R9P-Discuss- Schedule Of User Fees For The City�s Golf Coursesg MIAMIBEACH
City of Miomi Beoch, lZ0O Convention Center Drive, Miomi Beoch, Florido 33,l39, www.miomibeochfl.gov
COMMISSION MEMORANDUM
TO: Mayor Philip Levine and Members o
FROM: Jimmy L. Morales, City Manager
DATE: September10,2014
SUBJECT: DISCUSSION OF THE SCHEDULE OF USER FEES FOR THE CITY'S GOLF
COURSES
BACKGROUND
During the economic downturn, the revenues generated by the golf courses were negatively
impacted. The City determined that it would not raise any rates during this time, thus resulting in
the need to identify reductions to both, the operating and maintenance costs for both of the golf
courses (Miami Beach Golf Course and Normandy Shores Golf Course). Given that the economy
has begun to stabilize, there is an opportunity to assess the current fee schedules for the City's two
golf courses. ln preparation for the upcoming FY 2014115 budget, Staff worked with Professional
Course Management (PCM), who manages and operates the City's two golf courses and maintains
the Par 3 Course, to conduct a fee assessment for the golf courses.
Since the renovated Miami Beach Golf Club opened in December 2002 through FY 2006, non-
resident rates were raised incrementally several times. The resident daily fee and membership
rates were raised once, from $75 to $80 (peak) and $3,000 to $3,500, respectively. However,
there have not been any increases to golf fees since 2007. The member cart fee has been set at
$20 and has never been increased since inception. As of today, this is the lowest cart fee charged
in South Florida.
ln addition to the established golf fees for both courses, PCM also offers a "Premier Card". This
discount card can be purchased for an established price and allows for the cardholder to play at
any of the Premier Card golf courses at a reduced rate. Fifty percent (50%) of the net proceeds
(minus advertising and administrative costs ($5,000 per course)) from Premier Card sales are
distributed amongst all of the participating golf courses and the remaining 50% is distributed at the
end of the year based on the number of rounds each course plays. Currently, Miami Beach Golf
Course receives the highest distribution of the remaining net revenue, with approximately 14o/o and
Normandy Shores Golf Course receives approximately 9o/o.
A survey was conducted by comparing the City's fees to a cross section of comparable golf
facilities in our market area. The results of this survey are provided as "Attachment A". On July 18,
2014, the Administration presented a proposal to the Finance and Citywide Projects Committee
(FCWPC) recommending increasing the golf rates for FY2014115. During the discussion,
clarification was provided to the FCWPC concerning the intent of the proposed fee increases. The
recommendation to increase the rates for Miami Beach residents by $S.OO is intended to address
the rising operational costs due to the implementation of the City's Living Wage Ordinance, as well
as the anticipated impacts stemming from the Affordable Healthcare Act. The increases to the non-
resident rates are being recommended in order to remain competitive in the market compared to
other comparable golf courses in the area. The proposed fee schedule that was presented on July
18,2014, is estimated to generate approximately $349,836 for FY 2014115, ($2t8,076 for Miami
Beach Golf Course and $131,760 for Normandy Shores Golf Course). The proposed rate
increases and corresponding revenue analysis are provided in "Attachment B". Following the
Agenda nem Rl P..
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Page 2 of 2
discussion, the FCWPC directed the Administration to bring the item back to the August 13,2014
FCWPC meeting where the proposed FY2014l15 budget will be discussed. This meeting was
rescheduled for August 29, 201 4.
On August 19, 2014, the Administration presented the Budget Advisory Committee (BAC) with the
proposed fee schedule that was discussed during the July 18, 2014 FCWPC meeting. During the
meeting, the BAC requested for the Administration to revise their proposal in order to maintain the
rates currently charged to Miami Beach residents and South Florida residents at the Normandy
Shores Golf Course, while still proposing increases that would generate approximately $350,000 in
revenue for FY 2014115. Based on the direction from the BAC, the Administration has provided an
additional proposal for consideration. This proposal would generate approximately $349,675 in
revenues ($306,825 for MBGC and $42,850 for NSGC) for FY 2014115. However, it is important to
note that based on the BAC's request, this proposal would increase the summer rack rate at the
Miami Beach Golf Club by $ZO. This increase would make the Miami Beach Golf Course rack rate
one of the highest, if not the highest, in our market area for the summer months. The alternative
proposal and corresponding revenue analysis based on the BAC's recommendations is provided
as "Attachment C".
The BAC also made a motion to recommend that the City Commission consider providing the golf
management company with the flexibility to make temporary rate adjustments with City's approval,
provided they would be prohibited from increasing rates for Miami Beach residents. The
Committee believed that providing this authority to the management company could give flexibility
in order to capture additional revenue during slow periods and/or high profile events.
This item was presented to the FCWPC at its August 29, 2014 meeting. The Committee was
supportive of a rate increase for both golf courses. However, there was disagreement regarding
whether or not to increase any rates for Miami Beach residents. The final motion was to support
the recommendation of the BAC to increase the rates for both golf courses; however, no increases
would be made to the Miami Beach resident rates. The final vote was 2:2, with Commissioners
Tobin and Steinberg voting in support of the motion and Commissioners Weithorn and Malakoff
voting against the motion. ln addition, a second motion was made to refer a discussion item back
to the BAC concerning the use of the Premier Card and to also identify the feasibility of providing
PCM with the flexibility to make temporary rate adjustments at their own discretion in order to
capture additional revenue.
CONCLUSION
Administration is committed to providing quality Parks and Recreation services to our residents and
guests. Administration is also focused on the need to balance the cost of such services with the
impact these services have on the City's budget. The cost of staffing, operations and maintenance
continues to increase. Given that the City's golf fees have not been increased in over seven years,
our fee schedule is below market rate. To attain a balance the City must establish fees that are
reasonable, fair and in-line with other municipalities in the greater Miami-Dade County area. The
approval of a rate increase is the first step in attaining this balance. Therefore, the Administration
recommends that the City Commission approve increasing the existing golf rates and also consider
incremental increases over the next five years in order to remain competitive with other
comparable golf courses in south Florida, while minimizing any significant financial impacts to our
residents and visitors who utilize the City's two golf courses. The Administration seeks direction
from the City Commission on how they wish to proceed.
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