HomeMy WebLinkAboutRes 2013-18 DW Increase Resident Golf Rate CITY OF PALM DESERT
STAFF REPORT
REQUEST: APPROVE AN INCREASE TO THE RESIDENT GOLF RATE AT
DESERT WILLOW GOLF RESORT TO $48.00 BASED ON THE
CONSUMER PRICE INDEX
SUBMITTED BY: Martin Alvarez, Director of Economic Development
DATE: May 9, 2013
CONTENTS: Resolution No. 2013-18
Recommendation
By Minute Motion:
1. Approve a resident golf fee rate increase from $45.00 to $48.00 for Fiscal Year
2013/14, based on actual CPI, utilizing 2010 as the base year.
2. Approve Resolution No.2o13-Ig establishing an annual resident golf rate
adjustment based on annual CPI, by whole dollar increases only.
Backqround
The resident rate for Desert Willow was set by City Council in Fiscal Year (FY) 1996/97,
upon the opening of Desert Willow, at $45.00. Since the opening of Desert Willow, the
rate for the resident has not changed. KemperSports Management submitted the
successful proposal to operate and manage Desert Willow in 1996. The original
proposal identified the in-season resident rate at $80.00 per round. However, The City
of Indian Wells established their public golf course prior to Desert Willow and charged
$35.00 for a resident rate. When the resident rate was addressed by the City Council,
many residents attended the Council meeting and argued for the same rate as Indian
Wells. Ultimately, the Council compromised at a rate of$45.00.
Below is a summary of the cost per round calculated over the last three fiscal years, using
the formula of adding the golf-related expenses and dividing the total by rounds played
(not including depreciation).
FY Cost Per Round
2010-11 $68.71
2011-12 $69.22
2012-13 ear to date) $76.50
Staff Report
Resident Rate for Desert Willow
May 9, 2013
Page 2 of 3
Desert Willow Golf Resort averages over 85,000 rounds of golf per year and
approximately 20-25% of the rounds come from residents. The rates for non-residents
vary depending on the time of the season and the time of play. The resident rate is
$45.00 year round. The Average Daily Rate (ADR), including the resident play over the
last three years is summarized below:
FY ADR
2010-11 $69.71
2011-12 $72.00
2012-13 ear to date $76.50
Given that approximately 20,000 of all rounds at Desert Willow are resident rounds and
the ADR is $76.50, the non-resident play subsidizes the resident play by $24-$32 a round
and the resort is subsidizing the round cost by $23-$24.
Discussion
The concept to increase the resident rate would be to measure the Consumer Price Index
from March to March, for Los Angeles, Long Beach and the Riverside area to determine
the impact on the resident rate, using only whole dollar increases. For purposes of the
current proposed fee increase 2010 can be used as the baseline year.
The following table illustrates the proposed increase from $45.00 to $48.00, using whole
dollar amount only, with 2010 as the base year.
Fiscal Year CPI $ Rate Increase Actual Increase Actual Whole $ Increase
2009-2010 1.860% $0.84 $45.84 None $45.00
2010-2011 3.000% $1.38 $47.22 $47.00
2011-2012 2.020% $0.95 $48.17 $48.00
2012-2013 1.290% $0.62 $48.79 $48.00
The resolution provided sets a new policy for future resident rate increases by reviewing
CPI annually and adding CPI to the $48.00 rate, but only increasing the rate by whole
dollars. As an example, if the CPI is 3.1%, the rate would increase to $48.395 but the
rate charged would be $48.00 and the $.395 would be added to next year's calculation
with 2013 as the baseline. If actual CPI would have been implemented annually to the
resident rate over the last 14 years, the actual resident rate would be $65.00 today.
The arguments for utilizing CPI is that adjusting the resident rate would slightly modify the
rate from year to year avoiding larger, more controversial, increases while allowing the
Staff Report
Resident Rate for Desert Willow
May 9, 2013
Page 2 of 3
recovery of some increased costs to water, energy, fertilizer, seed, labor, equipment, etc.
An additional consideration to justify the increase to the resident rate is that artificially
keeping the resident rate far below the cost of golf rounds impacts the private golf club's
ability to attract new members, especially residents.
Resident Restaurant Discount
In consideration of the resident golf rate increase from $45.00 to $48.00, staff and
KemperSports Management proposes to offer a 10% discount for residents dining at the
clubhouse. The 10% discount would be applicable for parties up to 6 people, and would
exclude any special events.
FISCAL IMPACT
Although Desert Willow is not a current burden on the City's General Fund, without RDA
funds for large capital expenditures, an increase in revenues will allow the City and
Kemper to build a capital replacement account to maintain and make continual
improvements.
One caution is that in this current economy and perhaps in the future, golf rounds in the
Coachella Valley and nationally are declining. Golf pricing is far more competitive today
versus five years ago. It would be unwise to lose more play at Desert Willow, both the
20-25% resident play or to see a reduction in the 85,000 plus rounds per year.
Submitted By:
artin Alvarez Paul Gibson, Finance Director
Director of Economic Development CTTYCOUNCILACTION
APPROVED � DF,NTED
Approved: RECENED OTHER
MF.I�.TING DATE '
AYF,S: �e
n M. Wohlmuth, City Manager NOF,S: �-� -�� —
AI3�;F.NT: ._1J6 ns�
A13STAtN:
V�I2IFITD I3Y: - �
(3ri�;in<il on [+ile with ity C c�•k's Of�ce
5-9-2012: Approved recommendations, without a
food and beverage discount program, and direct
that future Resident Golf Fee Rate increases to
come before City Council for approval.
RESOLUTION NO. 2013-18 �
�
A�
A RESOLUTION OF THE CITY OF PALM DESERT�,�f'�
ESTABLISHING A POLICY TO ADJUST ANNUALLY TH �
RESIDENT GREEN FEES BY CPI AT THE DES T
WILLOW GOLF RESORT
WHEREAS, the City of Palm Desert has developed � o public golf courses to
provide for recreational facilities; and
WHEREAS, the City of Palm Desert has certain ligations in accordance with
that certain agreement with the Management Compan of the Golf Resort to establish
and set said green fees; and
WHEREAS, the City of Palm Desert desir to provide for reasonable rates to
play said golf course for its residents of the City; d
NOW, THEREFORE BE IT RESOLV , that the City of Palm Desert hereby
establishes a policy of adjusting the residen green fees annually based on utilizing the
annual Consumer Price Index, March to arch, for the Los Angeles, Long Beach and
Riverside area to determine the adjus ents to the resident rate by whole dollar
increases only;
ALSO BE IT RESOLVED, t t the City of Palm Desert reserves the ability to
adjust said rates from time to time.
PASSES, APPROVED A D ADOPTED the day of 2013,
AYES:
NOES:
ABSENT:
ABSTAIN:
JAN C. HARNIK, MAYOR
ATTEST:
RACHELLE D. KLASSEN, CITY CLERR
CITY OF PALM DESERT, CALIFORNIA
RESOLUTION NO. 2013 -18
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM DESERT, CALIFORNIA, ESTABLISHING A POLICY TO
ADJUST ANNUALLY THE RESIDENT GREEN FEES BY
CONSUMER PRICE INDEX (CPI) AT THE DESERT WILLOW
GOLF RESORT
WHEREAS, the City of Palm Desert has developed two public golf courses to
provide for recreational facilities; and
WHEREAS, the City of Palm Desert has certain obligations in accordance with
that certain agreement with the Management Company of the Golf Resort to establish and
set said green fees; and
WHEREAS, the City of Palm Desert desires to provide for reasonable rates to play
said golf course for its residents of the City.
NOW, THEREFORE BE IT RESOLVED, `AS FOLLOWS:
The City of Palm Desert hereby establishes a policy of adjusting the resident green
fees annually based on utilizing the annual Consumer Price Index (CPI), March to March
for the Los Angeles, Long Beach and Riverside area to determine the adjustments to the
resident rate by whole dollar increases only;
The adjustment shall be made based upon the following table using 2010 as the
base year:
Fiscal Year
2009-2010
2010-2011
2011-2012
2012-2013
CPI
1.860%
3.000%r
2.020%
1.290%
$ Rate Actual Actual Whole
Increase Increase $ Increase
$0.84 $45.84 None ($45.00)
$1.38 $47.22 $47.00
$0.95 $48.17 $48.00
$0.62 $48.79 $48.00
The resident rate effective July 1, 2013, shall be $48.00 per round per resident.
RESOLUTION NO. 2013 - 18
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Palm Desert
City Council held this day of , 2013, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
RACHELLE D. KLASSEN, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA
2
JAN C. HARNIK, MAYOR
RESOLUTION NO. 2013 -18
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM DESERT, CALIFORNIA, ESTABLISHING THE RESIDENT
GREEN FEES BY CONSUMER PRICE INDEX (CPI) AT THE
DESERT WILLOW GOLF RESORT FOR FISCAL YEAR 2013-2014
WHEREAS, the City of Palm Desert has developed two public golf courses to
provide for recreational facilities; and
WHEREAS, the City of Palm Desert has certain obligations in accordance with
that certain agreement with the Management Company of the Golf Resort to establish and
set said green fees; and
WHEREAS, the City of Palm Desert desires to provide for reasonable rates to play
said golf course for its residents of the City.
NOW, THEREFORE BE IT RESOLVED, AS FOLLOWS:
The City of Palm Desert hereby adjusts the resident green fees effective with Fiscal
Year 2013-2014 based on utilizing the annual Consumer Price Index (CPI), March to
March for the Los Angeles, Long Beach and Riverside area, to determine the adjustment to
the resident rate by whole -dollar increase only:
The adjustment shall be made based upon the following table using 2010 as the
base year:
Fiscal Year CPI $ Rate Actual Actual Whole
Increase Increase $ Increase
2009-2010 1.860% $0.84 $45.84 None ($45.00)
2010-2011 3.000% I $1.38 I $47.22 I $47.00
1 2011-2012 2.020% I $0.95 I $48.17 I $48.00
2012-2013 1.290% I $0.62 I $48.79 I $48.00
The resident rate effective July 1, 2013, shall be $48.00 per round per resident.
RESOLUTION NO. 2013 - 18
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Palm Desert
City Council held this 9th day of May, 2013, by the following vote, to wit:
AYES: BENSON, SPIEGEL, TANNER, and HARNIK
NOES: WEBER
ABSENT: NONE
ABSTAIN: NONE
ATTEST:
RACHELLE D. KLASSEN, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA
2
JAN C. HARNIK, MAYOR