to recapture market share, improve facility presentation and expand grow-golf programming.

Implementation: Parks and Premier Golf are working closely together to implement action steps. This Plan is designed to describe how this will be accomplished.

2. Implement recommended fee increases in 2006, and earmark increased net operating income for capital improvements. Establish a fee review process.

Implementation: A $2.00 per round increase was implemented in 2006. The fee increase was not earmarked for any special purpose pending development of financial policies. A fee review process will be established.

3. Update, review and modify the course master plans and priorities for capital improvement. Evaluate and identify options for funding.

Implementation: The following sections of this plan provide detailed updates and present the priorities for capital improvements needed at each course.

4. Finalize estimates and design to accelerate the completion of identified capital and facility improvements for completion by 2007.

Implementation: This plan outlines the capital improvement priorities. Due to budget realities it is not feasible to accelerate capital improvements as recommended by ERA. The prioritized approach presented in this plan balances the needs with the funds available and establishes a timeline for implementation.

5. Maintain the biannual golfer survey to measure and ensure continued improvement in golfer satisfaction.

Implementation: Parks and Premier Golf intend to continue the customer satisfaction survey.

6. Continue to foster and promote the joint efforts of the Department and Premier Golf, which will continue to create efficiencies and coordinate efforts benefiting customer services, accounting, reporting and management systems currently in development (ERA, section II).

Implementation: Parks and Premier Golf have refined our reporting and tracking systems and will continue to do so to increase management efficiency.

Following a review of existing facilities, historical performance and a market overview, ERA recommended an aggressive capital improvement plan to act as the cornerstone of the strategic plan. In ERA's opinion, prioritized capital improvements at this time would bolster revenues, develop new profit centers, and ensure the golf system's economic viability. Without these improvements, ERA believed that the courses would continue to generate an average return for the Department, but jeopardize its long-term competitiveness in the regional golf marketplace. ERA identified MGS's inability to complete capital improvements on the City courses in an orderly and effective manner as its single most important failing during its tenure as the operator of the City's three 18 hole golf courses (ERA, section V).

The final pages of ERA's draft plan are devoted to the financial performance projections of the golf facilities, under the assumption that the capital improvement recommendations detailed in their document are completed by 2007 (ERA, section VI). The final section of this Plan builds on the capital improvement recommendations of ERA, establishes a prioritization based on set criteria and the anticipated funding level.

GOLF FINANCIAL POLICIES

The City Council requested that the Golf financial policies include, but not be limited to, the following: how much of net golf revenues is to be used to fund ongoing capital improvements at the City's golf facilities; how much of net golf revenues is the Department of Parks and Recreation allowed to use for "general DPR overhead" and "general parks programs"; how much the City might consider investing other City funds such as REET I & II in capital improvements at the City's golf facilities.

Golf net revenues have averaged $0.7 million per year since 2002. They are projected to be $0.9 million in 2006. One of the recent challenges has been developing reliable projections of net golf revenues. Overly optimistic projections in past years have resulted in recent skepticism. The reliability of revenue projections is important to understanding and developing financial policies that will withstand changing priorities and golf revenue realities.

An important consideration in outlining financial policies for the golf program is determining the appropriate financial return to the Parks fund and the appropriate level of reinvestment in the courses. Parks incurs costs associated with its ownership and oversight of the golf program beyond the direct costs of the maintenance staff and the dedicated Golf Director. The Finance Director, Enterprise Division Director, Superintendent, accounting staff, public information staff, web master, and administrative support staff each provide a portion of their time supporting golf programs.

A survey of municipal courses in the Puget Sound area reveals that other jurisdictions collect a portion of golf course revenues to support general administrative functions and programs (Table 3).

Table 3: Comparison of Other Municipal Courses

Jurisdiction # of holes Gross Revenue Interfund % of Gross fees, Overhead revenues * services and rent

Auburn 18-hole $1,475,000 None 0% Municipal (Enterprise Fund)

City of 2 18 hole $3,115,000 $207,183 6.7% Everett courses (Enterprise Fund)

City of 18 hole 1,505,000 None 0% Tacoma Meadow course, + Park short 9 (Enterprise Fund)

Lynnwood 18 hole $1,677,000 $93,000 5.5% Municipal executive (Enterprise Fund)

Pierce County 18 hole $1,900,000 $105,680 5.6% (Enterprise course, + Fund) short 9 executive

TOTAL 127 Holes $9,672,000 $405,863 4.2%

* Interfund fees, overhead charges and rent may not be determined using a percentage of gross revenues as a financial policy.

In 2005, $0.5 million of net revenues was allocated for capital reinvestment and $0.3 million was retained for Parks administrative costs. The retained amount was 3.5% of gross revenues. This amount is slightly less than the average for other municipal courses in the region. Policy 4 proposes maintaining 3.5% for Parks administrative support consistent with 2005 levels.

POLICIES

GOLF PRICES

* POLICY 1 BASIS FOR GOLF PRICES: Golf will use a market-based approach to establish fees for the golf courses. These will be maintained at a level that is competitive with other public courses and maximizes course use and revenue over time. Reduced fees for youth and seniors and incentives for frequent play may be charged. Differential fees and charges for non-Seattle residents may also be charged.

* POLICY 2 RESPONSIBILITY FOR SETTING FEES: Within ranges approved by the City Council, the golf operator, with the approval of the Superintendent, will set fees and charges

USE OF GOLF REVENUES

* POLICY 3 -GOLF DIRECT OPERATING EXPENSES: In general, the City shall operate the Golf program on a current-funding basis, with current revenues paying for current expenditures. Budgets will be set with this principle in mind. Revenues and expenditures shall be monitored throughout the year. If at any time during the fiscal year, golf revenue and expenditure forecasts are such that an operating deficit is projected at year-end, the Department and its golf operator will take actions to reduce operating expenditures or increase revenues as necessary. If adjustments to operating expenditures and revenues are not sufficient to alleviate the deficit then contributions to the golf capital reserve will be reduced accordingly.

* POLICY 4 GOLF INDIRECT EXPENSES AND RETURN ON OWNERSHIP: Parks provides management coordination, financial oversight, accounting, general management support, community outreach, policy analysis, and other services for the Golf program, and it accepts the financial risk and liability as the owner of the courses. In order to acknowledge and pay for these activities, a percentage of gross golf revenues will be retained by Parks. That percentage will be 3.5% for 2006 through 2008 and will be reviewed biennially thereafter as part of the City's budget process.

* POLICY 5 CAPITAL INVESTMENT: After all expenses for operations, management, maintenance, and debt service have been paid, any remaining golf revenues will be deposited into a capital reserve account dedicated to capital improvements at the golf courses. Funds projected to be earned in the current year will be appropriated in the following year's budget.

ADDITIONAL CAPITAL INVESTMENT INTO GOLF FACILITIES

* POLICY 6 -PRIORITY OF CAPITAL INVESTMENTS: Golf capital improvements will be prioritized based on life/safety needs, facility integrity, customer service and potential revenue-generating enhancements. Projects will be identified for funding through the biennial budget process.

* POLICY 7 CRF FUNDING: Parks will allocate funds from its CRF major maintenance allocation for maintenance crew quarters for the golf courses. No other CRF major maintenance funds will be targeted for golf courses unless an emergency exists.

* POLICY 8 USE OF DEBT: In general, the City will use a pay-asyou go method for funding golf capital improvements. The City will consider using debt for capital improvements at golf courses if it can reliably demonstrate that revenues from the improvement will cover the debt service of the investment. Consistent with City-wide debt management policies found in Resolution 30345, and as modified by Resolution 30630, DPR will consider debt financing golf improvement projects on a case-by-case basis. Additionally, the City's Debt Management Policy Advisory Committee would have to approve any debt-financed projects above $50,000.

PRIORITIZE GOLF CAPITAL NEEDS

Parks golf management and maintenance staff and Premier Golf staff reviewed past assessments of the capital facilities at the City's golf courses and facilities (Jefferson, West Seattle, and Jackson Park and Interbay). This assessment: 1) reviewed the current physical condition of these facilities; 2) prioritized the need for repairing, replacing or renovating such facilities; 3) updated cost estimates; and 4) outlined a timeline for completing the work. The itemized list in table 4 presents the capital improvements in priority order and based on the criteria in policy 6: life/safety needs, facility integrity, customer service and potential revenuegenerating enhancements.

The prioritization and phasing of the capital projects is tied to funding available each year. The funding projections allow for $5,584,000 (in 2006 dollars) of capital improvements through 2012. An additional $3,374,000 (in 2006 dollars) in capital improvements are delayed beyond 2012. Cost estimates for each project were developed based on preliminary bids from suppliers and cost comparisons of recent comparable projects. Some project costs are set as cost allocations rather than specific project cost estimates and can be adjusted depending on the final scope of the project. For example, the scope and extent of projects such as bunker remodels and general infrastructure improvements can be adjusted based on funds available.

Project costs are presented in table 4 in 2006 dollars. Each project will require development of final project scopes and cost estimates prior to its getting underway. The intent of this prioritization is to establish a tentative schedule of projects and preliminary cost estimates were developed to assess the viability of the schedule in relation to anticipated funding availability.

Table 4: Capital Investment by Year

Total Capital Investment (in 2006 dollars) 2006 $ 1,120,000 2007 $ 50,000 2008 $ 888,000 2009 $ 730,000 2010 $ 950,000 2011 $ 946,000 2012 $ 900,000 TOTAL $5,584,000

Course Project Title Benefit Type Description Project Cost (in 2006 dollars)

2006

Interbay Interbay Improve or Expand Redesigns and 350,000 Synthetic Turf Capacity, Customer replaces target Replacement Service areas

Interbay Interbay Range Structural The entire netting 150,000 Netting Integrity/Safety for the driving Replacement Range is nearing its useful life. It is anticipated that there is only one season of use left in the netting.

Interbay Interbay Improve or Expand Floors, kitchen 63,000 Clubhouse Major Capacity, Customer facility and pro Maintenance Service shop counter have Phase 1: kitchen deteriorated and renovations, pro require major shop counter, maintenance repairs floor and upgrades. maintenance

Interbay Interbay Structural Protects exterior 30,000 Exterior Integrity/Safety surfaces from rust Painting and decay

Interbay Lighting and Structural Replace and upgrade 20,000 Netting Major Integrity/Safety all lights on the maintenance range and major maintenance on netting.

Interbay Interbay Structural The range ball 20,000 Elevator and Integrity/Safety elevator and washer Washer are nearing the end Replacement of their useful life and require replacement.

Jackson Jackson Park Structural Improves course 150,000 Golf Irrigation Integrity/Safety aesthetics and System conserves water Renovation consumption SPU participating in cost

Jackson Jackson Improve or Expand Course throughput is 70,000 Reconfigure 1st Capacity, Customer hampered by design Hole to Service of 1st hole. Changes accommodate a would enable course Par 4 vs. Par 5 to achieve budgeted hole. revenue

Jackson Jackson club Structural Cafe electrical 29,500 house major Integrity/Safety system is outdated maintenance - and doesn't meet electrical and current demand and flooring will be improved, major maintenance will be done to floor surfaces.

Jefferson Jefferson Improve or Expand Rebuilding of 45,000 Remodel bunkers Infrastructure dilapidated bunkers on Golf Course would be a very visible improvement leading to increased play. Potential added annual green fee revenue

Jefferson Jefferson Park Improve or Expand The staging area is 30,000 Pave Cart Path Capacity, Customer a mess and the carts around the 1st Service get dirty just being and 10th tees & towed from the cart staging area barn or sitting into the staging area when it rains.

Jefferson Jefferson Park Improve or Expand Renovate a portion 65,500 club house major Capacity, Customer of building to maintenance - Service create a banquet banquet room, room, replace floor floor surfaces, surfaces, replumb water fountains, water fountain, exterior modernize restaurant surfaces, cafe and repair and paint exterior surfaces.

West West Seattle Improve or Expand Complete remodel of 70,000 Seattle Clubhouse Infrastructure all clubhouse Bathroom Remodel bathrooms, floors and major and exterior maintenance surfaces require major maintenance.

West West Seattle Improve or Expand New lights, drapes, 27,000 Seattle Banquet Hall Capacity, Customer tables and chairs Refurbishment Service and refinish or carpet existing hardwood flooring. High potential increase in banquet revenue.

Total 2006 1,120,000

2007

Interbay Interbay Patio Improve or Expand An area of patio 50,000 addition Capacity, Customer outside the exit Service doors to the Interbay Cafe will be enclosed to allow functions to take place in inclement weather.

Total 2007 50,000

2008

Interbay Interbay Ball Improve Replaces worn and 50,000 Dispenser Infrastructure dated equipment Replacement

Interbay Interbay Parking Structural Resurfaces degrading 30,000 Lot Renovation Integrity/Safety surfaces and curbing

West West Seattle Improve or Expand Demolish dilapidated 30,000 Seattle Course Restroom Infrastructure restroom on hole 14 and build new restroom.

Jackson Jackson Improve or Expand Disabled parking and 25,000 Remodel Parking Capacity, Customer access is inadequate lot to Service and entire lot is in accommodate more deteriorated vehicles, condition. Customer provide for service and Disabled parking compliance with ADA and provide for would be improved Disable access to upper level pro shop area.

Jackson Jackson Improve or Expand The carts get dirty 20,000 Expansion of Capacity, Customer over night when Cart Barn to Service parked outside in house total the fenced area Fleet outside the cart barn

Jefferson Jefferson Air Improve or Expand Temperatures in the 18,000 conditioning in Infrastructure summer are restaurant and unacceptable, for pro shop both employees and customers. Air conditioning would improve customer service and working conditions.

West New Entrance Improve or Expand New Grand Sign 25,000 Seattle Signage Infrastructure (Ranch Style Drive under) at entry of course on 35th Ave SW.

ALL Infrastructure Structural Clubhouse, Course 50,000 Improvements Integrity/Safety and Maintenance Building Electrical, Plumbing and Physical Plant Replacement

Interbay Interbay Improve or Expand 20,000 Landscape Capacity, Customer Renovation Service

Jefferson Jefferson Improve or Expand The carts get dirty 20,000 Extend Cart Capacity, Customer over night when Storage Building Service parked outside in to Hold 50 Cars the fenced area outside the cart barn

Jackson Jackson Park Structural Improves course 600,000 Golf Irrigation Integrity/Safety aesthetics and System conserves water Renovation consumption SPU participating in cost

Total 2008 888,000

2009

ALL Infrastructure Structural Clubhouse, Course 455,000 Improvements Integrity/Safety and Maintenance Building Electrical, Plumbing and Physical Plant Replacement

Interbay Interbay Second Improve or Expand A second story will 275,000 Story Build out Capacity, Customer be added. The second Service story will allow the addition of much needed banquet space as well as additional office space. Since the framework is already in place, this project will add a lot to the facility at a reasonable cost.

Total 2009 730,000

2010

Jackson Jackson Park Improve or Expand Concrete surfacing 550,000 Golf Cart Path Capacity, Customer of the existing System Service gravel and earth cart path system will increase car rental revenues.

Jefferson Jefferson New Improve or Expand Due to lack of 200,000 Parking lot on Capacity, Customer parking, Jefferson's the par 3 Service afternoon play is course. low compared to other courses. Potential increase in net revenue.

ALL Infrastructure Structural Clubhouse, Course 200,000 Improvements Integrity/Safety and Maintenance Building Electrical, Plumbing and Physical Plant Replacement

Total 2010 950,000

2011

Interbay Mini Golf Ponds Structural Seal ponds and 11,000 Integrity/Safety repair or replace pumps.

Interbay Interbay Putting Improve or Expand Replaces artificial 20,000 Course Turf Capacity, Customer turf on the putting Replacement Service course

Jackson Jackson Structural Restrooms are 15,000 Remodel on Integrity/Safety currently closed all course Restroom winter. Customer to accommodate service will be winter usage improved with improvement in restroom conditions

Jackson Jackson Park Improve or Expand Increase in annual 900,000 Driving Range Capacity, Customer net operating 1st Phase Service revenues

Total 2011 946,000

2012

Jefferson Jefferson Park Improve or Expand Increase in annual 900,000 Driving Range, Capacity, Customer net operating Phase 2 Service revenues

Total 2012 900,000

Total 2006-2012 5,584,000 (2006 dollars)

Deferred

Jefferson Jefferson Improve or Expand Construct building 450,000 Facility Capacity, Customer adjacent to double Expansion Service deck tee structure to accommodate pro shop operations and food and beverage expansion

ALL Infrastructure Structural Clubhouse, Course 224,000 Improvements Integrity/Safety and Maintenance Building Electrical, Plumbing and Physical Plant Replacement

Jackson Jackson Facility Improve or Expand Remodel Restaurant 500,000 Expansion Capacity, Customer and Clubhouse and Service add banquet space.

Jefferson Jefferson Park Improve or Expand Concrete surfacing 550,000 Golf Cart Path Infrastructure of the existing System gravel and earth cart path system will increase car rental revenues

West West Seattle Improve or Expand Phase One of Driving 350,000 Seattle 35th Street Capacity, Customer Range, Practice Complex Phase Service Area, and Mini Golf One and related parking.

West West Seattle Improve or Expand Phase Two of Driving 800,000 Seattle 35th Street Capacity, Customer Range, Practice Complex Phase Service Area, and Mini Golf Two and related parking.

West West Seattle Improve or Expand Phase Three of 500,000 Seattle 35th Street Capacity, Customer Driving Range, Complex Phase Service Practice Area, and Three Mini Golf and related parking.

Total Deferred 3.374,000 (2006 dollars)

Total Cost (2006 8,958,000 dollars)

REVENUE AND EXPENSE PROJECTIONS

Applying the financial policies and following the capital investment priorities results in the financial projection presented in table 5. This projection assumes:

* Revenues will increase by 1% per year and due to capital improvements in facilities.

* Expenses are managed so they increase by just 1% per year.

* Interbay debt service is fixed at $425,479 per year.

* Return to the department is fixed at 3.5% of gross revenues.

* Expenditures on capital projects are limited to net revenues after all other expenses.

* Capital project costs have been inflated by 3% per year from 2006.

The financial analysis shows that an average of $963,000 per year is available for new capital improvements and $356,000 is available to offset Parks costs for managing the courses.

Table 5: Projected Revenues and Expenses

Actual Adopted Projected Projection Projection Projection Projection Projection Projection Budget

2005 2006 2006 2007 2008 2009 2010 2011 2012

Total Revenues 8,332,299 9,120,446 8,531,000 8,941,440 9,031,802 9,139,487 9,254,725 9,378,078 9,719,097

Base 8,332,299 9,120,446 8,806,000 8,894,060 8,983,001 9,072,831 9,163,559 9,255,195 9,347,746

(assume increase 1%/yr.)

Capital Related 0 -275,000 47,380 48,801 66,656 91,166 122,883 371,350 NET Rev (Cumulative)

Total Expenses 7,641,036 7,753,568 7,601,443 7,673,449 7,745,948 7,819,171 7,893,127 7,967,823 8,043,265

Direct Expenses 7,215,558 7,328,089 7,178,089 7,249,870 7,322,369 7,395,592 7,469,548 7,544,244 7,619,686

(assume increase 1%/yr.)

Interbay Debt 425,479 425,479 423,354 423,579 423,579 423,579 423,579 423,579 423,579 Service

Net Revenue 691,263 1,366,878 929,557 1,267,991 1,285,854 1,320,316 1,361,598 1,410,255 1,675,832

To Park Fund 331,263 946,662 555,585 312,950 316,113 319,882 323,915 328,233 340,168

(3.5% of gross rev. 2006-2012)

To Golf Capital 420,216 373,972 955,041 969,741 1,000,434 1,037,683 1,082,022 1,335,663 Reserve 360,000

Golf Capital Reserve

Beginning of Year 0 798,000 798,000 51,972 472 13,434 185,484 116,684 57,694 Balance

Net Golf Revenue to 360,000 420,216 373,972 0 955,041 969,741 1,000,434 1,037,683 1,082,022 Reserve

Capital Expenditures 360,000 1,218,216 1,120,000 51,500 942,079 797,691 1,069,233 1,096,673 1,074,647

New Capital Reserve 0 0 51,972 472 13,434 185,484 116,684 57,694 65,069

*2006 revenues reduced due to delay in completion of driving range project.

**In the 2006 Adopted Budget, it was assumed that $946,662 of golf net revenue would be retained by Parks (including $257,000 for the Late Night Teen Program). The Golf Capital Reserve would receive $420,216 golf net revenue. In addition to this, the Golf CIP received $257,000 of REET I funds to replace the net revenues that went to support the Late Night Teen Program and $541,000 of REET II funds that Council allocated for improvements at golf courses. The sum of the REET I and II funds are shown as the Beginning of Year Balance in the Golf Capital Reserve totaling $798,000. In the Projected 2006 column, the amount of net golf revenues retained by Parks is assumed to be 3.5% of gross revenues (per the new financial policies) plus the $257,000 of golf net revenues designated to support the Late Night Teen Program.

*** Additions to the Golf Capital Reserve for 2006 have been appropriated at $420,216 in the Operating Budget and the CIP. However, only the net revenues actually available (after reserving 3.5% of gross revenues plus $257,000 for general Parks use) will be transferred to the Golf Capital Reserve in 2006.

**** Capital expenditures were inflated at 3% per year from 2006 dollars

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