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HomeMy WebLinkAbout2011-08-30 JOINT WORK SESSION CITY COUNCIL-PARK BOARDAGENDA JOINT WORK SESSION EDINA CITY COUNCIL AND EDINA PARK BOARD CITY OF EDINA, MINNESOTA COUNCIL CHAMBERS AUGUST 30, 2011 5:30 P.M. Call To Order II. Introductions III. Receive Report on Edina Golf Courses — National Golf Foundation Presentation IV. Grandview Small Area Plan A. Update On The Process B. Preview of Work Plan C. Proposed Consultant Team V. Adjournment The City of Edina wants all residents to be comfortable being part of the public process. If you need assistance in the way of hearing amplification, an interpreter, large -print documents or something else, please call 952-927-886172 hours in advance of the meeting. SCHEDULE OF UPCOMING MEETINGS /DATES /EVENTS Tues Sept 6 Work Session — Budget Review 5:30 P.M. Tues Sept 6 Regular Meeting 7:00 P.M. Tues Sept 20 Work Session With Energy & Environment Commission 5:30 P.M. Tues Sept 20 Regular Meeting 7:00 P.M. Sat Oct 1 Town Hall Meeting 10:00 a.m. — Noon Tues Oct 4 Work Session — Human Services Task Force Funding Rec 5:30 P.M. Tues Oct 4 Regular Meeting 7:00 P.M. Tues Oct 18 Work Session — Review Proposal City Economic Dev. & Svc. 5:30 P.M. Tues Oct 18 Regular Meeting 7:00 P.M. Tues Nov 1 Regular Council Meeting 7:00 P.M. Tues Nov 8 ELECTION DAY — POLLS OPEN 7:00 A.M. UNTIL 8:00 P.M. jes Nov 15 Regular Meeting 7:00 P.M. Thur Nov 24 THANKSGIVING HOLIDAY OBSERVED — City Hall Closed Fri Nov 25 DAY AFTER THANKSGIVING HOLIDAY OBSERVED — City Hall Closed Tues Dec 6 Regular Meeting 7:00 P.M. Tues Dec 20 Regular Meeting 7:00 P.M. Mon Dec 26 CHRISTMAS HOLDIAY OBSERVED — City Hall Closed COMMUNITY ROOM COUNCIL CHAMBERS COMMUNITY ROOM COUNCIL CHAMBERS EDINA SENIOR CENTER COMMUNITY ROOM COUNCIL CHAMBERS COMMUNITY ROOM COUNCIL CHAMBERS COUNCIL CHAMBERS COUNCIL CHAMBERS COUNCIL CHAMBERS COUNCIL CHAMBERS .y Executive Summary City of Edina Golf System Strategic Outlook and Analysis Prepared For: City of Edina Park & Recreation Department 480:1 West 50`x' Street Edina, MN 55424 Prepared By: NGFCONSULTINa` 1150 South U.S. Highway One, Suite 401 "Jupiter, Florida 33477 (561) 744 -6006 August 2011 Executive Summary City of Edina Golf System Strategic Outlook and Analysis Prepared For: City of Edina Park & Recreation Department 480:1 West 50`x' Street Edina, MN 55424 Prepared By: NGFCONSULTINa` 1150 South U.S. Highway One, Suite 401 "Jupiter, Florida 33477 (561) 744 -6006 August 2011 Executive Summary PURPOSE National Golf Foundation Consulting, Inc. ( "NGF Consulting" or "NGF ") was retained by the City of Edina ( "City" or "Edina Golf') to assist in evaluating the operational and economic performance of City's municipal golf system. The following is a summarized version of our full system report, detailing the main findings and NGF recommendations for the City to improve its municipal golf system. In this Executive Summary, NGF provides a brief review of our findings and recommendations on the Edina Golf system, intended to provide an "at -a- glance" summarization of the full review. Additional detail on this summary can be found in the full body of our comprehensive report and its appendices. BACKGROUND The City of Edina is operating a multi- faceted golf system with many parts, each serving a defined niche in the market. The golf facilities appear to be very important to the City, and the Edina golf courses have developed a reputation for high quality and high activity that seems to be well known in the area and the State of Minnesota. The City is now operating a system of golf courses that truly can offer "something for everyone," from the beginner all the way up to seasoned golf professionals. The golf system reflects very well on the City of Edina and is a fine complement to the overall City image. In the last several years, the economic performance of the City's golf system has declined, leading to stress within the system. There have been many changes over the years, including the acquisition of Fred Richards Golf Course, the addition of a new 9 -hole course ( "Clunie ") at Braemar, and clubhouse expansions at Braemar. While some of these changes have not been overly popular, the golf assets within the City are now fixed and the NGF Consulting review has been completed to offer the most appropriate plan for these facilities going forward, regardless of what has happened in the past. In reviewing the Edina Golf system, it was conveyed to the NGF consultants that the City of Edina is "committed to providing affordable golf to the citizens of Edina," while making every effort to minimize the economic burden on the City. The Edina Golf enterprise now has 11 full -time and more than 100 seasonal employees on the payroll. Many of these employees are long -term City employees with lengthy records of service to the City. These employees are working hard to make the most of the Edina Golf system, and in many cases are having to get by with less as declining revenues have led to limited resources available to maintain the facilities. Further, the national economic recession of 2008 -2010 has impacted the City of Edina, and the Edina Golf courses have been hit especially hard with severe rainfall in 2011. In some ways, Edina Golf has been hit by a "perfect storm" of events including recession, declining demand for golf, increasing number of golf courses, and poor weather. Despite all this, it appears the Edina Golf program is still on sound footing and well positioned to regain its market position through changes already underway in the system (new General Manager and marketing), and other changes recommended by NGF. In 2011, NGF was retained by the City of Edina to assist with evaluating the Edina Golf system and to make recommendations to help ensure the long -term viability of the golf program. This includes a thorough review of the system on an 'as -is' basis, as well as a consideration of other National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary —1 operating alternatives, including privatization options. It is expected that the results of this NGF study will be used by the City as a guide for the future of the golf system, andr to help convey to interested parties (citizens of Edina, Park Board, City Council, etc.) that the City will operate the golf system in thenmost efficient manner possible, and clearly identify why and how much City economic support may be required. NGF Consulting completed .a thorough review of the City's golf program that included several meetings, inspections, review of data, and utilization of the NGF Consultants' experience and basic knowledge of.golf industry best practices. NGF findings and recommendations are designed to give the City, f Edina a.full understanding of its golf system as a whole, along with an understanding of each individual facility within-the City system. The ultimate goal of this project,is to create -a formal business plan for the City golf courses that will put the system on a path toward long -term economic stability and sustainability. The key issues addressed by the NGF team include: • Overall condition and operating structure of the Edina Golf system • A review of golf industry standards and norms of operation • Status of the Minneapolis /Edina golf market • A summary of NGF recommendations • An estimate of realistic economic potential of the Edina Golf system The NGF consulting engagement was managed by Richard Singer, Director of Consulting Services for the NGF, with assistance from Senior Project Director Ed Getherall. SUMMARY OF FINDINGS AND RECOMMENDATIONS In summary, our findings are that the City of Edina is operating high quality golf courses that suffer from some disadvantages that are controllable within the City structure and can be improved. NGF Consulting found five key specific controllable areas that are. contributing to the economic distress within the system and form the core of our recommendations to the City, including: • Decline in golf facility activity; especially during wet periods • High costs associated with the food and beverage / clubhouse operation • Legacy of antiquated/ outdated golf management. practices, particularly in marketing • The system debt service (expires in 2013) • Size constraints within the Braemar Golf Course facility In review of the Edina Golf system, NGF finds that action on these above items will provide the greatest relief1rom economic stress to the system, and that some of these items will require investment of capital by the City — (i.e., spend money to make money) — to gain relief. Assuming the viability of the golf system is in the best interest of the City, it is expected that these investments will provide some economic stimulus to the Edina Golf system. NGF recognizes that in operating public golf facilities there are variables to the operation that can be controlled by the owner (City) and variables that cannot be.controlled. Uncontrollable factors include the location of the facilities, the demand for golf, the weather, and the condition National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary — 2 of the national; local, and regional economy. While some of the key controllable factors were identified above, other controllable factors include direct expenses to operate the facilities (reduced by City in 2011), condition of the golf facilities, quality of services offered, and the extent to which the facilities are appropriately marketed. The review and NGF recommendations contained in this report are designed to focus on the factors of the golf system that can be controlled by the City and to form the foundation of a system -wide business plan for golf. The key NGF Consulting findings from this golf system review are shown below. Overall System Findings and Recommendations • Privatization Options. The NGF has reviewed the operation and management of the Edina Golf System, along with alternate "privatized" options for governance. It is the opinion of the NGF consultants that the present self- operation system should be continued, and that none of the privatization options reviewed clearly placed the system in an improved economic condition. In summary: ■ A management company will charge between $90,000 and $150,000 per year in management fees (3% to 6% of gross), thus requiring the system to improve by $90,000 to $150,000 in increased revenue or reduced expenses just to retain its present position. Further, all needed capital improvements will be the responsibility of the City. ■ For a lease or concession arrangement to improve economic performance, the City will have to collect enough income to support City overhead and debt service from the lease payment from vendor(s), plus the commitment of additional capital investment in order for the system to retain its present position. • It is likely that under any privatization structure, the method used by the private sector to achieve desired economic profitability will be to either terminate or reduce salaries and benefits of existing City golf employees. • One form of privatization that may be a consideration for the City is some form of concession arrangement for the Braemar Grill. However, NGF analysis shows that while this approach could improve the overall performance of the food and beverage operation at Braemar, the concession arrangement alone will not eliminate the loss on the Braemar Grill. Recommended Structure. The basic organizational structure of Edina Golf is efficient and within the norms observed by NGF in other large municipal golf systems that are self- operated. The system has been reacting to changes in rounds and revenue production by making concerted efforts to reduce staff and other expenses, trying to maintain a healthy system. The NGF recommends that this system be retained with: ■ A strong General Manager form of management with appropriate senior support staff (Superintendent, Golf Professional, Pro Shop, Clubhouse Manager, etc.). ■ The Golf General Manager should be a business - oriented position with golf business experience, particularly marketing and technology expertise. The National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary — 3 ■ Edina golf system had fallen behind in this area in recent years with employment of some "out -of- date" practices in Edina Golf. POS. The, City of Edina needs to. upgrade the Point -of -Sale (POS) system in the Edina golf system. Most important, all revenue centers should be on the same POS system to allow for ease of reporting and review of performance. Placing all revenue centers in one POS system will also save time and effort ofisenior management, thus reducing expense. Modernisation /Marketing. The Edina golf systernr needs to break away from older, outdated business:practices,.especially in marketing. This.process is well underway with the recent change'in General; Managet, and the new Website and other initiatives show that the current management team is committed to modernizing:the Edina Golf system..The NGF review of Edina Golf,marketing'in 2011 shows a highly sophisticated, comprehensive program, that covers several separate areas of focus. Fee Structure. The basic fee structure for Edina Golf appears to be market justified, and no major change''is recommended by NGF. However, some minor change is recommended for 2012 as documented in this report. In general, some non- patron fees could be increased slightly and there;is room:to increase the price of patron cards and still be the lowest priced in the market. The City should commit to at least two percent (2 %) increases in fees and charges every other year as a mechanism to keep up with inflation. Rounds and Revenue Performance. The Edina Golf system as a whole has experienced a decline in rounds activity of 9.6 %between 2007 and 2010, an amount very close to the total U.S. average of 10 %. Rounds may fall under 92,000 total for 2011 as a result of inclement weather through much of the late spring and early summer. Revenue has declined 4% since 2007, but is expected to decline another 7.6% in 2011. Total Edina Golf revenue was $3.443 million in 2010, and is projected to fall to $3.181 million in 2011. Expenses.. The $2.7 million in total operating expense has remained .fairly consistent since 2007, with reductions in both 2010 and 2011. The expenses to operate Edina Golf facilities are higher than expense averages for mid -range public golf courses in the nation (average 18 -hole facility = $931,900 <$1.398 million for 27- holes> in expenses), but lower than expenses for `Premium' public golf courses ($2.65 million <$3.9 million for 27- holes >. in expenses for 18- holes). NGF believes that Braemar 27 would be more directly comparable to 'premium' facilities. NGF has not compiled recent comparative expense data for the executive and par -3 courses.. Capital. NGF has. observed.declining investment in the golf courses as revenues declined. Golf courses are "living and breathing" assets that ,will "deteriorate over time, and significant reductions in capital expenditures eventually will catch up to the system. NGF has recommended specific upgrades to facilities as-a program to help improve revenue performance, but:other capital needs such as, .equipment replacement and irrigation upgrades are likely to be required in the three to seven year horizon and should_ be in the City's planning. External Factors • External Factors. The external (uncontrollable) factors that affect the City's ability to sell golf rounds all tended to be negative in 2011. NGF findings. include: National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary — 4 • The national and state economies appear to be in recession, and this has limited the amount of discretionary consumer income that can be spent on golf. • Further, national data presented by NGF show that golf courses nationwide have been experiencing declines in rounds and revenues, while experiencing inflation in operating expenses. • Among the keys to growth in golf activity will be increasing participation among minorities and females. Beginner -type facilities such as Braemar Executive, Fred Richards Golf Course, and the Golf Dome can be helpful in meeting this challenge. • The older age and higher income demographics of Edina are generally consistent with higher- than - average participation in golf. However, the older age may be a longer -term concern for Edina Golf, as replacing older golfers with new younger golfers will be a critical element in the longer -term success of Edina Golf courses. • The overall golf market in the Minneapolis metro area is large, with upwards of 6.7 million rounds of golf potentially demanded at area golf courses. Along with high demand there are lots of golf courses, including 187 total golf facilities in the greater Minneapolis -St. Paul metro area. A total of 14.5 new 18 -hole golf courses were added to the MSA market in the last ten years. • The golf market in the greater Minneapolis area is highly weather dependent, with length of winter and rain -out days in summer playing a key role in revenue generation. • In our review of several local Minneapolis area municipal golf systems, NGF Consulting found that the Edina Golf system compares favorably in most measures of average revenue, expenses, average labor, and ratio of labor to total expense. NGF can state that Edina Golf operations are not "out- of -the- ordinary" for municipal golf in this market. • The City of Edina golf courses generally compare favorably to their immediate competition with higher fees and generally comparable or higher activity. Braemar 27 Golf Course Summary • Braemar 27 is the premier facility in Edina Golf, and a premier public golf facility in the Minneapolis region, with a strong reputation for quality and service. The golf course and clubhouse are in good condition with no urgent upgrades needed. The Braemar 27 -hole golf course is producing rounds and revenue totals that are well in excess of national and regional averages, showing the facility to be among the more active municipal golf courses in its climate region. Coupled with high revenue are higher- than - average expenses, although some of the expenses charged to the Braemar 27 are covering other areas such as the executive course and driving range. • The maintenance condition of the Braemar 27 is outstanding, reflecting the quality of the superintendent and the maintenance staff. Maintaining golf courses in Minnesota National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary — 5 is more difficult than in other areas. of the U.S. due in part to the winter season and heavy snow cover. The City should be careful not to let customer pressure. influence maintenance practices (i.e., green speeds) and create the potential to damage fragile turf conditions. The Braemar 27 is presently, limiting the use of carts on the course during periods of heavy or persistent rain in an effort to prevent turf.damage. This practice is limiting the volume of rounds and hurting revenue. The Braemar 27 would benefit greatly from a full, "wall -to -wall' cart path system that would allow carts out on the golf course during some wet periods and allow for more rounds and increased revenue to the facility. This cart path expansion program is first on the list of NGF recommended upgrades for the system. While there are: concerns about the overall fit of the newer Clunie 9 -hole course at Braemar, any large -scale capital .investment.in redesigning and /or remodeling the course will not likely produce additional revenue to the facility and thus the,project is not cost justified nor recommended. Rather, the City should commit to minor adjustments in the golf course (tree trimming, tee movement, etc,_) completed a little at a time and through the existing maintenance program. Braemar Executive and Driving Range • The Braemar driving range is one of the finest driving range facilities in the Minneapolis area and is producing a high level of income to the Edina golf system. • The range configuration is tight, and surrounding elements are frequently hit by errant range balls. Fencing on the east'side of the range is needed to protect hole #1 on the Braemar Executive course. Northward expansion of the Braemar range is recommended by NGF as a means to increase the space available for lessons," increase regular usage of the range,. and allow for remodeling of the Braemar Executive course into a Braemar Par -3 course. NGF has estimated the cost of this project to be $300,000 to $400,000, depending on what (if any),structures are included, and the plan is completed. as an in -house project with,Braemar maintenance staff.,There may be some disruption of range and executive course business during the renovation process, although timing it properly could minimize the effect. The Braemar Executive course presently competes directly with Fred Richards Golf Course, as both facilities are offering virtually. the, same product to the, same customers. Renovation of the Braemar range will .require simultaneous renovation of the Braemar-Executive course, changing the course into. a shorter, par -3 facility that can function as a high quality "pitch- and - putt," thus opening the facility, to anew market of golfers. Braemar Clubhouse Summary • The Braemar Clubhouse offers an ideal complement to the Braemar Golf operation, serving both the needs of golfers'and functioning. as an ideal venue for banquets, and parties. The NGF sees great upside potentiaf to, grow revenues with this facility, both in the operation of the Braemar Grill and the. banquet facilities. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary — 6 • Close review of operating performance shows there may be inefficiencies within the clubhouse operation, but closer review of overhead expense allocations will need to be completed before any real judgment can be made. • The Braemar Golf Course could probably do more to try to attract a greater volume of non -golf business to the Braemar Grill. This will likely require some expansion of menu offerings and upgrade in service, but is possible without incurring a large increase in expense. • The City of Edina should monitor the performance of the Braemar Grill closely over the next year or two, and if there is no improvement in economic performance the City can consider some form of concession agreement for this operation. Such a concession will work for the City only if it involves a payment to the City of at least 10% of gross revenue, the concessionaire retains all variable expenses, and the City retains all banquet room rental revenue. • Room rental fees can be increased in 2012 according to the schedule recommended in the NGF report. • The only major capital improvements recommended for the Braemar clubhouse include the renovation of the banquet area restrooms, to be completed before 2013. Fred Richards Golf Course Summary • Fred Richards Golf Course is a 9 -hole "short" course with less than 2,000 yards and a par of 29 (termed in the golf industry as "executive- length "). This type facility traditionally has appeal to beginner and less- skilled golfers who have less concern for high quality playing conditions and extra "frills." • The City should commit to maintaining this facility at a high level (as current), but will find that large -scale capital investment in Fred Richards Golf Course is not likely to produce additional revenue and will not be cost justified. • While the facility has some physical upgrade needs, the NGF would not put these high on the list of priorities, due to the nature of the facility. Thus, the recommendations for Fred Richards focus on getting the most out of what is there now, and using the facility to promote golf to beginners in the Edina golf market. Braemar Golf Dome Summary • The Golf Dome is clearly a positive addition to the overall Braemar golf system, providing winter revenue and keeping the local golf population interested and engaged in golf during the winter off - season. • A golf dome like this should have an expected useful life of 25 to 30 years, meaning the 28 -year old Braemar Golf Dome is approaching a period when new capital investment may be required. However, the facility is functional as is, provided ongoing maintenance is kept up, especially relating to the fixing of leaks in the fabric as they occur and marinating structural integrity of the lobby building. • Specifically, the deteriorating lobby structure may be in need of upgrade, but any capital investment in this area is not likely to generate a positive return to the City. Rather, the City should focus on structurally securing the building with anchoring beam and patching the existing roof, maintaining and repairing the dome fabric and National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary — 7 HVAC system to ensure maximum efficiency in dome maintenance and prevent waste from leaks. • The City could consider being slightly more flexible with the Dome schedule, as an overly wet fall or spring may allow for increased Dome revenue if the facility were to open a little sooner in spring, or close later in the fall. • The City should make merchandise sales in the dome a point of emphasis during the winter season. Financial Overview Summary As part of our review of the City of Edina golf system, NGF Consulting has created a cash flow model for the continued operation of the Edina Golf system under the assumption of direct City control of operations ('as -is'), with enactment of NGF recommendations. The details and assumptions of this financial projection are contained in the body of the NGF report. Summary of Performance The results of the NGF analysis show that with favorable weather and implementation of NGF recommendations, Edina can experience growth in rounds activity back above 100,000 by 2012 and close to 110,000 by 2013. NGF still expects the Edina Golf system to remain fiscally challenged through 2012, beginning to seriously reduce the accumulated deficits beginning in 2013 when the system bond has been paid off. A summary of findings from the NGF financial projections: The Edina Golf Enterprise is viable to cover its basic operating expenses (excluding depreciation) and debt service for the years shown, and should be able to self -fund its capital needs as recommended by NGF. This is considering the presence of a large accumulated deficit on the property that will not be reduced significantly until 2013 when the system's bond is paid off. The capital expenditures proposed by NGF total $250,000 in 2012, $200,000 in 2013 and $125,000 in each year from 2014 through 2016. • When the system debt ends in 2013 there will be an immediate boost to net income, allowing the system to be capable of sustaining operations, capital expenditures, and accumulated deficit reduction beginning in 2014. • The above projections assume historical inflation in expenses and some inflation in fees charged for use of golf facilities. The Edina Golf Enterprise will have to commit to at least two percent (2 %) increases in fees every two years to meet these projections. Impact of Grill Concession NGF Consulting's projected financial results show performance assuming NGF projected rounds and revenue on an 'as -is' operating basis. One consideration addressed by NGF in our analysis was the losses in the Braemar Grill, and the possibility of creating a concession agreement for that operation. NGF review of this option shows that while the arrangement would improve the overall performance of the food and beverage operation at Braemar, the concession arrangement alone will not eliminate the loss on the Braemar Grill, given the present accounting and overhead allocation. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary — 8 s Summary Conclusion The recommendations made by NGF Consulting are generally centered on increasing revenues and reducing expenses through some capital investment. Still, despite the course of action recommended by NGF, the City of Edina should expect a "new reality" in rounds and revenue performance that is not likely to return to levels experienced a decade ago, but should exceed the levels experienced in 2011. It is clear that there are three key issues leading to economic hardship within the Edina Golf system, with two of these not being controllable by the City. Key stresses to the system are: (1) weather impacts; (2) high overall expense structure (being reduced in 2011); and (3) the trend toward declining golf activity in this market and nationwide. Despite these hardships, there are many positives within the system that could help to improve its economic situation, including: (1) high quality of facilities with a strong reputation producing at the high end of the market; (2) dedicated staff committed to doing all it can to improve performance; and (3) strong basic market characteristics in Edina where the population has age and income characteristics consistent with very high participation in golf. As part of this consulting effort, NGF reviewed alternative options for the operation and management of the City's golf system. This review showed that none of the "privatization" alternatives would immediately improve the economic performance of the Edina Golf Enterprise to a level that is clearly better than the expectations under continued self- operation. If the Edina Golf Enterprise can gain reductions in the economic burden from the three items noted above, then the privatization alternatives will look even less appealing. Put simply, there is no "magic bullet" for Edina Golf in privatizing; and the dedicated, hard - working, experienced staff of professionals offers the best likelihood of improved economic performance in Edina Golf going forward. Some of the recommendations made by NGF in this analysis require the City to make investments in Edina Golf properties, and much of the $350,000 in new investment over the next two years involves improving facilities so as to allow for their greater use, thus increasing revenue. NGF recognizes that these investments may add economic stress to the City golf system in the years these investments are made, and the first few years after. This is due not only to the actual financial investments themselves, but the disruption the changes may cause in facility operations. In the longer term (beyond five years) the upgrades NGF suggests should help position the City golf courses as high quality public golf facilities that are both desirable to a wide range of golfing customers, and efficient in their maintenance practices. The most important NGF recommendations for Edina Golf include: 1. No change in existing management structure 2. Invest in remodeling the Braemar range and Executive course (Par -3 course) 3. Invest in new cart path system at Braemar 27 4. Improve and modernize marketing practices and move away from previous "out -of- date" business practices 5. Get all revenue centers on the same POS system 6. Resist large -scale capital projects that have low return on investment, such as: a. Golf Dome lobby replacement b. Remodel Clunie 9 7. Create a reserve for replacement for the Braemar irrigation system 8. Watch the performance of the Braemar Grill and consider concession if there is not improvement by the end of 2012. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations Executive Summary — 9 i NrMFCONSULTING NATIONAL GOLF FOUNOATIUN City of Edina Golf System Strategic Outlook and Analysis Presented By: Richard Singer National Golf Foundation Consulting, Inc. (561) 354 -1642 rsingerAngtorg CONSULTING City of Edina Municipal Golf- .system NATIONAL GOLF FOUNDATION National Golf-foundation ■ Founded 1 -936 ■ Golf industry research ■ Custom -foci ity research, and consulting Municipal-golf facility consulting ■ Rich -ard Singer ■ Ed Getherall MCFCONSULTING ra -ate NATIONAL GOLF City of Edina Municipal Golf ,System ,. a .. .. . Purpose ■ Financial Downturn ■ Operations Review • Physical • Market • Management / Staff / Operations / Marketing ■ Purpose • Make recommendations to ensure short- and long -term viability • Preserve the recreational amenity for citizens of Edina • Business model that is self - sustaining 3 Methodollogy ■ Meetings I nterviews with City staff ■ Meetings interviews with :golf course management' and key staff ■ Physical review ■ Fi-nancial review ■ Macro golf market. analysis ■ Field research ■ Competitive analysis -.-and visits / interviews NGFCONSULTING City of Edina Municipal Golf System NATIONAL GOLF FOUNDATION Project, Background ■ Edina Golf has a reputation for high quality and high activity in the area and the State of Minnesota ■ Reflects very well on the City of Edinaand is -a -fine complement to the overall City image ■ Economic, performance of the City's golf: system -has declined recently, leading-to stresswith,in -the system= Many changes over-the years, including: • Acquisition of Fred. Richards Golf Course • Addition of new 9-hole course ("Clunie' at Braemar • Clubhouse expansions at Braemar ■ City golf assets are now fixed; NGF Consulting- review has been completed to offer the mbst -appropriate,plan for these facilities. going forward. .5 City of Edina Municipal Golf System Project Background N NATIONAL GOLF FOUNDA71ON ■ NGF Consulting provided: • A review of the overall condition and operating structure of the Edina Golf system • A review of golf industry standards and norms of operation • A summary of the status of the Minneapolis /Edina golf market • A summary of NGF recommendations • An estimate of realistic economic potential of the Edina Golf system 6 I M FCONSULTING ' NAT7tlNAL OtliF FOUNDATION City, of Edina Municipal Golf System Market Environment Overall System Findings and Recommendations Privatization Options ■ It is the opinion of the NGF consultants that the present self-operation system should be continued, and that none of the privatization- options reviewed clearly placed the system in- an improved economic condition FcoNSULT/NG City of Edina - Municipal Golf System Market-Environmen- IIATIO11,11 GOLF FOU40,1110M Overall- System.: Findings and Recommendations Recommended. Structure ■ Present system is efficient aInd within -norms observed in other large self-operated -municipal,: golf systems - ■ System has been reacting to changes in- rounds and revenue production by, making concerted efforts to. reduce staff and'; other expenses-, tryi.ngtoz maintain a healthy system. ■ Recommend ,that this system be retained with: • Strong General Manager with appropriate, senior, support staff (Superintendent, Golf Professional, Pro Shop, Clubhouse Manager, etc.). • Th'e Golf General Manager should be a -business-oriented person with golf �business experience, -,particularly 9- marketing and technology expertise 3 NOFCONSULTING City of Edina Municipal Golf System Market Environment AA7lONAL 11.1,1: i0UNOAT7f7N Overall System Findings and Recommendations POS ® Upgrade the Point -of -Sale system so that all revenue centers are be on the same system for ease of reporting and review of performance; also saving time and - effort of senior management, thus reducing expense INTERNET / MEDIA ■ Upgrade the internet and media systems-Io allow Edina Golf to enhance marketing 9 _C0MSUL't1MG City of Edina Municipal Golf System Market Environment: 7 ATI ONAL GOLF FOUNDATION ..... .................................................... ... . ...... Overall System Findings and Recommendations Modernization / Markefin ■ Need to -break away from older, outdated business practices, -especially in marketing (process is well underway with the recent change in General Manager) • New Website and other initiatives show commitment to modernizing the Edina Golf system. • The NGF review of Edina Golf -marketing-in 2011 shows a highly sophisticated, comprehensive program that- covers several separate areas -of focus 10 CONSULTING City of Edina Muniqipat Golf System Market- Environment AIATlONAi OOLF fOONDAPJON Overall. System,Findings,and Recommendations Rounds.and: Revenue Performance ■ The Edina Golfe system as a whole has experie'nced a decline in rounds activity of 9.6% between 2007 and 2010, an amount very close to the total U.S. average of 10 %.. ■ Rounds may fall under 92,000 total for 201� 1 -as a resuilt of inclement weather through much of the: Fate: spring and early summer. ■ Revenue has declined 4% since 2007, but-is expected to decline .another 7.6 % :in 2011. ■ Total Edina Golf revenue was $3.443 million in 2010, and is projected to fall to $3.181 million in 2011. 11 M F 10 VONSULUNG City of Edina Municipal'.- Golf System Market Environment M41IMMI ..LI IM404710M .Overall System Findings and Recommendations Expenses ■ The $2.7 million in total operating expense, has- remained fairly consistent since 2007, with reductions in both. 2010 and 20.11. ■ The -expenses to ope rate Edina Golf facilities are higher than -expense averages for mid-rang-e-- public -golf courses in the nation (average 18-hole facility = $931,900 <.31.398 million -for 27-ho.les> in expenses), but lower . than expenses for `Premium' public golf courses ($2.65 million <$3.9 million for 27-holes> in expenses for l 8- holes-). ■ NGF believes that Braemar 27 would be more directly comparable to premium' facilities. 12 N OF CONSULTING City of Edina Municipal, Golf System Market Environment NATIONAL GOLF FOUNaATION MaMm =.�: overall System Findings _and Recommendations ■ Fee-Structure The basic fee structure , is market - justified; no major change recommended, only minor ones -in 2012: • In general, some non- patron fees could beAncreased slightly and there is room to increase- the- - price -of patron cards and still be the lowest priced .in the market. • The City should- commit to at least two percent :(2 %o) increases. in fee&,and charges every other year as a mechanism to -keep up with inflation 13 Overall System Findings and Recommendations C a ,ita:l ■ NG -F has observed:.declining investment in the .golf courses as-.revenues declined • Golf co -urses are "living and breathing" assets that will deteriorate overtime, and significant reductions in capital expenditures eventually will catch up- to the system • NGF has recommended specific upgrades to facilities as'a program to help improve.revenue performance, but other capital needs such as equipment replacement and irrigation upgrades are likely to,. b.e required in the three to seven year horizon and should be in the City's p- Tanning 14 U F 00 COMSULTIMO City of Edina Municipal Golf System Market Environment 11A1101141 tltlIF FtlYNtlA77tlN External Factors ® Uncontrollable. factors that affect the City's ability to sell golf rounds tended to be negative in 2011: • National and state economies appear to be in recession, limiting discretionary -- spending • Golf- courses nationwide have been experiencing declines in rounds and revenues, while experiencing inflation in operating expenses • Added 14.5 new 18 -hole. golf courses to the MSA market in last ten years ■ Among the keys to growth in golf activity will be increasing participation among minorities and females. Beginner -type facilities such as Braemar Executive, Fred Richards Golf Course, and the Golf Dome can be helpful in meeting this challenge 15 CONSULTING N -1 F- -_ UN__ DATION City of Edina Municipal Golf System Market Enviro.nment NATIONAL OOLF FO Externa l f a�cto.rs ■ The older age and higher income-- demograp : hic-s- of ; Edina are generally consistent with -,"higher-than- average participation in -golf. • However, the older age may be a;longer-term concern for Edina Golf, as replacing older golfers with new younger golfers will be a critical element in the longer- term success of Edina Golf.courses . 16 coNSV�r�nr� t AA710NA1 City of Edina Municipal Golf System Market Environmen GOLF FOU #OATlON External Factors ■ The Edina Golf system compares favorably to several local - Minneapolis area municipal golf systems in most measures of average revenue, expenses, average labor, and ratio of labor to total expense. NGF can state that Edina -,Golf operations are not "out -of- the - ordinary" for municipal golf in this market. The City of Edina golf courses generally compare. favorably to their immediate competition with higher fees and generally comparable or higher activity. ■ The golf market in the greater Minneapolis- area highly weather- dependent, with length of winter and rain -out days in summer. playing a key role in revenue generation 17 MrMFCONSULTING - - - -- City of Edina Municipal Golf System Market Environment NATIONAL OOLF FOUNDATION Braemar 27 Golf Course Summary ■ Braemar 27 is the premier facility in Edina Golf, and a premier public golf facility in the Minneapolis region, with a strong reputation for quality and service • The golf course and clubhouse are in good condition with no urgent upgrades needed ■ The Braemar 27 -hole golf course is producing rounds and revenue totals that are well in excess of national and regional averages, showing the facility to be among the more active municipal golf courses in its climate region ■ Coupled with high revenue are higher- than - average expenses, although some of the expenses charged to the Braemar 27 are covering other areas such as the executive course and driving range 18 666, SUL-TING City of.,Edina Municipal Golf System Market Environment NAT10NAi LSOLF FOIANOAT/ON _ .mH Braemar 27 Golf Course Summary ■ Maintenance condition of the Braemar 27 is outstanding, reflecting the quality of the superintendent and the maintenance staff • Maintaining golf courses in Minnesota is more difficult than in other areas of the U.S. due in part to the winter season and heavy snow, cover • The City should be careful not to let customer pressure influence maintenance practices and create the potential to damage fragile turf co,nditions=. 19 M aFCONSULTING - City of Edina - Municipal Golf System Market Environment AVIIIIAL .01F I.UJ4..710N Braemar 27 Golf Course Summary PresePtly lim:iting the use of carts on the course during periods of heavy or persistent rain in an effort to prevent turf damage • This practice is limiting the volume of rounds :. and hurting revenue ■ -Would benefit greatly.from a full;- "wall -to- wall" cart path system • Allow carts.on the golf course during some wet periods.. • Allow for more rounds and increased revenue to- the facility ■ Cart path expansion, program is first- on the list of NGF recommended upgrades 20 coHSV�T►nr� City of Edina Municipal Golf System Market Environment,; NATIONAL GOLF FOUNDATION Braemar 27 Golf Course Summary • Even though some concerns about- -the overall fit of the newer-Clunie 9 -hole course at Braemar, any large -scale capital investment in - redesigning and /or remodeling will not fikely produce additional revenue to the facility; thus the project is neither cost - justified nor recommended • City should commit to minor adjustments in the golf course (tree trimming, tee movement, etc.) completed a little -at a time through the existing maintenance program 21 '.CONSULTING City of Edina Municipal Golf System Market Environment NATIONAL ODLF fOUNDAT/ON Braemar Executive and- Driving Range ■ One of the finest driving range facilities in the Minneapolis area; producing a high level of income to the Edina. golf system _- • Range configuration is tight; limiting -tee area space and surrounding elements are frequently hit 7 fencing. is needed ■ Northward expansion of the Braemar range is recommended by NGF as a means to increase the space available for lessons, increase regular usage of the range; and allow for remodeling of the BFraemar Executive course into a Braemar Par -3 course_. • Estimated the cost $300,000 to $400,000, depending on what (if any) structures are included, and the plan is completed as an in -house project with Braemar maintenance staff 22 FCONSULTING - - - -- City of Edina Municipal Golf System Market Environment liA""' GOLFFOUAUAVON Braemar Executive and: Driving Range ■ Braemar Executive course presently competes directly with Fred Richards Golf Course, as both facilities are offering virtual :ly the same product to the same customers Renovation: of the Braemar range will require simultaneous renovation of the Braemar Executive course, changing the course into a,:shorter pair -3 facility that can function as a high quality " pitch - and- p.utt, "thus, opening, the facility -to a new market of golfers_... 23 MrSFCONSULTING City of Edina Municipal Golf System Market Environment NATIONAL GOLF FOUNDATION Braemar Clubhouse Summary ■ Braemar Clubhouse is of adequate size and offers an ideal complement to the Braemar Golf operation, serving both the needs of golfers and functioning as- an ideal venue for banquets and parties ■ NGF sees great upside potential to grow revenues with this facility, both in the operation of the Braemar Grill and the banquet facilities ■ There may be inefficiencies within the clubhouse operation, but closer review of overhead expense allocations will need to be completed before any real judgment can be made 24 N CONSULTING City of Edina -Municipal Golf System Market Environment NATIONAL GOLF FOUNDATION Braemar Clubhouse`Summary Braemar Golf Course could probably do more to try to attract` a greater volume of non -golf business to the Braemar Grill. This will likely require some expansion of menu offerings and upgrade in service, but is possible without incurring a large increase in expense. ® City should monitor the performance of the- Brae'm'a,r Grill closely -over the next year or two, and ;if there is no improvement-in economic performance the City can consider some form of concession agreement for this operation • Such a concession will work only if it involves a payment to the City of at least 10% of gross revenue, -the concessionaire retains all variable. expenses, and the City retains all banquet room rental revenue 25 M 9--CONSU'LTING City of Edina Municipal - Golf System Market - Environment Braemar Clubhouse Summary Room rental fees can be increased in 2012 according to the schedule recommended ■ The only major capital improvemen-ts recommended for the Braemar clubhouse include the renovation:- of- the. banquet area restrooms, to be completed be'fo.re-:2013 26 M F-I CONSULTING City of Edina Municipal Golf System Market Environment NATlDNAi OOLF FOI/NDA7 /ON Fred Richards Golf Course Summary ■ Fred Richards GC is a 9 -hole "short" co -urse with- less than 2,000 yards and a par of 2.9 (termed in the golf industry as "executive- length ") • This type facility traditionally has appeal to beginner and less -s- killed golfers who have Iess concern for high quality playing conditions and extra "frills" ■ The City should. commit to maintaining this facility of a high level (as current), but will find that large -scale capital investment in Fred Richards Golf Course is not likely to produce additional revenue and -will not be cost justified. ■ Recommendations for Fred Richards focus on getting the most out. of what is there now, and -using the facility to promote golf to beginners in the Edina golf market. 27 MnFCONSULTING City of Edina Municipal Golf System Market Environment NATl"AL OOIF FOUNDAT)ON Braemar Golf Dome Summary ■ The Golf Dome is clearly a positive component of the overall Braemar golf system, providing winter revenue and keeping the local golf population interested and engaged in golf during the winter off - season ■ A golf dome like this should have an expected useful life of 25 to 30 years, meaning the 28 -year old Braemar Golf Dome is approaching a period when new capital investment may be required • However, the facility is functional as is, provided ongoing maintenance is kept up, especially relating to the fixing of leaks in the fabric as they occur and maintaining structural integrity of the lobby building. 28 NOF CONSULTING City of Edina Municipal Golf System .Market Environment tdATdOMA1 DDlf fOUND47IDW Braemar Golf -Dome Summary ■ Deteriorating lobby structure may be in need -of upgrade, but any large capital - investment in this area is not Likely to generate a positive return to the City ■ Focus on structurally securing the building with anchoring beam, patching existing roof, maintaining and repairing the dome fabric and HVAC system' -to ensure - maximum efficiency and prevent waste from leaks ■ Could consider being slightly more flexible with the Dome schedule, as an overly wet fall or spring may - ,allow for increased Dome.re:venue if the facility were to open. a little sooner in spring, or close later in the fall ■ Emphasize merchandise sales at the Dome during the winter season 29 NOFCONSULTING City of Edina Municipal Golf System Market Environment NATIONAL OOLF FOUMDA77ON Financial Overview Summary ■ NGF Consulting created a projection for the continued operation of the Edina Golf system assuming continuation of present management structure and enactment of NGF recommendations • When the system debt ends in 2013 there will be an immediate boost to net income, allowing the system to begin reducing the accumulated deficit beginning in 2014 • The above projections assume historical inflation in expenses and some inflation in fees charged for use of golf facilities ■ The Edina Golf Enterprise will have to commit to at least two percent (2 %) increases in fees every two years to meet these projections 30 NnFCOMSULTING City of Edina Municipal Golf System Market Environment NATIONAL ` F FOUNDATION No.. Financial Overview Summary Impact of Grill Concession ■ One consideration addressed by NGF in our analysis was the losses in the Braemar Grill, and the possibility of creating a concession agreement for that operation ■ NGF review of this option shows that while the arrangement would improve the overall performance of the food and beverage operation at Braemar, the concession arrangement alone will not eliminate the loss on the Braemar Grill, given the present accounting and overhead allocation 31 NCSFCONSULTING City of Edina Municipal_ Golf-System Market Environment. WAV NAL GOLF FOUNDATION .,. ................... ..... . ..... . . ... . .......... Summary Conclusion ■ The recommendations � are generally centered on. increasing i:ng revenues and reducing- expenses through some capital investment. ■ Despite the course of action recommended, by NGF, the City of Edina show Id-.expect a new reality in rounds and revenue performance that is not-likely to return to levels experienced 'a decade: ago, but sh.oujd.,:exceed- the levels experienced in 2011. I 32 Y CONSULTING City of Edina Municipal Golf System Market Environment "111 AL OOtF f.U.,..711'R Summary Conclusion ® It is clear that there are five key issues leading- to economic hardship within the Edina Golf system, with three of, these not being controllable -by the City. Key stresses to the system are: • Weather impacts • Recent increase. in the number of competing golf courses • High overall expense structure (being- reduced in 2011) • Trend toward declining golf activity in -this - _market and nationwide • Lack of investment in Edina Golf facilities in recent years 33 MaFCOMSULTIMG City of Edina Municipal Golf System Market Environment AtATtDtiAi DOIF FOUNDATION Summary Conclusion ■ Despite these hardships, there are many positives within the system that could help to improve its - economic situation, including: High quality of:facilities with a strong reputation - producing at the NO end -of the market • Dedicated staff committed to doing all it ca ;n to- improve Performance • Strong basic market characteristics in Edina where the population has.-age and income characteristics consistent with very high-participation in golf 34 ■ A summary of five most important actions that can be taken by the City to improve golf operations: e Pay off existing debt Invest in upgrades recommended by NGF Modernize marketing e Continue with expense controls instituted in 2011 e Continue to grow the lesson program 35 Strategic Outlook and Analysis of The City of Edina Municipal Golf System in Edina, Minnesota Prepared For: City of Edina, Minnesota Park & Recreation Department 4801 West 501h Street Edina, MN 55424 Prepared By: AIAMFCONSULTINR 1150 South U.S. Highway One, Suite 401 Jupiter, FL 33477 (561) 744 -6006 August 2011 Strategic Outlook and Analysis of The City of Edina Municipal Golf Operation in Edina, Minnesota August 2011 Table of Contents EXECUTIVE SUMMARY .............................................................................. ..............................1 Purpose................................................................................................. ..............................1 Background........................................................................................... ..............................1 Summary of Findings and Recommendations ........................................ ..............................2 Overall System Findings and Recommendations .......................................... ............................... 3 ExternalFactors ............................................................................................. ............................... 4 Braemar 27 Golf Course Summary ................................................................ ............................... 5 Braemar Executive and Driving Range .......................................................... ............................... 6 Braemar Clubhouse Summary ....................................................................... ............................... 6 Fred Richards Golf Course Summary ............................................................ ............................... 7 BraemarGolf Dome Summary ....................................................................... ............................... 7 Financial Overview Summary ........................................................................ ............................... 8 SummaryConclusion ..................................................................................... ............................... 9 CITY OF EDINA MUNICIPAL GOLF SYSTEM OVERVIEW ........................ .............................10 Location and Accessibility Analysis ....................................................... .............................10 LocalMap Context ....................................................................................... ............................... 11 Organization and Administration ........................................................... .............................12 Organizational Structure 2011 ..................................................................... ............................... 13 City -Wide Support for Golf System .............................................................. ............................... 14 CitizenAdvisory Committees ....................................................................... ............................... 14 GolfOperations ..................................................................................... .............................15 Point -of -Sale (POS) and Reservation Systems ........................................... ............................... 15 CashControls .............................................................................................. ............................... 15 EdinaGolf Marketing ................................................................................... ............................... 16 EdinaGolf Fee Structure ............................................................................. ............................... 17 PatronProgram ............................................................................................ ............................... 18 KeyMarkets Served ..................................................................................... ............................... 19 JuniorGolf .................................................................................................... ............................... 19 Lessons and Programs ................................................................................ ............................... 19 Groupand Tournament Play ........................................................................ ............................... 20 Carts and Maintenance Equipment .............................................................. ............................... 22 Braemar27 Holes ................................................................................. .............................22 FacilityOverview .......................................................................................... ............................... 23 GolfCourse .................................................................................................. ............................... 23 Present Operational Issues .......................................................................... ............................... 24 ProShop Operations ................................................................................... ............................... 26 PhysicalEvaluation ...................................................................................... ............................... 27 Facility Performance and Data Analysis — Braemar 27 ............................... ............................... 33 Braemar Golf Course Operations Summary ................................................ ............................... 37 Braemar Clubhouse Operation ............................................................. .............................39 Inventoryof Facilities ................................................................................... ............................... 39 Braemar Clubhouse Service Areas .............................................................. ............................... 40 Clubhouse Performance and Data Analysis ................................................ ............................... 41 ClubhouseOperations Summary ................................................................. ............................... 44 Braemar Executive Course and Driving Range ..................................... .............................44 Braemar Executive / Range Operations ...................................................... ............................... 44 PhysicalEvaluation ........................................................................................ .............................45 Facility Performance and Data Analysis — Braemar Executive Golf Course .............................. 46 Fred Richards Golf Course ................................................................... .............................48 Fred Richards Operations ............................................................................ ............................... 49 PhysicalEvaluation ...................................................................................... ............................... 49 Facility Performance and Data Analysis — Fred Richards Golf Course ....... ............................... 50 GolfDome ............................................................................................ .............................53 GolfDome Operations ................................................................................. ............................... 54 PhysicalEvaluation ...................................................................................... ............................... 54 Facility Performance and Data Analysis — Golf Dome ................................. ............................... 55 Summary — City of Edina Municipal Golf Operations ............................. .............................57 Summary Financial Performance 2007 -2010 .............................................. ............................... 58 Summary of Performance by Revenue Center 2007 -2010 ......................... ............................... 60 WinterOperations ........................................................................................ ............................... 60 EXTERNAL FACTORS AFFECTING THE EDINA MUNICIPAL GOLF OPERATION ..............61 Demographics Summary ...................................................................... .............................61 EconomicOverview .............................................................................. .............................62 Minneapolis -St. Paul MSA ........................................................................... ............................... 62 Cityof Edina ................................................................................................. ............................... 64 Golf Market Supply and Demand Indicators .......................................... .............................65 NationalTrends in Golf ................................................................................ ............................... 65 LocalGolf Demand ...................................................................................... ............................... 66 GolfSupply Factors ..................................................................................... ............................... 68 Golf Course Market Supply / Demand Summary ......................................... ............................... 69 CompetitiveGolf Market ....................................................................... .............................69 Public Golf Facilities Map — Primary Competitors ........................................ ............................... 70 Competitive Assessment Review — Primary Competitors ............................ ............................... 71 Significant Findings — Key Competitors ....................................................... ............................... 74 Regional Municipal Golf Facility Comparisons ............................................ ............................... 74 Key Comparisons — Regional Municipal Golf Operations ............................ ............................... 76 External Factors Summary ....................................................:............... .............................76 SUMMARY OF NGF CONSULTING RECOMMENDATIONS ...................... .............................78 Recommendations on Basic Oversight and Structure ........................... .............................78 ManagementOptions ................................................................................... ............................... 78 Option 1: Self- Operation by City .................................................................. ............................... 79 Option 2: Full Service Management Contract .............................................. ............................... 79 Option 3: Concession Agreements .............................................................. ............................... 80 Option 3A: Food and Beverage Only Concession ....................................... ............................... 81 Option 36: Maintenance Only Concession .................................................. ............................... 82 Option4: Operating Lease ........................................................................... ............................... 83 Option 5: Sale, Closure or Reconfiguration of the Golf Course ................... ............................... 85 OverviewDiscussion .................................................................................... ............................... 85 NGF Consulting Recommendations on Basic Oversight and Structure ...... ............................... 85 Specific Physical Recommendations .................................................... .............................86 Braemar Golf Course Improvements ........................................................... ............................... 86 Braemar Clubhouse Improvements ............................................................. ............................... 88 Golf Dome Improvements ............................................................................ ............................... 88 Fred Richards Golf Course Improvements .................................................. ............................... 88 Specific Operational Recommendations ............................................... .............................88 Recommendations on City Operation .......................................................... ............................... 88 Hoursof Operation ....................................................................................... ............................... 89 Programming................................................................................................ ............................... 89 Food & Beverage Operations ...................................................................... ............................... 90 Business / Marketing Recommendations .................................................... ............................... 90 Fee Recommendations ................................................................................ ............................... 93 CITY OF EDINA GOLF PROGRAM FINANCIAL PROJECTIONS .............. .............................95 Financial Projections Assuming "As -Is" Operation with NGF- Recommended Upgrades ....95 Inputs........................................................................................................... ............................... 96 Pro Forma Estimate for'As -Is with NGF Upgrades 2011 — 2016 ................ ............................... 96 Edina Golf System Summary by Department .............................................. ............................... 98 Summary of Golf Facilities' Economic Performance .................................... ............................... 99 Justifications for Projections ........................................................................ ............................... 99 Braemar Grill Concession Consideration ................................................... ............................... 100 APPENDICES............................................................. ............................... ............................101 Appendix A — Golf Course Life Cycle ..................................................... ..............................1 Appendix B — Golf Industry Standards, Norms, and Operational Issues . ..............................2 Public Golf Operational Norms ...................................................................... ............................... 2 PublicGolf Course Staffing ............................................................................ ............................... 7 Braemar Golf Course Staffing ........................................................................ ............................... 8 Golfer Expectations of Better Quality Public Golf Facilities ........................... ............................... 9 Merchandising Operations ........................................................................... ............................... 11 Food and Beverage Operations ................................................................... ............................... 12 Executive Summary PURPOSE National Golf Foundation Consulting, Inc. ( "NGF Consulting" or "NGF ") was retained by the City of Edina ( "City" or "Edina Golf') to assist in evaluating the operational and economic performance of City's municipal golf system. The following is a summarized version of our full system report, detailing the main findings and NGF recommendations for the City to improve its municipal golf system. In this Executive Summary, NGF provides a brief review of our findings and recommendations on the Edina Golf system, intended to provide an "at -a- glance" summarization of the full review. Additional detail on this summary can be found in the full body of our comprehensive report and its appendices. BACKGROUND The City of Edina is operating a multi- faceted golf system with many parts, each serving a defined niche in the market. The golf facilities appear to be very important to the City, and the Edina golf courses have developed a reputation for high quality and high activity that seems to be well known in the area and the State of Minnesota. The City is now operating a system of golf courses that truly can offer "something for everyone," from the beginner all the way up to seasoned golf professionals. The golf system reflects very well on the City of Edina and is a fine complement to the overall City image. In the last several years, the economic performance of the City's golf system has declined, leading to stress within the system. There have been many changes over the years, including the acquisition of Fred Richards Golf Course, the addition of a new 9 -hole course ( "Clunie ") at Braemar, and clubhouse expansions at Braemar. While some of these changes have not been overly popular, the golf assets within the City are now fixed and the NGF Consulting review has been completed to offer the most appropriate plan for these facilities going forward, regardless of what has happened in the past. In reviewing the Edina Golf system, it was conveyed to the NGF consultants that the City of Edina is "committed to providing affordable golf to the citizens of Edina," while making every effort to minimize the economic burden on the City. The Edina Golf enterprise now has 11 full -time and more than 100 seasonal employees on the payroll. Many of these employees are long -term City employees with lengthy records of service to the City. These employees are working hard to make the most of the Edina Golf system, and in many cases are having to get by with less as declining revenues have led to limited resources available to maintain the facilities. Further, the national economic recession of 2008 -2010 has impacted the City of Edina, and the Edina Golf courses have been hit especially hard with severe rainfall in 2011. In some ways, Edina Golf has been hit by a "perfect storm" of events including recession, declining demand for golf, increasing number of golf courses, and poor weather. Despite all this, it appears the Edina Golf program is still on sound footing and well positioned to regain its market position through changes already underway in the system (new General Manager and marketing), and other changes recommended by NGF. In 2011, NGF was retained by the City of Edina to assist with evaluating the Edina Golf system and to make recommendations to help ensure the long -term viability of the golf program. This includes a thorough review of the system on an 'as -is' basis, as well as a consideration of other National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 1 operating alternatives, including privatization options. It is expected that the results of this NGF study will be used by the City as a guide for the future of the golf system, and to help convey to interested parties (citizens of Edina, Park Board, City Council, etc.) that the City will operate the golf system in the most efficient manner possible, and clearly identify why and how much City economic support may be required. NGF Consulting completed a thorough review of the City's golf program that included several meetings, inspections, review of data, and utilization of the NGF Consultants' experience and basic knowledge of golf industry best practices. NGF findings and recommendations are designed to give the City of Edina a full understanding of its golf system as a whole, along with an understanding of each individual facility within the City system. The ultimate goal of this project is to create a formal business plan for the City golf courses that will put the system on a path toward long -term economic stability and sustainability. The key issues addressed by the NGF team include: • Overall condition and operating structure of the Edina Golf system • A review of golf industry standards and norms of operation • Status of the Minneapolis /Edina golf market • A summary of NGF recommendations • An estimate of realistic economic potential of the Edina Golf system The NGF consulting engagement was managed by Richard Singer, Director of Consulting Services for the NGF, with assistance from Senior Project Director Ed Getherall. SUMMARY OF FINDINGS AND RECOMMENDATIONS In summary, our findings are that the City of Edina is operating high quality golf courses that suffer from some disadvantages that are controllable within the City structure and can be improved. NGF Consulting found five key specific controllable areas that are contributing to the economic distress within the system and form the core of our recommendations to the City, including: • Decline in golf facility activity, especially during wet periods • High costs associated with the food and beverage / clubhouse operation • Legacy of antiquated / outdated golf management practices, particularly in marketing • The system debt service (expires in 2013) • Size constraints within the Braemar Golf Course facility In review of the Edina Golf system, NGF finds that action on these above items will provide the greatest relief from economic stress to the system, and that some of these items will require investment of capital by the City — (i.e., spend money to make money) — to gain relief. Assuming the viability of the golf system is in the best interest of the City, it is expected that these investments will provide some economic stimulus to the Edina Golf system. NGF recognizes that in operating public golf facilities there are variables to the operation that can be controlled by the owner (City) and variables that cannot be controlled. Uncontrollable factors include the location of the facilities, the demand for golf, the weather, and the condition National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 2 of the national, local, and regional economy. While some of the key controllable factors were identified above, other controllable factors include direct expenses to operate the facilities (reduced by City in 2011), condition of the golf facilities, quality of services offered, and the extent to which the facilities are appropriately. marketed. The review and NGF recommendations contained in this report are designed to focus on the factors of the golf system that can be controlled by the City and to form the foundation of a system -wide business plan for golf. The key NGF Consulting findings from this golf system review are shown below. Overall System Findings and Recommendations • Privatization Options. The NGF has reviewed the operation and management of the Edina Golf System, along with alternate "privatized" options for governance. It is the opinion of the NGF consultants that the present self- operation system should be continued, and that none of the privatization options reviewed clearly placed the system in an improved economic condition. In summary: • A management company will charge between $90,000 and $150,000 per year in management fees (3% to 6% of gross), thus requiring the system to improve by $90,000 to $150,000 in increased revenue or reduced expenses just to retain its present position. Further, all needed capital improvements will be the responsibility of the City. • For a lease or concession arrangement to improve economic performance, the City will have to collect enough income to support City overhead and debt service from the lease payment from vendor(s), plus the commitment of additional capital investment in order for the system to retain its present position. • It is likely that under any privatization structure, the method used by the private sector to achieve desired economic profitability will be to either terminate or reduce salaries and benefits of existing City golf employees. • One form of privatization that may be a consideration for the City is some form of concession arrangement for the Braemar Grill. However, NGF analysis shows that while this approach could improve the overall performance of the food and beverage operation at Braemar, the concession arrangement alone will not eliminate the loss on the Braemar Grill. Recommended Structure. The basic organizational structure of Edina Golf is efficient and within the norms observed by NGF in other large municipal golf systems that are self- operated. The system has been reacting to changes in rounds and revenue production by making concerted efforts to reduce staff and other expenses, trying to maintain a healthy system. The NGF recommends that this system be retained with: ■ A strong General Manager form of management with appropriate senior support staff (Superintendent, Golf Professional, Pro Shop, Clubhouse Manager, etc.). ■ The Golf General Manager should be a business - oriented position with golf business experience, particularly marketing and technology expertise. The National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 3 Edina golf system had fallen behind in this area in recent years with employment of some "out -of- date" practices in Edina Golf. • POS. The City of Edina needs to upgrade the Point -of -Sale (POS) system in the Edina golf system. Most important, all revenue centers should be on the same POS system to allow for ease of reporting and review of performance. Placing all revenue centers in one POS system will also save time and effort of senior management, thus reducing expense. Modernization / Marketing. The Edina golf system needs to break away from older, outdated business practices, especially in marketing. This process is well underway with the recent change in General Manager, and the new Website and other initiatives show that the current management team is committed to modernizing the Edina Golf system. The NGF review of Edina Golf marketing in 2011 shows a highly sophisticated, comprehensive program that covers several separate areas of focus. Fee Structure. The basic fee structure for Edina Golf appears to be market justified, and no major change is recommended by NGF. However, some minor change is recommended for 2012 as documented in this report. In general, some non - patron fees could be increased slightly and there is room to increase the price of patron cards and still be the lowest priced in the market. The City should commit to at least two percent (2 %) increases in fees and charges every other year as a mechanism to keep up with inflation. Rounds and Revenue Performance. The Edina Golf system as a whole has experienced a decline in rounds activity of 9.6% between 2007 and 2010, an amount very close to the total U.S. average of 10 %. Rounds may fall under 92,000 total for 2011 as a result of inclement weather through much of the late spring and early summer. Revenue has declined 4% since 2007, but is expected to decline another 7.6% in 2011. Total Edina Golf revenue was $3.443 million in 2010, and is projected to fall to $3.181 million in 2011. Expenses. The $2.7 million in total operating expense has remained fairly consistent since 2007, with reductions in both 2010 and 2011. The expenses to operate Edina Golf facilities are higher than expense averages for mid -range public golf courses in the nation (average 18 -hole facility = $931,900 <$1.398 million for 27- holes> in expenses), but lower than expenses for 'Premium' public golf courses ($2.65 million <$3.9 million for 27- holes> in expenses for 18- holes). NGF believes that Braemar 27 would be more directly comparable to 'premium' facilities. NGF has not compiled recent comparative expense data for the executive and par -3 courses. Capital. NGF has observed declining investment in the golf courses as revenues declined. Golf courses are "living and breathing" assets that will deteriorate over time, and significant reductions in capital expenditures eventually will catch up to the system. NGF has recommended specific upgrades to facilities as a program to help improve revenue performance, but other capital needs such as equipment replacement and irrigation upgrades are likely to be required in the three to seven year horizon and should be in the City's planning. External Factors • External Factors. The external (uncontrollable) factors that affect the City's ability to sell golf rounds all tended to be negative in 2011. NGF findings include: National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 4 • The national and state economies appear to be in recession, and this has limited the amount of discretionary consumer income that can be spent on golf. • Further, national data presented by NGF show that golf courses nationwide have been experiencing declines in rounds and revenues, while experiencing inflation in operating expenses. • Among the keys to growth in golf activity will be increasing participation among minorities and females. Beginner -type facilities such as Braemar Executive, Fred Richards Golf Course, and the Golf Dome can be helpful in meeting this challenge. • The older age and higher income demographics of Edina are generally consistent with higher- than - average participation in golf. However, the older age may be a longer -term concern for Edina Golf, as replacing older golfers with new younger golfers will be a critical element in the longer -term success of Edina Golf courses. • The overall golf market in the Minneapolis metro area is large, with upwards of 6.7 million rounds of golf potentially demanded at area golf courses. Along with high demand there are lots of golf courses, including 187 total golf facilities in the greater Minneapolis -St. Paul metro area. A total of 14.5 new 18 -hole golf courses were added to the MSA market in the last ten years. • The golf market in the greater Minneapolis area is highly weather dependent, with length of winter and rain -out days in summer playing a key role in revenue generation. • In our review of several local Minneapolis area municipal golf systems, NGF Consulting found that the Edina Golf system compares favorably in most measures of average revenue, expenses, average labor, and ratio of labor to total expense. NGF can state that Edina Golf operations are not "out- of -the- ordinary" for municipal golf in this market. • The City of Edina golf courses generally compare favorably to their immediate competition with higher fees and generally comparable or higher activity. Braemar 27 Golf Course Summary • Braemar 27 is the premier facility in Edina Golf, and a premier public golf facility in the Minneapolis region, with a strong reputation for quality and service. The golf course and clubhouse are in good condition with no urgent upgrades needed. • The Braemar 27 -hole golf course is producing rounds and revenue totals that are well in excess of national and regional averages, showing the facility to be among the more active municipal golf courses in its climate region. Coupled with high revenue are higher- than - average expenses, although some of the expenses charged to the Braemar 27 are covering other areas such as the executive course and driving range. • The maintenance condition of the Braemar 27 is outstanding, reflecting the quality of the superintendent and the maintenance staff. Maintaining golf courses in Minnesota National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 5 is more difficult than in other areas of the U.S. due in part to the winter season and heavy snow cover. The City should be careful not to let customer pressure influence maintenance practices (i.e., green speeds) and create the potential to damage fragile turf conditions. The Braemar 27 is presently limiting the use of carts on the course during periods of heavy or persistent rain in an effort to prevent turf damage. This practice is limiting the volume of rounds and hurting revenue. The Braemar 27 would benefit greatly from a full, "wall -to -wall' cart path system that would allow carts out on the golf course during some wet periods and allow for more rounds and increased revenue to the facility. This cart path expansion program is first on the list of NGF recommended upgrades for the system. While there are concerns about the overall fit of the newer Clunie 9 -hole course at Braemar, any large -scale capital investment in redesigning and /or remodeling the course will not likely produce additional revenue to the facility and thus the project is not cost justified nor recommended. Rather, the City should commit to minor adjustments in the golf course (tree trimming, tee movement, etc.) completed a little at a time and through the existing maintenance program. Braemar Executive and Driving Range • The Braemar driving range is one of the finest driving range facilities in the Minneapolis area and is producing a high level of income to the Edina golf system. • The range configuration is tight, and surrounding elements are frequently hit by errant range balls. Fencing on the east side of the range is needed to protect hole #1 on the Braemar Executive course. • Northward expansion of the Braemar range is recommended by NGF as a means to increase the space available for lessons, increase regular usage of the range, and allow for remodeling of the Braemar Executive course into a Braemar Par -3 course. NGF has estimated the cost of this project to be $300,000 to $400,000, depending on what (if any) structures are included, and the plan is completed as an in -house project with Braemar maintenance staff. There may be some disruption of range and executive course business during the renovation process, although timing it properly could minimize the effect. The Braemar Executive course presently competes directly with Fred Richards Golf Course, as both facilities are offering virtually the same product to the same customers. Renovation of the Braemar range will require simultaneous renovation of the Braemar Executive course, changing the course into a shorter, par -3 facility that can function as a high quality "pitch- and - putt," thus opening the facility to a new market of golfers. Braemar Clubhouse Summary • The Braemar Clubhouse offers an ideal complement to the Braemar Golf operation, serving both the needs of golfers and functioning as an ideal venue for banquets and parties. The NGF sees great upside potential to grow revenues with this facility, both in the operation of the Braemar Grill and the banquet facilities. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 6 • Close review of operating performance shows there may be inefficiencies within the clubhouse operation, but closer review of overhead expense allocations will need to be completed before any real judgment can be made. • The Braemar Golf Course could probably do more to try to attract a greater volume of non -golf business to the Braemar Grill. This will likely require some expansion of menu offerings and upgrade in service, but is possible without incurring a large increase in expense. The City of Edina should monitor the performance of the Braemar Grill closely over the next year or two, and if there is no improvement in economic performance the City can consider some form of concession agreement for this operation. Such a concession will work for the City only if it involves a payment to the City of at least 10% of gross revenue, the concessionaire retains all variable expenses, and the City retains all banquet room rental revenue. • Room rental fees can be increased in 2012 according to the schedule recommended in the NGF report. • The only major capital improvements recommended for the Braemar clubhouse include the renovation of the banquet area restrooms, to be completed before 2013. Fred Richards Golf Course Summary • Fred Richards Golf Course is a 9 -hole "short" course with less than 2,000 yards and a par of 29 (termed in the golf industry as "executive- length "). This type facility traditionally has appeal to beginner and less- skilled golfers who have less concern for high quality playing conditions and extra "frills." • The City should commit to maintaining this facility at a high level (as current), but will find that large -scale capital investment in Fred Richards Golf Course is not likely to produce additional revenue and will not be cost justified. • While the facility has some physical upgrade needs, the NGF would not put these high on the list of priorities, due to the nature of the facility. Thus, the recommendations for Fred Richards focus on getting the most out of what is there now, and using the facility to promote golf to beginners in the Edina golf market. Braemar Golf Dome Summary • The Golf Dome is clearly a positive addition to the overall Braemar golf system, providing winter revenue and keeping the local golf population interested and engaged in golf during the winter off - season. • A golf dome like this should have an expected useful life of 25 to 30 years, meaning the 28 -year old Braemar Golf Dome is approaching a period when new capital investment may be required. However, the facility is functional as is, provided ongoing maintenance is kept up, especially relating to the fixing of leaks in the fabric as they occur and marinating structural integrity of the lobby building. • Specifically, the deteriorating lobby structure may be in need of upgrade, but any capital investment in this area is not likely to generate a positive return to the City. Rather, the City should focus on structurally securing the building with anchoring beam and patching the existing roof, maintaining and repairing the dome fabric and National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 7 HVAC system to ensure maximum efficiency in dome maintenance and prevent waste from leaks. • The City could consider being slightly more flexible, with the Dome schedule, as an overly wet fall or spring may allow for increased Dome revenue if the facility were to open a little sooner in spring, or close later in the fall. • The City should make merchandise sales in the dome a point of emphasis during the winter season. Financial Overview Summary As part of our review of the City of Edina golf system, NGF Consulting has created a cash flow model for the continued operation of the Edina Golf system under the assumption of direct City control of operations ('as -is'), with enactment of NGF recommendations. The details and assumptions of this financial projection are contained in the body of the NGF report. Summary of Performance The results of the NGF analysis show that with favorable weather and implementation of NGF recommendations, Edina can experience growth in rounds activity back above 100,000 by 2012 and close to 110,000 by 2013. NGF still expects the Edina Golf system to remain fiscally challenged through 2012, beginning to seriously reduce the accumulated deficits beginning in 2013 when the system bond has been paid off. A summary of findings from the NGF financial projections: The Edina Golf Enterprise is viable to cover its basic operating expenses (excluding depreciation) and debt service for the years shown, and should be able to self -fund its capital needs as recommended by NGF. This is considering the presence of a large accumulated deficit on the property that will not be reduced significantly until 2013 when the system's bond is paid off. The capital expenditures proposed by NGF total $250,000 in 2012, $200,000 in 2013 and $125,000 in each year from 2014 through 2016. • When the system debt ends in 2013 there will be an immediate boost to net income, allowing the system to be capable of sustaining operations, capital expenditures, and accumulated deficit reduction beginning in 2014. • The above projections assume historical inflation in expenses and some inflation in fees charged for use of golf facilities. The Edina Golf Enterprise will have to commit to at least two percent (2 %) increases in fees every two years to meet these projections. Impact of Grill Concession NGF Consulting's projected financial results show performance assuming NGF projected rounds and revenue on an 'as -is' operating basis. One consideration addressed by NGF in our analysis was the losses in the Braemar Grill, and the possibility of creating a concession agreement for that operation. NGF review of this option shows that while the arrangement would improve the overall performance of the food and beverage operation at Braemar, the concession arrangement alone will not eliminate the loss on the Braemar Grill, given the present accounting and overhead allocation. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 8 Summary Conclusion The recommendations made by NGF Consulting are generally centered on increasing revenues and reducing expenses through some capital investment. Still, despite the course of action recommended by NGF, the City of Edina should expect a "new reality" in rounds and revenue performance that is not likely to return to levels experienced a decade ago, but should exceed the levels experienced in 2011. It is clear that there are three key issues leading to economic hardship within the Edina Golf system, with two of these not being controllable by the City. Key stresses to the system are: (1) weather impacts; (2) high overall expense structure (being reduced in 2011); and (3) the trend toward declining golf activity in this market and nationwide. Despite these hardships, there are many positives within the system that could help to improve its economic situation, including: (1) high quality of facilities with a strong reputation producing at the high end of the market; (2) dedicated staff committed to doing all it can to improve performance; and (3) strong basic market characteristics in Edina where the population has age and income characteristics consistent with very high participation in golf. As part of this consulting effort, NGF reviewed alternative options for the operation and management of the City's golf system. This review showed that none of the "privatization" alternatives would immediately improve the economic performance of the Edina Golf Enterprise to a level that is clearly better than the expectations under continued self- operation. If the Edina Golf Enterprise can gain reductions in the economic burden from the three items noted above, then the privatization alternatives will look even less appealing. Put simply, there is no "magic bullet" for Edina Golf in privatizing; and the dedicated, hard - working, experienced staff of professionals offers the best likelihood of improved economic performance in Edina Golf going forward. Some of the recommendations made by NGF in this analysis require the City to make investments in Edina Golf properties, and much of the $350,000 in new investment over the next two years involves improving facilities so as to allow for their greater use, thus increasing revenue. NGF recognizes that these investments may add economic stress to the City golf system in the years these investments are made, and the first few years after. This is due not only to the actual financial investments themselves, but the disruption the changes may cause in facility operations. In the longer term (beyond five years) the upgrades NGF suggests should help position the City golf courses as high quality public golf facilities that are both desirable to a wide range of golfing customers, and efficient in their maintenance practices. The most important NGF recommendations for Edina Golf include: 1. No change in existing management structure 2. Invest in remodeling the Braemar range and Executive course (Par -3 course) 3. Invest in new cart path system at Braemar 27 4. Improve and modernize marketing practices and move away from previous "out -of- date" business practices 5. Get all revenue centers on the same POS system 6. Resist large -scale capital projects that have low return on investment, such as: a. Golf Dome lobby replacement b. Remodel Clunie -9 7. Create a reserve for replacement for the Braemar irrigation system 8. Watch the performance of the Braemar Grill and consider concession if there is not improvement by the end of 2012. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 9 City of Edina Municipal Golf System Overview The City of Edina golf system comprises six separate revenue centers and /or facilities, all located within the City of Edina. The facilities and type are shown below: Facility Type Braemar 27 27 -Hole Championship Golf Course Braemar Executive 9 -Hole Executive Golf Course Braemar Driving Range Driving Range Braemar Clubhouse Food and Beverage Services with Banquet capabilities Fred Richards Golf Course 9 -Hole Executive Golf Course Golf Dome Indoor Driving Range In our review of the Edina Golf system, the NGF Consulting team found good quality golf facilities, each serving a defined market niche and not necessarily competing directly with each other, perhaps with an exception in Braemar Executive and Fred Richards serving similar markets. The centerpiece facility, Braemar, features a very high quality golf course, together with appropriate ancillary support amenities golfers are accustomed to finding at good quality golf facilities (i.e. clubhouse, pro shop, food and beverage or "grill' operation). Further, the NGF team has observed that the Edina golf facilities are located in residential areas of the City and thus have developed a local "core" market from which to draw. As part of this consulting effort, NGF Consulting has observed very dedicated and hard working staff members at all City of Edina golf facilities. All of the facilities are presently operating under somewhat reduced staffing due to budgetary limitations, and are trying to get by with often very limited resources. The Golf Administration staff has also been reduced and is presently going through a transition of leadership from a long -term (40 years) Manager of Golf who recently retired. This retirement has increased considerations for the future of the Edina golf courses, how the system should be managed, and what specific skills and abilities should form the leadership. The City appears willing to put additional resources into the golf courses, provided these resources are used to help improve financial performance and increase revenues. LOCATION AND ACCESSIBILITY ANALYSIS The Braemar golf courses are divided into two separate locations, with the Braemar 27, Executive Course, clubhouse, driving range and Golf Dome in one location, and the Fred Richards Golf Course in a separate location. The two facilities are approximately 2.25 miles apart from each other and each has its own location issues and advantages. Both properties are within the City of Edina and in close proximity to the Central Minneapolis core and the MSP Airport. Braemar Golf Course is located in immediate proximity to the Interstate 494 and U.S. 169 interchange, within an open area of Edina surrounded by mostly single - family residences. There are some commercial elements within proximity to the south and west, along with Braemar Park National Golf Foundation Consulting, Inc. — City of Edina Golf Operations —10 to the northwest. Access to the facility is via John Harris Drive (main entrance to Braemar), connecting to Braemar Boulevard. Braemar Boulevard is a relatively active thoroughfare between U.S. 169 and the surrounding residential neighborhoods. Although the facility has great ease of access, golfers unfamiliar with the property may have trouble finding it the first time, as the signage is poor when coming from the east and /or south; it is unclear where to turn north when traveling on West 78th Street. A simple directional sign at the intersection of West 78th Street and Gleason Road would be helpful in directing golfers to the property, if such a sign is permissible within the City. The Golf Dome is farther northwest along Braemar Boulevard and has similar ease of access considerations. Overall, Braemar appears to be in a prime location to maximize golf activity, both from local regular -play golfers as well as occasional regional golfers. The Fred Richards Golf Course has a different location profile with similar accessibility and entrance issues. The facility is bounded by commercial elements to the south and residential units to the north, some of which are directly adjacent to the golf course. There is only one entrance in to Fred Richards Golf Course via the driveway between two office buildings on Parklawn Avenue in proximity to the intersection with West 76th Street. Local Map Context W 6th St b I Powde orn 70 7 si. ;Park 100 Csthoun Pa ` 3 33 0a ` 10v _ Lyndtle - nna polls ,B q �' 7 Pak 777 3rd St E d Hopkins 1 Lake '" 3 Harriet 22 m Leke H" atha ! RAM Y 'a 40 dry OaN ' Lak e 20 17 21 1 rmha Fh s_ 3 rn Miahaha`_ S u 00 ;r,'nofonka Lone Lek '6'i iamon ke V Park I58 71 J Diamond eke M N E S O T A 02 '. 02 121 r Res Mother Lake d SneNing 02 d "ma N E P N eaPIZI SSS 106 avSt. 77 tama j 03 loo jJ / 33 3 Bryant Braemar Golf Curse 212 Lake W l;ak t ❑ J rfiell oPicl {a 31 4 r � 7 hS 3 J `��"•� EdeA t • Fred Ridurds Dn - r 13 '� 7 .. 32 -" ,. - %Fort Snelling . ' Anderaop ekes r' 841h eke ,.� Park Pr serve irerd } _ 1 Me an j State Perk - Lake, Anderson ark J %. Lakes. IB9 l 2Bi 212 W 901h i Hush Lake a Perk, D A IS.O T S n Leke Park 77Ea9an 26 .. O M01 raaosoft Cwp. PD Aghu ... / / I National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 11 ORGANIZATION AND ADMINISTRATION The City golf program is structured as an enterprise fund, which is common in municipal golf all across the U.S. The system is structured with ultimate authority in the City of Edina Park and Recreation Department and its Director and Park Board. This Department operates the golf courses with a staff of City employees (some golf professionals are exceptions), the highest ranking of which is the Golf General Manager. In 2011, the system includes a senior staff of a General Manager, a single Maintenance Superintendent for all facilities, a Clubhouse Manager for Braemar, Pro Shop Manager, Golf Operations Manager, Executive Course Manager (part- time) and a Fred Richards /Golf Dome Manager (part-time - detailed later in this report). In 2011, the Edina golf system has been operating with reduced staffing as a result of individual positions being vacated through retirement and not being replaced. The Edina golf system is presently going through a period of transition with the recent retirement of the previous General Manager who had been in place for more than 40 years, and had the assistance of an Assistant General Manager position which is eliminated in the new structure. The individual who served as the previous Assistant General Manager is now the General Manager and is working to make some changes to the operating culture put in place by the previous General Manager. Records and policies reviewed by NGF in this study would suggest that the previous General Manager employed operating policies that were somewhat "out -of- date" for 21 st century public golf operations, and are in the process of being adjusted under new leadership in 2011. Specific areas that are in need of adjustment include some basic operational policies and a greater emphasis on electronic (Internet, email, etc.) marketing (more detail presented by NGF later in this report). The current City of Edina golf system organizational chart is shown on the following page. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 12 Organizational Structure 2011 Head Professional Assistant Professionals 3 FT City of Edina Park and Recreation Department I Park Board IBraemar Golf Course I General Manager Pro Shop Manager I Executive Course Clubhouse Manager/ Fred Richards Golf Golf Course Golf Operations Manager / Dome Maintenance Administrative Course Manager / Coordinator / Supervisor Superintendent Director Dome Supervisor Merchandise ,,,Pro Shop Staff PT ...Starters PT ... Staff PT Assistant Superintendent Grill Manager ...Richards Staff PT ...Rangers PT Fred Richards Supervisor ...Staff PT ...Golf Dome Staff PT -- -Carts PT ... Staff FT ...Bev. Cart Staff. PT ...Staff PT National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 13 City -Wide Support for Golf System The City of Edina golf operation is a key element of the City's public service offering, and the system has support from City administration and the Park and Recreation Department in particular. Marketing — At present there is no comprehensive City -wide marketing plan for golf incorporating research, planning, strategy, market identification, budget, advertising, timetable, and follow -up. There is some marketing support from the City of Edina for the golf course, including basic descriptions on its City website and a direct link to a new Braemar Golf website. Park Board — The City of Edina Park and Recreation Department has a 15- member Park Board that oversees park operations, including the golf courses, and reports to /advises the City Council on matters pertaining to the management and operating policies of the Edina golf courses. Accounting — The golf courses are required to provide an appropriate accounting statement to the City each year for review. All financial statements provided to NGF Consulting by the City of Edina are prepared using an accrual basis of accounting, where revenues are recognized when earned, and expenses are recognized when incurred. Enterprise Fund — The City of Edina operates the golf courses under a defined Golf Enterprise Fund. The enterprise fund structure is very common for municipal golf systems, both in the State of Minnesota and nationwide. The City currently supports the enterprise fund for larger capital improvements and covering the debt service on the facility. As of December 31, 2010, the Golf Course Fund cash position had a negative balance of ($1,106,989). The fund has been declining steadily since 2002, with acceleration of losses in the 2004 -2007 period. Enterprise accounting allows a community to demonstrate to the public the portion of total costs of a service that is recovered through user charges and the portion that is subsidized by the tax levy or other available funds, if any. A community may choose to recover total service costs through user charges, but it is not required. Enterprise funds frequently are used to account for services whose costs are only partially funded by fees and charges. A community may account for a certain service in the general fund, special revenue fund or an enterprise fund. The advantages of using the enterprise fund method include the ability to demonstrate the total cost of the service, ability to retain investment income, and surplus. Citizen Advisory Committees Like many municipalities that operate golf facilities, the City of Edina has a Golf Advisory Committee (called the Greens Committee) whose responsibility is to provide advice and counsel designed to improve the overall golf system. The committee includes six members, all drawn from various clubs and associations such as the Braemar Golf Association, Men's Club, and Ladies Club, along with the Golf Professional (or General Manager) and Maintenance Superintendent. The group meets once per month in the golf season (March through October), and provides suggestions and /or recommendations to the staff on operations and physical condition of facilities. This committee has no real authority and is strictly an advisory body. Recent examples of advice from the Greens Committee that have led to changes in the system include the addition of a new Green Tee added in the last two years. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 14 Braemar also benefits from a fund of money, derived from donations and separate from the City, since 1985. This "Memorial Fund" is presently has a reported balance of $345,000 (due to a recent large donation) and is expecting additional donations from its fundraiser scheduled for September 2011. The Memorial Fund Committee is the custodian of the Memorial Fund while the Braemar Golf Association facilitates disbursements. The Memorial Fund has been responsible for several additions and improvements to the Braemar golf facility over the years, including (partial list): • Four large- screen TVs • Braemar Room podium • New library cabinets and trophy cabinets in the Harry Cooper Lounge • New south and west deck furniture • Curtains and light shades for Braemar windows • Downstairs furniture • Many other projects for signs, flagpoles, gardens, etc. The NGF consultant did meet with the Greens Committee as part of this consulting effort, and recognizes that the City of Edina has a great resource in the volunteerism from within this group and other regular users of the golf facilities, as well as the direct financial support from the Memorial Fund. GOLF OPERATIONS A summary of the NGF review of Braemar golf course operations in areas including the POS system, marketing, fee structure, patron program, groups / tournaments, and lessons is covered in the following section. Point -of -Sale (POS) and Reservation Systems The City of Edina is presently using the ARS Business Solutions system for Point -of -Sale (POS) at Braemar Golf Course, although the grill area and Executive Course /range are not on this system. Based on the NGF review, it does appear that there is some concern about the usefulness and effectiveness of this system, and inclusion of all elements within the Edina municipal golf system (especially at Braemar Golf Course) would help streamline and consolidate performance reporting. This system does integrate well with the Teemasters on -line tee -time system and would be a good choice to continue operations. While a thorough review of the POS system is not under the scope of the present study, on the surface it appears to NGF that this system is working appropriately, pending use of the system in all areas of the Edina golf system. Cash Controls The City of Edina appears to have adequate controls in place to protect the financial integrity of the golf operation. Public golf is now primarily a credit card business, with declining reliance on checks or cash. The system in place requires tight controls and trackable logins for access, so management has a record of all who access the cash registers. The golf operation is subject to City forensic audits, with previous such evaluations showing good reports. The NGF does not recommend any change in the cash control system of Edina golf. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 15 Edina Golf Marketing Traditionally, Edina Golf did not market itself aggressively, and the records show that spending on advertising was very low before 2009. The following table shows the recent history of advertising expenses by Edina Golf: Edina Golf Advertising and Printing Expenses 2007 2008 2009 2010 2011* Advertising $8,450 $7,501 $47,206 $35,625 $40,000 Printing 8,272 10,508 18,803 10,814 13,000 Fred Richards Advertising & Printing 0 0 0 0 1,000 Golf Dome Advertising 22,468 26,752 18,155 22,142 20,000 Total $39,190 $44,761 $84,164 $68,581 $74,000 *2011 budget. Source: City of Edina. In general, NGF recommendations for total marketing expenses for a public golf course are between 2% and 3% of total gross facility revenue, a "standard" of approximately $68,000 to $100,000 for the Edina golf system (total revenue of $3.4 million in 2010). It appears that the Edina golf system has become more aggressive in marketing the facilities since 2009. The NGF review also shows that present Edina Golf staff is implementing a marketing program that contains the key elements NGF will typically recommend for a high quality public golf course like Braemar. Key areas of marketing focus at Braemar include: Website — The centerpiece of marketing at Braemar Golf Course is the facility's website (www.braemargolf.com). This site appears to be very well done for all of the elements of the Edina golf system, and contains all of the key elements recommended by NGF for successful golf Websites (scorecard, up -to -date information, tee - times, rates, tournament information, email program sign -up, directions, course tour, and much, more). Most important is the ability to book tee times directly through the site. Social Networking Sites — In enhancing its Web presence, Braemar is actively posting on several social networking sites such as Facebook, YouTube, and Twitter in an effort to boost exposure of the golf course. • Email Program — Braemar has a very active email program to keep the club in touch with its customers. The staff reported having nearly 7,000 email addresses in the database, excluding league emails. • N — Braemar runs several 30- second commercials produced in -house on the Golf Channel and local cable stations such as Edina 16. The commercials focus on information about specials, particularly the Patron Card program. These ads are also run on the Braemar Golf Website. NGF Commentary on Edina Golf Marketing The NGF review of the Braemar marketing program shows the staff is placing emphasis in the most appropriate areas that NGF industry research has shown can provide the most direct impact on a high quality public golf operation. Website and direct email marketing have been shown to be the most effective marketing at golf courses nationwide. The NGF has estimated National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 16 that upwards of 90% of all golfers get information about golf courses they are considering for play from the Internet. Other key items to consider: • Trackable — The most effective advertising activities are ones that can be tracked, showing effectiveness. • Labor Intense — Social media marketing is growing in golf and should be used to communicate with golfers who are NOT presently customers and drive them to learn more about a property. Existing Braemar customers should be communicated to via email. We note that posting "tweets" in social media is time consuming and should be evaluated on a regular basis to gauge effectiveness. • Print Is Not Dead — Although various forms of print media are less popular with golf facilities in the Internet age, this area of golf marketing is not totally dead. Print media can help raise brand awareness and promote the image of Braemar, even if at a quick glance or to drive prospects to the Website for more information. Magazine ads and rack brochures are still effective in the Minneapolis market and should be included in the facility's marketing plan. Historically, the Edina golf system was not heavily marketed. With the recent transition to the new General Manager, Braemar Golf Course management has become more aggressive in the last two years in an attempt to drive business onto the golf course. This is expected to produce better operating results in rounds and total facility revenue. Edina Golf Fee Structure The table that follows displays the present fee structure for Braemar Golf Course. Later in this report, the NGF team will offer insights into how this structure fits in with the product offering and the local market, as well as provide a recommendation for any changes to the fee structure. The NGF has observed that Braemar staff has been resisting the use of tee -time wholesalers like GolfNow.com. These groups provide a service to sell tee times for golf courses at a discount to the public. The advantage to Braemar of using this service would be the sale of additional tee times, while the disadvantage is a third party is discounting these tee times without Braemar's control. It is appropriate for golf courses like Braemar to resist this service in an effort to retain control of the facility's pricing and keep third parties from discounting City services. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 17 Patron Program The City of Edina is offering a discount / loyalty card for frequent golfers called the "Patron Card." This name is common in the Minneapolis area, and several of the other public courses in the market use the same name for discount cards. The Patron Card basically functions as a loyalty card, in that it allows users to pay a fee for the card to receive benefits, including: • Discounted green fees (approximately 21%) • 7 -day advance tee time reservations • 20% discount off regular - priced clothing, shoes, and bags in the pro shop • 5% discount off sale items of clothing, shoes, and bags in the pro shop The Patron Cards come in several types including: • Edina Resident Patron - $75 ($70 before April 1) • Non - Resident Patron $90 • Super Senior (75 +) Resident Patron - $75 • Executive Course Patron ($25 resident - $35 non - Resident) National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 18 2011 Rates Regulation Course . 18 Holes 9 Holes Non - Patron $37.00 $19.00 Patron $29.00 $15.00 Super Senior' $24.00 $14.00 U25 $25.00 $15.00 Juniors2 $18.00 $10.00 Golf Carts3 $15.00 $9.00 Handicaps Resident $24.00 Non - Resident $28.00 Braemar Executive and Fred Richards Course Non - Patron $14.00 Patron $11.00 Super Senior Patron $9.00 Junior4 $9.00 Golf Carts3 Driving Range Large Bucket $7.50 Small Bucket $5.00 Warm-up Bucket $3.00 1 — Mon — Thurs open to 1:00 2 —18 and younger 3 — Per player 4 — Any time Patron Program The City of Edina is offering a discount / loyalty card for frequent golfers called the "Patron Card." This name is common in the Minneapolis area, and several of the other public courses in the market use the same name for discount cards. The Patron Card basically functions as a loyalty card, in that it allows users to pay a fee for the card to receive benefits, including: • Discounted green fees (approximately 21%) • 7 -day advance tee time reservations • 20% discount off regular - priced clothing, shoes, and bags in the pro shop • 5% discount off sale items of clothing, shoes, and bags in the pro shop The Patron Cards come in several types including: • Edina Resident Patron - $75 ($70 before April 1) • Non - Resident Patron $90 • Super Senior (75 +) Resident Patron - $75 • Executive Course Patron ($25 resident - $35 non - Resident) National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 18 The data indicate that the City of Edina is earning between $106,000 and $120,000 per year in Patron Card revenue, equating to roughly 1,800± cards sold each year. This figure has been reduced over the years, with a peak of more than 2,500 card holders a decade ago. Total rounds data show the importance of patron card holders, as this group accounted for about 45 %± of total Braemar 27 rounds in 2007, 2008, and 2009, declining to only 37% in 2010. The NGF review finds this system to be one of the most effective loyalty / discount programs in place at municipal golf facilities (systems) nationwide. The program is a great way to tie the golf customer to the Braemar golf courses and provides strong incentive to play all rounds within the system. Further, the program allows a simple way to enact discounts while still maintaining the integrity of golf "rack" rates. Key Markets Served As Braemar is operating as a public golf course, the predominance of revenue generated by the facility is derived from green and cart fees, plus additional revenue from ancillary amenities such as the driving range, and food and beverage. With its position as an Edina municipal golf course, it appears that the vast majority of the play at this facility is derived from Edina residents. Considering the density of cities, towns, and communities in the south -of- Minneapolis suburbs, this finding is not surprising. Given its location, operators of the Braemar golf courses will always have the ability to generate golf activity from outside the local market area by attracting tournaments and outings to the facility. Junior Golf Junior golf is clearly a large part of the overall Edina City golf program, with all elements of the program (range, Executive Course, lessons, regulation course, and the dome) experiencing demand from younger golfers. These juniors are also important because they represent the future of the Edina golf program. The new GM instituted a new policy in 2010 allowing younger golfers than previous requirements, with golfers allowed at ages as young as 8 (10 if unaccompanied) on the Executive Course and as young as 10 (12 if unaccompanied) on the Braemar 27. This program should be a benefit to Braemar in stimulating more activity from both the juniors and their parents. Lessons and Programs The City of Edina and Braemar golf courses are active in promoting lessons and programs, including an active Junior Program, in an effort to drive new business to the facility. This is highly important for the future of this facility, as the current customer profile tends to be older, and new younger players are needed for the future. Professional golf Instruction is available seven days a week, and private instruction can be arranged by appointment. All golf teaching at Braemar is coordinated by the PGA Head Professional, a long -term fixture at Braemar (45+ years). The facilities in the Braemar golf courses are ideal for an active lesson and teaching program, including the range and Executive Course at Braemar, the Golf Dome, and Fred Richards. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 19 Braemar offers: • Adult group classes $99 for 5 hours of instruction • Junior group classes $46 for 5 hours of instruction • Private lessons from $50 (1/2 hour) to $100 (full hour) + package deals • Youth private lessons from $44 • Braemar also offers opportunities for Junior Golf Leagues on both the Regulation and the Executive Courses and participates in the Minnesota Golf Association junior competition tournaments This golf lesson and teaching program is among the most comprehensive in the market area and among other similar municipal golf operations nationwide. The Braemar lesson program is reported to be the largest in Minnesota and has earned upwards of $175,000 per year, broken out by $60,000 in groups, $15,000 in juniors, and $100,000 in private lessons. This income has been reduced by 15 -20% in the last year or two. The program is set up so lesson revenue is used to pay the assistant pros who have other responsibilities to the Braemar operation, thereby saving the City personnel expenses. This is generally a common system; most municipalities allow golf professionals to keep the bulk of lesson revenue, but not necessarily to offset a City salary. The system at Braemar appears to be favorable for the City and no change is recommended. One aspect of the lesson and teaching program at Braemar that appears to need improvement is the physical layout of the facility. Despite having a large driving range and Executive Course, Braemar uses the north end of the driving range as a lesson tee to allow for regular range use during lesson times and /or classes. Given that the range is too short to handle some of the long hitters in golf today, it is possible that students and /or instructors could be hit by golf balls during lessons at this location when the south (primary) end of the range is in use. NGF recommends altering this configuration to expand the driving range back farther north, and reducing the Braemar Executive Course to a par -3 course (more detail in the recommendation section). Group and Tournament Play Braemar Golf Course has a very active group, league, event, and tournament program, and the 27 -hole layout allows for a much greater level of accommodation for these groups and events than a typical 18 -hole facility. Leagues and Clubs League and club activity at Braemar include: • 16 separate leagues (men's and ladies) — average of 942 players a week, all on weekdays • 8 separate Executive Course leagues (4 on each executive course) • Braemar Men's Club (BMC) — has 300+ members (down from a peak of 375) and plays 16+ events each year. This is reportedly the largest men's golf club in Minnesota. • Braemar Ladies Club —has 95 members (down from 106 in 2010) National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 20 This level of activity is high for a municipal golf course and provides both advantages and disadvantages. Advantages include a large and loyal customer base that frequents the facility and provides a strong and loyal core of revenue. The disadvantage is that it can sometimes be difficult for Braemar to sell rounds to non - regular players, some who are willing to pay the higher non - patron green fee. A key element in municipal golf operations such as Braemar is to balance the needs of regular league players and allow open times for regular daily fee guests. It appears that Braemar is striking this balance well with most (if not all) league and club play held on weekdays. Outings and Tournaments Another form of group play that can be particularly lucrative for public golf courses is the large outing and /or tournament, especially charity tournaments. These tournaments and other events are a proven method for stimulating interest and maximizing activity at public golf courses, and help to expose the facility to new golfers who may not be familiar with the property. Braemar appears to be an ideal venue for these types of events for many reasons, including location, ample parking, nice golf course, sizable clubhouse, and accommodating staff. Key aspects of the Braemar Tournament program (16 or more players, Monday- Friday only, no weekend tournaments) include: • Base fee for 18 holes = $69, including green fee, cart and $5 pro shop credit (prizes). • Base fee for 9 holes = $36, including green fee, cart and $5 pro shop credit (prizes) • Accommodation for a full 18 -hole shotgun (minimum 100 players) • Accommodation for a full 9 -hole shotgun (minimum 50 players) Data provided to NGF Consulting show: • 47 tournament events held in 2010, for a total of 2,858 rounds (average 60 per event) • Largest events included the Univita in August (169 players) and Abbey's Hope in September (166 players) • Total pre- bookings were up for 2011, but many early events had to be cancelled or rescheduled due to weather • The largest events include using all three 9 -hole courses in a shotgun start (27 -hole event). There are three such events booked for 2011. • Total revenue from tournaments was $147,921 in 2010, showing increases over the last few years as.shown in the following table. This level of rounds and revenue is well above average for municipal golf courses, and shows the staff commitment to this business line that typically has a high margin. Average revenue per event round in 2010 was $51.76, compared to the overall facility average of $33.75 for the total system. Braemar Golf Course Tournament Sales (2007 -2010) 2007 2008 2009 2010 Tournament Revenue $134,108 $138,935 $135,671 $147,921 National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 21 Carts and Maintenance Equipment The City of Edina is responsible for operating and maintaining fleets of golf carts and maintenance equipment, as is appropriate and customary at municipal golf courses and multi - course golf systems. At present, the City owns all carts and equipment, seeking to use its City purchasing power to maximize purchasing effectiveness, and using a staff mechanic operation to maintain this equipment to the highest standard. Cart Operations The Edina Golf system employs a full fleet of 78 EZGo carts for the Braemar operation. These carts are new to the operation (2010), and include a mix of 47 electric and 31 gasoline powered carts. The electric carts are all stored and charged within the Braemar clubhouse for maximum efficiency. The NGF typically recommends a minimum of 60 carts for an 18 -hole golf operation that requires cart use in all rounds. This would indicate that the 78 carts in use at Braemar are within the acceptable range for carts, given that the facility allows walking and that the Executive Course is predominantly used by walkers. Braemar has eight single rider "handicap" carts as required to be in compliance with the Americans with Disabilities Act (ADA). There are an additional eight gas powered carts for the Fred Richards operation. Electric carts are generally less expensive to operate (both for the cost of gasoline and the ease of cart maintenance), and electric carts generally are preferred by golfers as they are quieter and do not have the exhaust fumes. However, electric cart fleets require appropriate storage facilities to allow for re- charging batteries each evening. Braemar Golf is also earning revenue for pull cart rentals, although the revenue is much lower than for power carts. Golfers choose to walk for two reasons: (1) to save money; and (2) to add an exercise component to the enjoyment of the activity. The trend in the golf industry is to make carts mandatory, although the NGF did observe that very few of the public golf courses in Minneapolis require the mandatory use of power carts. Maintenance Equipment The Edina Golf system requires a full fleet of golf course maintenance equipment to provide proper course conditions. A review of documents provided to NGF shows the City has a total of 38 individual pieces of maintenance equipment with varying number of hours used. There are additional utility carts used by maintenance, as well as two beverage carts. It is recommended by NGF that the City continually update its fleet of maintenance equipment, replacing older pieces with newer ones on a regular basis to prevent having to replace the entire fleet at once. It is also recommended that the City fund a reserve for replacement, even in years when no new equipment purchases are made. This is the system that is recommended for municipal golf courses that choose to own rather than lease. BRAEMAR 27 HOLES The primary golf facility in the Edina golf system is the regulation 27 -hole Braemar Golf Course. This golf course is the centerpiece facility within the Edina system and represents the largest portion of City golf revenues. Together with its component Clubhouse, Grill, Executive Course and driving range, the Braemar golf course complex is one of the premier municipal golf facilities in the Minneapolis metro area and has an outstanding reputation for quality and service. As the individual pieces of the Braemar system have been divided by NGF for closer review in our report, this section will focus on the operations, physical condition, and economic National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 22 performance of the main 27 -hole Braemar golf course. The other Braemar components will also be examined separately in the remainder of this chapter. Facility Overview Braemar has a long history going back to its original opening as a Dick Phelps designed 18 -hole municipal golf course in 1963, with additions and expansions of both the golf course (Don Brauer designed "Clunie" 9) and clubhouse, the most significant of which occurred in 1994. The facility remains very popular in Minneapolis -area golf and is often mentioned as an important part of the history of golf in the region. The facility has been rated among the top 75 public golf courses in the nation. Rounds played at Braemar have traditionally been among the highest in the region, hosting as many as 60,000 on 18 holes back in the 1980s and early 1990s. Braemar offers a challenging and traditional golf layout that has basic features with strong appeal to golfers of all skill levels. Its location in close proximity to large residential neighborhoods adds to the popularity of this golf course. One key aspect of the regulation Braemar golf course is that it offers 27 holes of golf. This configuration is growing in popularity within the golf industry; it allows for three tee areas to begin play simultaneously, allowing for a greater volume of "peak" rounds at times when demand is strongest (i.e., weekend mornings), or even the accommodation of tournaments and outings without having to close the course to others. This system will work very well at golf courses that offer three equal 9 -hole courses, thus allowing golfers to have a full round of 18 holes on two equally pleasing and challenging 9 -hole courses. However, at Braemar this is one area of concern, because the three nines are not of equal quality or appeal. The original 18 -hole golf course consists of what is now referred to as the "Castle" (holes 1 -9) and "Hays" (10 -18) courses, and these two 9 -hole courses appear to be preferred by the golfing public. The third 9 -hole course, the "Clunie" (holes 19 -27) appears to have less appeal to some segments of golfers due to greater elevation changes and narrowness of golf holes. Holes 19 -27 are more difficult to play and more difficult to walk and thus are less desirable by some in the golfing public, but this 9 may have greater appeal to others who are better - skilled players seeking a greater challenge. Further, given the configuration of the golf facility and the way it is operated, golfers who reserve tee times at Braemar are not able to request a specific 18 -hole course. However, it seems that this issue has diminished somewhat as a problem as gofers in the area become more used to the realities of the Braemar facility. Golf Course The Braemar Golf Course is a scenic golf layout with interesting topography and numerous mature trees bounded in many areas by natural woodlands. The golf course is highly scenic and almost completely devoid of any development visible from the golf course, creating a true "oasis" atmosphere for golfers despite close proximity to the busy city life that surrounds it. Braemar uses a somewhat unique numbering system giving each hole a number between 1 and 27. Thus the original 18 -hole course is numbered 1 -18, and the newer "Clunie" 9 is numbered 19 -27. This system is highly effective in keeping track of the golf course for both players and management, and NGF will use these hole- number references in our review of the facility. The golf course includes many features that add to both the challenge and aesthetics of the golf course. There are a total of 52 bunkers spread out over the 27 holes, with 35 on holes 1 -18 and 17 on holes 19 -27. There are a number of narrow, tree -lined golf holes on the course, with most National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 23 of these on the newer "Clunie" 9 ( #19 -27). Nine of the holes 1 -18 and five of the holes 19 -27 have a water feature, giving 14 of the 27 holes some type of water feature adding to both the challenge and aesthetics of the course. These water features and bunkers also add to the maintenance responsibilities of the golf course, requiring "hands -on" maintenance that is labor intense (more later in this section). The greens average 6,000 to 7,000 square feet and are slightly above average in size, which is preferred by most golfers. The mix of 18 -hole configurations resulting from the three 9 -hole courses also leaves a mix of course layouts. Yardages range from between 6,262 and 6,660 from the longest (Blue) tees to between 4,737 and 5,043 from the most forward (Gold) tee. Braemar now offers five sets of tees, which has become the "standard" for modern high - quality golf courses. The multiple tee positions allow for golfers of different skill levels to play from a total golf course yardage that is comfortable for them, and the variety is a key selling feature. The USGA slope and rating data in the table below show the relative difficulty of the Braemar golf course from any tees that include holes 19 -27 (higher slope) and easier from the original 18 holes (1 -18). The hardest course (19 & 1) has a slope rating of 136 from its farthest tee, considerably higher than the "standard" USGA Slope Rating of 113. However we note the "standard" slope rating of 120 is for a par 72 course and holes 1 -18 play to a par of 71. Overall, Braemar Golf Course has the basic layout and amenities to offer a high quality golf experience with good basic design, tree -lined holes, and interesting of topography. Braemar Golf Course possesses design characteristics and features comparable to other public golf courses in the market area and consistent with its target fee level. Thus, no significant changes to the layout are recommended: these would likely have a high dollar investment that is not likely to be recovered through increased activity or increased fees. Present Operational Issues Braemar is operated as a public golf facility with the majority of revenue derived from green fees and cart fees, with additional ancillary concessions (pro shop, F &B, other rentals) that will be addressed later in this chapter. The NGF review of the facility's basic operation follows in this section. Staffing The facility is presently operated directly by the City of Edina, under the direction of the system's Golf General Manager, a long -term City employee who has been at Braemar for 25 years, National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 24 Braemar Golf Course Men's Course Rating/Slope 1 &10 10 &19 19 &1 Blue 71.9/129 70.5/130 72.4/136 White 70.61126 69.1/127 71.3/134 Red 67.8/121 66.3/122 67.5/126 Gold 64.7/115 63.6/116 64.8/121 Women's Course Rating /Slope 1 &10 10 &19 19 &1 White 76.9/135 75.2/132 77.9/140 Red 73.5/128 71.9/125 73.4/131 Green 72.0/124 71.3/124 72.5/129 Golf 69.8/120 68.4/118 70.0/124 Overall, Braemar Golf Course has the basic layout and amenities to offer a high quality golf experience with good basic design, tree -lined holes, and interesting of topography. Braemar Golf Course possesses design characteristics and features comparable to other public golf courses in the market area and consistent with its target fee level. Thus, no significant changes to the layout are recommended: these would likely have a high dollar investment that is not likely to be recovered through increased activity or increased fees. Present Operational Issues Braemar is operated as a public golf facility with the majority of revenue derived from green fees and cart fees, with additional ancillary concessions (pro shop, F &B, other rentals) that will be addressed later in this chapter. The NGF review of the facility's basic operation follows in this section. Staffing The facility is presently operated directly by the City of Edina, under the direction of the system's Golf General Manager, a long -term City employee who has been at Braemar for 25 years, National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 24 previously as the Assistant General Manager under the previous General Manager who retired in 2010. The facility employs a full -time Head Golf Professional via contract agreement. The Head Professional then employs three assistant professionals who are paid through lesson income to the facility. This system appears to be a great benefit to the City in that these assistant professionals have responsibilities to oversee golf operations at no cost to the City. The reported staff at Braemar and how this has changed in the last few years is shown in the table below: Braemar Golf Course Total Golf Operations Staffing — 2009 and 2011 Position 2009 2011 Full Time General Manager Staffed Staffed Assistant General Manager Staffed Not Staffed Golf Professional (Contract) Staffed Staffed Clubhouse Manager Staffed Staffed Pro Shop Manager / GC Coordinator Staffed Staffed Golf Operations Staffed Staffed Grill Manager Staffed Staffed Part Time Prof Shop Staff (PT — ea. 1/2) 2 Positions 2 Positions Executive Course Manager (PT — ea. 3/4) 1 Position 1 Position Starters /Rangers /Carts (PT — ea 1/3) 12 Positions 12 Positions Assistant Pros (Contract) 5 Positions 5 Positions Grill /Bev Cart Staff (PT — ea. 1/4) 6 Positions 6 Position Total Maintenance Total Facility FT Equiv. (FTE) 14.0 FTE 13.0 FTE Clientele The Braemar management staff reports a very local clientele, with strong league and club participation. While the City does not offer a discount for City residents on green fees, residents do get a discount on the Patron cards and thus the vast majority of card holders are Edina residents. Another factor noted to NGF was that the predominant Braemar golfer is much older and there are a shrinking number of younger adult players at Braemar. This has implications for the future of Braemar Golf and the facility's marketing program. Cart Use One issue NGF did observe in carts at Braemar is the slightly above average rate of power cart use at Braemar Golf Course. NGF estimates more than 60% of golfers will rent carts, with that percentage increasing if the newer "Clunie" 9 holes is included in the round. This rate still leaves 40% of the play as walking rounds, showing that Braemar golfers are still interested in walking. The high cart use at Braemar has implications for revenues in wet periods after heavy rain. If the course is too wet to allow carts, there are many golfers who will not play Braemar. For this reason it may be a boost to revenues for Braemar to add a wall -to -wall cart path system to allow carts onto the golf course in some fashion (cart path only) even after periods of heavy rain (more in the physical review later in this section). Fee Analysis The fee schedule for the Edina golf program was presented earlier in this report. The table showed green fees at Braemar to peak at a rate of $37 for non - patrons, up to $52 if a cart is National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 25 included. We note the green fee at Braemar is the same weekdays and weekends. While it is common in the U.S. golf industry to have a variance in rates between weekends and weekdays, it appears that the weekend /weekday rate structure is less common at municipal courses in the Minneapolis market area, as the City of Minneapolis is the only municipality reviewed by NGF to charge a premium for weekend rates (Golden Valley, Edina, and Bloomington have the same fees weekday and weekend). It appears to NGF that the weekend /weekday program is probably appropriate where it is now for two reasons: (1) if the weekend fee were increased, it would be a burden to generally younger, working people who can play only on weekends and are a key target market for the future of Braemar; and (2) if the weekday fee were lowered to create a variance, the policy would simply be a discount program for seniors who frequent the course during the week and appear willing to pay the established weekday fee. Thus the pricing appears appropriate for Braemar with non - patron green and cart fees at $52, just over the key $50 threshold in public golf. Pro Shop Operations Braemar Golf Course has a nicely appointed pro shop of about 1,800 square feet. From the front entrance, the pro shop is conveniently located at the west end of the clubhouse and can be entered via the outside cart staging area and through the snack bar /grill. The shop has large windows and allows fair sightlines to the 1 s' and 10th tees, although the 19th tee is not visible. The pro shop features an attractively displayed variety of soft goods, including shoes and logoed apparel, and hard goods, including golf clubs and balls. Apparel is priced toward the middle to upper price range (which seems appropriate given the demographic profile of Edina). Braemar does employ a Pro Shop Manager who is responsible for merchandise purchasing and organizing the shop and its displays. The Braemar pro shop appears to be run very efficiently with adherence to key issues the NGF will typically include in our pro shop recommendations, including: • Including "sale" racks and tables to promote items on sale, and rotating through various merchandise to place on sale, not just the "rejects." • Doing a large business in "impulse" items related to golf activity (gloves, balls, tees, etc.). Braemar staff reports selling upwards of $16,000 in used golf balls, a number that is very good for a public golf course. • The merchandise program is kept up in the winter. If the clubhouse is open, the pro shop is open. Some merchandise is moved to the Golf Dome and promoted /sold at that location. • Hosting "demo days" with equipment manufacturers to promote golf clubs to golfers. • Setting up special exclusive deals with certain manufacturers such as FootJoy to exclusively sell their product in exchange for discounts. One area where Braemar may be slightly deficient in its merchandise operation is in the issue of the Braemar logo. NGF is a firm believer in the benefit of having an attractive logo to put on shirts, hats, bags, umbrellas, etc., as a mechanism to increase the sales of those items. The City may find it worthwhile to spend some money for a new / more attractive logo for Braemar merchandise. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 26 The goal of the Pro Shop Manager is to generate gross revenue in the range of $4 to $5 per round of golf, a figure considerably higher than the NGF- observed average of $2.32 for "mid - fee" public courses (see Appendix B), but not inconsistent with the Edina market and not that much higher than actual experience of Braemar. The following table shows some key operating results of the Braemar pro shop. We see that the facility is earning close to $3.50 per Braemar round in pro shop sales, a figure which is a decline of 11 % from 2007, but an increase of 14.5% over 2009. Cost of sales is slightly higher than the industry standard of 74 %, reflecting lower margins in the last year to clear out old merchandise retained by the previous Pro Shop Manager. Braemar Pro Shop Revenue and Cost of Sales History — 2007 -2010 Revenue 2007 2008 2009 2010 Total Braemar Pro Shop Revenue $248,842 $229,028 $209,675 $213,945 Direct Cost of Sales $186,724 $174,555 $167,093 $170,175 Cost of Sales % 75.0% 76.2% 79.7% 79.5% Pro Shop Revenue /Braemar Round $3.90 $3.54 $3.04 $3.48 Pro Shop Revenue/Total Round $2.88 $2.64 $2.28 $2.67 Source: City of Edina Physical Evaluation Braemar appeared to be a very well maintained golf course at the time of the NGF visit in late June 2011, and the course appears to deserve its Audubon Certification. NGF expects that Braemar 27 will have maintenance requirements that could be considered at a level higher than the Executive Course or Fred Richards. However, given the high volume of rounds played at Braemar 27, coupled with the issues related to irrigation and maintenance of lakes /ponds, the labor required to maintain the property may be higher than other public courses of comparable size and use. Basic Evaluation The basic NGF findings on our physical evaluation of the Braemar Golf Course property include: Turfgrass/ Irrigation — Turfgrass at Braemar 27 consists mainly of Kentucky Bluegrass fairways, tees, and roughs, with a Bentgrass/Thatch mix on the greens. The turf appeared to be generally healthy and in no need of urgent repair or replacement, although there were areas of stressed turf observed. It appears that the condition of the turf is an annual variable at Braemar, as each year the course comes out of the cold winter and an evaluation of condition must be completed. In 2011, it appeared that the cold ice covering from the previous winter had "thinned" out some turf areas, leading to fragile conditions. Continued extreme care by the superintendent is needed to ensure maximum turf health each year. The greens are particularly vulnerable and should not be cut too low (to make faster) as this will likely add to the stress of the turf condition. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 27 Braemar uses well water to irrigate the Braemar golf course, thus the City is not paying for irrigation water beyond what it costs to pump it out and into the system. There are three wells on the property, each with its own pump: • The first pump produces 750 gallons /minute and appears in good working order with no urgent replacement needed. • The second pump produces 350 gallons /minute and appears in good working order with no urgent replacement needed. • A third pump is much larger (1,000 gallons /minute) and newer and is now for golf course use only, after many years servicing areas of Braemar Park. The irrigation system dates back to 1980, with upgrades to the control systems made during the renovation of 1994. Appendix A shows the industry standards for useful life on components of a golf course irrigation system, and we can see that Braemar is reaching the point where planning for a new system will have to be completed. Once a system gets beyond 30 years, it is running on "borrowed time," and repair issues will become a leading use of staff time. However, full replacement of the system will be an expensive proposition, both in terms of direct cost of the new system and in lost income for when the work is completed. The present system is organized into separate zones that do not exactly match the 9 -hole courses, thus preventing an organized system of closing one 9 -hole course and replacing irrigation and then moving to the next. Native Areas — Introducing "native" or "natural" areas within the course is one of the best and most widely used methods for conserving water. Braemar has begun doing this in a number of areas, primarily in open out -of -play areas. We encourage the staff to consider broadening this practice wherever possible within the course. The overall course should be analyzed in detail, identifying appropriate areas such as around tees, behind greens, between holes, and around the fringes of the course. Cart Paths and Bridges — Braemar has a good cart path circulation area around the clubhouse and near the tees and greens on the 27 -hole course. However, the paths are not complete throughout the course and thus carts must travel on the turf during regular play. This can be problematic during wet periods, because the carts tend to damage wet turf and are not allowed on the course after periods of heavy or sustained rain. This has a negative effect on facility revenue, particularly in comparison to other golf courses that have a "wall -to- wall" system of cart paths and can allow play even on wet days. Braemar Golf Course has nine bridges, including one wooden bridge that is not in use by the public. The remaining eight bridges appear to be in good overall condition with no concerns related to structures. Some of the bridges did appear to have cracked or broken bridge plankings that will need to be replaced. Course Drainage — The existing slopes of the course seem to surface drain well within the course to the six different ponds and Nine -Mile Creek. However, it is common for the course to stay wet after periods of heavy or sustained rainfall, thus leading to course closures due to lack of full cart path system. Maintenance Area — The current maintenance facility is basically functional and includes all of the key elements desired by NGF in our facility reviews. The facility space is generally adequate to store all of the equipment (owned by the City) and there is sufficient space for equipment National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 28 repair, including a machine lift. No urgent repair of renovation of the maintenance compound should be required in the next five years. On- Course Facilities — The Braemar 27 has somewhat limited on- course services (restrooms /drinking fountains), although the course layout is such that golfers are never too far from the central clubhouse. Having appropriate and clean on- course restrooms is a customer benefit feature that can add play to a golf course, especially in the female segment. There is a restroom as part of the maintenance compound that golfers can use on hole #4, and also a full restroom station (with vending) between hole #5 and #6, and #15 and #16 on the western side of the property. On the eastern side of the property, much of the Clunie 9 -hole course does not have a full restroom station, but does have a weather shelter near the #23 green. If a new restroom station were to be added to this location near #8, #9 and #23, it would be an appropriate place. Course Aesthetics — Braemar has a very comfortable, inviting, friendly, neighborhood atmosphere from the time you enter the clubhouse throughout the entire round. The easy access entrance / parking, modestly stated clubhouse with outdoor patios, and the park -like environment make the entire experience low -key and relaxing. It is understandable why it is a popular course with the Minneapolis -Metro golfing community. Another component of the facility aesthetics is the outstanding landscaping / flower program at Braemar. The NGF was impressed with the level of landscaping detail and the highly positive curb appeal of the facility. This is very useful in attracting events, banquets, parties, and golf tournaments to the property, and continuation of the program is recommended. The Braemar Superintendent employs approximately five part-time "flower staff' to maintain the non -golf landscaping at Braemar. Space Constraint Issues — The NGF observed a rather tight space for the Braemar Driving Range, located between hole #1 on the Braemar 27 and holes #1 and #2 on the Executive Course. From its longest tee located in the center of the hitting area, the driving range is approximately 300 yards long. However, due to the arching shape of the tee area, the range length for golfers at either end of the hitting area may be as much as 25 to 40 yards shorter. As golfers today are capable of hitting shots as long as 300+ yards, the lesson tee on the north end of the range is frequently hit, creating a dangerous situation for students. In many cases, lessons are not permitted in this area at certain times when the range is overly busy, leading to reduced lesson and other revenue. The areas on both the Executive Course (holes #1 and #2) and the regulation course ( #1) are frequently hit by range balls. While there is fencing around hole #1 on Braemar 27 to help prevent this, the area on the Executive Course and north -end training area is not protected. The aerial images below show the tightness of the range set -up along with preliminary ideas for space re- configuration (more in upgrade recommendations noted just after the images). National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 29 Aerial Image Google Earth image showing the Braemar Golf Course site and its immediate surroundings. We note the tight configuration of the property, especially in the area on the north end of the driving range and proximity to holes #1 and #2 of the Executive Course. Google Earth image showing a close up of the northern portion of the driving range, Executive Course, and lesson center, along with NGF suggested changes to be considered. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 30 Maintenance Staffing NGF completed its inspection of the golf course in June 2011 and observed generally good conditions. We note that Braemar has experienced some change in maintenance staff with the reduction of one mechanic position beginning in 2010. Braemar has an appropriately large maintenance staff due to responsibilities to maintain the 27 -hole regulation course, the Executive Course, and the driving range. It is understood by NGF that although the Head Superintendent is listed on the roster of Braemar, this position does have responsibilities at Fred Richards as well. In total, the City shows a budget of over $906,000 for total maintenance expense at Braemar, an increase of 13% from the $802,000 spent in 2010. However, it is reported to NGF that "over budgeting" for maintenance is common at Braemar, to provide a cushion for unforeseen events (positive for the City) and frequently come in under budget as in past years. The table below shows the change in staffing from 2009 to 2010: Braemar Golf Courses* Total Maintenance Staffing — 2009 and 2011 Position 2009 2011 Full Time Head Superintendent (FT) Staffed Staffed Asst. Superintendent (FT) Staffed Staffed Irrigation Spec. (FT) Staffed Staffed Mechanic 1 (FT) Staffed Staffed Mechanic 2 (FT) Not Staffed Not Staffed Grounds Staff 1 (FT) Staffed Staffed Grounds Staff 2 (FT) Staffed Not Staffed Grounds Staff 3 (FT) Not Staffed Not Staffed Part Time Seasonal Golf Worker (PT — ea 5/8) 8 Positions 8 Positions Seasonal Golf Worker (PT — ea 1/2) 6 Positions 6 Positions Seasonal Fairways /Roughs (PT — ea 3/8) 8 Positions 8 Positions Seasonal Landscape (PT — ea. 1/4) 4 Positions 4 Positions Total Maintenance Total Facility FT Equiv. (FTE) 18.0 FTE 17.0 FTE *Includes Braemar executive and driving range maintenance. Upgrade Recommendations — Higher Priority The overall condition of the Braemar Golf Course property is very good, and NGF does not see any urgent upgrades that would be required for the facility to maintain its revenues or significantly reduce expenses. There has been consideration within the City that a full overhaul of the newer Clunie 9 -hole course to make it fit better with the original 18 -hole course could be undertaken, but this is not recommended by NGF, as it is very unlikely to enhance revenue or reduce expenses. In looking to the future, there are some items that should be considered for upgrade at Braemar, presented in order of NGF recommended priority: 1. Range Renovation — The NGF recommends that Braemar complete a project to expand the driving range and reduce the existing par -29 Executive Course to a par - 27 par -3 golf course. This makes sense for several reasons, including: a. The range needs additional length to accommodate a learning center and for safety. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 31 b. There is land available within the existing Executive Course to add another green and /or tee. c. The inclusion of the Fred Richards Golf Course gives the City two par -29 executive courses that serve identical markets, and a par -3 course would open up new markets for Braemar, especially in the junior segment. d. The resulting Braemar range and par -3 course should lead to higher quality, greater customer satisfaction and produce additional revenue of up to $20,000 to $25,000 per year. The project would involve expanding the range into the area that is now the #2 and part of #3 hole on the Executive Course, adding a modest learning center and then adding two new tees and greens to other open portions of the Executive Course to create a 9 -hole par -3 course between 1,100 and 1,350 yards. NGF Estimated cost = $300,000 to $400,000 (expand range, 2 new tees, 2 new greens, modest irrigation work- possible new structure) Project would also require some loss of revenue during construction process. 2. Cart paths — The need for "wall -to -wall' cart paths at Braemar is evident, and revenue can be enhanced from such a program. NGF estimates that new cart paths will cost around $20 per linear foot of cart path (asphalt), or roughly $80,000 for the approximately 4,000 linear feet needed for completion). 3. Bridge Upgrades — Replace damaged plankings on Braemar bridges. NGF Estimated cost = $16 per linear foot, or approximately $12,000 for 750 linear feet of bridges. Upgrade Recommendations — Lower Priority Other upgrade considerations with much lower priority include: 1. New Irrigation System — Braemar should plan for completely replacing the existing irrigation system with a new system for irrigation on all 27 holes. NGF Estimated cost = $750,000 to $1.0 million, plus would require some loss of revenue during installation process. 2. Equipment — Braemar has some pieces of golf maintenance equipment that are past their. useful_life_and_ should be replaced as part of an annual review of equipment. NGF Estimated cost = approximately $100,000 per year for equipment over the next three years, to replace most of the aging fleet. 3. On- Course Restrooms— Braemar currently has one on- course restroom. Braemar would benefit from the addition of new restroom facilities at a central location on the golf course — perhaps near holes #8, 9, #23 and #24 (shelter at this location presently). NGF estimates approximately $60,000 to $80,000 for a new on- course restroom facility with full plumbing and electricity. Estimated Cost of Physical Improvements The estimated cost to complete the above noted facility improvements is detailed in the table below. The estimated costs detailed below do not include any lost revenue due to business disruption that may occur as a result of the upgrades (which will be addressed for items 1 -3 in financial projections made later in this report). National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 32 Braemar Golf Course Recommended Improvements Highest Highest Priority Items Estimated Cost Range Improvements $400,000 Cart Paths 80,000 Bridge Improvements Total High Priority 12,000 $492,000 Lower Priority Items New Irrigation System $1,000,000 Equipment Upgrades (annual) 100,000 On Course Restroom 80,000 Total Lower Priority $1,180,000 Total Braemar GC Upgrades $1,672,000 Facility Performance and Data Analysis — Braemar 27 Braemar Golf Course is operating as a fully public municipal golf course, and the predominance of revenue generated by the facility is derived from golf green fees (including cart fees). Additional revenue is collected from merchandise sales, patron card sales, and other rentals. A summary of activity, revenue, and expenses is shown below. Activity Levels At the time of the NGF Consulting review, the Braemar Golf Course had experienced a severe decline in rounds activity from 2009 to 2010, with additional declines in the first half of 2011. It does appear that Braemar has experienced a "perfect storm" of events all converging at once on the golf facility, with the price of gas, the downturn in employment, the increase in the number of golf courses, and a historically wet spring and summer combining to reduce the rounds activity and revenue of the Braemar Golf Courses. Total rounds at the Braemar 27 were 61,460 in 2010, down 10% from the 68,998 hosted in 2009, a particularly good weather year. Rounds in 2007 and 2008 were close to 64,000, representing a more recent "standard" figure. The decline from 2007 is consistent with other area facilities, although our research shows that 2010 was the worst, with none reporting any increase in 2011 (see competitive section). Considering the recent (2010) history of rounds played before and after June, the NGF has estimated a projected rounds total of 56,500 for 2011, unless there is a considerable change in weather for the second half of the year, perhaps allowing for enhanced play in late October and November. Average rounds per 18 -hole public golf course in the total U.S. now stand at about 32,500 rounds per year on 18 holes (equates to 48,750 for 27 holes), indicating that despite the declines, Braemar is still doing better than the national standards. (see Appendix B). National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 33 Capacity Issues As we will present later in the 'Competitive Analysis' section, historical rounds played volumes at Braemar are generally higher than other regulation golf courses in this area. Based on Braemar's market positioning, location, 27 -hole layout, and higher fee structure, NGF Consulting has estimated a maximum yearly capacity of about 65,000 to 70,000 rounds in a good weather year, indicating this facility is operating with rounds activity close to a reasonable maximum. Revenue Analysis Although rounds declined sharply in 2010, total Braemar 27 revenue did not fall as much, declining 3.5% (compared to 10% decline in rounds). The budget for 2011 projected a strong rebound (increase of 7.9% from 2010) and will likely not be realized. The Braemar 27 total revenue (including carts and merchandise) stands at $856,685 through the end of June, compared to $1,047,923 through June 2010 (decline of 18.2 %). Considering the recent (2010) history of revenues before and after June, NGF has estimated a projected total Braemar 27 revenue (including carts and merchandise) total of $1,884,000 for 2011, unless there is a considerable change in weather for the second half of the year. There are additional non - operating items such as tax increments and miscellaneous revenue items that are not addressed in the NGF revenue analysis, but included later in our summary financial position evaluation. When compared to industry averages (Appendix B) we see that Braemar is operating with revenues that were above average in 2009 (U.S. average = $993,800 in 2009), even when considering that the U.S. averages presented by NGF include ancillary revenues such as range, merchandise, and food and beverage. Total golf revenue (green fees, cart fees, memberships only) average about $700,000 per 18 holes for public golf courses in the U.S. in 2009 (equates to $1.05 million for 27 -hole courses). National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 34 Braemar 27 Golf Course Rounds Played by Type - FY2007- 2011' Through Through Total Total Total Total June June Round Type 2007 2008 2009 2010 2010 2011 18 Hole Patron 18,077 17,103 19,376 14,560 6,547 5,199 18 Hole Non - Patron 16,895 17,435 17,214 15,066 5,944 4,708 18 Hole Under 25 0 0 0 1,638 935 656 18 Hole Jr. 0 0 0 1,132 670 873 9 Hole Patron 12,292 12,415 11,008 8,116 3,919 2,899 9 Hole Non - Patron 16,548 17,797 21,400 14,504 7,211 6,028 9 Hole Under 25 0 0 0 2,479 1,425 1,132 9 Hole Jr. 0 0 0 3,965 2,107 2,244 Total Braemar 27 Rounds 63,812 64,750 68,998 61,460 28,758 23,739 Source: Braemar Golf Course. 'Through June 2011. Capacity Issues As we will present later in the 'Competitive Analysis' section, historical rounds played volumes at Braemar are generally higher than other regulation golf courses in this area. Based on Braemar's market positioning, location, 27 -hole layout, and higher fee structure, NGF Consulting has estimated a maximum yearly capacity of about 65,000 to 70,000 rounds in a good weather year, indicating this facility is operating with rounds activity close to a reasonable maximum. Revenue Analysis Although rounds declined sharply in 2010, total Braemar 27 revenue did not fall as much, declining 3.5% (compared to 10% decline in rounds). The budget for 2011 projected a strong rebound (increase of 7.9% from 2010) and will likely not be realized. The Braemar 27 total revenue (including carts and merchandise) stands at $856,685 through the end of June, compared to $1,047,923 through June 2010 (decline of 18.2 %). Considering the recent (2010) history of revenues before and after June, NGF has estimated a projected total Braemar 27 revenue (including carts and merchandise) total of $1,884,000 for 2011, unless there is a considerable change in weather for the second half of the year. There are additional non - operating items such as tax increments and miscellaneous revenue items that are not addressed in the NGF revenue analysis, but included later in our summary financial position evaluation. When compared to industry averages (Appendix B) we see that Braemar is operating with revenues that were above average in 2009 (U.S. average = $993,800 in 2009), even when considering that the U.S. averages presented by NGF include ancillary revenues such as range, merchandise, and food and beverage. Total golf revenue (green fees, cart fees, memberships only) average about $700,000 per 18 holes for public golf courses in the U.S. in 2009 (equates to $1.05 million for 27 -hole courses). National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 34 Average Revenue Analysis The total average revenue earned per round was $33.76 for 2010, showing relatively steady performance in this figure over the four years shown, and within each category. The average for mid -fee public golf courses in the U.S. was $21.54 for total revenue per round in golf revenue (green, cart, membership), plus an additional $9.04 in ancillary spending (food, beverage + merchandise - See Appendix B). Braemar 27 Golf Course Total Gross Revenue - 2007 -2011* Revenue 2007 2008 2009 2010 2011 Revenue 2007 2008 2009 2010 2011 Projected Miscellaneous $3,930 $852 $1,006 $1,289 $1,000 $1,170 Patron Cards 106,040 110,313 123,761 119,981 135,000 108,943 Rent/Storage 21,095 22,017 22,530 22,963 25,000 20,850 Locker Rental 641 864 940 578 800 525 Green Fees 18 -hole 910,304 948,013 960,662 903,412 975,000 820,298 Green fees 9 -hole 431,836 454,323 471,008 441,381 490,000 400,774 Cart Rentals 354,379 322,710 318,396 325,801 330,000 295,827 Merchandise Sales 248,842 229,028 209,675, 213,945 230,000 194,262 Golf Lessons 30,859 47,072 43,504 46,142 49,000 41,897 Comp Handicaps 601 1,027 958 869 2,000 789 Cash Over /Short 876 1,038 1,930 1,667 0 0 Total Operating Revenue $2,109,403 $2,135,181 $2,150,510 $2,074,694 $2,237,800 $1,885,336 Source: City of Edina *2011 Budget Average Revenue Analysis The total average revenue earned per round was $33.76 for 2010, showing relatively steady performance in this figure over the four years shown, and within each category. The average for mid -fee public golf courses in the U.S. was $21.54 for total revenue per round in golf revenue (green, cart, membership), plus an additional $9.04 in ancillary spending (food, beverage + merchandise - See Appendix B). National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 35 Braemar 27 Golf Course Average Revenue per Round - 2007 -2010 Revenue 2007 2008 2009 2010 9 -hole rounds 28,840 30,212 32,408 29,064 18 hole rounds 34,972 34,538 36,590 32,396 Total Rounds 63,812 64,750 68,998 61,460 Average Per Round 9 -H Green Fees /9 -H Round $14.97 $15.04 $14.53 $15.19 18 -H Green Fees /18 -H Round $26.03 $27.45 $26.25 $27.89 Total Blended GF Rev. / Round $21.03 $21.66 $20.75 $21.88 Patron Cards $1.66 $1.70 $1.79 $1.95 Green Fees $21.03 $21.66 $20.75 $21.88 Cart Rentals $5.55 $4.98 $4.61 $5.30 Merchandise Sales $3.90 $3.54 $3.04 $3.48 Golf Lessons $0.48 $0.73 $0.63 $0.75 Other $0.43 $0.37 $0.34 $0.39 Total Revenue $33.06 $32.98 $31.17 $33.76 Source: City of Edina National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 35 Expense Analysis Basic expenses to operate and maintain Braemar 27 totaled just under $2.28 million in 2010, an amount fairly consistent with the previous four years. The City has budgeted over $2.25 million for 2011, although there is some flexibility in the golf maintenance budget as reported. Data collected from Braemar in July 2011 shows significant reductions in 2011 expenses to match declining revenues. A summary of Braemar 27 expenses, including an estimate for the full 2011 based on expenses to date, is shown below, derived from full expense reports provided by the City of Edina. The overall expenses to operate this facility are considerably higher than expense averages for mid -range public golf courses in the nation (average facility = $931,900 in expenses- See Appendix B). Other Expense Findings The City provided a full line -item break -out of expenses incurred by Braemar Golf Course in operation of the facility for the last four full years, plus a budget for 2011 (the data excludes the Braemar clubhouse). The bullet points on the next page provide a brief summary of the NGF Consulting review of these expenses. NGF Consulting has also included basic information on golf industry 'standards,' for all golf courses of all types in all climates. Industry standards can vary depending upon specific courses, but as a "rule of thumb" allocated spending in key areas coincide with the following percentages: National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 36 Braemar 27 Golf Course Total Operating Expenses - 2007 - 2011* 2011 2007 2008 2009 2010 2011* Projected Administration Personnel $494,960 $506,653 $503,348 $412,359 $446,732 $388,442 Contractual 176,205 189,772 228,286 223,698 211,000 234,883 Commodities 29,235 48,287 59,243 52,336 39,500 39,252 Central 96,039 103,130 101,497 107,684 127,848 113,068 Total Admin $796,439 $847,842 $892,374 $796,077 $825,080 $775,645 Maintenance Personnel $563,406 $570,941 $596,932 $586,457 $633,169 $552,442 Contractual 79,323 52,358 53,758 44,448 69,450 46,670 Commodities 182,701 180,875 172,243 170,913 203,500 128,185 Total Maint. $825,430 $804,174 $822,933 $801,818 $906,119 $727,298 Carts Personnel $33,063 $29,568 $24,762 $26,708 $36,842 $25,159 Contractual 8,367 12,127 11,678 9,924 9,500 $10,420 Commodities 46,275 25,853 15,388 155,115 7,500 $116,336 Total Carts $87,705 $67,548 $51,828 $191,747 $53,842 $151,915 Pro Shop Personnel $72,855 $79,341 $79,482 $53,094 $26,709 $50,015 Contractual 1,468 423 226 364 500 382 Commodities 1,341 1,023 746 2,488 1,200 1,866 Total Pro Shop $75,664 $80,787 $80,454 $55,946 $28,409 $52,263 TOTAL BRAEMAR 27 OPERATING EXPENSES $1,785,238 $1,800,351 $1,847,589 $1,845,588 $1,813,450 $1,707,121 Source: City of Edina *2011 Budget Excludes direct cost of sales. Other Expense Findings The City provided a full line -item break -out of expenses incurred by Braemar Golf Course in operation of the facility for the last four full years, plus a budget for 2011 (the data excludes the Braemar clubhouse). The bullet points on the next page provide a brief summary of the NGF Consulting review of these expenses. NGF Consulting has also included basic information on golf industry 'standards,' for all golf courses of all types in all climates. Industry standards can vary depending upon specific courses, but as a "rule of thumb" allocated spending in key areas coincide with the following percentages: National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 36 Industry Indicator Braemar 27 Total 2010 50% Labor 58.0% $1,078,618 20% Products, Supplies & Repair 19.1% $354,516 15% Services (Incl. Equipment) 14.5% $269,817 5% Utilities 1.9% $34,953 5% G & A (Excl. Labor) 5.8% $107,684 5% Other 0.7% $12,793 $1,858,381 Source: Golf Course Superintendents Association of America (GCSAA) and NGF Consulting. Expense totals do not include non - recurring capital expenses or depreciation. NGF Consulting summary of Braemar Golf Course expenses: • Direct costs for labor are higher than standard in proportion to total spending at Braemar Golf Course in 2010, although this analysis does not consider reductions made in 2011. The City can expect that reduction in labor expense will occur in 2011, mostly as a result of personnel reductions (especially the elimination of the Assistant General Manager Position). • Direct costs for labor are considerably higher than appropriate in proportion to total spending at Braemar. This finding, coupled with the previous review of positions, shows that Braemar Golf Course is not "over- staffed," but total compensation may reflect indirect personnel costs and benefits such as pensions and flex wages. • The Braemar 27 has a particularly low utilities expense, largely a result of using wells on the property for irrigation. • Winter staffing appears appropriate for the Braemar Golf Course operation. NGF Consulting typically sees senior salaried staff working at the facility through the winter months, preparing marketing and business planning, golf course maintenance, and accommodating winter clubhouse events. Braemar Golf Course Operations Summary The Braemar Golf Course operates as a fully public municipal golf course, with green fees and other ancillary revenues as its primary sources of income. In total, this and other revenue drivers generated just over $2.07 million in operating revenue in 2010, down slightly from about $2.15 million in 2009 (3.7% decline). The NGF expects that the extremely wet spring and summer, coupled with other economic issues in the market, will reduce this revenue even further, perhaps as low as $1.885 million in 2011 (9% decline). The total revenue earned at Braemar 27 is considerably higher than the national averages for public golf courses of this type, as activity (rounds), total revenue, and total revenue per round is considerably higher than public golf facility expectations. Total expenses to operate the facility total approximately $1.846 million in 2010 before additional expenses such as interest, depreciation and other City overhead. The NGF Consulting review of this expense structure indicates that it is also considerably higher than National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 37 national averages and reflects a reduced and more cost - efficient operation at Braemar Golf Course in 2011. Further, the NGF Consulting team fully expects this basic structure to remain in place for the foreseeable future and does not see any specific areas that could be reduced to enhance overall earnings without jeopardizing the overall integrity of the facility (see further discussion in Financial Projection section). Below- the -line expenses at Braemar Golf Course include annual interest charges and depreciation, totaling some $435,000 combined, plus additional payment of bond principal and other capital expenditures totaling an additional $550,000 (addressed later in this chapter after the other revenue centers are each evaluated — clubhouse, Executive Course, Fred Richards, and Golf Dome). The basic summary of the Braemar 27 golf operation financial position is shown in the table below: Other summary points from NGF regarding the Braemar 27 include: • Despite the high rounds activity, there is opportunity to enhance revenue at Braemar 27 by allowing use of the course at times when use is presently prohibitive — during wet periods (new cart paths). There is some concern within the City, Braemar golf staff, and the golfing public that the newer Clunie 9 -hole course is not a good match for the original 18 -hole course, and the NGF generally shares this observation. However, from a pure business perspective, it is extremely unlikely that the City will earn any return on investment by investing large sums of capital on a project to correct this deficiency as no new revenue or reduction in expenses is likely to occur. Thus, the move is not recommended by NGF. • The irrigation system at Braemar is on "borrowed time," and replacement will be required sometime in the future. However, the system is basically functional at present and there is no urgency for replacement and the system will likely hold up, with proper maintenance, for another five years. • The turf system at Braemar is in good health, but generally fragile due to the winter climate experienced each year. The City should be careful to protect the turf health at Braemar and not succumb to customer "demands" for "pristine" conditions and faster green speeds that are not realistic to achieve and could possibly degrade overall turf health. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 38 Braemar 27 Golf Course Summary of Operations — 2007 — 2011' 2011 2007 2008 2009 2010 2011* Projected Total Operating Revenue $2,109,403 $2,135,181 $2,150,510 $2,074,694 $2,237,800 $1,885,336 Non - Operating Revenue $36,137 $170,000 $271,843 $99,329 $100,000 $100,000 Direct Cost of Sales $186,724 $174,555 $167,093 $170,175 $175,000 $147,800 Operating Margin $1,958,816 $2,130,626 $2,255,260 $2,003,848 $2,162,800 $1,837,536 Total Operating Expense $1,785,238 $1,800,351 $1,847,589 $1,845,588 $1,813,450 $1,707,121 NET INCOME (Loss) $173,578 $330,275 $407,671 $158,260 $349,350 $130,415 Gross Margin % 8.1% 14.3% 16.8% 7.3% 14.9% 6.6% Source: City of Edina *2011 Budget Other summary points from NGF regarding the Braemar 27 include: • Despite the high rounds activity, there is opportunity to enhance revenue at Braemar 27 by allowing use of the course at times when use is presently prohibitive — during wet periods (new cart paths). There is some concern within the City, Braemar golf staff, and the golfing public that the newer Clunie 9 -hole course is not a good match for the original 18 -hole course, and the NGF generally shares this observation. However, from a pure business perspective, it is extremely unlikely that the City will earn any return on investment by investing large sums of capital on a project to correct this deficiency as no new revenue or reduction in expenses is likely to occur. Thus, the move is not recommended by NGF. • The irrigation system at Braemar is on "borrowed time," and replacement will be required sometime in the future. However, the system is basically functional at present and there is no urgency for replacement and the system will likely hold up, with proper maintenance, for another five years. • The turf system at Braemar is in good health, but generally fragile due to the winter climate experienced each year. The City should be careful to protect the turf health at Braemar and not succumb to customer "demands" for "pristine" conditions and faster green speeds that are not realistic to achieve and could possibly degrade overall turf health. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 38 BRAEMAR CLUBHOUSE OPERATION The clubhouse operation at Braemar has many components and is a major contributor to the overall success of the Edina Golf program, in terms of service to golfers as well as a separate revenue center for events, luncheons, business meetings, parties, banquets, and weddings. Together, these elements account for upwards of $400,000+ in revenue, or approximately 11 % to 12% of total Edina Golf System revenue. The Braemar clubhouse is a key aspect of this golf operation in that it may be the area with the greatest potential for revenue increases, reaching out to non - golfers who do not presently use the facility but may be attracted to it for the right level of concession service. Inventory of Facilities The Braemar clubhouse has been pieced together over the years, growing from an original pro shop operation, through several additions, to the large facility that exists today. The clubhouse totals an estimated 27,000 square feet of floor space, divided into several sections — an upper level, lower level, and golf pro shop area. The 'footprint" of the building is approximately 12,000 square feet, plus another 3,000 square feet for the pro shop, plus additional space on both upper and lower outside decks. The space appears to be highly functional and it shows that the City has made extra effort to keep the overall presentation and "curb appeal" of the facility high. The entrance and landscaping have been well done. The eastern end of the building includes a separate entrance and portico used primarily for banquets and events. At the western end of the building is the pro shop entrance area used primarily by golfers. There is also a central entrance leading directly to the grill. Storage space is limited, and the Braemar staff is making do with every space that can be found. There appears to be a need for additional space. A summary of the Braemar clubhouse layout is detailed in the paragraphs that follow. Upper Level Elements of the upper level of the Braemar clubhouse include: • Braemar Room: This is the main ballroom for the facility, capable of holding 200 guests. The area is open, with a lot of windows overlooking the Braemar 27 golf course, and has retractable walls to separate it from the grill. When combined with the grill, the capacity increases to 250. There is also a patio area on the south edge of the Braemar Room, with seven tables capable of seating up to 30± with views of the Braemar 27. The Braemar room has Audio - Visual capabilities, increasing its desirability for business meetings. • Kitchen: The kitchen is basic and mostly represents a "catering" kitchen, with area reserved for preparation and delivery of catered meals that are actually cooked at a separate location. • Braemar Grill: The basic snack bar at Braemar, the grill area serves the day -to -day needs of golfers and others. The space has seating for up to 50 and includes several flat screen TVs set to sports channels. • West Deck: The west deck patio is outdoor space with seven tables and seating for up to 30 ±. • Restrooms: The upper level restrooms are located at the east end of the building, in proximity to the banquet entrance and are not convenient for regular day -to -day National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 39 use, but are convenient for banquet use. These restrooms are not in as good a condition as the lower level restrooms and may need upgrade. Office: There is also a small office for the clubhouse manager in proximity to the banquet entrance. Lower Level The lower level can be accessed through a central stairway leading to a lower level hallway, or through a door to the outside near the cart staging area. Elements of the lower level of the Braemar clubhouse include: • Cart Storage: here is ample space on the lower level to store and charge electric carts. The area is appropriately separated from clubhouse customer areas, yet it is easy to deliver and return / clean carts. • Men's & Women's Locker Room / Restroom: The lower level includes men's and ladies locker / restrooms with some lockers present, although there is not a high volume of use. These are the nicest restrooms in the Braemar clubhouse facility. • Ladies Card Lounge: Has a capacity of 25 with views out to the Braemar 27. • Harry Cooper Lounge: Is a large downstairs meeting room with nice decor of historical golf artifacts in pleasant cabinets (mostly donated by the "Memorial Fund "). With a capacity of 50 ±, it is mostly used by Braemar golfer clubs for meetings or as a men's card lounge. Pro Shop Area The clubhouse has a separate area that houses the golf shop and management offices. The space sits above the cart staging area and there are additional golfer restrooms on the lower level. The area is connected to the upper level of the clubhouse (Braemar Grill) through a slightly elevated passage. Braemar Clubhouse Service Areas The food and beverage service at Braemar is divided into three key areas of service: (1) Braemar Grill; (2) Beverage Cart; and (3) Banquets. All concessions are operated directly by the Braemar Golf Course City - employed staff, with significant use of part-time employees. A summary of each area follows: Braemar Grill + Beverage Cart The Grill includes counter service of a basic menu of items consistent with a good quality public golf course. The grill kitchen is small and limiting, but is large enough and storage is sufficient to sustain the Braemar food and beverage operation. The Braemar Grill offers a limited fixed menu of items generally consistent with golf course service at a relatively low price. A hamburger and fries for $7.95 is the most expensive item on the menu, with sandwiches from $5 to $6 and beer at $3.25 to $4.25 (up to $11 for a pitcher). This service is consistent with successful concession operations at golf courses and appropriate for serving golfers. If Edina seeks to increase grill revenue and expand the service to a broader segment of the non - golfing public, some upgrade to the menu will likely be required. The "typical" food and beverage concession at public golf courses produces approximately $5.61 per round, including banquets (see Appendix B). Analysis of Braemar shows average National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 40 revenue per round from the grill at approximately $5.40 in 2010, of which $2.24 is coming from beer alone. Given that all banquet food is catered (more below) the total average revenue per golf round in the Braemar Grill would appear to be better than expected. In summary, NGF Consulting believes that the food and beverage operation at the Braemar Grill is the appropriate complement to the overall facility, and Braemar golfing customers seem satisfied with the quality of service. There may be opportunity to increase performance of the Braemar Grill by reaching out to non - golfers without adding too much expense to the operation through enhanced marketing and slight changes to the menu. Banquets Banquets are the primary source of revenue for the Braemar operation, providing direct revenue with minimal cost. The facility is hosting banquets,. parties, meetings, and luncheons on a regular basis throughout the year, primarily collecting room rental fees and occasional service at the Braemar Grill. Most of the food and beverage service for large parties is via catering, usually from one of 18 approved vendors on a list published by the City. Other caterers may be used but must be approved by the City. The caterers are divided by price, with seven approved vendors at under $20 per plate, seven at under $30 and four at over $30. The City's primary revenue on large parties is from room rentals, totaling over $70,000 in 2010. The facility reports between 200 and 230 such events in the last year, each sold according to the price schedule shown below: Rental Fees Weekday Events (Monday- Thursday) Half Day $200 Full Day $375 Evening $350 Weekend Events (Friday- Sunday) Edina Residents' $900 Non - residents $1,000 Events requiring both rooms Additional $150 1 Proof of residency required Liquor: Edina's liquor license is for beer and wine only and thus hard liquor is presently prohibited. This could be changed if desired but consumption control is a concern for staff. Banquets are required to use Braemar beer and wine through a hosted bar and a Braemar - staffed bartender (at a fee of $16.00 per hour). Private wine is allowed but there is a $3.00 per bottle corkage fee. Beer purchased through Braemar at $200 per keg (more for premium beers) and soda can be purchased through Braemar at $1 per glass. Clubhouse Performance and Data Analysis Clubhouse revenue performance at Braemar is consistent with the golf operation: revenues have declined from over $430,000 in 2008 to just under $390,000 in 2010 (9.7% reduction). The budget for 2011 projected a strong rebound (increase of 12.8% from 2010) and will likely not be realized. The Braemar clubhouse total revenue (including concessions and room rentals) stands at $169,659 through the end of June, compared to $190,756 through June 2010 (a decline of National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 41 11 %). Considering the recent (2010) history of revenues before and after June, the NGF has projected total Braemar clubhouse revenue of $368,300 for 2011, unless there is a considerable surge in business for the second half of the year. The expenses for the Braemar clubhouse operation have also been reviewed, and NGF has accounted for reductions made to the operation in expenses through June 2011, with assumptions for the full 2011. Evaluating individual profit centers is difficult in the Edina municipal golf operation due to overhead allocation between entities, especially in the Braemar facility. For example the NGF observed a high expense for light, power heat, water, sewer and telephone (total over $103,000 — all charged in this department) in the clubhouse expenses, even though these items are part of the operation in other departments, thus making the clubhouse / grill operation look less profitable. When compared to industry averages (Appendix B) we see that Braemar is operating with clubhouse revenues that were above average in 2009 (U.S. average = $182,200 in total F &B in 2009). This would equate to approximately $273,300 for 27 -hole courses. The data further shows that the industry standard for total F &B cost of sales was 41.8% in 2009. The table that follows shows some detailed break -out of food and beverage sales as provided by the City of Edina. The second table shows a summary of cost of goods sold for use in comparison to national data. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 42 REVENUE Rental of Property Wine Sales Beer Sales Concessions Sales Total Gross Revenue Direct Cost of Sales Cost of Goods Sold Cost of Goods - Wine Cost of Goods - Beer Total Cost of Sales Gross Margin EXPENDITURES Personal Services - Grill Personal Services - Clubhouse Contractual Services - Grill Contractual Services - CH Commodities - Grill Commodities - Clubhouse Total Clubhouse Expenditures NET INCOME (LOSS) Source: City of Edina *2011 Budget Braemar Golf Course $118,899 $113,251 $2,904 Clubhouse Operation - 2007 -2011* $33,610 $37,537 $41,199 $161,851 $160,361 $156,014 20,779 2011 2007 2008 2009 2010 2011" Projected $65,258 $69,242 $64,012 $57,617 $70,000 $54,506 5,308 7,480 7,589 7,056 7,000 6,675 119,912 138,424 139,043 137,485 142,000 130,061 204,681 215,727 204,182 187,236 220,000 177,125 $395.159 $430.873 $414.826 $389.394 $439.000 $368.367 $125,337 $118,899 $113,251 $2,904 $3,925 $1,564 $33,610 $37,537 $41,199 $161,851 $160,361 $156,014 $233,308 $270,512 $258,812 $150,094 $153,550 $156,201 58,263 64,207 65,495 15,911 9,265 9,621 115,312 120,368 121,621 20,779 26,238 25,678 18,673 15,348 10,767 $379.032 $388.976 $389.383 $100,880 $119,000 $99,941 $0 $2,500 $2,133 $43,099 $45,000 $37,758 $143,979 $166,500 $139,831 $245.415 $272.500 $228.5351 $167,310 63,669 11,076 126,207 30,238 12,594 $411,094 145,724) ($118,464) ($130,571) ($1 $170,510 54,876 13,900 107,300 26,400 13,500 113 $157,606 $59,976 $11,630 $132,517 $22,679 $9,446 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 43 Braemar Clubhouse Operation Cost of Sales Analysis - 2007 -2011* Average (2007 - Direct Cost of Sales 2007 2008 2009 2010 2011" 2010 Cost of Goods Sold $125,337 $118,899 $113,251 $100,880 $119,000 $114,592 Cost of Goods - Wine $2,904 $3,925 $1,564 $0 $2,500 $2,098 Cost of Goods - Beer $33,610 $37,537 $41,199 $43,099 $45,000 $38,861 Total Cost of Sales $161,851 $160,361 $156,014 $143,979 $166,500 $155,551 Total Cost of Sales % 41.0% 37.2% 37.6% 37.0% 37.9% 38.2% Sub COS % Cost of Goods - Food 61.2% 55.1% 55.5% 53.9% 54.1% 56.4% Cost of Goods - Wine 54.7% 52.5% 20.6% 0.0% 35.7% 31.9% Cost of Goods - Beer 28.0% 27.1% 29.6% 31.3% 31.7% 29.0% Source: City of Edina *2011 Budget National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 43 Clubhouse Operations Summary NGF offers the following summary of the above -noted performance: • Total clubhouse revenues are in line with, or clearly exceed, NGF expectations for public golf operations. This reflects the high use of the facility by golfers, with some additional gain from room rentals. • The revenues for clubhouse operations at Braemar have been declining in recent years, consistent with the golf operations. • The total cost of sales is in line for industry averages for clubhouse operations, falling below 40% for most of the years shown. • Total operating expenses are much higher than typical for a public golf operation, especially in personnel costs that are now 56% of total clubhouse expenses. • Winter operations should be carefully evaluated. Since the clubhouse remains open for much of the winter season hosting banquets and parties, some food service and pro shop operation is appropriate as well, utilizing full -time staff that is paid through this period. • The challenge for the City of Edina will be to improve operational performance in this area, and establish a more appropriate overhead allocation system to gain a more accurate picture of the profitability of the clubhouse and grill operation. BRAEMAR EXECUTIVE COURSE AND DRIVING RANGE The Braemar Executive Golf Course includes a 9 -hole "executive- length" golf facility, along with a large driving range and separate clubhouse facility, all located on property shared with the Braemar 27 operation. Important factors relating to this facility include: • The golf course is a "beginner- friendly" golf design with seven par -3 holes and two par -4 holes (par -29). Total length is 1,900 yards from the back tee. • The golf course is comparable to Fred Richards, and serves a similar market niche. • The site includes a large driving range of well over 50 mat stations, although the range can accommodate more when grass is used. Hitting surfaces include both grass and mats. The shape of the range includes an inward arch, thereby providing the longest distance in the center of the hitting area and shortening the range on its ends. • The driving range at Braemar is very active with both daily fee use and organized lessons and programs. The north end of the range is a designated lesson area with a small covered lesson bay. • The facility includes a separate 2,300 square foot clubhouse with open counter /snack bar area and restrooms. Braemar Executive / Range Operations The basic operational structure of the Executive Course and driving range at Braemar Golf is basic and simple, but fully intertwined with the Braemar 27 operation. The facility is managed by a single part-time position that manages the Executive Course and shares some winter National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 44 responsibilities with the Fred Richards manager at the Golf Dome in the winter. There is other part -time counter help that works in shifts throughout the summer. The Braemar head superintendent and all Braemar maintenance staff are also responsible for the Braemar Executive Course and driving range. The operation appears to be very efficient, and no service or maintenance issues were reported as a result of the small staff. Braemar staff report a very local and generally younger clientele of golfers who frequent the facility. While Executive Course users tend to be less serious about golf and thus are less concerned with playing conditions, range users are often serious golfers who use the facility to practice and improve their game. The City reported four separate leagues that use the Braemar Executive Course or Fred Richards, with league participation as high as 60 players for some events at Fred Richards. There is no direct concession operation in the Braemar Executive Course clubhouse with only vending items for sale. The course stores 20 gas powered carts and eight single -rider carts to comply with ADA regulations in storage below the Executive Course clubhouse. The Braemar Executive Course does a lot of pull cart rentals. Physical Evaluation Braemar Executive and the driving range appear to be well maintained, with basic issues as addressed in the Braemar 27 section. Issues specific to the Executive Course and driving range include: • The range area is in a tight configuration, surrounded on all sides by golf holes - #1 on the Regulation course to the west, and #1 and #2 on the Executive Course to the east and north. • The longest hitting distance on the range is 300 yards from the center, falling to around 260 yards on the ends. • There is a small lesson tee on the west side of the range near the #1 hole on the Braemar 27. The north end of the range is reserved for lessons and has a lesson bay. The area can be somewhat dangerous given the shorter length of the range from the side tee positions. • The range has a fence down the west side protecting the #1 tee on the regulation course, but no protection other than trees down the east side protecting #1 on the Executive Course. • The Executive golf course has several interesting features that play into its maintenance responsibilities. These include: • Nine sand bunkers that require detail maintenance to be appropriately playable and visually appealing. • Water in play on four of the nine holes. • Two bridges: (1) between #3 and #4 crossing Braemar Boulevard — steel construction in good condition; and (2) a wooden bridge near the 9`h green that has been problematic and is not presently used by power carts. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 45 Upgrade Recommendations The overall condition of the Braemar Executive Course and driving range is acceptable, given its market, but this site would clearly benefit from reconfiguration to lengthen the range and allow for expansion of the lesson program. Thus, the primary upgrade recommendation is noted in the Braemar 27 section above — a driving range renovation. Other consideration for the Executive Course and driving range, presented in order of NGF recommended priority: 1. Add Fencing on East Side of Range — Add 130 feet of fence to protect hole #2 on the Executive Course NGF Estimated cost = $10 per linear foot or $1,300. 2. # 9 Bridge Repair — NGF Estimated cost = $3,000. Facility Performance and Data Analysis — Braemar Executive Golf Course The Braemar Executive Course derives revenue from golf green fees and range ball sales. As the facility is run as part of the Braemar 27 operation, the overall financial picture of this facility as a stand -alone operation will look much stronger than it actually is due to the lack of any direct maintenance expense within the budgets. A summary of activity, revenue, and expenses is shown below. Activity Levels The Executive Course hosted just under 18,600 rounds in 2010, down 18.7% from 2009 and 17.5% from 2007. The facility appears to have had relatively steady rounds between 2007 and 2009, with a sharp and sudden drop in 2010. This trend is expected to continue with a further drop projected for 2011. Data as of the end of June 2011 show rounds at the Executive Course to be 7,677, or about 26.5% lower than the 9,711 played through the end of June 2010, due in large part to weather issues as noted previously. It is possible that some of the decline can be made up with favorable weather in the coming months. Some of the 2010 and 2011 decline can also be a reflection of other factors, including the possibility that demand for executive golf is from golfers who tend to be less committed to golf and may be quicker to reduce their golf activity when time availability and /or discretionary income is reduced. The City of Edina may have to expect that rounds played totals achieved in 2010 may become the new reality for the facility in the coming years. A summary of recent rounds history: Braemar Executive Golf Course Historical Total Rounds — 2007 -2010 2007 2008 2009 2010 Total Rounds — Braemar Executive GC 22,510 22,038 22,848 18,578 Change % -2.1% 3.7% -18.7% Capacity Issues As we will present later in the 'Competitive Analysis' section, historical rounds played volumes at Braemar Executive and Fred Richards are generally higher than other 9 -hole executive courses in this area. NGF Consulting has estimated a maximum yearly capacity of about ±35,000 rounds in a good weather year. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 46 Revenue Analysis Revenue declined 10% in 2010, based mostly on declines in the Executive Course. While range revenue declined from 2009 to 2010, range revenue is increased from the 2007 and 2008 figures, a finding that contradicts many of the other revenue segments in Edina Golf. Total revenue from the Executive Course declined by 18% in 2010, an amount that is consistent with the decline in rounds. The Braemar Executive Course / driving range revenues stand at $203,022 through the end of June, compared to $299,055 through June 2010 (decline of 32 %). Considering the recent (2010) history of revenues before and after June, NGF has estimated a projected total Braemar Executive Course and driving range revenue of $396,000 for 2011, unless there is a considerable surge in business for the second half of the year. The NGF does not track averages separately for 9 -hole and /or executive /par -3 courses, although the average revenue per round for driving ranges has historically been in the $1.50 to $2.00 range per round of golf. Assuming the 80,000 rounds played at Braemar Golf Course in 2010 (both regulation and executive combined), the expected range revenue would be between $120,000 and $160,000, amounts much lower than the actual performance of the Braemar driving range. Expense Analysis Basic expenses to operate the Braemar driving range totaled just over $126,000 in 2010, an amount fairly consistent with the previous four years. The amounts are not fully reflective of the total cost of the operation due to the maintenance expense being included in the full Braemar 27 analysis, presented earlier. A summary of Braemar Range expenses is shown below, with an estimate of the full year 2011 expected charges based on actual performance through the end of June 2011. The NGF does not track average expenses separately for 9 -hole and /or executive /par -3 courses to make an accurate comparison. Braemar Executive Golf Course Total Gross Revenue - 2007 -2011* 2011 Revenue 2007 2008 2009 2010 2011* Projected Green Fees Exec. Course $226,177 $223,656 $231,191 $189,873 $235,000 $158,756 Driving Range $295,717 $291,614 $316,135 $301,726 $315,000 $236,809 Total Revenue $521,894 $515,270 $547,326 $491,599 $550,000 $395,565 Source: City of Edina *2011 Budget Personal Services $120,793 Expense Analysis Basic expenses to operate the Braemar driving range totaled just over $126,000 in 2010, an amount fairly consistent with the previous four years. The amounts are not fully reflective of the total cost of the operation due to the maintenance expense being included in the full Braemar 27 analysis, presented earlier. A summary of Braemar Range expenses is shown below, with an estimate of the full year 2011 expected charges based on actual performance through the end of June 2011. The NGF does not track average expenses separately for 9 -hole and /or executive /par -3 courses to make an accurate comparison. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 47 Braemar Executive Golf Course Total Operating Expenses - 2007 - 2011* 2011 2007 2008 2009 2010 2011* Projected Range Expenses Personal Services $120,793 $101,960 $107,443 $104,668 $119,041 $98,597 Contractual Services 216 492 1,006 1,220 1,200 1,281 Commodities 20,064 31,890 14,818 20,199 22,500 15,149 Total Range Expense $141,073 $134,342 $123,267 $126,087 $142,741 $115,027 Source: City of Edina *2011 budget National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 47 Summary of Braemar Executive / Range Golf Course The Braemar Executive Course and driving range are clearly adding positively to the bottom line of the Braemar Golf operation. Some summary points from NGF include: • Given the success of this operation, it would make sense for the City to direct new resources to this area to improve facilities and make both the range and course more appealing to golf customers. • The Braemar driving range is the premier driving range in the area, offering high quality turf (or mats), visible targets, and good range balls. These are the key drivers for a driving range business and should not be ignored. While the space is somewhat limited as noted above, there is still ample space for most golfers to feel comfortable within this facility. • Braemar Executive presently has the City's Fred Richards Golf Course as its primary competition, thus leaving an opening for a change to the configuration of the Braemar Executive Course. • Improvements to the range at Braemar will help improve regular range revenue and also enhance revenue from the lessons program. • Expenses are very low in the Executive Course and range at Braemar, reflective of the maintenance expenses not being charged to the revenue center as well as the efficiency in the operation. The City appears to be getting very good value for the expenses committed to the range and Executive Course operation. FRED RICHARDS GOLF COURSE The Fred Richards Golf Course includes a 9 -hole "executive- length" golf facility located on approximately 40 acres of property in the center of Edina. Important factors relating to this facility include: • Fred Richards was originally developed as the Normandale Golf Course and was acquired by the City in the 1990s ($1.0 million) as part of a larger expansion of the City golf program that included a new nine holes and clubhouse expansion at Braemar Golf Course. • The course is a "beginner- friendly" golf design with seven par -3 hoes and two par -4 holes (par -29). There is also a large practice green. The setup is such that golfers can decide between two different flagstick positions on each hole, allowing either a choice of challenge or a way to play two separate 9 -hole rounds. • Total length is 1,767 yards from the back tee, 1,575 from a middle tee, and 1,323 from a forward tee. The USGA slope and rating show the ease of the golf course — slope is 89 and rating is 29.1 for men; 88 and 28.2 for ladies. The average slope rating in the U.S. is 113, showing Fred Richards to be 21 % "easier' than a standard golf course. • The facility does not have a driving range. • The facility includes a 1,800 square foot clubhouse with open counter /snack bar area and restrooms. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 48 Fred Richards Operations The basic operational structure of Fred Richards is simple and efficient for the City. The facility is managed by a single part-time position that manages Fred Richards in the summer and the Golf Dome in the winter. There are three other part-time counter helpers who work in shifts throughout the summer. The Braemar head superintendent is also responsible for Fred Richards, but the facility does have an on -site supervisor for maintenance, plus three other part- time maintenance staff. The operation appears to be very efficient and no service or maintenance issues were reported as a result of the small staff. The Fred Richards staff reports a very local and generally lower- income clientele of golfers who frequent the facility. Many players at Fred Richards tend to be less serious about golf and thus are less concerned with playing conditions and keeping score. The market appears to be very price sensitive, and the Fred Richards fee schedule offers rates as low as $9.00 for super- senior patrons any time of the week. The staff estimates approximately 1/3 of play is from seniors, 1/3 from leagues and 1/3 from juniors. The City reported four separate leagues that use the Braemar Executive Course or Fred Richards, with league participation as high as 60 players for some events at Fred Richards. There is a very small concession operation at Fred Richards, with low totals for both merchandise and snacks. The course has eight gas powered carts and 14 pull carts. Fred Richards tends to get carts and other equipment as "hand -me- downs" from the Braemar operation, which is appropriate given the structure of the Edina golf system. Physical Evaluation Fred Richards appears to be well maintained. NGF expects that Fred Richards will have maintenance requirements that would be considered at a level below the other courses in the City of Edina golf system. The key findings on the physical condition and upkeep of the Fred Richards facility include: • The Fred Richards golf course sits on 40 acres, divided into two distinct sections: a western portion that has a harder Peat soil that retains water and does not drain as well; and an eastern portion that has a sandy soil that does drain well. • The golf course has several interesting features that play into its maintenance responsibilities. These include: ■ 34 sand bunkers that require detail maintenance to be appropriately playable and visually appealing ■ Water in play on six of the nine holes. The property includes several inter- connected water features that require maintenance, especially around the edges. ■ One bridge from the 8th tee to the 9th green needs both bridge maintenance and foliage maintenance to prevent blockage of the bridge. • The irrigation source for the property is two City wells on site, pumped through a modern Toro Automatic irrigation system. The irrigation system does not appear to be in need of urgent upgrade in. 2011. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 49 Upgrade Recommendations The overall condition of the Fred Richards Golf Course property is acceptable, given its market and low revenue. In looking to the future, there are some items that should be considered for upgrade at Fred Richards, presented in order of NGF recommended priority: 1. Trim Foliage around 8th — 9th Bridge — The foliage on the bridge is blocking the path and should be kept trim at all times. No additional cost, and within operating budget. 2. Parking Lot — parking lot upgrade to include new stripes. NGF Estimated cost = $3,000. Facility Performance and Data Analysis — Fred Richards Golf Course Fred Richards derives revenue from golf green fees and cart fees, plus additional revenues from the operation of the small pro shop and concession operation. A summary of activity, revenue, and expenses is shown below. Activity Levels The Fred Richards Golf Course hosted just under 22,000 rounds in 2010, down 15.4% from 2009 and 17% from 2007. The facility appears to have had relatively steady rounds between 2007 and 2009, with a sharp and sudden drop in 2010. This trend is expected to continue with a further drop projected for 2011. Data as of the end of June 2011 show rounds at Fred Richards to be 8,090, or about 28% lower than the 11,155 played through the end of June 2010, due in large part to weather issues as noted previously. It is possible that some of the decline can be made up with favorable weather in the coming months. Some of the 2010 and 2011 decline can also be a reflection of other factors, including the possibility that demand for Fred Richards is from 'overflow' golfers who are crowded out elsewhere, and from the NGF finding that executive course golfers tend to be less committed to golf and may be quicker to reduce their golf activity when time availability and /or discretionary income is reduced. The City of Edina may have to expect that rounds played totals achieved in 2010 may become the new reality for the facility in the coming years. A summary of recent rounds history: Fred Richards Golf Course Historical Total Rounds — 2007 -2010 2007 2008 2009 2010 Total Rounds — Fred Richards GC 26,499 25,875 25,965 21,965 Change % -2.4% 0.3% -15.4% Capacity Issues As we will present later in the 'Competitive Analysis' section, historical rounds played volumes at Fred Richards are generally higher than other 9 -hole executive courses in this area. Based on Fred Richards' market positioning, location, shorter golf course, and lower fee structure, NGF Consulting has estimated a maximum yearly capacity of about ±35,000 rounds in a good weather year. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 50 Revenue Analysis Although rounds declined sharply in 2010, total Fred Richards revenue did not fall as much, declining 7% (compared to 15% decline in rounds). The budget for 2011 projected a strong rebound (increase of 9.6% from 2010) and will likely not be realized. Fred Richards total revenue stands at $101,498 through the end of June, compared to 138,590 through June 2010 (decline of 27 %). Considering that approximately 42% of Fred Richards revenue comes in the second half of the year, the NGF is projecting total Fred Richards revenue to be between $200,000 and $210,000 for the full 2011. The NGF does not track averages separately for 9- hole and /or executive /par -3 courses (the average for mid -fee public golf courses was $993,800 in 2009 - See Appendix B). Average Revenue Analysis The total average revenue earned per round was $10.94 for 2010, with increases shown almost each year from 2007 to 2010. A closer analysis of average golf fee revenue shows that average revenue by category has mirrored the overall revenue with no one line item standing out as being unique. The NGF does not track averages separately for 9 -hole and /or executive /par -3 courses. However, the average for mid -range public golf courses in the U.S. was $21.54 for total revenue per round in golf revenue (green, cart, membership), plus an additional $9.04 in ancillary spending (food, beverage + merchandise - See Appendix B). Fred Richards Golf Course Average Revenue per Round - 2007 -2010 Fred Richards Golf Course Total Gross Revenue - 2007 -2011* Revenue 2007 2008 2009 2010 Total Rounds 26,499 25,875 2011 Revenue 2007 2008 2009 2010 2011* Projected Vending / Misc $185 $102 $75 $95 $0 $79 Concession Sales 18,163 24,387 23,158 23,218 25,000 21,958 Rent Golf Cars 9,177 11,456 13,150 10,002 12,500 8,342 Car, Cart & Club Rental 3,864 4,517 4,261 3,419 5,000 2,851 Green Fees 226,624 220,325 217,749 203,595 221,000 169,798 Total Revenue $258,013 $260,787 $258,393 $240,329 $263,500 $203,029 Source: City of Edina *2011 budget Average Revenue Analysis The total average revenue earned per round was $10.94 for 2010, with increases shown almost each year from 2007 to 2010. A closer analysis of average golf fee revenue shows that average revenue by category has mirrored the overall revenue with no one line item standing out as being unique. The NGF does not track averages separately for 9 -hole and /or executive /par -3 courses. However, the average for mid -range public golf courses in the U.S. was $21.54 for total revenue per round in golf revenue (green, cart, membership), plus an additional $9.04 in ancillary spending (food, beverage + merchandise - See Appendix B). Fred Richards Golf Course Average Revenue per Round - 2007 -2010 Revenue 2007 2008 2009 2010 Total Rounds 26,499 25,875 25,965 21,965 Avg. Per Round Concession Sales $0.69 $0.94 $0.89 $1.06 Rent Golf Cars $0.35 $0.44 $0.51 $0.46 Car, Cart & Club Rental $0.15 $0.17 $0.16 $0.16 Green Fees $8.55 $8.51 $8.39 $9.27 Total Revenue $9.74 $10.08 $9.95 $10.94 Source: City of Edina National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 51 Expense Analysis Basic expenses to operate and maintain Fred Richards totaled just over $180,000 in 2010, an amount fairly consistent with the previous four years. The City has budgeted over $221,000 in expenses for 2011 (22% increase), most of which is in an increase in personnel costs. Given the actual experience of expenses through the end of June 2011, it is expected that these budgeted expenses will not be realized, with a more realistic expectation for expenses at Fred Richards for 2011 should be closer to $156,000 ( + / -) for 2011. A summary of Fred Richards expenses is shown below. The NGF does not track average expenses separately for 9 -hole and /or executive /par -3 courses to make an accurate comparison. Summary of Fred Richards Operations In summary, it appears that the Fred Richards operation has remained profitable through 2010, due in large part to a very low expense structure. With revenues expected to be under $210,000 for 2011, a continued commitment to reduced expenses at Fred Richards is key to success. Given the realities of the economics of the facility, coupled with the type of golf customer who utilizes the course, it is not expected that the City will commit significant funds to make large - scale capital investment in this property, as there is not likely to be any significant financial return on investment. Rather, the City should commit to basic maintenance and capital upkeep to make sure the product is appropriate for the market, with "no frills." A summary of net income performance of Fred Richards is as follows: National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 52 Fred Richards Golf Course Total Operating Expenses - 2007 - 2011* 2011 2007 2008 2009 2010 2011* Projected Direct Cost of Sales $8,337 $12,289 $11,775 $12,291 $12,300 $10,383 Administration Expenses Personal Services $43,343 $43,631 $46,194 $46,488 $48,378 $43,792 Contractual Services $14,722 $14,727 $13,430 $13,139 $15,100 $13,796 Commodities $1,341 $2,421 $2,833 $1,575 $3,100 $1,181 Total Admin. Expense $59,406 $60,779 $62,457 $61,202 $66,578 $58,769 Maintenance Expenses Personal Services $92,141 $94,167 $92,340 $83,652 $109,523 $78,800 Contractual Services $1,450 $6,262 $5,366 $2,670 $7,000 $2,804 Commodities $19,984 $20,846 $15,301 $20,647 $25,700 $15,485 Total Maintenance Exp. $113,575 $121,275 $113,007 $106,969 $142,223 $97,089 Total Operating Expenses $181,318 $194,343 $187,239 $180,462 $221,101 $155,858 Source: City of Edina *2011 budget Summary of Fred Richards Operations In summary, it appears that the Fred Richards operation has remained profitable through 2010, due in large part to a very low expense structure. With revenues expected to be under $210,000 for 2011, a continued commitment to reduced expenses at Fred Richards is key to success. Given the realities of the economics of the facility, coupled with the type of golf customer who utilizes the course, it is not expected that the City will commit significant funds to make large - scale capital investment in this property, as there is not likely to be any significant financial return on investment. Rather, the City should commit to basic maintenance and capital upkeep to make sure the product is appropriate for the market, with "no frills." A summary of net income performance of Fred Richards is as follows: National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 52 Other Key Findings — Fred Richards Golf Course NGF offers the following basic summary of Fred Richards expenses: • The Fred Richards Golf Course can have appeal to a variety of golfer skill levels, but in general, demand will always be at risk due to the nature of the executive course golfer that tends to be less committed and quicker to reduce spending on golf in uncertain times ( "soft" demand). • While Fred Richards may not be a consistently profitable facility for the City of Edina, its place as a "feeder' facility to develop new players and help promote interest in the game of golf is an invaluable service to the City as a whole and will benefit other golf facilities in the Edina Golf system • Another consequence of the "soft" demand is that investment in upgrading this facility would not likely be recovered. Given the reality of this operation, the NGF recommendations for Fred Richards are to maintain the property with a relatively small budget and make repairs as needed, but resist large -scale upgrades in the golf course or clubhouse. GOLF DOME The Golf Dome is Braemar's indoor golf range used primarily in the off - season to help keep golfers in the winter. The facility is a nice complement to the City's golf program: it helps earn golf revenues in the off - season, while keeping golfers interested and excited about golf at a time when snow is covering the area. The City maintains a moderately active lesson program at the Dome during the winter season, especially with the Kids Kamps over holiday breaks. The facility is also used to host youth soccer and lacrosse activities during the winter. The Dome is well located in immediate proximity to the Braemar Golf Course, and this allows for ease of operation and maintenance. The Braemar Golf Dome is the largest of its kind in the Minneapolis area, allowing for full - length hitting and a large number of tee stations (46) on two levels. The Braemar Golf Dome also includes a small short game area and artificial turf putting area. There is also a small lobby space with a few vending machines. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 53 Fred Richards Golf Course Summary of Operations — 2007 — 2011* 2011 2007 2008 2009 2010 2011* Projected Total Revenue $258,013 $260,787 $258,393 $240,329 $263,500 $203,029 Total Operating Expense $181,318 $194,343 $187,239 $180,462 $221,101 $155,858 NET INCOME (Loss) $76,695 $66,444 $71,154 $59,867 $42,399 $47,171 Gross Margin % 29.7% 25.5% 27.5% 24.9% 16.1% 23.2% Source: City of Edina *2011 budget Other Key Findings — Fred Richards Golf Course NGF offers the following basic summary of Fred Richards expenses: • The Fred Richards Golf Course can have appeal to a variety of golfer skill levels, but in general, demand will always be at risk due to the nature of the executive course golfer that tends to be less committed and quicker to reduce spending on golf in uncertain times ( "soft" demand). • While Fred Richards may not be a consistently profitable facility for the City of Edina, its place as a "feeder' facility to develop new players and help promote interest in the game of golf is an invaluable service to the City as a whole and will benefit other golf facilities in the Edina Golf system • Another consequence of the "soft" demand is that investment in upgrading this facility would not likely be recovered. Given the reality of this operation, the NGF recommendations for Fred Richards are to maintain the property with a relatively small budget and make repairs as needed, but resist large -scale upgrades in the golf course or clubhouse. GOLF DOME The Golf Dome is Braemar's indoor golf range used primarily in the off - season to help keep golfers in the winter. The facility is a nice complement to the City's golf program: it helps earn golf revenues in the off - season, while keeping golfers interested and excited about golf at a time when snow is covering the area. The City maintains a moderately active lesson program at the Dome during the winter season, especially with the Kids Kamps over holiday breaks. The facility is also used to host youth soccer and lacrosse activities during the winter. The Dome is well located in immediate proximity to the Braemar Golf Course, and this allows for ease of operation and maintenance. The Braemar Golf Dome is the largest of its kind in the Minneapolis area, allowing for full - length hitting and a large number of tee stations (46) on two levels. The Braemar Golf Dome also includes a small short game area and artificial turf putting area. There is also a small lobby space with a few vending machines. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 53 Golf Dome Operations The basic operational structure of the Golf Dome is simple and efficient for the City. The facility is managed by part-time positions that shares responsibilities with Fred Richards Golf Course and Braemar Executive Course. Other part-time staff is included as needed. The Dome is open primarily in the winter, although some years the facility will be open in late fall and /or early spring, depending on the weather. The Dome has not been kept open at all during the summer. When open, the Golf Dome is open 8 a.m. to 8 p.m. daily. The City has a program to sell buckets of balls for $7.50, or to allow golfers to pay for time used at a rate of $10.50 per half hour. Clientele The Braemar Golf staff reports a very local clientele of golfers who are also customers of the regulation and executive golf courses in the summer. In addition, the facility also attracts other users who may be less serious about golf and thus are less concerned with conditions and equipment. The market appears to be somewhat price sensitive and the Golf Dome should not be too aggressive with price increases. Physical Evaluation The Braemar Golf Dome was opened in 1983 and measures 270 feet by 230 feet, or approximately 62,000 square feet of covered space. The dome itself is primarily a vinyl composite that is held up by the air pressure inside the dome. As the dome material is somewhat fragile and 28 years old, it is preferred to keep the dome inflated even when closed to prevent wear on the fabric. There have been instances where the dome has fallen down due to heavy snow weight on the dome in winter causing closures and lost revenue. The lobby building adjacent to the Golf Dome is showing age and wear, but appears functional given the limited needs of the facility. Overall, the Golf Dome is a relatively easy facility to manage and maintain. Day -to -day maintenance is relatively light and the facility can be operated by a small staff. Among the key issues and expense in operating the dome are maintaining the integrity of the fabric and repairing rips as they occur. The largest expense in operating the Dome is the electric power needed to run the HVAC system to keep the dome aloft and the area warm in winter. Upgrade Recommendations The NGF review of the Golf Dome facility in 2011 showed no specific areas of repair or upgrade that are urgently needed to maintain its revenue and /or significantly reduce expense, although the facility is in decline overall. This facility appears to be highly functional, and as long as proper ongoing maintenance is kept up, especially relating to the fixing of leaks in the fabric as they occur and marinating structural integrity of the lobby building. The HVAC system appears to have enough useful life left to prevent the City from having any large -scale capital needs in that area for the next five years. The overall expected useful life of the Dome is approximately 25 to 30 years, so the City will have to consider fabric replacement at some point in the future, although this is unlikely in the next five years. While the lobby attachment is deteriorating, large investment in upgrading this portion of the facility is not likely to produce new revenue or lower expenses, thus only moderate upgrade to this area is recommended. Overall investment in the Golf Dome recommended by NGF includes structurally securing the building with anchoring beam and patching the existing roof. NGF Estimated cost = $120,000 to $150,000. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 54 Facility Performance and Data Analysis - Golf Dome The Golf Dome derives revenue from range ball sales, rentals of equipment, and other minor merchandise and vending sales. The following paragraphs summarize each of these revenue sources plus the expenses required to maintain the facilities and service customers. Activity and Capacity Issues With the City keeping the Dome open for five months, there are approximately 150 total usable days for the Golf Dome each year. With 12 hours per day and 46 stations, the maximum number of half -hour slots available for sale is 165,000, for a maximum income of $1.73 million if all stations are sold for $10.50 every half -hour of operation (not realistic). Traditionally, driving range operations assume a maximum of 20% utilization leading to about 33,000 half -hour slots totaling $346,500 in realistic maximum income. Revenue Analysis Golf Dome revenue has fallen steadily after a strong 2008 when range sales were close to the NGF estimated realistic capacity. The budget for 2011 calls for a strong rebound (increase of 23% from 2010) and has a good chance of being achieved as Golf Dome revenues are up 38% in 2011 compared to the same period in 2010. Data from the City shows total Golf Dome sales at $292,632 through the end of June 2011 (compared to $211,652 in 2010). Considering that approximately 14% of Golf Dome revenue comes in the second half of the year (November December sales), the NGF is projecting a total Golf Dome revenue of between $325,000 and $340,000 for the full 2011. Expense Analysis Basic expenses to operate and maintain the Golf Dome totaled just over $224,738 in 2010, down 19% from a high of $277,266 in 2008. The largest individual line items in the Golf Dome operation are personnel (most of which is from temporary employees), heat expense, and advertising. The City has not had to replace balls very often, with over $11,000 in balls replacement in 2010 after several years of minimal expense. There is $5,000 in the 2011 budget for ball replacement and NGF recommends a consistent ball replacement program to try to steady the expense from year to year. Overall, the NGF review does not find anything to be 'but of line" in expenses for basic driving range operations, recognizing that the Dome operation will always be slightly different due to the indoor nature of the operation and need for heat. A summary of Golf Dome expenses is shown below, including an estimate of 2011 year -end expenses based on actual 2011 experience through the end of June. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 55 Braemar Golf Dome Total Gross Revenue - 2007 -2011* 2011 Revenue 2007 2008 2009 2010 2011* Projected Misc. Retail $3,290 $3,593 $2,130 $3,256 $3,000 $3,677 Vending / Concessions 4,014 3,711 3,436 2,796 4,000 4,240 Range Balls (Receipts) 285,066 315,013 264,671 228,126 275,000 303,408 Rentals 14,518 16,361 17,716 13,109 21,000 17,435 Other 3,045 205 261 99 0 0 Total Revenue $309,933 $338,473 $287,692 $247,188 $303,000 $328,760 Source: City of Edina *2011 budget Expense Analysis Basic expenses to operate and maintain the Golf Dome totaled just over $224,738 in 2010, down 19% from a high of $277,266 in 2008. The largest individual line items in the Golf Dome operation are personnel (most of which is from temporary employees), heat expense, and advertising. The City has not had to replace balls very often, with over $11,000 in balls replacement in 2010 after several years of minimal expense. There is $5,000 in the 2011 budget for ball replacement and NGF recommends a consistent ball replacement program to try to steady the expense from year to year. Overall, the NGF review does not find anything to be 'but of line" in expenses for basic driving range operations, recognizing that the Dome operation will always be slightly different due to the indoor nature of the operation and need for heat. A summary of Golf Dome expenses is shown below, including an estimate of 2011 year -end expenses based on actual 2011 experience through the end of June. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 55 Summary of Golf Dome Operations In summary, it appears that the Golf Dome operation is a profitable separate venture for the City of Edina. As long as the basic physical integrity of the dome is upheld, the operation should be able to continue along this basic performance with acceptable profits before depreciation. The facility has a low expense profile and seems to fluctuate in a somewhat "countercyclical" fashion compared to the other golf operations. This is likely due to weather patterns showing that when the fall and /or spring has poor weather, the Dome will increase activity from golfers who are not able to use the golf courses or outdoor driving range. A summary of net income performance of the Dome is as follows: Braemar Golf Dome Total Operating Expenses - 2007 -2011* Summary of Operations - 2007 -2011* 2011 2007 2008 2009 2010 2011* Projected Cost of Goods Sold $2,858 $3,115 $3,366 $2,376 $2,500 $3,160 Total Personal Services $106,460 $104,157 $102,361 $91,686 $68,258 $86,368 Total Contractual Services $138,916 $153,727 $135,487 $125,082 $135,600 $131,336 Total Commodities $10,638 $5,923 $6,294 $13,678 $8,300 $10,259 Total Central Services $10,368 $10,344 $9,299 $9,274 $10,080 $9,738 Total Operating Expenses $269,240 $277,266 $256,807 $242,096 $224,738 $240,861 Source: City of Edina *2011 budget $13 $0 $0 $0 Amortization Summary of Golf Dome Operations In summary, it appears that the Golf Dome operation is a profitable separate venture for the City of Edina. As long as the basic physical integrity of the dome is upheld, the operation should be able to continue along this basic performance with acceptable profits before depreciation. The facility has a low expense profile and seems to fluctuate in a somewhat "countercyclical" fashion compared to the other golf operations. This is likely due to weather patterns showing that when the fall and /or spring has poor weather, the Dome will increase activity from golfers who are not able to use the golf courses or outdoor driving range. A summary of net income performance of the Dome is as follows: National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 56 Braemar Golf Dome Summary of Operations - 2007 -2011* 2011 2007 2008 2009 2010 2011* Projected Total Revenue $309,933 $338,473 $287,692 $247,188 $303,000 $328,760 Total Operating Expense $269,240 $277,266 $256,807 $242,096 $224,738 $240,861 Gross Margin $40,693 $61,207 $30,885 $5,092 $78,262 $87,899 Gross Margin % 13.1% 18.1% 10.7% 2.1% 25.8% 26.7% Non - Operating Expenses Interest $4,908 $2,602 $13 $0 $0 $0 Amortization $660 $660 $0 $0 $0 $0 Total Non - Operating Expenses $5,568 $3,262 $13 $0 $0 $0 Total Dome Expenses $274,808 $280,528 $256,820 $242,096 $224,738 $240,861 NET INCOME Before Depreciation $35,125 $57,945 $30,872 $5,092 $78,262 $87,899 Source: City of Edina *2011 budget National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 56 Other Key Findings — Golf Dome • The Braemar Golf Dome is a popular winter venue for the area and appears to generate a lot of use from both golfers and non golfers alike. • The presence of the facility can help to maintain interest in golf during the course of the winter, and inclusion of merchandise in the Dome during the winter season should help keep up merchandise sales. • In years when the spring and early summer are particularly wet (like 2011), the Dome should stay open later into the golf season to help offset some losses in other areas of the Edina golf system. The Golf Dome facility is now 28 years old and showing its age in some areas. However, the facility is functional as is, provided ongoing maintenance is kept up and thus no large -scale investment in upgrades is recommended. Specifically, the deteriorating lobby area may be in need of upgrade, and structurally securing the facility for a modest investment is recommended as opposed to large -scale replacement, as this is not likely to generate a positive return to the City. • Largest expense for the Dome appears to be the cost to heat the facility in the winter. SUMMARY - CITY OF EDINA MUNICIPAL GOLF OPERATIONS The Edina municipal golf system appears to be a good quality municipal golf system with many parts that appear to work well together. The Braemar Golf facility includes outstanding amenities at a desirable location and has a regional reputation for high quality and high activity. The facilities at Braemar Golf Course offer a unique mix of amenities that is truly "something for everyone" from beginners to seasoned golfers. The Fred Richards Golf Course offers a nice complement to the Braemar Golf Course, but we note that the executive par -29 golf course at Fred Richards is very similar to the par -29 Braemar Executive layout. In looking to the future of these golf facilities, the City of Edina may have to consider making some modest investment into the properties to help stimulate greater revenue and /or reduce expense. The golf system in Edina may be in a position where the City will have to spend some money in order to make more money. Specifically, installing a "wall -to -wall' cart path system for the Braemar 27 will allow the golf course to be open more often, thus allowing for more rounds and more revenue. Renovating the driving range to increase its size, while simultaneously reducing the Braemar Executive Course to a par -3 course, will also help stimulate more activity and open the facility to a new class of customer. These two projects, among other minor changes, should help the system increase its market share and grow new revenues. The City of Edina needs to create a formal capital plan (with funding mechanism) to address upgrades that will likely be required in the next five years as identified in this report. The management and operation of the Braemar Golf Course facility appears to be professional, and NGF observed that facility management has worked hard to reduce the cost of operation in recent years in order to maintain profitability. The recent changes to the system, including the retirement of a long -term General Manager, appear to have had a positive effect on the Braemar golf courses, especially in the area of marketing and promotions, where a more "modern" focus is evident. The present City- employed management team has been active in marketing the facility in an attempt to attract new players, and marketing and promotion strategies are consistent with industry expectations for maximizing revenue (Website, email, promotions, yield management, packages, outings, groups, etc.). The food and beverage operation offers the appropriate level of service to enhance the enjoyment of a round of golf at National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 57 Braemar Golf Course, and the banquet possibilities at the facility may offer revenue growth opportunities, although there appears to be a high level of expense in the clubhouse operation at Braemar. All of the revenue centers evaluated by NGF show that the City of Edina is producing gross income numbers that are well in excess of standard expectations for municipal golf facilities nationwide, and in this local market. All combined, the six revenue components of the Edina Golf operation generated in excess of $3.44 million in 2010, although this figure is expected to decline significantly in 2011. Total expenses to operate the Braemar Golf Course facility, excluding debt, depreciation, and City overhead expenses was $3.12 million in 2010, showing a basic operating profit of $320,000. However, when additional expenses such as depreciation, capital, and debt service are added, the result is a considerable loss requiring some form of City subsidy to continue. NGF has also observed that the Golf Enterprise Fund balance has declined over the last ten years to a total accumulated deficit of ($1,106,989) at the end of 2010. NGF has been informed that the debt service on the golf system is set to expire after 2013, thus providing a $290,000 boost to the golf system. Summary Financial Performance 2007 -2010 The table that follows shows a summary of financial performance of the Edina municipal golf system from the perspective of each revenue center. Although this method is not used by the City in its accounting of the golf enterprise, the NGF has reorganized the financials into this format for a more "at -a- glance" view of the system and its income production from the perspective of each revenue center. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 58 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 59 City of Edina Golf System Summary of Operations - 2007- 2011 2011 2011 REVENUES 2007 2008 2009 2010 Budget Projected General Revenue Braemar 27 Operating $2,109,403 $2,135,181 $2,150,510 $2,074,694 $2,237,800 $1,885,336 Braemar Grill 329,901 361,631 350,814 331,777 369,000 313,861 Braemar Clubhouse Rent 65,258 69,242 64,012 57,617 70,000 54,506 Braemar Executive 226,177 223,656 231,191 189,873 235,000 158,756 Braemar Range 295,717 291,614 316,135 301,726 315,000 236,809 Fred Richards 258,013 260,787 258,393 240,329 263,500 203,029 Golf Dome 307,237 338,473 287,619 247,188 303,000 328,760 Operating Revenue $3,591,706 $3,680,584 $3,658,674 $3,443,204 $3,793,300 $3,181,056 Less: Cost of Sales $359,770 $350,320 $338,248 $328,821 $356,300 $301,175 Gross Margin $3,231,936 $3,330,264 $3,320,426 $3,114,383 $3,437,000 $2,879,881 Expenses Braemar Admin $796,439 $847,842 $892,374 $796,077 $825,080 $775,645 Braemar Maintenance 825,430 804,174 822,933 801,818 906,119 727,298 Braemar Carts 87,705 67,548 51,828 191,747 53,842 151,915 Braemar Pro Shop 75,664 80,787 80,454 55,946 28,409 52,263 Braemar Exec. & Range 141,073 134,342 123,267 126,087 142,741 115,028 Braemar Clubhouse 192,248 199,923 197,883 202,470 175,676 201,939 Braemar Grill 186,784 189,053 191,500 208,624 210,810 191,914 Fred Richards 172,981 182,054 175,464 168,171 208,801 155,858 Golf Dome 269,240 277,266 256,807 242,096 224,738 240,861 Total Operating Expense $2,747,564 $2,782,989 $2,792,510 $2,793,036 $2,776,216 $2,612,720 Operating Income $484,372 $547,275 $527,916 $321,347 $660,784 $267,161 Non - Operating Items Non - Operating Revenue $41,878 ($205) $1,531 ($99) $0 $0 Non - Operating Expense Bond Interest $87,562 $68,161 $44,991 $17,568 $14,700 $14,700 Bond Principal 500000 445000 500000 280000 280000 $280,000 Capital $193,000 $172,000 $173,180 $173,300 $270,000 $270,000 Total Non - Operating $780,562 $685,161 $718,171 $470,868 $564,700 $564,700 $0 Transfers In $0 $182,181 $286,807 $30,432 $0 Annual Net Income ($254,312) ($137,886) ($190,255) ($149,521) $96,084 ($297,539) Golf Course Fund Cash Position ($1,128,696) ($1,084,401) ($987,849) ($1,106,938) ($1,010,854) ($1,404,477) National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 59 Summary of Performance by Revenue Center 2007 -2010 The table below shows the Edina municipal golf system performance by revenue department. While this review is useful in showing a general picture of department performance, the NGF is cognizant of allocations in expenses (as discussed previous) that may not be truly reflective of actual use and /or need in these departments. Winter Operations The winter operations program is appropriate for the City of Edina. The golf system has 11 full - time employees, each of whom has a role in winter activities. The senior office staff is planning for the upcoming year (business, marketing, budgets) as well as overseeing clubhouse operations. The maintenance staff is working to get the course ready for season and repairing equipment. Other staff is working the Golf Dome that is open in the winter. Almost all part-time labor is off and not charged to the system. It is not likely that the City can earn significant savings in this operation with any change to this system. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 60 City of Edina Golf System Summary of Operations - 2007 -2011* 2011 2011 Net By Department 2007 2008 2009 2010 Budget Projected Total Braemar Golf Rev. - 27, exec, DR, PS $2,631,297 $2,650,451 $2,697,836 $2,566,293 $2,787,800 $2,280,901 Cost of Sales $186,724 $174,555 $167,093 .$170,175 $175,000 $147,800 Exp. -27, exec, DR, PS $1,926,311 $1,934,693 $1,970,856 $1,971,675 $1,956,191 $1,822,149 Braemar Golf Net $518,262 $541,203 $559,887 $424,443 $656,609 $310,952 Braemar Clubhouse /Grill Revenue (CH + Grill) $395,159 $430,873 $414,826 $389,394 $439,000 $368,367 COGS (CH +Grill) $161,851 $160,361 $156,014 $143,979 $166,500 $139,831 Expense (CH + Grill) $379,032 $388,976 $389,383 $411,094 $386,486 $393,853 Braemar CH + Grill Net $145,724 $118,464 $130,571 $165,679 $113,986 $165,318 Fred Richards Revenue $258,013 $260,787 $258,393 $240,329 $263,500 $203,029 COGS $8,337 $12,289 $11,775 $12,291 $12,300 $10,383 Expense $172,981 $182,054 $175,464 $168,171 $208,801 $155,858 F. Richards Net $76,695 $66,444 $71,154 $59,867 $42,399 $36,787 Golf Dome Revenue $307,237 $338,473 $287,619 $247,188 $303,000 $328,760 COGS $2,858 $3,115 $3,366 $2,376 $2,500 $3,160 Expense $269,240 $277,266 $256,807 $242,096 $224,738 $240,861 Dome Net $37,997 $61,207 $30,812 $5,092 $78,262 $87,899 Overall System Revenue $3,591,706 $3,680,584 $3,658,674 $3,443,204 $3,793,300 $3,181,056 COGS $359,770 $350,320 $338,248 $328,821 $356,300 $301,175 Expense $2,747,564 $2,782,989 $2,792,510 $2,793,036 $2,776,216 $2,612,720 Operating Net $484,372 $547,275 $527,916 $321,347 $660,784 $267,161 Winter Operations The winter operations program is appropriate for the City of Edina. The golf system has 11 full - time employees, each of whom has a role in winter activities. The senior office staff is planning for the upcoming year (business, marketing, budgets) as well as overseeing clubhouse operations. The maintenance staff is working to get the course ready for season and repairing equipment. Other staff is working the Golf Dome that is open in the winter. Almost all part-time labor is off and not charged to the system. It is not likely that the City can earn significant savings in this operation with any change to this system. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 60 External Factors Affecting the Edina Municipal Golf Operation To appropriately assess the activity levels and potential market opportunities for the various elements of the Edina municipal golf operation, the environment in which the golf facilities operate must be understood. Therefore, it is helpful to examine local economic and demographic trends, as well as other factors, that have the potential to impact rounds played and revenues earned. This overview will include an analysis of the area's demographics, as well as a brief discussion of the local economy. In the second part of this section we provide an analysis of key golf market demand and supply indicators and a review of the competitive public golf market in the Edina / Minneapolis area. DEMOGRAPHICS SUMMARY City of Edina 3 mi 6 mi 10 mi Minneapolis - St. Paul MSA Minnesota U.S. Summary Demographics Population 1990 Census 70,615 318,502 774,523 2,538,824 4,375,085 248,710,012 Population 2000 Census 70,650 324,944 838,694 2,968,806 4,919,479 281,421,906 CAGR 1990 -2000 0.00% 0.20% 0.80% 1.58% 1.18% 1.24% Population 2010 Estimate 69,650 328,261 867,977 3,279,095 5,278,338 308,332,907 CAGR 2000 -2010 -0.14% 0.10% 0.34% 1.00% 0.71% 0.92% Population 2015 Projected 71,795 333,088 889,335 3,442,837 5,471,485 322,581,814 CAGR 2010 -2015 0.61% 0.29% 0.49% 0.98% 0.72% 0.91% Median HH Inc $74,589 $65,572 $60,636 $65,397 $57,371 $51,627 Median Age 47.5 42.0 38.3 36.8 37.4 37.1 CAGR = Compound Annual Growth Rate From the data collected for this study, NGF Consulting has made the following observations regarding the demographics of Edina and surrounding areas: • The area has shown stable population since 1990. The NGF estimates over 328,000 reside within six miles of central Edina (mid -point between Braemar and Fred Richards), and almost 868,000 within 10 miles. This is a large total population for the golf facilities to draw from and generally consistent with municipal golf course markets in large metro areas. Median household incomes in the Edina trade area are considerably higher than the corresponding national figure of $51,627 and the State of Minnesota figure of $57,371. The smallest 3 -mile local Edina market area has the highest income of the sub - markets reviewed, indicating a higher proportion of upper income residents. In general, higher income residents are more likely to participate in golf, and they play more frequently than lower income golfers. Thus the local Edina market area appears favorable for high golf participation and activity, when compared to other regional markets. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 61 • The Median Age in the local market area is much older than the national median of 37.1 years. In general, golf participation rates and frequency of play increase with age (though both decline at the oldest age segments), making relatively older markets more attractive to golf facility operators, all other factors being equal. ECONOMIC OVERVIEW In addition to identifying trends in golf course demand and supply, the NGF has examined certain economic indicators and other mitigating factors that have the potential to affect the performance of the City of Edina golf courses. Following are some key observations highlighting the broader economy, transportation, and visitation characteristics of Edina and the surrounding Minneapolis MSA. The overall findings are viewed as mixed for the region overall, while the Edina Golf market does seem to show many positive characteristics related to continued operation of City of Edina golf courses. It is unclear what effects the troubled regional and national economies will have on activity levels at public courses. On one hand, decreased discretionary income and the plunging values of many stock portfolios, retirement accounts, and homes will almost certainly cut down on recreational / leisure spending. However, interviews with area golf operators indicate that golfers are either playing less or shifting play patterns to less expensive rounds, which actually could benefit lower price point municipal golf courses. Minneapolis -St. Paul MSA • The Minneapolis -St. Paul MSA is home to about 3.3 million people, ranking 16th in the United States. The MSA is the primary business center between Chicago and Seattle. Climate • The Minneapolis area climate is "continental" and typical of the upper Midwest. Winters are cold and dry, while summer is hot and humid. Because of its northerly location in the United States and lack of large enough bodies of water in close proximity to moderate the air, Minneapolis is sometimes subjected to cold Arctic air masses, especially during the months of January and February. Annual precipitation average is 29.4 inches. The first snowfall of the season generally occurs around late October, and the last snowfall is in April, averaging 53.6 inches of seasonal accumulation. As a result, golf can be played year -round but is generally concentrated in the May through October season each year. In 2011, the area has been particularly hard hit by inclement weather not conducive to golf. Climate data reviewed by NGF shows total precipitation through July 31, 2011 to be at 22 inches, approximately 29% higher than the "standard" 17 ( + / -) inches recorded to this date in an average year. At this pace, the area is on pace to experience over 39 total inches of rain in 2011, a figure very close to, or even exceeding, record precipitation years of 1911 and 1965. NGF expects that the total number of golf playable days in the area has been reduced in 2011 by 15% to 20% in 2011. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 62 Basic Economy • The economy of Minneapolis today is based in commerce, finance, rail and trucking services, health care, and industry. Smaller components are in publishing, milling, food processing, graphic arts, insurance, education, and high technology. Industry produces metal and automotive products, chemical and agricultural products, electronics, computers, precision medical instruments and devices, plastics, and machinery. • Six Fortune 500 corporations make their headquarters within the city limits of Minneapolis: Target Corporation, U.S. Bancorp, Xcel Energy, Ameriprise Financial, Thrivent Financial for Lutherans and PepsiAmericas. • As of 2009 the city's largest employers are Target, University of Minnesota, Allina Hospitals & Clinics, Fairview Health Services, Wells Fargo, Hennepin County, Ameriprise, U.S. Bank, City of Minneapolis, Capella Education Company, Xcel Energy, Macy's, RBC Wealth Management, TCF Bank, Star Tribune, Thrivent, Federal Reserve Bank of Minneapolis, and ING Group. • Technology. Popular Science named Minneapolis the "Top Tech City" in the U.S. The Twin Cities ranked the country's second best city in a 2006 Kiplinger's poll of Smart Places to Live and Minneapolis was one of the Seven Cool Cities for young professionals. • The Minneapolis MSA contributes 63.8% of the gross state product of Minnesota. The area's $145.8 billion gross metropolitan product and its per capita personal income rank fourteenth in the U.S. Recovering from the nation's recession in 2009- 10, personal income and employment have remained consistent to slightly ahead of national performance. • The entity "Minneapolis Convention and Visitors Association" estimates total visitation to the Minneapolis area of 13.5 million in 2008. The Minneapolis Convention Center includes 475,000 square feet and includes an auditorium and ballroom. The site is in reasonable proximity to Braemar golf courses and could be a target for growth in golf events and tournaments. Transportation • The Minneapolis region is served by a comprehensive network of Interstate highways, connecting to all quadrants of the Twin Cities. Interstate 35 (and auxiliaries 35E and 35W) provide convenient north -south access, while Interstate -94 (and auxiliaries 1 -394 and 1 -494) provide east -west service. Minneapolis ranks second in the nation for the highest percentage of commuters by bicycle and was named the top bicycling city in the 2010 "Bicycling's Top 50" ranking. Minneapolis International Airport is the 13th busiest airport in the world, with 34,056,000 passengers passing through it in 2008. It covers more than 3,400 acres, on the southeast border of the city between Minnesota State Highway 5, Interstate 494, Minnesota State Highway 77, and Minnesota State Highway 62. The airport serves three international, twelve domestic, seven charter and four regional carriers and is a hub and home base for Delta Air Lines, Mesaba Airlines, and Sun Country Airlines. This airport is immediately proximate to the City of Edina and much of the lodging activity in Edina is related to the Minneapolis Airport. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 63 Stress Index The following table shows the "economic stress index" for Hennepin County. The data shows factors identified in May 2011 indicate that all key "stress" factors are elevated in Hennepin County. Economic Stress Index — Hennepin County, MN The Combined Impact of Unemployment, Foreclosures, and Bankruptcy Annual Point May 2011 Change October 2007 Stress Index 8.95 -0.66 5.11 Unemployment 6.2% -0.4 4.0 Foreclosure 2.06% -0.27 0.72 Bankruptcy 0.89% -0.02 0.44 Source: Associated Press Interactive Economic Stress Index: Measuring Financial Strain by County The recession began in December 2007 City of Edina • The city of Edina is a "First- Ring" suburb of Minneapolis, situated within the 1 -494 beltway and only eight miles from downtown Minneapolis. The 2010 population is reported at 47,941, which is approximately the same number of residents as reported for 1994. Edina has a reputation for being one of the most affluent suburbs of Minneapolis, as evidenced by the income figures presented earlier. Residential areas comprise the largest portion of the City, which is now more than 95 percent developed. Within Edina are many different neighborhoods, including Highlands, Indian Hills, Viking Hills, Morningside, Country Club District, Cahill Village, South Harriet Park, Interlachen, Rolling Green, Sunnyslope, White Oaks, Parkwood Knolls, Dewey Hill, and Hilldale. The City includes upwards of 13,000 single family units and 7,600 multi - family units, with 76% owner - occupied. • Residential areas comprise more than 95 percent of the City of Edina. The City has 39 parks, plus lakes, neighborhood and regional shopping areas, high - quality medical facilities, family -owned businesses, and major corporations. The mix of elements in this community tends to be favorable for the continued operation of a municipal golf facility. • Much of Edina is more convenient to MSP than Minneapolis itself. This proximity is a factor in the commercial activity of the 1 -494, and the proximity of Braemar Golf Courses to the large interchanges at Normandale Boulevard (100) and McCauley Trail (169) is viewed as a positive for high golf activity at Edina golf courses. • Edina itself is home to several large employers, many of which are centered in the Braemar area, directly impacting the City's municipal golf courses. In all, these employers have a positive impact on the continued health of the local golf industry. Largest employers in Edina include: National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 64 City of Edina Largest Employers Employer Employees Jerry's Enterprises 4,500 Fairview Southdale Hospital 2,500 Macy's -- Southdale Center 1,200 Edina Public Schools 1,172 Source: Minnesota Department of Trade and Economic Development. GOLF MARKET SUPPLY AND DEMAND INDICATORS The basic measures of golf demand and supply that may affect the performance of City of Edina golf courses are outlined below. National Trends in Golf Participation Golf participation in the U.S. has grown from 3.5% of the population in the early. 1960s to about 9.2% of the population today. NGF estimates that about 26.1 million golfers ages 6 and above reside in the U.S. Other surveys completed outside the golf industry show the number of people who "identify themselves as golfers" is as high as 45 million, indicating a large potential "latent" demand from very inactive golfers. Over the past 50 years, golf demand grew at about 4% per year while facility supply grew at about 2% per year. However, since 1990, the situation has reversed — demand has grown at only 0.5% per year while facility supply has grown at 1.4% per year. With the increase in supply, we are seeing a marked increase in competition, and the supply is greater than the demand in some markets. In addition to increased competition, four other factors have contributed to a decline in the number of rounds per course nationally during the 2002 to 2010 period. These include: 1) an uneven national economy; 2) recent reductions in corporate spending on golf; (3) significant reductions in the traveling golfer market; and 4) the increasing time pressure on individuals and families. The number of golf course closings quadrupled from an annual average of 24 courses per year in the 1993 -2001 time period to more than 100 courses in 2005. In 2006, there was negative net growth in golf facilities for the first time in six decades, with 146 18 -hole equivalents closing and 119.5 opening. In 2007, there were 113 openings and 121.5 closures, and in 2008, 72 golf course openings and 106 closures. In 2009, 49.5 openings minus 139.5 closures equated to a net loss of 90 18 -hole equivalents. Closures continue to be disproportionately public, stand- alone 9 -hole facilities or short courses (executive or par -3 length) with a value price point. Net growth in supply has been negative now for four consecutive years, with the largest drop of 90 courses in 2009. However, U.S. openings averaged 200+ (net) for 20 years, and total 18 -hole National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 65 equivalent supply is up 5% since 2000, indicating a slow market correction is underway. NGF projects 2010 net growth of about negative 50 (openings minus closings). U.S. rounds decreased 6.3% for the year through May 2011, while the East North Central Region decreased 38.8 %. In terms of the total number of rounds produced, NGF estimates that national rounds experienced an overall drop from 2000 to 2010 of -9.5 %. On the positive side, the growth in golf course development has slowed considerably nationally and in the majority of local markets, a trend that should help ease some of the competitive pressure. Another positive trend is the aging of America. Baby Boomers are rapidly approaching retirement age when golf activity flourishes. The baby boomers represent not only the largest single demographic in the U.S., but they also approach retirement age with more disposable income than any previous generation. Municipal Golf Municipalities were largely responsible for helping bring golf to the masses by creating affordable golf courses for their citizens. The role of municipal golf has changed dramatically over the past 30 years, with fewer municipalities viewing golf in the same vein as other recreational opportunities offered — simply an amenity for its citizens. Still, many municipalities remain that are willing to subsidize municipal golf. Though these municipalities certainly prefer to earn enough to cover direct expenses, they recognize the value of offering affordable golf to their residents with respect to quality of life issues, providing positive diversions for lower - income and /or at -risk youth, and even longevity, due to health benefits. Several factors have changed over the last few decades that have, at least temporarily, altered the golf course market and the role of the municipally owned golf course. The main factor has been increased competition. As noted, in the last two decades the supply of public golf courses has increased dramatically, thus eliminating the near - monopoly that municipalities used to have on public golf. Now municipal courses are finding themselves competing head -to -head for market share with private enterprise. Unfortunately, few municipalities find they are equipped to handle this type of competitive environment. There are several factors that typically inhibit municipalities in their ability to compete successfully with private enterprise and present them with considerable challenges in the modern golf industry. These include slow response due to bureaucracy, budget constraints, personnel policies, marketing, procurement, and the lack of incentives to employees. Local Golf Demand The methodology for determining the relative strength of the subject market is based on ongoing NGF research of American golf participation habits. The NGF Golf Demand Model includes the critical combination of age and income, regional seasonality, and available golf course supply, as well as existing and emerging demographic trends in a particular market area. This model can be used as a benchmark for estimating potential market strength in a particular area. Each year, the NGF does an annual survey of golfers nationwide. The results of this survey allow NGF to make accurate predictions concerning demand, participation, and golf spending. The results for the local areas are posted below: National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 66 Golf Demand Key notes from the above table include: • Merchandise sales reflect all merchandise purchases, including those at retail stores, discount stores, and over the Internet. • Over half (51%) of the rounds played by area households are done locally. • There is very little difference in participation rates or spending between the three market areas. However, both participation and fees are slightly higher for the local Edina market. In order to make comparisons more meaningful, NGF indexes are used to compare the above values against a national mean, which is set at Index =100. An index value of 90 means 10% less than the national average, while an index value of 110 means 10% more than the national average. Golf Demand Indices 3 mi 6 mi 10 mi Minneapolis - St. Paul MSA Minnesota Number of golfing households 6,984 30,713 78,135 284,479 450,888 Number of rounds played 119,385 462,509 1,113,792 4,085,852 6,693,520 Rounds played locally (less than 50 mi) 61,409 244,269 595,976 2,235,508 3,721,072 Rounds played regionally (50 -200 mi) 46,339 174,383 399,418 1,317,475 2,058,204 Rounds played on vacation (more than 200 mi) 8,926 33,037 88,816 391,358 651,293 Rounds played at Seasonal home 2,711 10,820 29,582 141,511 262,951 Golfing Fees $5,958,635 $23,084,324 $52,542,776 $173,470,784 $269,428,192 Hard goods spending $667,004 $2,584,041 $6,222,750 $22,827,654 $37,400,156 Soft goods spending $428,787 $1,661,149 $4,000,300 $14,674,767 $24,042,702 Rounds /Golfing Household 17.1 15.1 14.3 14.4 14.8 Fees /Round $49.9 $49.9 $47.2 $42.5 $40.25 Merchandise /Round $9.18 $9.18 $9.19 $9.19 $9.18 Key notes from the above table include: • Merchandise sales reflect all merchandise purchases, including those at retail stores, discount stores, and over the Internet. • Over half (51%) of the rounds played by area households are done locally. • There is very little difference in participation rates or spending between the three market areas. However, both participation and fees are slightly higher for the local Edina market. In order to make comparisons more meaningful, NGF indexes are used to compare the above values against a national mean, which is set at Index =100. An index value of 90 means 10% less than the national average, while an index value of 110 means 10% more than the national average. Golf Demand Indices Minneapolis - St. Paul 3 mi 6 mi 10 mi MSA Minnesota Index: Golfing Households 118 114 114 121 116 Index: Rounds Played by Residents 86 73 69 74 73 Index: Rounds Played Locally (less than 50 mi) 79 69 66 72 73 Index: Rounds Played Regionally (50 -200 mi) 98 81 74 70 67 Index: Rounds Played on Vacation (more than 200 mi) 95 78 82 105 106 Index: Rounds Played at Seasonal Home 56 49 53 74 84 Index: Golfing Fees 106 90 81 77 73 Index: Hard Goods Spending 85 73 69 74 73 Index: Soft Goods Spending 85 73 69 73 73 • Area golf participation is 14 -18% higher than the U.S., but pretty uniform across the area. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations - 67 • While participation is higher than the national average, the number of rounds played per person is 26 to 31 % lower than the national average, reflecting the shorter season. • Notably, the golf fees are about 6% higher than the national average in the local Edina market, but 27% lower in the overall Minneapolis MSA and the State of Minnesota. Golf Supply Factors Along with the higher income and dense population, the NGF has counted a total of 27 golf facilities (16 public and 11 private) within 10 miles of Edina in 2011. Utilizing this data in conjunction with the demographics presented earlier, we note the following comparison of golf facility supply to the number of households available in the market to support each facility. The data shows that the 3 -mile local Edina market has 7% fewer households (Index =93) per 18 holes of golf (unfavorable), but the wider geographies have considerably more households per golf course, as is characteristic of a dense metro market like Minneapolis. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 68 Household Supply Ratios Edina Market Golf Facility Supply Edina Market Minneapolis - St. Paul St. Paul 3 mi 6 mi 10 mi MSA Minnesota U.S. Total Golf Facilities 4 12 27 187 479 15,902 Public Golf Facilities 3 6 16 153 428 11,633 Private Golf Facilities 1 6 11 34 51 4,269 Total Golf Holes 81 216 459 3,240 7,416 268,443 Public Golf Holes 63 108 261 2,637 6,543 191,214 Private Golf Holes 18 108 198 603 873 77,229 Source: National Golf Foundation Households Supply Index: Private 120 91 126 142 National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 68 Household Supply Ratios Edina Market Minneapolis - St. Paul 3 mi 6 mi 10 mi MSA Minnesota U.S. Households per 18 Holes: Total 7,166 12,235 14,585 7,115 5,128 7,733 Households per 18 Holes: Public 9,213 24,470 25,650 8,742 5,812 10,856 Households per 18 Holes: Private 32,245 24,470 33,812 38,231 43,561 26,879 Households Supply Index: Total 93 158 189 92 66 100 Households Supply Index: Public 85 225 236 81 54 100 Households Supply Index: Private 120 91 126 142 162 100 Source: National Golf Foundation National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 68 Recent Construction Activity There have been only 9 new holes of golf added in the 10 -mile market in the past ten years. SITE: Edina 3 mi 6 mi 10 mi Minneapolis - St. Paul MSA Minnesota U.S. Golf Course Construction Activity 2001 -2010 Total holes added past 10 years 0 0 9 261 675 24,318 Public holes added past 10 years 0 0 9 243 621 17,469 Private holes added past 10 years 0 0 0 18 54 6,849 Percent Total Holes Added 0.00% 0.00% 2.00% 8.10% 9.10% 9.10% Percent Public Holes Added 0.00% 0.00% 3.40% 9.20% 9.50% 9.10% Percent Private Holes Added 0.00% 0.00% 0.00% 3.00% 6.20% 8.90% Facilities in Planning or Under Construction NGF research indicates no new golf courses presently in planning for the 10 -mile market area as of July 2011. Golf Course Market Supply / Demand Summary Using the most basic measures of golf demand and supply, the Edina area appears to be an "inactive" or even "saturated" market, with a mostly higher- than - average number of households (relative to national benchmarks) available to support existing golf courses, and a lower level of golf demand per household. However, though the predictive demand model and supply ratio analysis is very useful in evaluating the relative strength of golf markets, it cannot stand on its own in determining the status or health of a golf market. Rather, these analyses must be considered in the context of what is actually happening "on the ground" in the market, in terms of price point and activity level trends at existing golf courses. COMPETITIVE GOLF MARKET NGF Consulting has analyzed the public access golf market in the Edina primary trade area, with particular emphasis on determining the facility's current market position and prospects for sustaining and /or building market share in the future. On the following pages, we list summary operating information for those public golf facilities that NGF has identified as the key competitors for the municipal golf operations in Edina. The facilities listed were chosen based on interviews with Braemar and Fred Richards management and other market golf operators, as well as factors such as facility type, quality, location, and price points. The relative location of Edina and these facilities is illustrated on the map below. At the end of this section, we provide our significant findings regarding the competitive market. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 69 Public Golf Facilities Map - Primary Competitors Medi 70 25 S edicin e Lake- 102 81 gg '• _ 81 c• ,. win La Theodore Wirth Golf Course i 27 derda 36 PI�TI 1 2 G/e `son La ✓ 55 Brookview Golf Course 1 100 L' 40 152 280 Falco Heigh • "- ~ ! _ 38 32 - 12 122 '� ' • d ke.Of - e Isles - -: 20 Woodland 1g Loul � 3 _ 55 101 -. ar 33 onka' 5 ° -La Calhou St. a 7 22 38 y - E S Mead owbrook Golf Course Hiawatha Golf Course 7 pki s • Harriet 35 140 - Greenwood 8 , 1n a2 3 Q ! wood n La 186 } iamo ,j c Christmas ake 158 31 82 62 d1 inn ap s g2 Interne Mother Lake endot Airport • LOfus • Birch Island ke�f �- - aul nal 11 " 55� 110 Lake / *`" , 212 17 101 ". p ck Lake I f 100 tt 5 _ / ` dot / B nt e , Braemar Golf Course oo L e_' c eld 7 , M _ ! • Fred Richards Golf Course Gun CIu ake Me nha 5 hessen 312 5 ".' �pf� • St 2 . " 13 = 4 la �.L a Susan ,Long Meadow Lake jh ; 28 ._Staring Anderson -- W h 111 _ Riley. Lake'. Lakes �" Bush L e� Lake: 1 0 Bluff Creek Goff Club Hy>an • Airoud !? J 212 _ Eagan 43 Grass Lake, .Rice Lake Blue Lake 1 'r Dwan Golf Club Black Dog • -Lake, % 13 30 m 1 18 Fisher 'Lake '•/° 31 h eaa9e ° j urnsm lie 32 Ca n M'T© ZD03(Mcrosohe,co` )-42 -1 or. su `lie`rsl'N�ri Ms reserved, National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 70 Competitive Assessment Review - Primary Competitors The following tables show summary operating information for Edina golf courses and those public facilities that NGF Consulting has identified as the facility's primary competitors. Summary Information — Braemar Golf Course and Primary Full- Length Competitors Facility Type Location Year Open Par / Slope Back Tee / Forward Tee Distance from Braemar GC Braemar Golf Course 45H -MU* Edina 1964 72 / 136* 6,660 / 4,990* -- Hiawatha Golf Club 18H -MU Minneapolis 1934 73/130 6,613 / 5,122 7.5 mi NE Theodore Wirth Golf Course 18H -MU ** Minneapolis 1916 72 / N/A 6,575 / 5,285 9 mi NNE Dwan Golf Course 18 -H MU Bloomington 1970 68/115 5,485 / 4,518 5.5 mi SSE Meadowbrook Golf Course 18H -MU Minneapolis 1926 72/132 6,557 / 4,934 3.5 mi N Brookview Golf Course 18H -MU ** Golden Valley 1937 72/131 6,387 / 5,328 8 mi N Bluff Creek Golf Course 18 -H DF Chaska 1971 72/126 6,641 / 5,366 8.5 mi SW *Slope and distances are from the longest combination of tees (1 & 19), and do not include the Braemar Executive Course. * *Also has 9 -hole par -3 course KEY: MU — Municipal DF — Daily Fee SP — Semi - Private Summary Information — Braemar Golf Course, Fred Richards Golf Course, and Primary `Short- Course' Competitors Facility Type Location Year Open Par / Slope Back Tee / Forward Tee Distance from Braemar GC Braemar Golf Course Executive 45H -MU Edina 1987 29 / N/A 1,900 / 1,300 -- Fred Richards Golf Course 9H -MU Edina 1997 29 / N/A 1,767 / 1,323 2 mi E Theodore Wirth Par -3 9H -MU Minneapolis 1958 27 / N/A 1,240 9 mi NNE Brookview Golf Course Par -3 9H -MU Golden Valley 1977 27 / N/A 1,287 / 1,146 8 mi N KEY: MU — Municipal DF — Daily Fee SP — Semi - Private Of the facilities listed above, NGF believes that, in terms of relative quality, markets served, amenities offered and price points, Golden Valley's Brookview Golf Course is the primary competitor to Braemar Golf Course and the Braemar Executive Course. Braemar will also occasionally, and for certain types of rounds, compete for market share with other market facilities, including lower priced City of Minneapolis courses, as well as higher priced daily fee courses like Bluff creek. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 71 This table provides general comparative and summary fee and rounds played information for the primary competitors, as defined previously. Primary Competitive Golf Facilities — Summary Rounds Played and Fee Information 2011 . 2011 2011 Senior Individual 2009 Weekend 18- Weekday 18- Special 18- 2011 9 -Hole 7 -Day Rounds Hole Green Hole Green Hole Green Green Fee Cart Fee Range Fees Unlimited Golf Course Played Fee Fee Fee (WE/WD) (9H/18H) (Sm /Med /Lg) Pass Braemar 27 Golf Course 62,460 $37/$29' $37/$29' $24 $19/$15' $9/$15 $7.50/$5/$3 DNA' Hiawatha Golf Course 43,000 $32/$252 $28/$212 $24/$162 $18/$162 $9/$15 $9/$6.75/$4.50 $1,2602 Theodore Wirth Golf Course 40,000 $32/$252 $28/$212 $24/$162 $18/$162 $9/$15 No Range $1,2602 Meadowbrook Golf Course 40,000 $32/$252 $28/$212 $24/$162 $18/$162 $9/$15 No Range $1,2602 Brookview Golf Course 40,900 $35/$283 $35/$283 $28/$243 $19/$163 $10/$153 $7/$5/$3 DNA Bluff Creek Golf Course 36,000 $424 $364 None $26/$234 $8/$164 $7/$5/$3 $1,9754 Dwan Golf Course 44,000 $29/$225 $29/$225 $29/$225 $19/$155 $8/$14 No Range DNA' Average Rounds6 /Fees 40,980 $34.14/$28.00 $31.57/$25.43 $21.86/$16.86 $19.57/$16.71 $8.86/$15.00 KEY 1 Non Patron / Patron. No unlimited pass but Patron Cards are $70 (res) and $90 (non -res). 2 City of Minneapolis courses. Rates include Patron / Non - Patron. City offers many passes including family all- course unlimited for *NGF Consulting estimate $2,775, a M -F pass $860, one - course pass $945 and Patron Cards $55/$85 (res /non -res). N/A — Not Available 3 Rates are Parton / non - patron. Patrons also get discount on carts. Patron rates are $70 residents and $110 non - residents. DNA — Does not apply 4 Bluff Creek also offers a WD early bird ($28) and twilight ($23). There is a M -F membership for $1,375 and a family unlimited at Notes: $2,450. 5 City of Bloomington. Rates are Parton / non - patron. Patron fees are $83 resident + $58 senior; $120 non - resident + $95 senior. 6 Average rounds equalized to 18- holes. Braemar 27 equalized 18 -h rounds = 42,970 National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 72 Primary Competitive Executive / Par -3 Golf Facilities — Summary Rounds Played and Fee Information Adult Non - 2009 Rounds Adult Patron Patron Adult Patron Cart Fee (per Golf Course Played Green Fee Green Fee Super Senior Junior Player) Pull Carts Braemar Executive Golf Course 18,578 $11.00 $14.00 $9.00 $9.00 $7.00 $2.50 Fred Richards Golf Course 21,965 $11.00 $14.00 $9.00 $9.00 $7.00 $2.50 Theodore Wirth Golf Course 17,000 DNA $11.00 $9.50 $9.50 $6.00 $4.00 Brookview Par -3 18,740 $9.00 $12.50 $8.00' $8.00 $7.50 $4.00 KEY 1 Non Patron rate for seniors and juniors is $9.50. "NGF Consulting estimate N/A — Not Available DNA — Does not apply National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 73 Significant Findings - Key Competitors NGF Consulting research indicates the following significant findings for the Edina area public access golf market: • The Edina / Minneapolis area has a wide variety of golf offerings, with ample private, daily fee and municipal golf courses. The basic structure of having a regulation 18- hole golf course in conjunction with a 9 -hole par -3 or executive course (like Braemar) appears to be common in this market area. • The fees for golf at public golf courses identified in this market as comparable to the Edina municipal golf offerings tend to fall within a relatively close range, with Edina's facilities at the highest end. The Edina par -3 / executive course fees are also at the highest in the market area. • While the Minneapolis golf courses offer a separate weekday and weekend rate, Braemar, Brookview, and Dwan do not offer weekend rates. There does not appear to be an opportunity to increase weekend fees at Braemar. • The program of offering discounts for "patron" card holders appears to be a very popular program at municipal golf courses in the Edina area market. Only Minneapolis is offering a full, pre -paid green fee arrangement with unlimited (or weekday only) play privileges for a fixed annual fee. • Overall, current rounds played volumes at Edina golf courses and its competitive set are below capacity, even in this seasonal climate. NGF estimates that Edina is hosting rounds totals higher than its immediate competitive set in 2010. Rounds at all facilities in the market are down in the early part of 2011, due in part to an unusually wet May and June 2011. • Anecdotal evidence suggests that, both regionally and nationally, golfers are playing fewer rounds, as well as shifting their play to less expensive rounds, such as twilight. Additionally, large outing / tournament and banquet business is off at many golf facilities. • As is the case in most markets nationally, local golf operators reported a drop -off in rounds played between about 2000 and about 2005 -2006. Some markets nationally experienced declines on a per - facility basis of 25% to 30% or more. The decrease in per- course activity levels, both regionally and nationally, has been attributed to several factors, including emerging socio- economic trends and a general oversupply of public golf courses fighting for market share at a time when golf demand is flat. Regional Municipal Golf Facility Comparisons NGF has prepared a review of three other regional municipal golf systems that are self- operated (or were self- operated in 2010) for direct comparison to the performance of the Edina golf operation. The information was collected by NGF as part of this consulting engagement, as well as previous consulting with other cities. This list of systems is believed to represent a "reasonable comparison" to Edina based on the mix of facilities and City labor. The City of Minneapolis also represents an immediate local comparable, with several facilities that are noted as key market competition to the Edina golf facilities. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 74 The following table displays the results of key aspects of each golf system's performance in 2010. Minneapolis Area Municipal Golf Systems Summary of Comparative Data (2010) City of City of City of Inver City of Minneapolis, Golden Grove Edina, MN MN Valley, MN Heights, MN Number of Facilities 2 7 1 1 Year of Data Presented 2010 2010 2010 20105 Rounds' 102,003 223,288 59,632 49,984 Revenue Green Fees /Admis. /Memb. $2,086,368 $1,242,160 1,007,500 F &B / Concession 576,376 205,000 164,000 Charges for Services $5,922,551 750,500 Commissions and Rentals 780,460 1,108,247 244,000 263,100 Total Revenue $3,443,204 $7,030,798 $1,691,160 $2,185,100 Average Total Revenue per Round $33.76 $31.49 $28.36 $43.71 Expense Salaries & Wages $1,636,091 $2,359,085 $904,940 $941,500 Benefits 838,790 Operating Costs2 1,483,420 2,871,302 661,640 784,600 Total Operating Expense $3,119,511 $6,069,177 $1,566,580 $1,726,100 Operating Income Before Debt $323,693 $961,621 $124,580 $459,000 Labor % of Total Exp. 52.4% 52.7% 57.8% 54.5% Total Full -Time Employees 133 21 7 7 Part-Time Employees 70 98 28 28 Total Golf Employees 83 119 35 35 FT Employees per Hole .2893 .194 .259 .259 Average Labor Ex p. Per hole $36,357 $21,843 $33,516 $34,870 Source: Subject Cities and NGF from previous consulting projects. NGF Consulting estimates in italics. 1 Rounds do not represent accurate comparisons due to inconsistent counting on 9 -hole rounds between cities 2 excluding depreciation 3 There were 13 full -time employees in 2010, reduced to 11 in 2011 (2011 FT employees per hole = .244) 4 Includes 18 -H regulation and 9 -h executive 5 Inver Grove Heights 2010 figures are budget estimates National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 75 Key Comparisons - Regional Municipal Golf Operations The data collected show that each of the four multi- course operations shown has relatively consistent green fee revenue performance, with the exception of Inver Grove Heights whose information is based on the 2010 budget, not actual performance. Other findings: • All the facilities fall within a relatively tight range on labor percentage of expenses (between 52% and 58 %), and the average total labor expense per golf system employee is between $44,833 and $50,274. • Each of the cities has between .2 and .25 full time employees per golf hole, although all of these cities have experienced recent reductions in full -time staff. • All of the cities are making a basic operations profit (before debt service, depreciation, and other charges). • All four systems have at least one facility that is offering a banquet / or event center with higher- than - average concession revenue. • While the City of Minneapolis is reporting 21 full -time employees in the golf system, the number may be slightly underestimated considering some City practices. NGF discussions with officials in the Minneapolis City golf system show that several key golf employees have their hours divided between departments, thus reducing the full - time employee expense in the Minneapolis golf enterprise. EXTERNAL FACTORS SUMMARY Some summary points about the overall market environment within which the City of Edina golf courses are operating, and factors affecting these golf operations that are generally uncontrollable by the golf courses and the City include: • National trends in the golf industry are generally not favorable for operators. The total number of "core" golfers is declining and total spending on golf is declining along with them, while the total number of golf facilities has expanded in the last ten years, leading to a decline in per- course rounds and revenues. The NGF has also documented a rapid inflation in expenses to operate golf facilities nationwide. • Among the keys to growth in golf activity will be increasing participation among minorities and females. Beginner -type facilities such as Braemar Executive, Fred Richards and the Golf Dome can be helpful in meeting this challenge. • The greater Minneapolis metro area and the City of Edina in particular have many favorable attributes related to economic activity that can translate to high golf activity. Large employers, convenient transportation infrastructure, and higher incomes will all contribute to a continuing vibrant golf economy. • The older age and higher income demographics of Edina are generally consistent with higher- than - average participation in golf. However, the older age may be a longer -term concern for Edina golf as replacing older golfers with new younger golfers will be a critical element in the longer -term success of Edina golf courses. • The overall golf market in the Minneapolis metro area is large, with upwards of 6.7 million rounds of golf potentially demanded at area golf courses. Overall participation in golf is predicted to be higher than average in the Minneapolis market, but actual participation may be slightly lower, indicating a somewhat "inactive" golf population. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 76 Along with an expected higher participation rate comes lots of golf courses, including 187 total golf facilities in the greater Minneapolis- St. Paul metro area. Of these facilities, a total of 14.5 new 18 -hole golf courses were added to the MSA market in the last ten years, although only one 9 -hole course was added in the 10 -mile Edina market area (favorable). The overall ratio of households to golf courses is favorable in the Minneapolis market, but more is needed to stimulate greater activity from the "inactive" households as noted. • The golf market in the greater Minneapolis area is highly weather dependent, with length of winter and rain -out days in summer playing a key role in revenue generation. • The Edina Golf facilities each have unique key market competitors, but several facilities stand out as offering competition to the Edina golf system overall. The City of Minneapolis golf courses, along with Brookview (Golden Valley), provide the most immediate competition for both Braemar and Fred Richards. • In our review of several local Minneapolis area municipal golf systems, NGF Consulting found that the Edina golf system compares favorably in most measures of average revenue, expenses, average labor, and ratio of labor to total expense. The NGF can state that Edina golf operations are not `but -of- the - ordinary" for municipal golf in this market. • The City of Edina golf courses generally compare favorably to their immediate competition with higher fees and generally comparable activity. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 77 Summary of NGF Consulting Recommendations NGF Consulting has prepared a schedule of recommendations for the continued operation of the Edina golf courses. These recommendations have been organized into three main categories: (1) Basic oversight and structure; (2) Physical Improvements; and (3) Operational Recommendations. In the chapter following these recommendations, NGF Consulting will display the potential financial impact of enacting all of these recommendations. RECOMMENDATIONS ON BASIC OVERSIGHT AND STRUCTURE The NGF Consulting recommendation for the future operation of the City's golf system (Braemar Golf Course, Fred Richards Golf Course, and the Golf Dome) is based on our understanding of the economic performance of the system and the City's need to maximize economic performance. The following section summarizes the options available to the City of Edina by presenting descriptions of the most typical management options for public sector golf operations, as well as advantages and disadvantages of each option. Before presenting the recommended management arrangement for the City's golf course, NGF Consulting has presented five basic options the City of Edina could consider for golf facility operations. Management Options These options, which are presented in order of most direct City involvement to the least City involvement, include: 1. Self Operation. Under this scenario, the City would continue to operate the facilities under direct control of the Director of Recreation and through an on -site Golf General Manager who is a City employee. 2. Full- Service Management Contract. Hire a management company to operate all aspects of all City golf facilities. 3. Concession Agreements. Similar to a lease agreements, but usually involve granting a license to operate a portion of a facility rather than the right to occupy the premises. These can come in several types (i.e. pro shop, maintenance or food and beverage), thus there are also several possible combinations: c. Self Operate Maintenance and Pro Shop, and Contract for Food / Beverage Services involves direct City control of maintenance and management while contracting food / beverage operations. d. Self Operate Pro Shop and Food / Beverage Services, and Contract for Maintenance involves direct City control of management and food / beverage operations while hiring a private company for golf maintenance. e. Multiple Concessions would involve creating multiple contract agreements for separate entities for each facet of the golf operation (pro shop, food / beverage and maintenance). National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 78 4. Operating Lease(s). Lease the facility to a private operator in exchange for an annual (or monthly / quarterly) lease payment to the City. The lease could be established to include certain lessee requirements, including capital investment in facility improvements. Maintenance standards and compliance policies would be included, and some restrictions regarding setting of green fees could be included. 5. Sale or Closure of the Golf Course. Not part of the scope of the NGF review — see discussion below. Management contracts, operating leases, and concession agreements are the three most commonly used terms to describe a contract between a municipality and a private golf course operator. Each has significant differences, but also several common characteristics. A general discussion of each option, along with key advantages and disadvantages is presented in the following paragraphs. Option 1: Self- Operation by City Self- operation gives the City the greatest control over golf operations. The City of Edina would continue to have control over all employees, course maintenance, policies and procedures, hours of operation, fee schedules, and operating and capital budgets. All revenues would be available to pay for operating and maintaining the facilities. This option is essentially the 'status quo' option for Edina. Advantages of Self- Operation • Simplest option • Direct City control of the assets • All workers are City employees Disadvantages of Self- Operation • Golf operation may experience fiscal loss and require subsidies from other departments (i.e., taxpayer support). • Revenues may not cover rapidly increasing costs (particularly labor), especially when golf market is in decline. • City may lack necessaryy expertise in managing golf facilities, especially in food and beverage area. • When revenues and /or operating /capital reserves are down, needed improvements may not be funded (or at least deferred). Discussion Under this option, the City will have to be prepared to fund all needed improvements, and these needs may be in excess of the Golf Enterprise Fund balance (as present). The inability to fund capital improvements and ever - increasing operating expenses could ultimately result in a less attractive product to golfers, leading to rounds and revenue decreases. Option 2: Full Service Management Contract The primary goal of a management contract or management agreement is to provide a golf facility with experienced, professional managers who are responsible for the daily operations, National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 79 thus relieving the owner (City) of this task. In a typical management contract, the municipality hires a firm that is charged with all management responsibility. The municipality funds all capital improvements, and the management firm hires all employees. Because employees work for the management firm and not the City, payroll cost may be less; thus, the operating expenses may be reduced. Management fees paid as compensation in these agreements typically fall between two and four percent (2% to 4 %) of total revenues, or approximately $68,000 to $136,000 for the Edina golf facilities (including F&B). Advantages of Management Contracts • Reduction of operating costs when those expenses are much higher than normal (not the case at Braemar Golf Course in 2011). • It is assumed that the company or individual hired has experience and expertise in golf facility operations, including food and beverage. Not only can this provide help in operations and maintenance but also in other areas such as marketing and merchandising. • The City is removed from day -to -day operation in exchange for a payment of a pre- determined fee plus a percentage of gross revenues or some other formula, which is equitable to both parties. In addition, net revenues (if any) are retained by the City. Disadvantages of Management Contracts • Though this option offers the City more control than with an operating lease, it offers less control than self- operation. • Unlike a lease, management contracts usually do not provide a guaranteed income for the owner (the City), but rather a guaranteed income for the management entity (operating risk remains with the City). • The City would still be responsible for capital improvements (which NGF Consulting believes is an important element in the case of Braemar Golf Course). • The City would still need staff with golf course expertise who could spend a significant amount of time overseeing the golf operation and contract compliance. Discussion This is an option that is typically considered as a reaction to extremely high operating cost, a situation that is not the main deficiency at Braemar Golf Course. Still, under this option the total business risk would still lie with the City of Edina, and seems very unlikely that this type of arrangement will significantly alter the basic revenue /expense equation that is present at Braemar Golf Course in 2011. Option 3: Concession agreements This form of agreement is very common in the golf industry, especially in the food and beverage service area. Concession agreements are usually granted for properties in "as is" condition and seldom require the concessionaire to make major physical improvements to the facility. Advantages of Concession Agreements • The municipality would be removed from the day -to -day operation in exchange for green fees and a pre- determined percentage of other gross receipts. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 80 • Concession agreements provide more control than an operating lease, but less than a management contract. Disadvantages of Concession Agreements • Concession agreements do not provide guaranteed revenue to the municipality and the City will still be responsible for facilities maintenance (operating risk remains with the City). • The City would be responsible for all major capital improvements. • There are likely to be fewer highly qualified management firms interested in a short- term concession agreement. • It is unlikely that the City will find one vendor for this type of agreement and thus may end up with separate contracts for various functions in Edina golf (i.e. F &B, pro shop, maintenance, lessons or separate agreements at Braemar and Fred Richards). • Adherence to maintenance standards can be hard to enforce if the contract is not comprehensive, or if it does not address contingencies and extraordinary events. Option 3A: Food and Beverage Only Concession Another area of separate concessions is in food and beverage -only contracts. In this case, the basic golf operations would remain 'as -is,' but with a concession agreement for food and beverage services. The City would retain the clubhouse rental revenue and essentially turn over the Braemar Grill and beverage cart to a private entity, in exchange for a concession fee, usually around 10% of gross revenue. General Discussion The clubhouse and grill operation at Braemar appears to be the most operationally challenged aspect of this City's golf program, and thus it would be the first component of the Edina golf system to consider for contracting. Based on the NGF Consulting review of the Braemar Golf Course food and beverage operation, it does not appear that this segment of the Braemar business is beyond the point to pursue this option, but unless there is growth in concession revenue, the costs associated with the operation (assuming they are allocated appropriately — may not be the case at Braemar) will continue to place strain on the system as a whole. There are a number of companies that specialize in operation of food and beverage concessions at golf courses and this form of concession arrangement is common at municipal golf courses nationwide. However, the NGF should note that much of the fixed cost associated with the food and beverage concession (running the clubhouse, utilities, etc) will remain the responsibility of the City. Variable expenses such as labor and cost of sales would usually fall to the Vendor under this type of arrangement. Advantages of Food and Beverage Contracts • Relieves the municipality of high costs associated with concession operation. • Reduces the risk to the municipality on the concession operation. • Often adds an element of proficiency in the concession operation that may be needed to attract non - golfers to the property for concession service. • City can retain room rental fee revenue. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 81 Disadvantages of Food and Beverage Contracts • The food and beverage operation will often become too focused on outside service and inappropriate for golfers in terms of price and ambiance, leading to a decline in total concession revenue. • High fixed costs remain with the City. Option 313: Maintenance Only Concession Another area of separate concessions is in maintenance -only contracts. In this case, the pro shop and food & beverage operations would operate under separate concession agreements, or by the City, but the City would privatize the maintenance function to another private entity. This model has become more common in certain areas of the country where labor costs for maintenance are increasing too rapidly to keep under control, or where maintenance staffs have been reduced significantly to reduce expense thereby reducing the overall quality of maintenance. General Discussion Golf course maintenance, including associated labor, is almost universally the largest single line expense item on a golf course's operating budget. This is especially true in public sector golf operations, when employee wage and benefit costs are often significantly higher than in the private sector. Based on the NGF Consulting review of the Braemar Golf Course golf system, it does not appear that there is an opportunity to reduce golf maintenance expenses through this arrangement, due, to the small maintenance staff present at the facility as a result of recent reductions. There are a number of companies that specialize in fixed -fee outsourced golf course maintenance, ranging from single- contract operators to industry leaders such as ValleyCrest Golf Course Maintenance, which reports 54 total contracts, and International Golf Maintenance (IGM), which totals 45 contracts. Maintenance companies are able to offer considerable maintenance cost savings due to several reasons, foremost of which is the ability to employ cost - effective manpower and scheduling strategies, which most municipalities are constrained from doing. Additional savings are often achieved through the ability of the larger companies to leverage national purchasing agreements for equipment, materials and supplies, and through other economies of scale. Contract Pricing and Basics In typical fixed fee maintenance -only contracts, the vendor's profits are built into the overall maintenance budget, or contract price. The overriding variable that comes into play in determining contract price is the projected cost of labor. The vendor will first determine the cost of labor in the market where the client facility is located. Some companies, such as ValleyCrest, will not inherit union employees as a matter of company policy. On the other hand, the private vendor may have no restrictions regarding labor (other than state minimum wage laws); it is under this scenario where the greatest savings are typically realized by the municipality. In a municipal setting, the cost of maintenance contracts range between $350,000 and $600,000 per 18 -holes per year, depending on various local factors. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 82 Advantages of Maintenance Contracts • Fixed -fee outsourced maintenance contracts with reputable companies nearly always result in savings on labor expenses, especially when taking on municipal courses that were self- maintained. • These companies will often do as good, if not better, at maintaining golf course conditions, even at the significantly lower budget. • Maintenance contracts relieve the municipality from a number of accounting functions such as accounts payable for maintenance vendors, vendor sourcing, and other responsibilities. Disadvantages of Maintenance Contracts • Adherence to maintenance standards can be hard to enforce if the contract is not comprehensive, or if it does not address contingencies and extraordinary events. • The private fixed -fee maintenance company has its profit margins built into the contract price and has no revenue incentive. Also, higher profits result for the maintenance company if they spend less. • These arrangements can lead to conflicts between the management of the golf course and the maintenance company if the two parties are at cross - purposes (over maintenance conditions, for example). Option 4: Operating Lease The primary goals of an operating lease are to relieve the municipality of all operating concerns, to ensure a minimum rent payment to the municipality (or at least eliminate the losses), and to improve and /or protect the asset. An operating lease is similar to a management contract in that the lessee, like the management firm, hires and fires all employees and is responsible for the day -to -day operation of the facility. The difference between the two is that the full economic risk of the operation is shifted from the municipality to the private management firm, in exchange for the opportunity to earn higher revenues and profits than the municipality was able to generate. The lessee would be committed to pay the municipality a fixed rent, pay all operating expenses, supply equipment, and typically provide some capital for investment in the golf facility. In exchange for incurring all operating expenses and at least sharing capital upkeep, the private lessee would receive most (if not all) of the revenue and pay the municipality either a flat payment (flat lease) or a percentage of revenue (percentage lease), or both, which has a base rate plus percentage share after a meeting a certain revenue target. Advantages to Leasing • Burden of Risk. Leasing the facility to a private entity shifts the burden of operational risk to the lessee. This includes the risk associated with rapidly rising labor and other expenses, as well as potential continued downturns in rounds played and revenues. Barring a breach of the contract, the City could have a guaranteed net revenue stream. The only expenses remaining with the City will be those associated with administering the contract, oversight, and compliance. • Simplicity. The City would be relieved of the day -to -day responsibility in maintaining and operating these facilities. (As with all management options, the City should still have a person who has golf course expertise monitoring the operation and enforcing contract compliance — i.e., Director of Golf Operations or Golf Course Manager). National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 83 • Capital Improvements. Depending on the relative attractiveness of the business opportunity to the private entity, the lease terms could require (or at least incentivize) the lessee to make, or at least contribute significantly to, needed capital improvements (i.e., improving drainage, maintenance facility and on- course services). • Maintenance Equipment. The lessee would be responsible for providing maintenance equipment and golf carts. Disadvantages to Leasing • Control. This lease option offers municipalities the least amount of control over the golf course operation, especially with regard to resident use of the facility and pricing. • Profit Motive. This is closely tied to the control issue. If not carefully executed, a lease arrangement may directly conflict with the objective of providing an affordable, enjoyable recreation activity for residents, as private interests (including maximizing return) can often be in opposition to public interests (such as providing a community service). • Labor Issues. The lease could lead to public sector employees losing their positions at the golf course, or at least face reductions in pay and /or benefits. • Revenue Constraint. As would be expected when one party shares a disproportionately low share of the risk, the City would receive less of the upside revenue potential than it would with a management contract. • Long Term. Leases are typically for a long term, especially if capital improvements are included in the lease terms. This makes it difficult to get out of the lease, should the municipality become displeased with the lessee's operation of the facility. • Down Market. The lessee may be forced to cut maintenance expenses and /or raise fees if revenues do not meet expectations. Unexpected golf market downturns often lead to the lessee seeking to renegotiate terms. Discussion While leasing of public sector golf facilities was popular in previous decades, its popularity waned in the 1990s as golf revenues were increasing and public agencies began to see what they thought were large sums in golf revenue going to an outside vendor and not being reinvested in the facility or going as profit to the municipality. However, since the turn of the 21St century, leases are coming back into fashion for municipal golf facilities, particularly in the 2008- 2010 period of time, with public sector budget challenges. Leasing out the golf operations shifts the burden of operating risk to the private vendor, eliminates large fiscal losses and, in some cases, provides a guaranteed revenue stream to public agencies. In most cases, the vendor will also contribute to capital improvements. Although the appeal of turning everything over to an outside agency may have a lot of merit, especially in terms of transferring operational risk, we should note that the basic issues that tend to drive municipalities into this option do not exist in Edina golf operations. While there may be some inflation in its expenses, Braemar Golf Course is presently operating efficiently and working to reduce its expense structure under new leadership in 2011; it does not seem that the conditions in Edina lend themselves to this sort of solution. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 84 Option 5: Sale, Closure or Reconfiguration of the Golf Course NGF Consulting was hired to help the City of Edina identify the most viable option for the continued operation of the City's golf courses with its present basic physical structure intact. As such, analyzing the potential benefits of selling this golf facility outright to another party, or closing the golf course altogether was beyond the scope of this study. Sale of Golf Course NGF Consulting notes that in our experience direct sales of golf facilities have slowed considerably in recent years, and what sales are taking place are happening at fractions of development costs. In short, it is extremely unlikely the City would be able to sell its golf assets for an appropriate value. For the City to consider this option, it would obviously have to do much further study, identifying both its goals with respect to offering affordable golf to its residents, as well the expenses, revenues, and various other costs and benefits that would be eliminated with the sale of the golf course. As is the case with outright sale of the facility, closing the facilities is also an option to be considered by the City that was beyond the scope of this study. The NGF team feels that there is a longer progression of changes that would have to take place before such an option could even be considered, and the City has not yet exhausted all these options. As such, this option was not considered by the NGF Consulting team. Overview Discussion The NGF review of the various operational considerations for the Edina Golf courses shows that two of the four options presented are probably not the best fit for the City of Edina and can be eliminated from further evaluation: • Management Contract. Given that the City of Edina golf system is neither deficient in golf expertise, nor does it have extraordinarily elevated labor cost (in 2011), the price to pay for a management company to come in and take over the golf operation is not likely to bring the Edina Golf Enterprise into a more favorable economic position than it is at present. Traditional Concession. This option will likely produce too many "working parts" that require attention and shift the City burden from managing golf courses to managing contracts. The City will likely still be responsible for covering losses and making capital improvements (retain risk). Thus the multiple concession option is not likely to bring the Edina Golf Enterprise into a more favorable economic position than it is at present. In light of this, the NGF sees the lease or self- operation with F &B concessions (as -is) as the two most appropriate options for the City of Edina going forward. However, the NGF must also note that if the City opts to pursue a lease agreement for Edina Golf, the key issues that must be addressed prior to making the evaluation include the legal ramifications of a lease and whether to include one, some, or all of the City's facilities in the lease agreement. NGF Consulting Recommendations on Basic Oversight and Structure The NGF team is recommending that the City of Edina not make any changes to the basic structure of operations at the Braemar Golf Courses at this time. The NGF Consulting team sees that the City is presently getting very good value for the money spent on its golf operations National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 85 and maintenance expenses, and the City is not likely to enjoy much savings with any of the outsource options we have just presented. Our finding is that it is far more pressing for the physical upgrades to the driving range and cart paths be completed and then given a chance to produce the additional revenue the NGF team expects to occur from those changes. If after these enhancements the next several budget cycles show decline, then the City may have to consider the outsource options presented earlier. If this is the case, then the NGF team would suggest consideration of the lease option. However, we would not expect the City of Edina to be able to earn much in excess of $100,000± per year in lease revenue from such an arrangement, which is more than is earned at present but not enough to cover debt service and City overhead items. In short, there is no guarantee that any outsource program at Braemar Golf Course will produce net results to the City that are any better than the system presently in place. Food & Beverage Structure The City of Edina should watch its concession operation at Braemar very closely over the next year and a half, and if the present system is not able to improve revenues, then the City should consider some form of private food and beverage concession arrangement. If the City goes in this direction, it should retain the clubhouse rental revenue and include only the Braemar Grill and beverage cart in the concession agreement. Assuming the industry standard of 10% of gross revenue, the City could expect to earn approximately $30,000 to $35,000 per year, but still be responsible for clubhouse maintenance expenses (presently totaling over $150,000 under present allocation system). SPECIFIC PHYSICAL RECOMMENDATIONS NGF Consulting has noted that the overall Braemar Golf Course facility is in generally good condition, but that some enhancements could be made to improve the ability of the facility to increase revenue and /or reduce expenses. A summary of the physical improvements recommended for the City of Edina golf courses is shown below. Braemar Golf Course Improvements The improvement recommended for Braemar golf course (27 -H, executive, range and clubhouse) include (presented in order of NGF recommended priority): 1. Range Renovation — The NGF recommends that Braemar complete a project to expand the driving range and reduce the existing par -29 Executive Course to a par - 27 par -3 golf course. The project will add additional length to accommodate a learning center and for safety, provide another golf facility alternative (par -3 course), and increase revenue by an estimated $20,000 to $25,000 per year. The project would involve expanding the range into the area that is now the #2 and part of #3 hole on the Executive Course, adding a modest learning center and then adding two new tees and greens to other open portions of the Executive Course to create a 9 -hole par -3 course between 1,100 and 1,350 yards. NGF Estimated cost = $300,000 to $400,000 (expand range, 2 new tees, 2 new greens, modest irrigation work- possible new structure) Project would also require some loss of revenue during construction process. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 86 2. Cart paths — The need for "wall -to -wall' cart paths at Braemar is evident and revenue can be enhanced from such a program. NGF estimates that new cart paths will cost around $20 per linear foot of cart path (asphalt), or roughly $80,000 for the roughly 4,000 linear feet needed for completion). 3. Bridge Upgrades — Replace damaged plankings on Braemar bridges. NGF Estimated cost = $16 per linear foot, or approximately $12,000 for 750 linear feet of bridges. Upgrade Recommendations — Lower Priority Other upgrade considerations with much lower priority include: 4. New Irrigation System — Braemar should plan for completely replacing the existing irrigation system with a new system for irrigation on all 27 holes. NGF Estimated cost = $750,000 to $1.0 million, plus would require some loss of revenue during installation process. 5. Equipment — Braemar has some pieces of golf maintenance equipment that are past their useful life and should be replaced as part of an annual review of equipment. NGF Estimated cost = approximately $100,000 per year for equipment over the next three years, to replace most of the aging fleet. 6. On- Course Restrooms— Braemar currently has one on- course restroom. Braemar would benefit from the addition of new restroom facilities at a central location on the golf course — perhaps near holes #8, 9, #23 and #24 (shelter at this location presently). NGF estimates approximately $60,000 to $80,000 for a new on- course restroom facility with full plumbing and electricity. Braemar Golf Course Recommended Improvements Lower Priority Items Highest Highest Priority Items Estimated Cost Range Improvements $400,000 Cart Paths 80,000 Bridge Improvements 12,000 Total Hiah Prioritv $492.000 Lower Priority Items New Irrigation System $1,000,000 Equipment Upgrades (annual) 100,000 On Course Restroom 80,000 Total Lower Priority $1,180,000 Total Facility Upgrades (after 3 years) $1,672,000 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 87 Braemar Clubhouse Improvements The improvement recommended for the Braemar clubhouse generally involves some "face -lift" type items and a renovation of the banquet restrooms on the east end of the building. NGF Estimated cost = $20,000 to $40,000; the project should not cause any loss of revenue during construction process. Golf Dome Improvements Investment in the Golf Dome recommended by NGF includes structurally securing the building with anchoring beam and patching the existing roof. NGF Estimated cost = $120,000 to $150,000. Fred Richards Golf Course Improvements The items NGF recommended for upgrade at Fred Richards, presented in order of NGF recommended priority: 1. Trim Foliage around 8th — 9th Bridge — The foliage on the bridge is blocking the path and should be kept trim at all times. No additional cost and within budget. 2. Parking Lot —parking lot upgrade to include new stripes. NGF Estimated cost= $3,000. SPECIFIC OPERATIONAL RECOMMENDATIONS After our thorough review of the Braemar Golf Course operation, NGF Consulting is not inclined to recommend that any fundamental changes be made to the operation of the facility. As noted above, the management structure of the facility is sound, and the facility is being managed and maintained efficiently. We noted NGF opinion that the City is receiving excellent value for the money spent on golf management and maintenance positions and that these individuals are showing outstanding achievement despite small staff size and shrinking budgets. In all, NGF has observed a very dedicated staff that is working hard to improve the physical and financial condition of this property for the City of Edina. Therefore, no major changes in operation are recommended. Our operational recommendations are as follows: Recommendations on City Operation NGF Consulting has noted that the City of Edina, due to increasing expenses, the competitive nature of the golf market, and the vagaries of the regional climate, should not expect to earn significant net income from this golf course, even if large - scale enhancements are made to the property. The recommendations in this report are aimed largely at helping the City preserve the asset for the future, prevent erosion of market share, and enhance revenues. • The Braemar Golf Courses are a valuable asset for the City of Edina, and the City should do all it can, within reason, to protect these assets and see to it that the system remains healthy and fiscally stable. It is not recommended that the City of Edina enter into any form of privatization or outsource arrangement for the management and /or maintenance of the facility at this time. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 88 • The City of Edina should commit to making the physical improvements detailed above. While it is not clear that the improvements will immediately pay for themselves in enhanced revenue, these physical changes should lead to some increases in revenue that will help the Braemar Golf Course over the long run. • The City of Edina should seek to implement a single consistent point -of -sale (POS) system within all elements of the Edina golf operation. Specifically, all elements of the Braemar Golf Course operation (regulation course, grill, range, Executive Course) should be on one linked system with centralized control. Hours of Operation Ideally, the hours of operation in the pro shops should be from 7:00 AM until dark from May through October. Using these hours will help to: • Increase driving range revenue • Increase merchandise revenue (golfers often buy after their rounds) • Increase F&B revenue (especially if beer is sold). • Add tee -time reservations (more rounds) from existing golfers. • Provide better customer service (golfers do not like to finish with the pro shop closed; makes them feel unwelcome). • Add supervision to the property while golfers are still on the course. Programming NGF Consulting believes that direct selling of tournaments and /or outings is essential to building play levels and revenues at any public golf facility. More so than daily fee play, large tournaments and outings are very much about entertainment and camaraderie, rather than golf. These events are generally at the highest green fee and expose many golfers to the course for the first time. By providing a top -flight experience, annual events can often be re- booked immediately after an outing, thus reducing uncertainty. At present, there is a considerable amount of programmed activity at Edina Golf facilities, and growth in this area is key to enhancing revenues, especially at Braemar 27. Edina golf facility programming should include (in addition to existing programs): • In -house tournaments, especially scrambles where everyone can participate. • Increased women's participation. The surveys conducted by NGF show that public golf courses have a predominantly male clientele. A key growth segment for golf facilities in the coming years will be female participation, and the keys to growing female golf participation are social aspects and family enjoyment. As a result, beginning women golfers will feel more comfortable when they can bring a friend or family member to golf - related events, such as free golf lessons and clinics, networking receptions, golf rules and etiquette seminars, and on- course playing opportunities and instruction. Also offering a female golf professional (present at Braemar) women -only demo days, women -only custom fitting days, and /or the availability of women's club rental sets will assist in growing business in this area. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 89 Food & Beverage Operations The NGF has observed that Edina Golf facilities generally have food and beverage service that is appropriate for serving golfers, but may be missing an opportunity to expand the Braemar Grill operation to serve non - golfers. To do this effectively the City will have to maintain high quality in food and beverage operations and consider expanding the menu. NGF Consulting believes that upgrading the food and beverage operation at Braemar will: • Increase rounds of golf (probably by 5% or more). • Increase revenue per round. • Increase traffic to the Braemar property. • Service other non -golf customers and employees and enhance the overall appeal of the Braemar facility. Beverage Cart Service On- course service of beverage (and some food) items has become a key component of golf operations in the U.S., particularly at resort-type golf courses of high quality. While the beverage cart itself is often not highly profitable (can add to $2 to $3 per round in revenue), the beverage cart provides a level of service that the golf customer has come to expect and will lead to enhanced revenue in other areas of the operation (green fees, carts, etc.). NGF Consulting recommends that Braemar 27 offer this service seven days per week in the golf season. Business / Marketing Recommendations The City should make a commitment to continuing with enhanced marketing efforts described in this report. The NGF has noted that the City of Edina has a marketing budget of $74,000 for 2011 (includes advertising and printing for Braemar, Fred Richards, and the Dome). A marketing emphasis is critical to creating awareness, correcting misperceptions in the market (e.g., the course is wet), and increasing daily fee play. Strategies may include advertising to create a brand image and maintain awareness, developing a public relations campaign, and utilizing Web, print, and yield management strategies, some of which are now being implemented at the golf courses beginning in 2011. An effective and comprehensive marketing plan must incorporate research, planning, strategy, market identification, budget, advertising, timetable, and follow -up. Advertising should be tracked adequately to gauge its effectiveness; first -time customers, to the extent that they can be identified, should be surveyed as to their experience and why they decided to try Braemar golf courses. Current efforts to enhance golf activity at Braemar Golf Course include: (1) Website; (2) email programs; (3) golf school / lesson programs; (4) member clubs; and (5) printed promotions and advertisements. While some of these activities were ongoing in prior years, it is clear that these efforts, particularly Web and email, have been enhanced since the new General Manager has taken over in 2011. The marketing plan in place for the Braemar golf courses should be revised annually and address: • Market conditions • Competition — including pricing and any changes in policies, facilities, or apparent market strategy. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 90 • Target markets • Overall strategy • Pricing • Implementation strategy • Media sources • Budget • Specials / promotions • Customer feedback and research • Follow -up • Measurement (a mechanism to gauge the effectiveness of the marketing plan). Key Components Customer Service — Quality customer service is the best marketing tool, as it is easier to retain current customers than it is to create new ones. This is especially critical for a municipal facility, since the image it projects reflects back on the municipality. The old axiom — a person having a poor experience will tell ten friends about it — is largely true, making proper training of personnel essential. A golf facility cannot give a customer a reason not to return — there are simply too many other choices out there. Periodic customer surveys are an excellent way to measure the pulse of the facility's patrons Maintaining an appropriate pace of play is certainly a key customer service issue and demand driver at public golf courses. NGF Consulting considers it essential that the City find a way (more below) to alleviate the pace of play problem at the Braemar course, perhaps with better training of starters and rangers. Advertising — An important part of any successful business plan is advertising. Relying on word -of -mouth or your known presence in the community is not the basis on which to promote a business. Obviously, free publicity will be limited, so paid newspaper and radio advertising will be an important component of the marketing plan. The primary goals /themes will be stimulating trial of the golf course and making sure potential patrons know how to find it. Rack Brochure — A quality, professionally produced rack brochure for the golf course needs to be developed and distributed to area visitor centers, hotels, tourist attractions with information racks, restaurants with tourist racks, Chambers of Commerce, etc. NGF research (NGF publication The U.S. Golf Travel Market) reveals that 44% of all golfers play golf when they travel. The brochure should, at a minimum: • Have four -color pictures. • Be designed to fit on the tourist racks seen at various visitor centers. • Have the word "GOLF" written on the top 1 '/2" so that it is clearly visible in a rack. • Have facility descriptions (features, amenities, etc.) • Have a map and directions. • NOT have pricing, as pricing changes too frequently. Email — Email databases are essential in today's golf market place, as a means of staying in touch with the club's customer base. The City should continue to aggressively add to its existing and large email database. Email marketing, with the exception of word -of -mouth and free advertising, is the most cost - effective advertising possible. In today's market, it is essential to National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 91 have and use an email database. Email addresses can be captured from customers via a sign - up sheet at the pro shop, with a notice that people on the email list will receive notice of special promotions. The facility's new Website should help Braemar Golf Course build upon its existing database. Website and Internet — The Internet is having a larger and larger impact on golf as time goes on. Golfers, especially when traveling, are using the web more and more to find places to play. The web has several key advantages over other forms of advertising: • Cost: A Website is relatively inexpensive to setup and maintain. • Reach: As the name "World Wide Web" indicates, the Internet is international in scope. Today, almost every household that contains a golfer will have access to the Internet. • Information: The amount of information that can be put on the web is virtually unlimited. At the very least, clear directions and contact information can be used to dramatically increase impact. Of course, for a Website to be effective, people have to be able to find it. It has to be designed such that today's Web search engines will find it based on key terms people are likely to use. NGF Consulting is encouraged that the Braemar Golf Course Manager has taken positive steps with the creation of the new dedicated website for Braemar Golf Course. It is essential that the website be kept current for rates, hours, etc. The best sites are the ones that are constantly being updated with new promotions and news items, so that customers get in the habit of checking them regularly. The website (or page) should continue to include: • Pictures of the facility • Verbal descriptions • A full scorecard • Map / directions to the course • Email signup: There should be a way to sign up for the email program. • Information about group and individual lessons • Current rates and operating hours • Amenities • A calendar or news of promotions and upcoming events Player Development One of the of the critical elements to the long -term viability of Braemar Golf Course is player development, and this should continue to be a point of emphasis at the facility. The continued promotion of lessons and junior programs appears to be a major positive for this facility and should pay dividends to the City over the long term. Plan Execution Of course, no matter how well conceived the plan, it will be useless if not effectively executed. The marketing plan should be considered a guideline, but there should be enough flexibility to make adjustments as the market dictates. The Golf Course Manager must be a driving force National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 92 behind the implementation of the marketing plan, and must be motivated and dedicated to building market share and customer loyalty. Fee Recommendations Analyzing green fee structures can be a difficult exercise without having detailed records about play patterns by time of day and day of week, preferably across two or more consecutive years so that changes in demand can be analyzed in the context of fee increases or decreases. That being said, given our analysis of the current competitive golf market dynamic, as well as other factors such as the demographic profile of Edina and the uncertain regional economy, NGF Consulting has prepared a recommended fee table that appears in the table that follows. NGF has concluded that little change in fees is warranted, but that non - patron rates can be increased while a new under -40 discount can be added to stimulate play from this group. Also, the "super senior' age can be lowered to 60 or 65. Range fees can also be increased after a renovation is completed to be on par with Minneapolis and Golden Valley. Patron Card rates can be adjusted, as Edina has the lowest rate for Patron cards in the market. The table below shows the recommended fee structure for 2012, with changes shaded in grey: Non - Patron Patron Super Senior U40 U25 Juniors2 Golf Carts3 Handicaps Resident Non - Residen 2012 Rates Regulation Course 18 Holes - $38.00 - $29.00 $24.00 $32.00 $25.00 $18.00 $15.00 9 Holes $20.00 $15.00 $14.00 $16.00 $15.00 $10.00 $9.00 $24.00 t $28.00 Braemar Executive and Fred Richards Course Non - Patron $14.00 Patron $11.00 Super Senior Patron $9.00 Junior4 $9.00 Golf Carts3 $7.00 Driving Range Large Buckets $8.00 Small Buckets $5.50 Warm -up Buckets $3.50 1 Mon — Thurs open to 1:00 — reduce age to 55 2 —18 and younger; 3 — Per player; 4 — Any time; 5- After renovation National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 93 2012 Rental Fees Weekday Events (Monday- Thursday) - -- - ------ - - - - -- - - - -- ----_-.-------- Half Day $225 Full Day $400 Evening $500 Weekend Events (Friday- Sunday) Edina Residents' $900 Non - residents $1,100 Events requiring both rooms Additional $150 I 1 Proof of residency required 2012 Patron Fees Edina Resident Patron Edina Resident Super Senior Non - Resident Patron Card Executive Course Edina Resident Patron Non - Resident Patron Card — - $85 $85 $100 $25 $40 National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 94 City of Edina Golf Program Financial Projections As part of this study effort, NGF Consulting has prepared an analysis to show what the potential economic performance of Braemar Golf Courses could be considering the recommendations made in this report, particularly the physical upgrade to Braemar Golf Course's cart paths and driving range. In this section, the facility's economic potential is evaluated with estimates of performance based on a set of assumptions that may or may not become reality. We feel that these estimates represent the best effort to create a "fair estimate of performance" for these facilities based on our complete review of the operation. Improvements to marketing and upgrades to the Braemar Grill menu are also assumed in this analysis. FINANCIAL PROJECTIONS ASSUMING "AS -IS" OPERATION WITH NGF - RECOMMENDED UPGRADES NGF Consulting has created a cash flow model for the continued operation of the City of Edina municipal golf courses under the same operational structure, with recommended marketing and physical improvements as detailed earlier in this report. The tables show the projected cash flows for the full operation through 2016, assuming a 'standard' market, economy, and weather conditions over the five years shown. This projection is intended to show the City what it can expect from the golf operation in the next five years assuming physical enhancements as proposed by NGF. Base assumptions in preparing this financial performance estimate include: • The Braemar Golf Courses facility will remain under its present operating structure through the end of 2016. Enhanced Web and other marketing activities increase rounds of golf to a stabilized 111,000 by 2014. This includes about 71,700 rounds on the Braemar 27, 16,500 on the Braemar Par -3 (New in 2013), and 23,000 on Fred Richards. • NGF has assumed selling between 1,800 and 1,850 patron cards each year through 2016. • The historical blended average green /cart fee is raised slightly in 2012 to reflect changes recommended by NGF. A new under -40 green fee rate is added in 2012. After 2012, the NGF is assuming the City can maintain 2.0% growth every other year in blended average fees through 2016. • Other revenue centers such as merchandise, range, lessons and other continue to generate average per round revenue roughly equal to 2011, with slight increases (2 %) every other year to reflect modest fee increases every two years. • The Braemar Grill and Clubhouse rental revenue is projected to increase slightly faster than other revenue centers, reflecting greater emphasis on these areas by management ads recommended by NGF. • Golf Dome revenue is assumed at a stable $300,000 for the full five years shown. • Beginning in 20.12, expenses are estimated using actual figures from 2010, with the historical 3.5% annual increases in all categories through 2016. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 95 • Cost of sales is assumed at proportions established in 2007 -2010: 75.5% for Merchandise, 42.2% for Braemar Grill, 0.4% for other. • Capital projects as recommended by NGF are assumed at $250,000 in 2012 for new cart paths and range, $200,000 in 2013 to complete the cart paths, purchase new equipment and upgrade the banquet restrooms in the clubhouse, then a stable $125,000 for each year from 2014 through 2016 to reflect yet- to -be- determined capital needs at that time. • Interest and bond principal is assumed to end after 2012. City transfers are assumed to end after 2011. Inputs Utilizing the above assumptions and activity /revenue estimates, NGF Consulting has prepared a preliminary sketch pro forma for the next five years of operation. The estimates for 2011 are based on projections for year -end performance derived from reports as of June 30, as presented earlier in this report. The inputs for the pro forma are summarized in the following table: Pro Forma Estimate for'As -Is with NGF Upgrades 2011 - 2016 Utilizing the above assumptions and activity /revenue estimates, NGF Consulting has prepared a pro forma for the next five years of operation, including a year -end projection for 2011. As this is an estimate of future performance, all figures have been rounded to the nearest $100 for simplicity. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 96 Edina Golf Enterprise Basic Activity and Average fee / Revenue Inputs 'As -Is' Operation With NGF Upgrades Braemar Braemar Cart Path + Range Equipment + Golf Dome Upgrade + Braemar CH + Braemar Key actions Cart Path Restrooms Equipment Basic Capital as needed 2011 2012 2013 2014 2015 2016 Description Projected Projected Projected Projected Projected Projected Braemar 27 Rounds 56,450 67,000 69,500 71,700 71,700 71,700 Executive Course (P -3) 16,500 12,000 16,500 16,500 16,500 16,500 Richards Course 18,900 24,500 22,500 23,000 23,000 23,000 Total Rounds 91,850 103,500 108,500 111,200 111,200 111,200 Average Golf + Cart Fees Blended Avg. - Braemar 27 $27.54 $27.83 $28.20 $28.20 $28.21 $28.21 Blended Avg. - Exec /Par -3 $9.50 $9.75 $9.75 $9.95 $9.95 $10.14 Blended Avg. - F. Richards $9.00 $9.25 $9.25 $9.44 $9.44 $9.62 Other Revenue (per Round) Merchandise $2.13 $2.13 $2.13 $2.17 $2.17 $2.22 Braemar Grill $3.61 $3.80 $3.80 $3.85 $3.85 $3.90 Braemar Range $2.58 $2.64 $2.75 $2.81 $2.81 $2.86 Pro Forma Estimate for'As -Is with NGF Upgrades 2011 - 2016 Utilizing the above assumptions and activity /revenue estimates, NGF Consulting has prepared a pro forma for the next five years of operation, including a year -end projection for 2011. As this is an estimate of future performance, all figures have been rounded to the nearest $100 for simplicity. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 96 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 97 Edina Golf Enterprise Basic Activity and Average fee / Revenue Inputs `As -Is' Operation With NGF Upgrades Braemar Cart Path + Range Equipment + Golf Dome Upgrade + Braemar CH + Braemar Key actions Cart Path Restrooms Equipment Basic Capital as needed 2011 2012 2013 2014 2015 2016 Projected Projected Projected Projected Projected Projected Revenue Green Fees $1,259,100 $1,554,100 $1,628,200 $1,715,800 $1,715,800 $1,750,100 Patron Cards 108,900 111,900 112,200 114,800 115,100 117,700 Carts 295,800 319,800 335,300 343,600 343,600 343,600 Merchandise 195,600 220,500 231,100 241,600 241,600 246,400 Braemar Other 43,200 49,900 52,300 54,600 54,600 55,700 Braemar Grill 331,600 393,300 412,300 428,100 428,100 433,700 Braemar Clubhouse Rental 55,000 65,000 70,000 75,000 75,000 75,000 Braemar Executive 156,800 117,000 160,900 164,100 164,100 167,400 Braemar Range 237,000 273,700 298,400 311,900 311,900 318,200 Fred Richards 170,100 226,600 208,100 217,000 217,000 221,300 Golf Dome 328,800 300,000 300,000 300,000 300,000 300,000 Operating Revenue $3,181,900 $3,631,800 $3,808,800 $3,966,500 $3,966,800 $4,029,100 Less: COS Grill $139,800 $165,800 $173,800 $180,500 $180,500 $182,800 COS Merchandise $147,800 $166,600 $174,600 $182,600 $182,600 $186,200 COS Other $13,500 $15,400 $16,200 $16,800 $16,800 $17,100 Total Cost of Sales $301,100 $347,800 $364,600 $379,900 $379,900 $386,100 Gross Margin $2,880,800 $3,284,000 $3,444,200 $3,586,600 $3,586,900 $3,643,000 Expenses Braemar Admin $775,600 $796,100 $820,000 $844,600 $869,900 $896,000 Braemar Maintenance 727,300 801,800 825,900 850,700 876,200 902,500 Braemar Carts 151,900 191,700 197,500 203,400 209,500 215,800 Braemar Pro Shop 52,300 55,900 57,600 59,300 61,100 62,900 Braemar Exec. & Range 115,000 126,100 129,900 133,800 137,800 141,900 Braemar Clubhouse 201,900 202,500 208,600 214,900 221,300 227,900 Braemar Grill 191,900 208,600 214,900 221,300 227,900 234,700 Fred Richards 155,900 168,200 173,200 178,400 183,800 189,300 Golf Dome 240,900 242,100 249,400 256,900 264,600 272,500 Total Operating Expense $2,612,700 $2,793,000 $2,877,000 $2,963,300 $3,052,100 $3,143,500 Operating Income $268,100 $491,000 $567,200 $623,300 $534,800 $499,500 Non - Operating Expense Bond Int. + Princ. $295,200 $294,550 $0 $0 $0 $0 Capital $0 $250,000 $200,000 $125,000 $125,000 $125,000 Transfers In $100,000 $0 $0 $0 $0 $0 Operating Income (Loss) $72,900 $53,550 $367,200 $498,300 $409,800 $374,500 Golf Fund Position (Loss)* $934,089 $987,639 $620,439 $122,139 $287,661 $252,361 "Assumes beginning balance of ($1,106,989). National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 97 Edina Golf System Summary by Department Braemar Golf Total Rev. (27 +Exec +Shop +Range) Cost of Sales Operating Expenses Braemar Golf Net Operating Braemar Clubhouse / Grill Total Rev. (Clubhouse +Grill) Cost of Sales Operating Expenses Braemar CH /Grill Net Fred Richards Total Rev. Cost of Sales Operating Expenses F. Richards Net Op Braemar Golf Course 2016 2011 2012 2013 2014 $2,296,400 $147,800 $1,822,100 $2,646,900 $166,600 $1,971,600 $2,818,400 $174,600 $2,030,900 $2,946,400 $182,600 $2,091,800 $326,500 $508,700 $612,900 $672,000 Braemar Clubhouse / Grill 2016 2011 2012 2013 2014 $386,600 $139,800 $393,800 $458,300 $165,800 $411,100 $482,300 $173,800 $423,500 $503,100 $180,500 $436,200 1147,000) ($118,600) ($115,000) ($113,600) Fred Richards Golf Course 2016 2011 2012 2013 2014 $170,100 $10,400 $155,900 $226,600 $11,800 $168,200 $208,100 $12,400 $173,200 $217,000 $12,900 $178,400 $3,800 $46,600 $22,500 $25,700 2015 2016 $2,946,700 $2,999,100 $182,600 $186,200 $2.154.500 $2.219.100 2015 2016 $503,100 $508,700 $180,500 $182,800 2015 2016 $217,000 $221,300 $12,900 $13,100 $183,800 $189,300 $20,300 $18,900 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 98 Braemar Golf Dome Basic Activity Golf Dome 2011 2012 2013 2014 2015 2016 Total Rev. $328,800 $300,000 $300,000 $300,000 $300,000 $300,000 Cost of Sales $3,160 $3,600 $3,800 $3,900 $3,900 $4,000 Operating Expenses $240,900 $242,100 $249,400 $256,900 $264,600 $272,500 Golf Dome Net Operating $87,900 $57,900 $50,600 $43,100 $35,400 $27,500 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 98 Edina Golf Enterprise Basic Activity and Average fee / Revenue Inputs 'As -Is' Operation With NGF Upgrades System 2011 2012 2013 2014 2015 2016 Total Rev. $3,181,900 $3,631,800 $3,808,800 $3,966,500 . $3,966,800 $4,029,100 Cost of Sales $301,200 $347,800 $364,600 $379,900 $379,900 $386,100 Operating Expenses $2,612,700 $2,793,000 $2,877,000 $2,963,300 $3,052,100 $3,143,500 Edina Golf Net Income $268,000 $491,000 $567,200 $623,300 $534,800 $499,500 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - 98 Summary of Golf Facilities' Economic Performance The results of the NGF analysis show that with favorable weather and implementation of NGF recommendations, Edina can experience growth in rounds activity back above 100,000 by 2012 and close to 110,000 by 2013. The NGF still expects the Edina Golf system to remain fiscally challenged through 2012, beginning to seriously reduce the accumulated deficits beginning in 2013 when the system bond has been paid off. A summary of findings from the tables above: The Edina Golf Enterprise is viable to cover its basic operating expenses (excluding depreciation) and debt service for the years shown, and should be able to self -fund its capital needs as recommended by NGF. This is considering the presence of a large accumulated deficit on the property that will not be reduced significantly until 2013 when the system's bond is paid off. The capital expenditures proposed by NGF total $250,000 in 2012, $200,000 in 2013 and $125,000 in each of 2014 through 2016. • When the system debt ends in 2013, providing an immediate boost to net income, the system will be capable of sustaining operations, capital expenditures, and accumulated deficit reduction beginning in 2014. • The above projections assume historical inflation in expenses and some inflation in fees charged for golf facilities. The Edina Golf Enterprise will have to commit to at least two percent (2 %) increases in fees every two years to meet these projections. Justifications for Projections NGF Consulting believes the "as -is with NGF upgrades" financial projections created for the Edina Golf Enterprise, under the assumptions noted above, are achievable with the staff and market environment in place in 2011. We base this assertion on the high awareness of the facility that already exists in the market, augmented by NGF recommended improvements. NGF Consulting believes the financial projections created for Edina, under the assumption of recommended changes being enacted, are achievable for the following reasons: • Potential high quality of Braemar Golf Course compared to local competitors. • Ability to host additional rounds due to cart path enhancements and the new par -3 course that would be created. Braemar Golf Course is operating at rounds levels that are lower than actual capacity, and the facility has achieved rounds played levels well in excess of what NGF Consulting is projecting as recently as 2009. • Increased marketing emphasis through more "modern" approaches, as well as promotion of new improvements made at the facility will result in a change in the in the marketplace perception of Braemar Golf Course. • More proactive direct selling of larger tournaments and events; better golf experience to offer large group events. • Improved food & beverage operation and facilities. • Large population of the Edina area and potential for regional economic recovery, resulting in increased discretionary income. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 99 Braemar Grill Concession Consideration The above results show performance assuming NGF projected rounds and revenue on an 'as- is' operating basis. One consideration addressed by NGF in our analysis was the losses in the Braemar Grill. NGF noted that although the loses are likely to be less than shown due to misallocation of overhead, it is still appropriate to address the possibility of a concession arrangement and show what the net result might look like. The table that follows shows the results of the Braemar Grill operation if it were to be operated via concession. Key assumptions include: • Edina would collect 10% of gross revenue from the Braemar Grill and retain clubhouse rental revenue. • Braemar Grill revenue performs as projected by NGF for 2012 through 2016. • New concessionaire is responsible for all cost of sales. • All expenses in the Braemar Grill operation are borne by concessionaire, except fixed clubhouse and clubhouse management personnel expenses. The results show that while this arrangement would improve the overall performance of the food and beverage operation at Braemar, the concession arrangement alone will not eliminate the loss on the Braemar Grill, given the present accounting and overhead allocation. It is likely that only a large increase in revenue will be able to bring the Braemar Grill area into profitability status, based on its present expense structure. The City may find that a reevaluation of overhead allocation within this department may lead to a more realistic picture of performance from this revenue department. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 100 Braemar Grill Operation Assuming Concession at 10% of Gross Revenue As -Is Concession Braemar Grill 2011 2012 2013 2014 2015 2016 Grill Concession Revenue (10 %) $331,600 $39,330 $41,230 $42,810 $42,810 $43,370 Clubhouse Rental Income $55,000 $65,000 $70,000 $75,000 $75,000 $75,000 COGS (Grill) $139,800 $0 $0 $0 $0 $0 Fixed Expense (CH + Grill) $393,800 $175,000 $180,300 $185,700 $191,300 $197,000 Braemar CH + Grill Net $147,000 $70,670 $69,070 $67,890 $73,490 $78,630 The results show that while this arrangement would improve the overall performance of the food and beverage operation at Braemar, the concession arrangement alone will not eliminate the loss on the Braemar Grill, given the present accounting and overhead allocation. It is likely that only a large increase in revenue will be able to bring the Braemar Grill area into profitability status, based on its present expense structure. The City may find that a reevaluation of overhead allocation within this department may lead to a more realistic picture of performance from this revenue department. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 100 Appendices A — Golf Course Life Cycle B — Golf Industry Standards, Norms, and Operational Issues National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — 101 APPENDIX A - GOLF COURSE LIFE CYCLE GOLF COURSE ITEMS IOW LONG'SXOULD PARTS OF THE GOLF COURSE.IAST? Component life spans tan.vary depending upon location ofthe golf course, quality,of materials;.original nstallation and. past maintenance prictie . 4e* encourage 600:course, leaders to work with their .golf course architect, superintendents anti -others to`essess the longevity of their partica for course s..:componetns. The,American Society of'GolfCourse;Arcifiiects (ASGCA)'thanks_those,at the USGA Green Section; Golf Course Builders Association of America, Golf Course- Su perintendents.Association_ of.America and various b. suppliers! for,their.assistance.'in compiling,this information., The. materials piesented on this'ehart-have been reviewed,by the :following= Allied.Associatlons of Golf. N,rn Mfg- GCBM law --- -- J- -SGA 4e1c�'� DATA COUNLEDBY ASOC4, 725 NORTH EXECU71VE ORNE, SURE 7OWSROONFIEL0, KI63005 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - Appendices - 1 YEARS ITEM YEARS Greens(1) 15 -30 years ITEM Cart Paths - concrete 15 -30 years Bunker Sand 5 - 7 years Practice Range Tees 5 -10 years Irrigation System 10 - 30 years Irrigation Control System 10 - 15 years PVC Pipe (under pressure) 10 -30 years Pump Station 15 -20 years Tees 15 - 20 years Corrugated Metal Pipes 15 - 30 years Bunker Drainage Pipes (3) 5 -10 years Mulch 1- 3 years Cart Paths - asphalt (2) 5 -10 years Grass (4) Varies for longer) NOTES* (1) Several factors con weigh into the decision to replace greens, accumulation of layers an the surface of the original construction, the desire to convert to new grasses end response to changes in the game from an architectural standpoint fliko rho interaction between green speed and hole locations/. O Assumos ongoing maintenance beginning 1 -2 years afar installation, (3) 7ypicagy mplaced bocauso the send is being changed— while the machinery is thereto change send, it's often a good time to replace the drainage pipes as well. (4) As new grasses enter the marketplace— far example, those that are more drought and disease tolerant— replanting maybe appropriate, depending upon the situ. Component life spans tan.vary depending upon location ofthe golf course, quality,of materials;.original nstallation and. past maintenance prictie . 4e* encourage 600:course, leaders to work with their .golf course architect, superintendents anti -others to`essess the longevity of their partica for course s..:componetns. The,American Society of'GolfCourse;Arcifiiects (ASGCA)'thanks_those,at the USGA Green Section; Golf Course Builders Association of America, Golf Course- Su perintendents.Association_ of.America and various b. suppliers! for,their.assistance.'in compiling,this information., The. materials piesented on this'ehart-have been reviewed,by the :following= Allied.Associatlons of Golf. N,rn Mfg- GCBM law --- -- J- -SGA 4e1c�'� DATA COUNLEDBY ASOC4, 725 NORTH EXECU71VE ORNE, SURE 7OWSROONFIEL0, KI63005 National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - Appendices - 1 APPENDIX B — GOLF INDUSTRY STANDARDS, NORMS, AND OPERATIONAL ISSUES The NGF has presented a selection of basic golf industry information designed to help educate the City of Edina on "reasonable expectations" for public golf operations in the U.S. Information provided includes operational norms for public golf courses (rounds, revenues, expenses, staffing) as well as some other "standards" consistent with successful public golf courses. Public Golf Operational Norms For comparison purposes to City of Edina golf courses, we present a review of selected NGF data collected from various surveys conducted in the last five years. This include data from the aggregate of all golf courses in the U.S. (by category), as well as data from selected sub- categories of golf facilities, including "Standard" (highest green fee under $35), "Mid -Fee" (highest fee between $35 and $70) and "Premium" (highest fee over $70). These data are detailed in the National Golf Foundation publication, Operating & Financial Performance Profiles of 18 -hole Golf Facilities in the U.S. As Edina is operating golf courses that fit into two separate categories, the NGF has included benchmark data for'mid -fee' public golf courses, but does not have complete and accurate data for comparison on 9 -hole Executive - length and par -3 courses. In addition, NGF Consulting has added estimates from the "Future of Public Golf in America" study completed in 2009 and presented at the annual NGF Golf Business Symposium. Public Golf Facility Rounds Expectations NGF research indicates that the average number of rounds played per 18 -hole golf course has been declining in the last 25 years. The totals now stand at an average of 32,497 rounds for municipal golf courses, 26,009 for all daily fee (privately- owned, open to the public), and 17,748 for private (member only) clubs. We note these figures all represent significant declines since 1985, with acceleration of decline since 2001. As a benchmark comparison, average rounds per 18 -hole municipal golf course was around 36,000± in 2005 and just over 33,500± in 2009. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 2 Rounds Played Median 18 -hole 60,000 50,000 Municipal 40,000 Daily Fee 32,497 30,000 26,009 20,000 Private 17,748 10,000 0 1985 1992 1994 1997 1999 2001 2003 2005 2008 2009 Public Golf Facility Revenue Expectations NGF research indicates that the total of all golf facility revenues in the U.S. represents a $22.3 billion industry, down from a peak of $29.1 billion in 2005. The table below shows the NGF estimate for total golf facility revenue (public and private combined) in the United States for selected years since 1992. Total U.S. Golf Facility Revenue Total Golf Facility Revenues Adjusted for inflation, includes public & private $35 $30 $25 $20 $15 $10 $5 $0 1992 1994 1997 1999 2001 2005 2008 2009 Average Revenue per Golf Facility The NGF estimate for total revenue per golf facility in the U.S. now stands at $1.5 million for daily fees, $1.3 million for municipals, and $3.4 million for private clubs. Again, we note that this National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 3 is a full aggregate of all golf facilities in the U.S., inclusive of all climatic regions and facility types. Facility -Level Revenues Average Total Revenues 18 -hole - $millions 2009* 2008 2009 % change Daily Fee $1.6 $1.5 -6.1% Municipal $1.3 $1.3 -2.1% Private $3.6 $3.4 -4.7% Source: National Golf Foundation and Golf Datatech F &B revenue (incl. banquets) Revenue Detail for `Mid -Fee' Public Golf Courses Further detail on 'mid -fee' public golf facility operations in the United States has been collected by NGF over the years, a summary of which is presented below for 2005 and 2009. 'Mid -fee' public golf courses are those with green fees in the $35 to $70 range (excluding carts). The NGF consultants feel that this represents the best measure of comparison to performance at the 27 holes at Braemar Golf Course, and is used for this purpose throughout the NGF engagement for the City of Edina. Public Mid -Fee Average Revenues 2005 2009* % change Green fees, cart fees and member /passholder revenue $679,280 $624,900 -8.0% All other golf revenue $76,930 $75,000 -2.5% F &B revenue (incl. banquets) $214,400 $182,200 -15.0% Merchandise revenue $80,080 $75,300 -6.0% All other operating revenue $37,560 $36,400 -3.1% Total Revenue $1,088,250 $993,800 -8.7% Source: Operating & Financial Performance Profiles of 18 -Hole Golf Facilities in the U.S., 2006 edition, National Golf Foundation, and "Future of Public Golf in America" study — 2010. 'Estimated totals derived from sample research in 2009. Public Golf Facility Expense Expectations NGF research indicates that all golf facilities in the U.S. had a total of $21.3 billion in direct operating expenses, down 20.5% from a high of $26.8 billion in 2001. The table below shows the NGF estimates for total golf facility expenses (public and private combined) in the United States for selected years since 1992. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 4 Total U.S. Golf Facilitv Expenses Total Golf Facility Expenses Adjusted for inflation, includes public & private $30 $26.8 $25 $24.7 $22.4 $21.3 $20 $20.0 $16.5 $15 $14.6 $12.4 $10 $5 $0 1992 1994 1997 1999 2001 2005 2008 2009 Average Expense per Golf Facility The NGF estimate for total expenses per golf facility in the U.S. now stands at $1.3 million for daily fees, $1.1 million for municipals and $3.2 million for private clubs. Again, we note that this is a full aggregate of all golf facilities in the U.S., inclusive of all climactic regions and facility types. Facility -Level Expenses Average Total Expenses 18 -hole - $millions 2008 2009 % change Daily Fee $1.4 $1.3 -5.8% Municipal $1.1 $1.1 -1.2% Private $3.4 $3.2 -5.4% Source: National Golf Foundation and Golf Datatech Operating Expense Detail for `Mid -Fee' Public Golf Courses Further detail on 'mid -fee' public golf facility operational expenses in the United States from 2005 and 2009 are displayed below. The NGF consultants will use these figures for comparison to performance at Braemar Golf Course throughout the NGF engagement for the City of Edina. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 5 Public Mid -Fee Average Expenses 2005 2009* % change Total maintenance costs $377,160 $414,900 10.0% Golf car fleet costs $31,120 $30,500 -2.0% COGS F &B $86,360 $76,200 -11.8% COGS merchandise $56,450 $44,600 -21.0% Other expenses $315,280 $365,700 16.0% Total Expenses $866,360 931,900 7.6% Notes: "Total maintenance costs" includes payroll, supplies, and equipment. "Other expenses" is a large category because it includes all non - maintenance payroll and all other operating expenses. Source: Operating & Financial Performance Profiles of 18 -Hole Golf Facilities in the U.S., 2006 edition, National Golf Foundation, and "Future of Public Golf in America" study — 2010. 'Estimated totals derived from sample research in 2009. Other Expense Findings NGF Consulting has also included basic information on golf industry 'standards' for all golf courses of all types in all climates. Industry standards can vary depending upon specific courses, but as a "rule of thumb," allocated spending in key areas coincide with the following percentages: Key Area Allocated Spending Labor 50% Products, Supplies & Repair 20% Services (Incl. Equipment) 15% Utilities 5% G & A (Excl. Labor) 5% Other 5% Source: Golf Course Superintendents Association of America (GCSAA) and NGF Consulting. Expense totals do not include non- recurring capital expenses, amortization, or depreciation. Public `Mid -Fee' Average Revenue and Expense per Round NGF research indicates that middle -fee public golf courses in the U.S. average $30.58 in total facility revenue per round of golf in 2009. Of this figure, $21.54 (70.4 %) is derived from "golf' sources (green, cart, pass fees and driving range), with the remaining $9.04 (29.6 %) per round derived from "ancillary" (mostly merchandise, food + beverage) sources. Overall, this figure has declined by about 6.0% between 2005 and 2009, with the largest decline (12.5 %) coming from food and beverage revenue. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 6 Middle -fee public golf courses in the U.S. average $28.68 in total facility expenses per round of golf. Of this figure, $12.77 (44.5 %) is derived from golf course maintenance, with the remaining $15.91 (55.5 %) per round derived from all other expenses. Overall, this figure increased by about 11 % between 2005 and 2009. Public Mid -Fee U.S. Average Revenue Per Round 2005 2009 % change Total Revenue $32.54 $30.58 -6.0% Golf Revenue $22.61 $21.54 -4.7% F&B revenue (incl. banquets) $6.41 $5.61 -12.5% Merchandise revenue $2.39 $2.32 -2.9% All other operating revenue $1.12 $1.12 0.0% Source: Operating & Financial Performance Profiles of 18 -Hole Golf Facilities in the U.S., 2006 edition, National Golf Foundation, and "Future of Public Golf in America "study - 2010 Middle -fee public golf courses in the U.S. average $28.68 in total facility expenses per round of golf. Of this figure, $12.77 (44.5 %) is derived from golf course maintenance, with the remaining $15.91 (55.5 %) per round derived from all other expenses. Overall, this figure increased by about 11 % between 2005 and 2009. Public Golf Course Staffing As noted previously, the City of Edina is operating its two golf facilities directly, through a City - established Golf General Manager, and a single City Golf Superintendent and separate manager for Fred Richards and the Golf Dome (one position) employed directly by the City. While there has been some use of various contracted staff for functions over the years, this has been the system in place for most of the history of Edina Golf facilities. This structure is very common among municipal golf courses in the U.S., although it often results in labor expense that is higher than similar operations in the private sector. The discussion that follows will explore the operation of Edina golf courses and help to assist the City in identifying a "standard" for staffing a public golf course operation, for ultimate use in establishing a program for staffing at each of the Edina golf sub - facilities. However, we note that given the relative quality of each facility, its local market characteristics, and the level of rounds played and revenue production, it is clear that a `one size fits all" approach will not be appropriate for this system. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - Appendices - 7 Public Mid -Fee U.S. Average Expense Per Round 2005 2009 % change Total maintenance costs $11.28 $12.77 13.2% Golf car fleet costs $0.93 $0.94 0.9% Total COGS $4.27 $3.71 -13.1% Other expenses $9.43 $11.25 19.4% Total Facility Expense $25.91 $28.68 10.7% Source: Operating & Financial Performance Profiles of 18 -Hole Golf Facilities in the U.S., 2006 edition, National Golf Foundation, and "Future of Public Golf in America "study - 2010 Public Golf Course Staffing As noted previously, the City of Edina is operating its two golf facilities directly, through a City - established Golf General Manager, and a single City Golf Superintendent and separate manager for Fred Richards and the Golf Dome (one position) employed directly by the City. While there has been some use of various contracted staff for functions over the years, this has been the system in place for most of the history of Edina Golf facilities. This structure is very common among municipal golf courses in the U.S., although it often results in labor expense that is higher than similar operations in the private sector. The discussion that follows will explore the operation of Edina golf courses and help to assist the City in identifying a "standard" for staffing a public golf course operation, for ultimate use in establishing a program for staffing at each of the Edina golf sub - facilities. However, we note that given the relative quality of each facility, its local market characteristics, and the level of rounds played and revenue production, it is clear that a `one size fits all" approach will not be appropriate for this system. National Golf Foundation Consulting, Inc. - City of Edina Golf Operations - Appendices - 7 Braemar Golf Course Staffing Braemar Golf Course has reported the following staff to NGF Consulting (FT - full time with benefits and PT — part time): Pro Shop Staff • Golf Course General Manager (FT) • Golf Professionals (contract) • Pro Shop Manager (FT) • Golf Operations (FT) • Cashiers /Assistants/ (PT) • Starters / Rangers (PT) Clubhouse / Other Staff • Clubhouse Manager (FT) • Grill Manager (FT) • Grill / Bev. Cart Staff (PT) Golf Maintenance Staff • Golf Superintendent (FT) • Assistant Superintendent (FT) • Irrigation Specialist (FT) • Mechanic (FT) • Staff (FT) • 26 PT Maintenance Crew Staff size is comparable to golf courses of similar operation (see below). There are no industry standards that can be referenced to determine the appropriate staffing levels for a golf operation. The number of staff needed for a particular golf operation depends on several factors, not the least of which is budget considerations. Personnel costs typically represent the largest single expense item in a golf course operation, as is the case for Braemar. Therefore, an analysis of these costs is essential to understanding the financial performance of the City golf operation. It appears that Braemar Golf Course cannot reduce staffing any further without jeopardizing the quality of the product offering, unless perhaps more positions are modified from full time to part time in nature. We note that there are only two full -time employees in this operation and it does not seem that there is room for any further reductions. The NGF review of public golf operations nationwide in 2009 revealed the following averages for full -time staffing at 18 -hole daily fee golf courses nationwide: National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 8 U.S. Averages Distribution of Staffing — Full -Time Equivalents (Year- Round) Total Daily Fee Golf Courses Municipal Golf Courses U.S. by season length by season length Braemar 10 -12 10 -12 GC* Avg.* mos.* <10 mos.* mos.* <10 mos.* Golf Maintenance Staff 17A 10.0 9.5 7.0 10.5 9.0 Pro Shop Staff 8.0 9.5 9.0 7.0 10.5 7.5 Clubhouse Staff (F &B) 4.0 3.0 3.0 2.0 2.0 2.5 Total 29.0 22.5 21.5 16.0 23.0 19.0 Source: Operating & Financial Performance Profiles of 18 -Hole Facilities in the U.S., National Golf Foundation. *based on combination of pt and ft — volunteers not counted — Averages are for 18 -hole courses and Braemar is 36 holes. Golfer Expectations of Better Quality Public Golf Facilities Golf consumers have developed certain expectations about the package of amenities they expect at golf courses of various levels of quality. These expectations extend to both the physical attributes (maintenance) of a facility as well as the level of service provided. In this section, NGF will provide a basic "checklist' of amenities and services that are expected at various levels of golf course quality and should be considered within the overall program of the City of Edina golf system. This includes a review of golf course facilities, support amenities, and service. Golf Course Expectations A summary of categories of expectations for golfers at middle -to -better quality golf courses includes: • Clean carts • Good scenery • Appropriate length and challenges (see below) • Well maintained conditions • Well maintained greens • Well maintained fairways • Well maintained tees • Well maintained bunkers • Clearly marked and visible yardage and hazard indicators • Rough that is not too difficult and ball can be found • Practice facility • On- course facilities / water fountains Clubhouse Expectations Basic expectations of golf course clubhouses from golf consumers at middle -to -better quality public golf courses include: National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 9 • Visually appealing entrance and landscaping • Area to drop golf bags directly from auto • Clean and clearly marked entrance • Appropriate and visible art and decorations • Visually appealing pro shop area • Room to shop and view items for sale + ease of purchase • Convenient restrooms cleaned twice daily • Clear logistics and ergonomics (where do I go to check in ?) • Space and comfortable chairs to sit and relax • Wi -Fi and cell service available • Space to privately change clothes /shoes (if necessary) • Nice views of the golf course • Good food and beverage service • Alcohol service (at least beer) and a comfortable place to go to enjoy food and drinks and reflect on their round with friends • Big screen TVs in the lounge /bar and /or grill area that are always tuned to sports Service Expectations Basic service expectations from golf consumers at middle -to -better quality public golf courses include: • Availability of, and accommodation for booking tee -times • Assistance with golf bag drop • Ease of parking • Friendly /courteous staff at check -in counter • Pro shop stocked with appropriate basic items (balls, tees, gloves, etc) • Carts cleaned and fully charged for a round • Courteous starter attentive to golfer needs • Management/staff attention to pace -of -play • Courteous ranger moving play along • Beverage cart service • On- course restroom / drinking stations • Ability to conveniently consume snacks /beverages after 9th hole (the "turn ") • Assistance with golf bag after the round • Ability to conveniently consume snacks /beverages after 18th hole • Pro shop open when round complete The above items represent the basic package of golf facility amenities expected by golfers to complete a better quality golf experience. Attention to these details will help produce repeat customers and strong "word -of- mouth" recommendations. In general, the facilities at Braemar Golf Course meet these expectations with some exceptions to be addressed by NGF in our recommendations section. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 10 Merchandising Operations Merchandise sales are an often overlooked aspect of golf operations. Most operators realize that it is important to carry some items as a convenience to their customers, some even see it as a profit center, but rarely is it seen as a significant source of income. Instead, it is looked upon more as a small add -on sale and is rarely given much attention. As a result, most operators are content with merchandise sales of $2.50 or so per round. On the other hand, some operators see merchandise sales for what it can be — a major profit center for the golf operation. In addition, savvy operators understand that the quality of the merchandise helps set the golfer's expectations for the course. For example, if a golfer comes in and sees a sparsely stocked pro shop, they are likely to conclude that the golf course is in financial difficulty, which may reflect on the quality of the golf course and its condition. Similarly, if the pro shop carries high - quality shirts and supplies, the golfer is led to believe the golf course is a higher -end facility that attracts higher -end golfers who can afford to play at better facilities. The biggest key to success in merchandise sales is attitude. If a golf facility operator approaches merchandise sales as simply a minor add -on, it is likely to remain a low priority and generate little revenue. On the other hand, if the pro shop is viewed as a retail store, the entire perspective changes. The degree to which a golf facility can emulate successful retail store practices will determine just how successful that golf shop can become. Ideas to help move improve merchandise operations at public golf courses include: • Sales. Always have merchandise on sale. Further, the merchandise on sale is not just the rejects, but includes popular selections as well. Merchandise should be rotated regularly through the sales tables and not kept on sale for more than a few weeks at a time. • Promotion. The typical pro shop relies on a small sign placed strategically on a rack or table to announce items that are on sale. Merchandise sales can also be promoted on the Website, sent out in emails, noted on large signs in the lobby or grill area, or on smaller signs at the pro shop counter or even on the golf carts. • Inventory. Successful retail stores recognize that having a strong inventory is important for two reasons: (1) it gives customers a wider selection, which increases the chances for a sale; and (2) full shelves are much more enticing to customers than sparsely stocked shelves. • Margin. Most successful pro shops will have a cost -of -goods for merchandise sales of around 70 -75% (Braemar Golf Course is close to this threshold). • Know Your Market. One of the biggest keys to success is to know your market and stock merchandise that is consistent with the golfers at the facility and the price point. • Logo. One thing golf discounters and on -line stores do NOT have is your logo! Your logo is often the main reason buyers will purchase your shirts and caps, etc., because it is unique and gives them something to wear others won't have. The Edina Golf system and Braemar should strive to improve the golf log, and then promote it on all soft goods items (shirts, jackets, hats, etc.), as well on golf balls and umbrellas and other hard goods items. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 11 • Staffing. The best pro shops will have staff that is dedicated to merchandise sales. There should be a merchandising manager (as with Braemar) who is knowledgeable on retail sales and knows both how to order and display merchandise successfully. Food and Beverage Operations The food and beverage (F &B) operation at most golf courses is critical to the facility's profitability, either positively or negatively. The F &B operation, though, is more important to the success of a golf course than simply its direct contribution to the bottom line. What is often undervalued, perhaps because it is so hard to measure, is the F &B's impact to the overall desirability of a golf course and thus its effect on rounds performance. There is no question that for most golfers a golf course's F &B operation significantly impacts the overall golfing experience. Given that a golf round usually takes four to four and half hours to play, a golf round is inevitably going to impact at least one meal for a golfer. Further, many golfers enjoy relaxing after a round of golf, preferably while eating and /or drinking. This is an important social time as the golfers reflect on the round, settle bets, and often discuss various issues that may have nothing to do with golf. (Notably, a golf course is a popular spot to conduct business). As a result, a facility's F &B operation can be either an asset or a detriment to a facility. If the quality of food is excellent and the atmosphere and service are good, there is no doubt that the operation will have a positive impact on golf course performance. However,. if the F &B is lacking (or even non - existent) it can deter a lot of players from even coming to the course. This is true if for no other reason than convenience. Given that the golfer is likely to need a place to eat either before, after or even during a round, if the golf course cannot provide the meal, the golfer must find another place — adding additional time and inconvenience to the round. Further, a golfer tends to want to satisfy thirst and hunger immediately. If this cannot be done at the golf course, the round can be much less pleasant. On the other hand, if the food quality and service are good, it adds to the golf experience and increases the desirability of the golf course as a place to play. A high quality F &B operation can help make up for any deficiencies of the golf course. Similarly, a poor F &B operation can drag even a good golf operation down. It is also important to understand that the F &B operation is not limited to the grill or restaurant, but definitely extends to the golf course. Many golf operators have discovered that offering a good beverage cart operation not only creates a new profit center, but also increases total rounds performance. Golfers tend to enjoy beverage cart service, when the operators are well - trained and personable and the prices and selection reasonable. It is not uncommon for a mid- level facility to average more than $4 per round from beverage cart sales alone. Successful beverage carts include good servers and good selection, consistency (be available) and the sale of beer. National Golf Foundation Consulting, Inc. — City of Edina Golf Operations — Appendices — 12 j' MEMORANDUM TO: Honorable Mayor & City Councifthembers FROM: Cary Teague, Director of Planning RE: GrandView Small Area Plan DATE: August 30, 2011 Planning Commissioner Kevin Staunton will update the City Council on the GrandView Small Area Planning Process. The following background information is attached to aid in the discussion: • A draft work plan for the GrandView District Small Area Plan. • Background information on the consultant team that is being recommended by the GrandView Steering Committee. The development team that is recommended includes lead consultants Bruce Jacobson of Close Landscape Architecture and Mike Lambe of Cunningham Group Architecture. Others include transportation consultants Jack Broz of HR Green and Antonio Rosell -of- Community Design Group, and market and financial consultant Tony Schertler of Springsted. 11Sr r i f r f ' f - i i i r r i ---- i r i i i i r � i i r r � r r � f r i i i CUNINGHAM G R O U P rr it r i f r r i e f August 12, 2011 GrandView District Small Area Plan Approach, Scope, and Budget Presented to City of Edina Prepared by Cuningham Group Architecture, P.A. 201 Main Street SE, Suite 325 Minneapolis, MN 55414 Contact Michael Lamb 612- 379 -5558 mlamb @cuningham.com CUNONGHAM G R O U P Grand Mew Distrito Small Area Plan Approach, Scope, and Budget APPROACH The Cuningham Group team is proposing a community-based approach that recognizes the organization and effort that has been made to date; from those efforts this process is a `bridge' to the next steps. We will depend on the established organization of the Steering Committee and its sub - committee structure to work with a process that is focused on key issues, opportunities, and recommendations. The approach is organized around the Steering Committee that meets on a regular basis to guide the Consultant Team. A key feature of the approach is using a Community Workshop format to facilitate a highly interactive process over an approximately four (4) month schedule, which continues the progress that has been made by the Steering Committee and community stakeholders. The workshop format is designed to quickly and efficiently present ideas, get feedback, make adjustments, and re- engage local stakeholders. We are proposing to work with you to conduct three (3) Community Workshops at specific milestones. The community participation process includes these primary groups of participants: Steering Committee, Executive Committee, Work Groups, .City Staff, Focus Groups (land owners, neighborhoods, public officials, school district, institutions, city departments, developers, business operators, etc.), Planning Commission, and City Council. Each of these groups is engaged at key times throughout the process. Roles and Responsibilities The consultant team will rely on the organizational capacity of the Steering Committee and City to act in a number of project roles during the process. Steering Committee — will provide overall guidance to the process and act as hosts during the workshops and ambassadors to the greater community. Executive Committee — will provide active direction to the consulting team on behalf of the Steering Committee and will help lead the planning process at each step. Work Groups — will continue to function relative to specific topics; for the Workshops each group will prepare a snapshot of the `big picture' context and detailed information about the district conditions. A Communications/PR Work Group will lead the overall outreach and communications efforts. • City Staff— will support the process with technical and policy information, assist with public and community outreach, and guide the larger team through the necessary approval steps. • 'Cuningham Group — will serve as the lead contract holder and co -lead the planning process. • Close Landscape Architecture — will serve as the co -lead for the planning process. • HR Green — will provide transportation/traffic planning /engineering expertise as needed. Springsted — will provide market and'financial expertise as needed. Community Design Group —will participate in the Workshop process providing expertise and assistance across a range of subject areas. CUN'ONGHAIMA G R O U P GrandVlew District Small Area Plan Approach, Scope, and Budget Part I — Discussion and Discovery Part I is about learning from and listening to the, Steering Committee, Work Groups and other stakeholders, analyzing the study area and understanding the work done to -date, appreciating the larger dynamics of the area, and clearly defining the opportunities. An initial Community ,Workshop is held to conduct work group discussions /downloads; a public meeting/presentation is hosted by the Steering Committee and the consultant team Part II =Ideas and Options Part II focuses on developing ideas and options that address the specific issues raised by the Steering Committee, stakeholders, and the public process., The consultant team conducts a three -day Community Workshop (to be held in the study area) that will include Steering Committee meetings, focus group meetings, stakeholder interviews, team work sessions, and concludes with a public meeting/presentation. Part III - Decide and Deliver Part III' consolidates all the comments, ideas, and options into a preferred direction. This part includes a third Community Workshop and public meeting. The consulting team prepares a summary document that may be widely distributed via a variety of sources (print, web, etc.) and a Sketch -up 3D model of the area with preferred options. 2 CUNINGHAM G R O U P GranciView District Small Area Plan Approach, Scope, and Budget SCOPE OF SERVICES Part I — Discussion and Discovery Part I includes the overall review and understanding of the existing conditions of the plan area, the larger context in which it exists, and the activities /efforts by the Steering Committee. This includes identification and analysis of the physical characteristics of the area as well as a summary review of land use, community needs, transportation, market place, and proposed/planned development and infrastructure initiatives. Each Work Group will also be responsible for preparing a contextual overview of their topic and a more specific summary of the conditions /influences of the district study area. Key tasks include: Kickoff Meeting: The project team meets with the Steering Committee and City staff to review expectations, roles, scope, and milestones for the project. During this meeting the client group identifies key stakeholders to be engaged during the process. Assessment and Analysis: We will review and conduct a general analysis and assessment of the study area, what has been produced to -date, its physical and environmental characteristics (using data and information that is readily available and/or provided by the client and client Work Groups). Our analysis will focus on what we anticipate to be the key issues, such as: land use, transportation, community needs /public realm, real estate market/finance, and implementation. The project team will also produce draft goal statements to be used as a guide relative to options and implementation recommendations. The team prepares graphic and narrative documentation as needed to summarize this task. Work Group Reports: Each of the four topical Work Groups will organize, research, and prepare a `group report' and will share the results of that with the project team during the first workshop. The reports should focus on two levels of information: a), "big picture" or the larger context of the district, city and sub - region; and b) "on- the- ground" or information that is very specific to the study area. Reports should be summarized in memorandum form not to exceed 3 -4 pages but should include any and all necessary supplemental information, data, Community Workshop #1: The first Workshop (1 day) is organized around "download" meetings with each Work Group during the day followed by public meeting/presentation during the evening. Key Activities: Team work sessions; Community Workshop #1 Deliverables: Graphics, summary notes, as needed; Sketch -up base model; PowerPoint presentation; Web -Ready updates in Graphic and Narrative Formats Meetings: Steering Committee, City Staff, Executive Team, Work Groups, and Public meeting CUNONGHAM G R O U P GrandView District Small Area Plan Approach, Scope, and Budget Roles and Responsibilities: • Steering Committee.- meet as a group at least one time with the project team; attend and host the -Workshop public meeting • Executive Committee — meet as group at least one time with the project team; attend the Workshop as needed • Work Groups — prepare a snapshot of the `big picture' context and detailed information about the.district conditions per topic City Staff— organize a departmental meeting with the consultant team;.meet with the project team at least one time; provide project team with available data, information, mapping, and other resources as needed Part H — Ideas and Options In Part II the project team prepares a series of feasible options based on the results of the first Workshop and analysis. These are prepared using a combination of words, pictures, and numbers; options for how the built environment might be developed are illustrated with the Sketch -up model. Ideas will respond to the many initiatives and efforts ongoing, planned, or in consideration (in particular, identified infill and redevelopment sites). Community Workshop.42: The purpose of Community Workshop #2 (3 days) is to present options and alternatives to the local stakeholders. We will meet with the Work Groups, conduct focus groups, meet with the Steering Committee, and hold a public meeting/presentation during the evening of the last day. Work Group Review: Each of the four topical Work Groups will meet with the project team during the Workshop to review and discuss the ideas and options being considered and provide additional research as identified by the project team: Draft Plan Summary: The consultant team prepares a draft summary that will address ideas and options for five major components: land use /community design; transportation; parks, open space, and natural resources (public realm); market/ finance; and implementation. The purpose is to solidify the key ideas and eliminate unsupported or infeasible recommendations prior to moving into Part III. The draft summary along with an implementation strategy will be presented and reviewed during Public Workshop #3 Key Activities: Team work sessions; Community Workshop #2 Deliverables: Graphics, summary notes, as needed; Sketch -up model options; PowerPoint presentation; Web- Ready Updates in Graphic and Narrative Formats Meetings: Steering Committee, City Staff, Executive Team, Work Groups, and Public meeting Roles and Responsibilities: • Steering Committee — meet as a group at least one time with the project team; attend and host the Workshop public meeting • Executive Committee — meet with the project team at least one time; attend the Workshop as needed 4 CUNINGHAl1A_- G R O U P - GrandView District Small Area Plan Approach, Scope, and Budget Work Groups — meet with the project team as least one time; provide additional research as needed City Staff— meet with the project team at least one time; assist project team as needed Part III — Decide and Deliver Part III consolidates all the comments, ideas, and options into a preferred direction. This part includes a third Community Workshop and public meeting. The project team prepares a summary document that may be widely distributed via a variety of sources (print, web, etc.) and a Sketch -up 3D model of the area with preferred options. Community Workshop #3: The team hosts Community Workshop #3 (2 days) in which refinements, adjustments, and implementation are presented and reviewed. Work and focus groups are reconvened, as necessary, for a final time and a final public meeting is conducted. Plan Summary: The consultant team completes the Citizens Summary (Plan Summary) that will address five major components: land use /community design/ facilities; transportation; parks, open space, and natural resources (public realm); market/finance; and implementation. The purpose is to solidify main ideas and eliminate unsupported or infeasible ideas prior to developing final Summary recommendations. Key Activities: Team work sessions; Community Workshop #3 Deliverables: Graphics, summary notes, as needed; Sketch -up model w /options; PowerPoint presentation; Web -Ready Updates in Graphic and Narrative Formats Meetings: Steering Committee, City Staff, Executive Team, Work Groups, and Public meeting Roles and Responsibilities: • Steering Committee — meet as a group at least one time with the project team; attend and host the Workshop public meeting • Executive Committee — meet with the project team at least one time; attend the Workshop as needed Work Groups — meet with the project team as needed City Staff— meet with the project team at least one time; assist project team as needed CUNINGHAM G R O U P GrandView► District Small Area Plan Approach, Scope, and Budget DELIVERABLES Final deliverables are a combination of plan and process summary, 3 -D modeling, and other multi -media tools. The. consultant team and project team will work together to prepare the deliverables. The specific content will be determined by the Steering Committee and Project Team and include the components necessary to facilitate incorporation into the City's comprehensive plan. The deliverables will include the following. 1. Plan Summary that includes four major categories: 1.1..Hope for change---7a definitive statement about why planning is needed to guide GrandView area and what the community gains from this process. The Small Area Plan Guide Process principles and community-based process is documented. 1.2. Thoughts and interactions —a summary of the ways in which people are talking about the future of GrandView. 1.3. Patterns for a neighborhood center — describing what is possible in GrandView and narrowing the possibilities to a direction that resonates with the community's vision. Specific topics to be addressed: land use /community design/facilities; transportation; parks /open space and natural resources; real estate market/finance; and implementation. 1.4. Moving forward with purpose--a framework for subsequent activities that draws us nearer to the vision through incremental but well - orchestrated actions. 2. PowerPoint Presentations 3. Sketch -up model with options /interventions 6 GrandView District Small Area Plan Approach, Scope, and Budget CUNINGHAM_ _ G R O U P COMMUNITY WORKSHOP AGENDA /DRAFT FOR DISCUSSION (dates suggested) Community Workshop #1 -1 day (week of September 19) Day 1 loam Team arrives Work Group meetings Noon Lunch provided by client Work Group meetings 3pm Break 3:30pm Prep for public meeting 5:30pm Dinner provided by client 6:30pm Public meeting Community Workshop #2 — 3 days (week of October 10 or October 24) Day 1 loam Team arrives /go over schedule Download discovery/discuss issues/concerns/other Noon Lunch provided by client 1 -3pm Work Group and Focus group meetings 3pm Break 3:30pm Work Group and Focus group meetings 5:30pm Dinner provided by client 6:30pm Meet with client group — discuss potential direction and program Day 2 Day 3 loam Team arrives Work session Noon Lunch provided by client 1 -3pm Work session 3pm Break 3:30pm Work session 5:30pm Dinner provided by client 6:30pm Meet with client group — review work/preview public meetings loam Team arrives Work session Noon Lunch provided by client 1 -3pm Prep for public meeting 3pm Break 3:30pm Prep for public meeting 5:30pm Dinner provided by client 6:30pm Public meeting (brief presentation, feedback, conclude) 7 CUNONGNAM G R O U P GrandView District Small Area Plan Approach, Scope, and Budget Community Workshop #3 — 2 days (week of November 14) Day 1 loam Team arrives Work session Noon Lunch provided by client 1 -3pm Work session 3pm Break 3:30pm Work session 5:30pm Dinner provided by client 6:30pm Meet with client.gioup — review work/preview public meetings Day 2 loam Team arrives' Work session Noon Lunch provided by client 1 -3pm Prep for public meeting 3pm Break 3:30pm Prep for public meeting 5:30pm Dinner provided by client 6:30pm Public meeting (brief presentation, feedback, conclude) 8 CUNINGHAM, _ G R O U P Grandview District Small Area Plan Approach, Scope, and Budget Fee Budget Draft - By Part & Task Total Part & Tasks $ 94,800.00 subtotal % Scoping $5,000 Part I Discovery & Discussion $ 13,890.00 Community Workshop #1 $ 7,370.00 hrs $ $ 21,260.00 22% Part II Ideas & Options $ 13,890.00 Community Workshop #2 $ 20,580.00 - hrs $ $ 34,470.00 36% Part III Decide & Deliver $ 13,370.00 Community Workshop #3 $ 15,780.00 hrs $ .$ 29,150.00 31% $ 84,880.00 Subtotal $ $ 84,880.00 90% Steering Committee $ 3,480.00 Ex Committee $ 3,480.00 Workshops Staff Coordination $ 1,960.00 Plan Comm /Council $ 1,000.00 Subtotal $ $ 9,920.00 $ 9,920.00 10% Total Part & Tasks $ 94,800.00 GrandView District Small Area Plan Proposed Project Schedule Project /Community,Meetings septa " Oct Nov.,, Dec Part 0 0 0. Discussion and Discovery Y '- 0 0 0 Community Workshop #1 Executive Team Meeting 0 0 0 Part ll Community Workshop ® #t * #2 ® #3 Ideas and Options i. 0 0 0 Community Workshop #2 Plan Commission /Council 0 Part III Project Update 0 0 0. Decide and Deliver Community Workshop #3 Deliverables Project /Community,Meetings septa " Oct Nov.,, Dec Steering Committee 0 0 0. 0 Staff Coordination 0 0 0 0 Executive Team Meeting 0 0 0 0 Community Workshop ® #t * #2 ® #3 °Team work session Work Group Meetings 0 0 0 Plan Commission /Council 0 0 Project Update 0 0 0. 0 Note: Scope and schedule subject to review and approval by the Client and Cuningham Group Community Workshops Typical Workshop Schedule Community workshops are held over a 2 -3 Day 1/2 day period as an inter - active way to facilitate Morning stakeholder focus groups and provide the ° Team coordination consulting team a continuous point of contact ° Focus and work group meetings and organization with the Steering Committee, Lunch staff and stakeholders. The first day would ° Focus group meetings accommodate focus group meetings, Evening interviews, and consultant team coordination. ° Steering Committee meeting The first day would conclude with a Steering Committee meeting in the evening. The Day 3 second day would allow for additional team °Team work session work - sessions and client coo dination prior to Lunch °Team work session hosting a public meeting in the evening. o Meeting preparation Evening ° Community presentation CUNINGHAM G R O U P 10 c► b 0 IL S i 0 N N d s A d d 0 n n c =z oa cl cz a 9 • a SMALL AREA PLAN GUIDE PROCESS - KICKOFF o ESTABLISH STEERING & O EXECUTIVE COMMITTEES n u;* Q N_ N T C O O n 7 O METROPOLITAN COUNCIL a GRANT APPLICATION m =1 t m w • 0 0 • v m p to COUNCIL APPROVES a 21 GUIDE PROCESS REPORT an 1n O 'n 7 d n 7 = .•r p COUNCIL APPROVES SMALL AREA PLAN PROCESS KICK -OFF AND EXECUTIVE COMMITTEE STEERING COMMITTEE Jo VISIONING EXERCISE N ISSUE REQUEST FOR INTEREST SELECT CONSULTING TEAM DEVELOP PROPOSED Jo WORK PLAN w a D I I y `)Oo$ • I A � C ^ 3 0 0'$ I , 0 I A. is 7 O Y nn c 04 n g n a D n a_ a -+ O C d COMPLETE SMALL AREA PLAN p N c► b 0 IL S i 0 N N d s A d d 0 n n c =z oa cl cz a 9 CUNIN HAM G R O U P MINNEAPOLIS LOS ANGELES LAS VEGAS BILOXI BAKERSFIELD SEOUL all* i ._____.- __,_.. i CUNINGHAM G R O U P i i �_I __.w r••s. GrandView District Mr. Cary Teague, Director of Planning Small Area Plan City of Edina Letter of Interest Cuningham Group Architecture, P.A. (Cuningham Group) is pleased to offer this letter of interest July 11, 2011 for the GrandView District Small Area Plan. Our interest is in providing assistance in the following areas: • Community Needs Assessment and Public Realm Development • Land Use Planning We have a very successful portfolio preparing Small Area Plans and similar redevelopment plans /projects. We work with place- making principles and practices that put an emphasis on how the public realm connects communities. We regularly work for municipal clients on similar projects that are multi - disciplinary, based on the realities of the marketplace, and sensitive to the nuances of their communities. Our land use planning background includes a broad and comprehensive range of experience: an inter - disciplinary, urban design approach to use; working from market - responsive strategies; application of design /development guidelines; and preparation of innovative zoning techniques such as form -based codes. We work from a community -based approach and typically utilize a variety of techniques to facilitate participation. We tailor the participation process with technical and design expertise to help clients create plans that reflect the uniqueness of the site and the community. In addition to our urban design and planning practice, Cuningham Group will support this effort with knowledge, experience and expertise from several of our studios that focus on market segments such as urban living, restaurant /retail, hotels and resorts, and corporate office. We look forward to learning more about the GrandView District and how we can provide more information about our interest and expertise. Sincerely, Cuningham Group Architecture, P.A. #1 ��' Michael Lamb Director, Urban Design Studio . Understanding of community -led process and appreciation of the need to develop a Small Area Plan that conforms to the Guiding Principles sr' Jim Parking - Parking is the predominate visual and physical character of the area. And though there are some very pleasant landscape details and walls, surface parking is essentially a very large puzzle of odd shapes, dis- connections,and multi - levels with little or no pedestrian comfort or safety. In general parking defines the street frontages, not buildings or well - designed place for people. We understand the City has already spent considerable effort in thinking about the future of the GrandView area. In particular, a very organized community -based process has clearly identified the strengths and opportunities of the area as well as the constraints and weaknesses. The Community Advisory Team has produced a valuable document that identifies a set of principles that will guide the Small Area Plan. The GrandView District is a well - established commercial /service area located at the Hwy 100 interchange. And common to manyfirst ring suburbs, redevelopment issues now need to be addressed, in particular the former public works site and other sites that are ripe for reinvestment and /or higher utilization. This began with the Potential Area of Change in the Comprehensive Plan (2008) and then, over the past year, convening a Community Advisory Team (CAT) Edina —the interested stakeholders are engaged, educated, and prepared to take the next step of creating a Small Area Plan. During the Guide Plan Process the CAT developed Seven Guiding Principles. These Principles set the tone for the Small Area Plan. They represent an understanding of the marketplace and redevelopment and provide solid beginning to the planning process. With the Principles complete, the consultant (team) will be able to focus on more technical and creative matters. Our understanding of the site is informed by reviewing the existing patterns of the built environment, specifically the street and block pattern; the arrangement of buildings; the location and relationship to parking; and building frontage — probably one of the most important physical design considerations when accommodating a pedestrian- oriented place. We prepared a very basic analysis of streets, buildings, and parking to better understand the context, which we summarize here. 1e • Buildings - Like parking, buildings are arranged to only respond to parking needs with little thought to a larger connected, cohesive whole. In contrast, the GrandView Square represents one way to define the pedestrian environment with streets designed as places and building frontages defining the street enclosure. And though this may not be an ideal arrangement for some retail uses, attention to pedestrian and bicycle functions can be successfully integrated into the area. Streets - Streets are mainly a response to the topography, Hwy 100 access, and how private lots are developed. Vernon is designed to move vehicles and is not very pedestrian friendly (a good contrast would be Excelsior Blvd in St. Louis Park). A number of rational street connections are missing; GrandView Square is a strength in this regard and should be thought of as a model. 2. Identification of the areas in Which we are proposing to offer our assistance and a description of our capacity and innovation Our interest covers two of the four areas of expertise identified: land use planning and community needs /public realm. Our capacity and interest is represented by our well - established experience with working from a community -based approach (promoting a process where all stakeholders that are interested are welcome); a focus on place- making principles that maintain balance in how the built environment is realized; depending on a prominent public realm that provides community and real estate value; and our approach to land use planning that understands the outcome is a three - dimensional arrangement of fundamental urban components. Our resume for award - winning, innovative work is demonstrated on this page with quotes from our clients, a list of recent awards, and examples of work that have been planned, designed and built - projects that you can visit and ''kick- the - tires." One is Franklin - Portland Gateway in Minneapolis and the other is the Village Creek Master Plan in Brooklyn Park. On the following pages are examples of our work that we believe are very applicable to Grandview. Franklin - Portland Gateway Hope Community and Aeon National model for community revitalization; mixed -use buildings designed to accommodate stacked flats over townhouses and commercial/ retail space; Master Plan and two buildings The Gateway was featured in a New York Times article in 2007. Web: http://www.nytimes.com/2007/12/16/ re a lesta te/ 16n a ti. ht m I? fta =y Village Creek Master Plan City of Brooklyn Park 133 -acre redevelopment plan foraging, retail area; plan featured'daylighting'; Shingle Creek to create a prominent public amenity. Multiple phases of investment have occurred since the Master Plan was adopted in 2000. Web: http://www.brooklynpark.org/sitepages/ pid433.php Quotes from our clients ...to take information from those meetings and really get to the nuts and bolts of what needed to happen and be done in short order and deliver drafts and products back to us in the time frame that they promised. Frankly, l was awed with their abilities to do those kinds of things." "lt was a great having Cuningham Group as part of the form -based code tea/77. They brought an astute urban design sense and unique perspective. Their illustrations and renderings have been used repeatedly to assist community members with visualizing change and to provide a clear understanding of the potential for downtown Overland Park." Awards 2011 American Planning Association, Wisconsin Chapter Chapter Award - Plan Document Category Greenbush Vllas Neighborhood Plan Supplement - Revitalization Strategy, Madison, Wisconsin 2010 Minnesota Chapter ofthe American Planning Association - Merit Award Zoning and Design Rules for the Minnesota State Capitol Area, Saint Paul, Minnesota 11! 1000 Friends of Iowa Best Development Awards - Leadership Category Historic Millwork District Master Plan, Dubuque, Iowa Iowa Chapter of the American Planning Association Planning Excellence Award - Innovation in Best Practices for Sustainability Historic Millwork Distrla Master Plan, Dubuque, Iowa Dubuque Main street 24th Annual Awards - Best Community Initiated Development Historic Millwork District Master Plan, Dubuque, Iowa American Planning Association, Wisconsin Chapter Chapter Award - Urban Design Stoughton Road Revltallzadon Project Plan, Madison, Wisconsin 11 Minnesota Chapter of the American Planning Association Merit Award - Outstanding Planning or Urban Design Category Riverdale Station Area Transit Oriented Development Guidelines, Coon Rapids, Minnesota Minnesota Chapter of the American Planning Association Merit Award - Outstanding Planning or Urban Design Category Uptown Small Area Plan. Minneapolis, Minnesota American Planning Association, Wisconsin Chapter Chapter Award - Planning Category Chippewa Falls Downtown Rlverfront Plan, Chippewa Falls, Wisconsin Neighborhoods USA National Neighborhood of the Year Award - Multi- Neighborhood Project Partnerships Category Stoughton Road Revitalization Project, Madison, Wuconsin 3. A description of Examples of Innovative Work Greater Lowertown Master Plan Greater Lowertown Task Force A unique first effort led and funded by a totally volunteer task force of residents and stakeholders; the Plan will update the Lowertown Small Area Plan. The Plan directly responds to the major changes taking place including construction of the Central Corridor LRT line, Union Depot renovation, and Lafayette Bridge replacement. A major issue addressed was how Lowertown connects to the large public realm /open space features like the Bruce Vento Nature Sanctuary, Lower Phalen Creek and the Mississippi River. Collaboration — Process included local stakeholder focus groups, strategic interviews, regular public meetings, arts /creative community workshop, city /county /watershed coordination and special meetings with Minnesota Congressional Representative Betty McCollum and MN DOT Commissioner Thomas Sorel. Web: www.lowertownvision.com University District Alliance Vision University District Alliance Working with a state legislature mandated process, Cuningham Group was engaged to assist the University of Minnesota and four surrounding neighborhoods in preparing a development vision and report back. Process — We worked directly with a committee comprised of the four neighborhoods and the University of Minnesota to facilitate a highly compressed, interactive process that included meetings with each of the neighborhoods and then convened "summary summits "on weekend mornings. Project was featured in Architecture Minnesota magazine earlier this year: http: / /www.aia- mn.org /ext_architecture -mn /archive /am— magazine - jan20l l.cfm. Riverdale Station Area TOD Guidelines - City of Coon Rapids, Minnesota A redevelopment area contiguous to the Riverdale Station on the \ Northstar Commuter Rail line, the City and County wanted to take a community -based approach to preparing TOD Guidelines for the 15 -acre site owned by Anoka Co u nty. Th ro u g h a steering committee structure, neighborhood meetings and public presentations we prepared guidelines aimed at market - driven, incremental investment that will result in a place. Product delivery: Transit - oriented guidelines that support place - making principles; the guidelines were prepared using a form - based approach. 4 3. A description of Examples of Innovative Work (cont'd) Historic Millwork District Master Plan City of Dubuque, Iowa Named a national model by the National Trust for Historic Preservation as one of three national Preservation Green Lab partner cities, the District focused on the reinvestment of almost 2 million square of vacant space as a new urban village. The Master Plan was recognized with three awards in 2009 including a "Best Development Award" from 1000 Friends of Iowa. Product Delivery - The Master Plan was produced primarily during a series of 3- to 4 -day interactive charrettes that included focus groups, steering committee, city council, land owners, staff and public meetings. Open meetings held so that anyone could drop by during the process and see what was going on or participate. Web: http:// www. cityofdubuque .org /index.aspx ?NID =116 Central Avenue Small Area Plan City of Minneapolis Cuning ham Group prepared the Small Area Plan for the City of Minneapolis and the 12 neighborhoods that are connected by this community corridor. Process & Collaboration - The project was a community - based event where each of the 12 neighborhoods and two business associations were organized into a 50- person steering committee. The Committee was then formed into a number of sub - committees to address public meetings, publicity, issues and neighborhood coordination. Web: http: / /www.ci.minneapolis.mn.us /cped /central -ave_ plan - update.asp Downtown Form -based Code City of Overland Park, Kansas The Urban Design Studio worked with Ferrell Madden on new form -based code for the Metcalf Corridor and downtown business district. Key tasks included documenting existing conditions in 3D modeling software, analyzing built environment precedents and illustrating potential code options with laser -cut wood models Innovation - Use of a graphic- based, form -based code to more clearly illustrate and communicate (with graphics, words, and numbers) how development should be implemented. A simple, direct tool that helps everyone in the community better understand the complexities and nuances of zoning. Web: http: / /www.opkansas.org /Doing- Business/Visions -And- Images 5 4. Identification of the Individuals who would be working on the Project The Urban Design Studio The Urban Design Studio works with public and private clients to create cities, communities and neighborhoods of lasting value. Our goal is to increase confidence in a place by making it more beautiful and more functional. Design matters. As cities increasingly look more and more alike, urban design can help communities distinguish themselves; in turn helping to raise civic pride, attract investment and improve livability. Our efforts are both collaborative and strategic in order to help our clients understand the complexities of development. We focus on guiding new investment in neighborhoods and districts; planning redevelopment in urban and transit corridors; and preparing design guidelines and codes for effective implementation. When combined with a meaningful public process, we produce solutions that are feasible and a good fit for their communities. Team I6 i Michael Lamb Director of Urban Design Over 25 years experience of leadership in the development, management and delivery of urban design services; responsible for design oversight, overall project delivery and contract administration. Michaels' experience includes lead urban designer for the Park Commons Town Center (Excelsior & Grand); planning and code work for both the Minnesota and Wisconsin State Capitals. Michael has lead the Urban Design Studio for the past 6 years during which the studio has been recognized with 10 awards. His education includes under graduate study in urban planning, studio art and architecture supplemented by a master of architecture in urban design degree. Andrew Dresdner, AICP, Senior Urban Designer Over 12 years experience working with public clients on urban projects. Andrew is skilled at managing projects, teams, and a public design process. His background includes working for the national/international firm Urban Design Associates, in the urban planning department for the City of Minneapolis, and serving as the co -chair of the C -17 Committee, a community- based organization that led the support for the Twins Target Field. Andrew holds dual graduate degrees in urban planning and architecture. Cynthia Harper Urban Designer 10 years of experience working with public clients and a variety of stakeholders. Cindy is skilled using design solutions to managing diverse viewpoints. Cindy brings a broad perspective to the team and a background informed by a masters degree in landscape architecture. She is also committed to a larger view of community service and serves as a member of the Minnesota Design Team Executive Committee. Cuningham Group Architecture, P.A. John Cuningham founded Cuningham Group in 1968. He developed a working model of team architecture that is highly inclusive and incorporates extensive client, consultant, engineer and contractor participation. This philosophy led to the design of award- winning projects and a solid reputation for collaboration. Today, Cuningham Group is organized into a series of studios focused on key market areas and client types. Cuningham Group's size provides clients with the resources of a large firm while the studio approach provides a dedicated, specialized team of professionals for each client and project. CUNINGHAM G R O U P Cuningham Group Architecture, P.A. 201 Main Street SE, Suite 325 Minneapolis, MN 55414 contact Michael Lamb Director, Urban Design Studio 612 379 5558 mlamb @cuningham.com P 612 455 2980 www.closelandarch.coni 11 July 2011 Mr. Cary Teague 4801 West 50th Street Edina, MN 55424 Dear Cary; On behalf of CLOSE Landscape Architecture, we are submitting this Letter of Interest for the Grandview District Small Area Plan Understanding of the Small Area Plan Process Land use and transportation have been inextricably linked since settlements first appeared in this country. Natural harbors, rivers, crossing trails on the prairie — all became places where the convenient movement of people and goods resulted in settlements. Compact districts like 50th and France reflect an urban pattern that evolved along a streetcar line. More expansive areas like the Grandview District matured during the auto - centric era of the last six decades in direct response to the layout of roads and an increasing dependence on cars. Now, in reaction to the dominance of the car and its impact on livable, pedestrian - friendly environments, communities nationwide are embarking on ambitious programs to reclaim the public realm by balancing modes of movement and creating more compact, bikeable and walkable environments served bytransit.The Grandview District is such a place. The City of Edina responded by issuing a request of interest to consultants to work with a community -based Steering Committee to develop a small area plan for this complex and disaggregated part of the city. The overwhelming desire to create a new, more balanced area prompted the City to pursue a Livable Communities Demonstration Account grant through the Met Council, which they won. Bob Close, Founding Principal at Close Landscape Architecture, sat on the Livable Communities Advisory Committee for five years, reviewing projects and awarding grants for innovative, forward thinking urban design. This will be a community -led process. We have worked side by side with communities on much of our work over the past two decades. We understand and appreciate the wide range of ideas that people bring to the table. We also understand that people often put personal agendas aside to realize a better outcome. In the 1990's, working with the City of St. Louis Park on the Excelsior and Grand charrette, it was startling and gratifying to experience the insight that people brought to that exercise. For Grandview, the 18 member Community Advisory Team comprises an articulate, diverse voice; in conjunction with the staff -led Technical Advisory Committee, vision and implementation become much more seamless. The CAT report submitted to the City, with the assistance of a design team, included seven Guiding Principles that are the foundation of this small area planning process. The melding of key precepts such as connectivity, place- making, multimodal transportation opportunities, sustainability, district parking and incremental growth are all elemental to good city building. They are parts of the whole. The Small Area Plan will focus on the synthesis of all the layers to re- imagine and revitalize this district as a balanced place of commerce and community gathering. Areas of Interest (Expertise) Based on the categories listed in your Request for Interest, we would focus our efforts on the following: • Community Needs Assessment and Public Realm Development • Land Use Planning In terms of our'capacity for innovation, CLOSE Landscape Architecture has a recognized reputation for design creativity, technical expertise, productive community process and progressive, contemporary thinking. In short, we are both inventive and pragmatic not only in our approach, but also demonstrated in many completed projects throughout the Twin Cities. 400 1st Avenue North Suite 528, Minneapolis, MN 55401 Work Examples Community Needs Assessment + Public Realm Development Our public realm design portfolio spans more than three decades of design and constructed work, further highlighting our reputation for creativity and the highest level of client service. It was gratifying to have been a part of these collaborations and also to share in the success of the outcome ... to witness first -hand the generations of people who enjoy these public places. The proliferation of suburban sprawl has engulfed numerous small towns and villages throughout the country. These communities face a daunting challenge to preserve their character and authenticity in the face of this swift transformation. This Master Plan provides an innovative blueprint for accommodating growth within a small village. Our Landscape Architect -led team facilitated public workshops and stakeholder roundtables to develop a creative framework for new development. Owners of vacant land surrounding the village also participated. This unique public/private collaboration produced a development strategy that targets City goals, resident and business expectations and builder/ developer financial models. S' Greenway,'' nneapo`s, Minnesota CLOSE Landscape Architecture+ led a team charged with creating a master plan for the Midtown Greenway Corridor This greenway is of special significance because of its potential to catalyze neighborhood revitalization and also complete a vital link in the regional plan for multi -modal transitand transportation systems — with a strong focus on bike commuting. The Master Plan process involved extensive community participation from early concepts to completed projects. An abandoned rail corridor purchased by Hennepin County, the Midtown Greenway realizes a century -old vision to establish an east- west'green'connection from the Chain of Lakes across the city to the Mississippi River This Plan defined specific implementation strategies to spur economic development near the corridor and provided access for inner -city residents to the world renowned park, trail and open space network, a signature of the Twin Cities. Ci - Richf e d, MinnesotE CLOSE Landscape Architecture+ was commissioned by Gramercy Corporation to design this major public plaza and surrounding streetscape for a new mixed use redevelopment site at the heart of the new town center in Richfield, Minnesota. The plaza, constructed on a roof deck over a parking garage, includes a fountain and a series of gardens, walkways, gathering and performance spaces, becoming the focal point for commercial and housing development that surrounds it. A custom designed steel arbor and vine - covered light columns provides unique accents for the new village square. Plants were selected for ease of maintenance and long -term sustainability, while reinforcing the strong sensory experience associated with Italian landscapes. Ramsey Commons contains the largest contiguous dedicated park space within the Town Center and provides grade - separated bicycle and pedestrian trail access through the entire development. Design priorities include preservation of green space for recreation, wildlife habitat and the natural filtration of stormwater. The rolling topography creates numerous high point knolls for special event spaces, picnicking and other passive recreational uses, while low areas capture storm runoff to create signature water features including ponds and wetlands. The newly constructed amphitheater has already become the recognized centerpiece for community activities. The final link in St. Paul's riverfront development, Chestnut Plaza connects residential and commercial uses with Upper Landing Park and the downtown central business district. CLOSE Landscape Architecture + designed a multi -tier space with a variety of interactive water features and a grand promenade leading to the Mississippi River's edge. Inspiration for the design and selection of materials grew from its industrial past and the historic river boat landing at this location. Upper Landing Park is the newest public space along the Mississippi River in downtown St Paul and a critical component in the city's efforts to revitalize its riverfront. The park is a destination along the river valley's regional trail system and a link between a residential, institutional, and commercial land uses. The new park is "about the river "and getting the public to the river. It provides a large meadow (floodplain) for passive recreation. It is flanked by a broad promenade along the river. The design of four small seating areas with walls are an abstration of river eddies behind check dams. These eddy plazas are animated by lighted jet fountains and fantastic bird sculptures which pay homage to the Mississippi River as a migration corridor. An amphitheatre with stone seating focuses on a stage that doubles as a launch site for St Paul fireworks displays. Earthen mounds at the east end of the park subtly mark the elevations of flood events in the recent past. :, r r e_ CLOSE Landscape Architecture +collaborated with public artists to create a successful mixed use project combining urban -infill housing along East Lake Street, commercial uses at West River Parkway and a plaza with stunning views of the Mississippi River gorge.The plaza provides outdoor seating for a restaurant and functions as a public gathering place. It has become a neighborhood destination. Th roug hout an extended and contentious design and approvals process with the community, CLA worked intensively with Lander Group to shape a project which responds to neighborhood concerns and meets the developer's goals. Residential units are full and commercial tenants are thriving. Work Examples Land Use Planning CLOSE Landscape Architecture+ has an extensive portfolio of land use planning projects representing a range of scales and types. We have worked in the urban core, with transitioning suburban communities and in the exurban reaches surrounding the Twin Cities Metropolitan area. 5: o Fra Sa nt uI nrescta CLOSE Landscape Architecture+ was the landscape architectural consultant on the interdisciplinary design team creating a long range development framework for the city of Saint Paul and the riverfront corridor.The plan calls for the creation of "urban villages" in the downtown area providing concentrated neighborhoods, organized around small parks, where people can live, work and recreate. Our work focused on the preservation, restoration and en- hancement of the river and its environs as well as studying approaches for the "greening 'of the urban core and the streets which pass through it. We looked at how the city relates to the metropolitan region through an interconnected system of open spaces and recreational trails. We also coordinated with the ecologist on the team to develop a set of goals and objectives for development along the river's edge. Minneapc JM ,- ,neso -_ CLOSE Landscape Architecture +, working with a multi - disciplinary team, created an innovative development concept characterized by an armature of parks and parkways reminiscent of the world- renowned Minneapolis park system. The plan emphasized Bassett Creek, previously contained in a pipe, as both a neighborhood amenity and a direct link to city and regional destinations. -.. _, .. Ramsey, Minnesota CLOSE Landscape Architecture+ created a master plan that captures the qualities of traditional communities, yet encourages contemporary solutions related to mixed -use, density, transit connections and urban form. This new downtown includes civic, entertainment and shopping uses with more than 2,000 units of new housing. A system of parks and open space links people with neighborhood amenities and regional resources. -. Vi, e Saint Pau' Winreso- Originally retained to master plan this new 17 acre riverfront neighborhood in downtown Saint Paul, CLOSE Landscape Architecture+ had a continuing role in the detailed design for public parks, streets and rainwater gardens in this mixed -use community. CLA worked closely with the development team, Xcel Energy and the City of Saint Paul to develop concepts in concert with private and public initiatives, including development of Upper Landing Park, installation of a new regional trail along the riverfront, development of a flood barrier for the energy plant and improvements to Shepard Road, the primary entrance to the city along the river's edge. A IL ��!;. y►f� i�'ri�+ ,� -bi�� .tea J`�,.,.- �rA}.� v f'•: Y „4 .yRi .. CLOSE Landscape Architecture + teamed with EDAW to prepare five scenarios for redevelopment of the Ford Plant sitting atop the bluff overlooking the Mississippi River. Each of the scenarios is being analyzed through the AUAR (Alternative Urban Areawide Review) process to determine the environmental impacts on the surrounding neighborhood and existing infrastructure. The five scenarios included keeping the site entirely as an industrial use plus a variety of mixed -use schemes that included parks and open space, housing, institutional and retail land uses. The Central Corridor light rail line presented the West Bank community with a unique opportunity to "stitch backtogether" the freeway -style cut that has divided the neighborhood since the 1960's. CLOSE Landscape Architecture, a co- leader of the team and primary author of the final document, focused on connectivity and the character of the public realm, including streets, parks and plazas. A key component of the report is a development matrix that identifies and prioritizes key infrastructure projects and provides estimated construction costs. - t I c i 7 " cZ The Downtown East and Elliot Park (DEEP) neighborhoods historically have played a major role in the development of Minneapolis.The city's first industries, hospitals, churches, schools and parks were established here; and the district's proximity to the Downtown Business Core, the Riverfront, the University of Minnesota and the neighborhoods of South Minneapolis made it a crossroads of residency and commerce. After undergoing a period of disinvestment, this part of the city represents the last extensive potential for urban core development.The DEEP 2100 Initiative capitalizes on current opportunities for revitalization through sustainable redevelopment that creates great new urban places while attracting a new wave of investment to this district. . -- -t. Working with a team of developers and architects, CLOSE Landscape Architecture +developed a site concept for this Superfund site located in a former oil tank storage facility on the bluff overlooking the Mississippi River. The design had to respond to "hot spots °on the site, and integrate into the surrounding community. 'ublie Pic'. iw ►� j -_� J A I 'O 11 0 ilarmwale ,iii• i.f f s ` Basin b Framenade bL 5 varal�C.\ , L �'d! `_ .: wd7 rte, Y• Ott n Fields ..',3` 't •:�t -+F)' •. r,t. Garden ��> �1 ,,,.•. ,. � ; ^��s -"��:� . .fie— �...�. r rte, * � ' '�• �i [y uli -Moo Tronsitwa .�..� i wean ■wx�w ■ � ~p - - n..,r■u.n.�,w �wrn� w " �� rsmwwwe.swa 11 � ti 1080 .1 ` .6 9 17 1111 Ion c� ? ?87 vi '7 n11 I g7`I_ i 10. Distnc# " Y < ,r Energy u_..� �; �.� Y' r eS ,ob Center "- Si Pi ��1 U n LnrJng River el Olt '3 .1 Company Profile & Project Participants Established in 1976, CLOSE Landscape Architecture + is a team of creative, diverse, committed designers and planners with a common goal: to create places that respect our natural world and enhance the quality of our lives. We emphasize innovative yet realistic design solutions based on the unique opportunities, specific program goals and distinctive characteristics of each site. The common threads through our work are the enrichment of the human experience, a commitment to design excellence, and the creation of quality, engaging and sustainable environments that are accessible to all users. Working with both public and private clients, we are known for our ability to generate ideas, shape a vision and craft a design that addresses the complex issues of human activity on the land. We have a proven process to engage community residents and businesses as well as elected leaders and city staff in focused dialogue to achieve consensus and move ideas into implementation. C _c'sca -. ^Jtec F ".S Bob Close established his practice, Close Landscape Architecture, in 1976. From the outset, his work has focused on the creation of engaging, sustainable and livable environments, whether in the public domain or for private clients. He has extensive experience ranging from the design of urban parks, public spaces and institutions to master planning for campuses, cities, housing developments and private facilities. His work can be found throughout the Twin Cities region and surrounding five -state area. Qualifications B.A. English and Fine Arts, University of Minnesota, 1969 B.L.A Landscape Architecture, University of Minnesota, 1976 Memberships Member and former President Minnesota Chapter of the American Society of Landscape Architects (ASLA) Named a Fellow in 2007 Experience CLOSE Member Urban Land Institute (ULI) and member of Executive Committee and Co -Chair of Education Committee, ULI Minnesota Charter Member, Congress for New Urbanism (CNU) 35 years Founding Principal, 1977 - present Bruce joined Close Landscape Architecture in 1995. his experience in planning and urban design draws from completed projects in a number of urban centers across the country including the Twin Cities, Denver and the Baltimore /Washington metro area. Much of this work defined strategies for neighborhood revitalization and economic development organized around engaging public spaces, with an emphasis on transit and mixed use. Central to this planning approach is the determination to provide vibrant, memorable and sustainable places for people to gather, to conduct business and to call home. Bruce brings valuable experience to both planning and detailed site design. His commitment to an inclusive and collaborative approach, including active public participation, is key to the successful implementation of many CLA projects. Discipline Landscape Architecture Qualifications BS Landscape Architecture, Iowa State University, 1980 Experience 31 years CLOSE 1995 — present We appreciate your review of this submittal and look forward to meeting with you to further discuss this exciting project. Sincerely, CLOSE Landscape Architecture+ Bob Close Bruce Jacobson Principal Principal Key Personnel CDG's efforts in this project will be led by Director and Project Manager Antonio M. Rosell, P.E., AICP, a Civil Engineer and Urban Planner with more than -fifteen years ot planning, engineering and design experience. Mr. Rosell is a leading non - motorized transportation; placemaking, and community engagement practitioner, and consults and lectures locally and internationally. Mr. Rosell has led numerous urban planning and community engagement projects, including Phase 2 planning and design services for the Phase 2 expansion,of Nice Ride Minnesota (ongoing); development of the WSCO / District 3 Community Plan in Saint Paul (ongoing); design and technical services to Twin Cities Metro -area jurisdictions as part of the $25'millton'Federal Non- motorized Transportation Pilot (NTP) grant; and development of the City of Minneapolis 38th Street and Chicago Avenue Small Area / Corridor Framework Plan (adopted by Minneapolis into its overall Comprehensive Plan). He also led CDG's development of the City of Edina's first Comprehensive Bicycle Transportation Plan. Mr. Rosell's professional focus includes pedestrian and bicycle mobility, economic development, urban design, transportation planning, and community participation processes. A recognized and respected planning and design professional, his advice is often sought by public officials, neighborhood and community organizations, bicycle and pedestrian advocates, and other consulting firms. Additt al CDG staff. for this proje' c ludes: ® Natali ollins, MPH, a pu ealtprofessional and Active Living planner working at the intersectio of comm health. and design; ® Colin Harris, ED AP, a mul Civil Engineer; o Carrie Che sen, an experienced researcher, writer.and designer; and o Liliana quispe, ch, a design and community engagement practitioner with several years o ternational experience. Community Design Group LLC I Letter of Interest - GrandView District Small Area Plan - Submittal 07/11/11 Page 6 of 6 me* man community design group a people- centered, asset -based approach to urban planning, policy and design Community Design Group, LLC 1 212 3rd Avenue North, Suite 515, Minneapolis, MN 55401 1 612 -354 -2901 1 www.c -d -g.org July 11, 2011 Cary Teague, Director of Planning Planning Department, City of Edina 4801 West 501h Street Edina, MN 55424 Dear Mr. Teague, It is a great pleasure for us here at Community Design Group to submit this Letter of Interest for consideration of our services toward development of the Small Area Plan for the Edina GrandView District. As you may know, we had the privilege of working with Edina residents and staff in the development of the City of Edina Comprehensive Bicycle Transportation Plan in 2007, which was incorporated into the City of Edina Comprehensive Plan approved in 2009 and has led to implementation of several important improvements in Edina's bicycle infrastructure. One of the reasons why we are excited to express our interest in this project is that the approach and range of services this project calls for closely match our philosophy of work and areas of expertise. Walking and bicycling, connectivity and connection, planning frameworks that favor the development of human- scaled, memorable places, and a deep commitment to community process, consensus building, and implementable recommendations are basic tenets of our practice. I commend Edina residents and staff for the process you've designed for selecting your consultant team - it is as innovative and thoughtful as the consultant team will have to be to develop a Small Area Plan that effectively guides development of the Grandview District and fulfills its potential for shaping the kind of community that Edina is to become over future years. I hope that the next pages of this submittal provide evidence that we have the experience, knowledge, tools and passion to develop an effective framework for your vision. Please let me know if you have any questions or if you need any additional information for your evaluation of our experience and capabilities. Sincerely, Antonio M. Rosell, P.E., AICP Director, Community Design Group, LLC e w KEY STAFF Chuck Rickart. PE. PTOE Our transportation analysis team will be led by Chuck Rickart, a Senior Project Manager in our Transportation Engineering Group with over 25 years of experience in'trangportation planning and traffic operations and control. Chuck's project experience has included project management for transportation planning and engineering projects, construction engineering, site traffic engineering studies, pedestrian stud ies,'parking studies, and traffic signal design. Chuck has unparalleled knowledge of the City of Edina's traffic conditions, future impacts, and planning. He has aided in the development of the City's Transportation Plan,, as well as multiple roadway and intersection improvements within the City involving high profile areas with significant business and resident involvement, specifically on the 70th Street corridor. He will be the primary" lead for traffic analysis and coordination with land use plan development. John A. Broz, PE Jack will bring over 30 years of experience to. the role of Project Advisor for the GrandView Small Area Study. He will be responsible for leading the Context Sensitive Solutions (CSS) approach to ensure an effective delivery of the GrandView Vision. This-approach was successful in delivering the planning and design of projects such as TH 212- Chaska to Eden Prairie and Complete Streets in Richfield. These projects demonstrate his ability to lead 'effective public engagement and value engineering, and to meet critical technical objectives. Jack's reputation for effective project delivery with significant cost savings has led Mn /DOT to request that Jack rewrite and deliver their Context Sensitive Training curriculum and participate in Mn /DOT's Complete Street Advisory Committee. Jupe Hale. PE Jupe has over 18 years of experience in the design and construction of transportation facilities. Recently, he has led planning and design projects for the Cities of Richfield and Golden Valley that involve significant community and high - profile business involvement, combining redevelopment.needs with community vision to establish multimodal facilities and implement land use plans. Jupe is an approved roundabout. designer by Mn /DOT, and has participated in the evolution of State Aid standards to accommodate Complete Streets concepts. His role on the plan development will be to develop concepts with enough detail regarding interchange design, intersection control and corridor sections such that communication with approving agencies and the community can be facilitated. Derek Schmidt, PE Derek is a Project Manager in WSB's Transportation Group with over ten years of experience. His primary focus of work includes preliminay and final highway design on major interstate and trunk highway projects, including major interchange design. He has extensive knowledge, of CAD software including MicroStation and GEOPAK7. Prior to joining WSB, Derek was employed by a global engineering firm where he provided detail design services on numerous complex projects throughout the United States and also served as the ISO 9001 quality coordinator for their local office. PROJECT RELATED EXPERIENCE 70th Street Roundabouts — Edina, MN The primary objective of the West 70th Street project, from France Avenue to York Avenue, was to improve safety for both vehicles and pedestrians in the corridor, while. ensuring the satisfactory traffic operations now and in the future. WSB was called upon to prepare a corridor plan which reduced crashes, provided for pedestrian flow in the corridor, maintained ® access to businesses, and maintained vehicle operation, all in anaesthetically pleasing environment. With two WSBdevelopment projects proceeding adjacent to West 70th Street, as well as a crash investigation, the ultimate ® design reached was the construction of three single -lane roundabouts along the corridor. The roundabouts & Associates, Inc. - City of Edina Grandview Dlsbictsmall Area Plan Sonestroo is a privately owned Minnesota corporation founded'in 1956. Headquartered in St. Paul, our firm employs more than 300 staff in a comprehensive range of service areas'. Ranked 206th nationally in Engineering News Records list of Top 500 Design Firms, Bonestroo Is one of the Midwest's largest full - service engineering, planning, and environmental science firms. Bentz /Thompson /Rietow, Inc. is a privately owned Minnesota corporation in Minneapolis. The firm was established in 1971 for the practice of architecture, interior design, and urban design. Firm principals bring talents and experiences that encompass programming and design to construction administration and post occupancy evaluations. Springsted's professionals have extensive experience in public sector financial analysis and implementation. The firm assists clients in developing and maintaining stable and viable communities by offering an improved quality of life through employment opportunities, a full range of housing options, and an expanded economic base. Greenway Transportation Planning is a newly established Minnesota transportation planning consultancy specializing in multimodal transport strategies. The firm's principal has 20 years of worldwide transportation planning experience in transit - intensive cities in the U.S., Ireland, United Kingdom, southeast Asia, and China. PROJECT TEAM The qualifications and experience of our key staff are briefly summarized below: Geoff Martin, ASLA — Project Manager Geoff's influence as a landscape architect and urban designer has shaped many Midwestern communities over the past 30 years. Consistent among his award - winning urban redevelopment plans, streetscapes, and parks is his ability to lead cities through complex planning and design processes to define and illustrate a vision for their future, create the tools to guide Page 2 July 11, 2011 redevelopment, and design built works that build value over time. Geoffs work provides regional models for smart growth and placemaking. He was principal designer and manager for numerous projects similar in scope to the GrandView District. These include Heart of the City and Nicollet Commons Park in Burnsville, the Sauk Rapids downtown framework plan and streetscape, the Rochester Second Street Corridor Master Plan, the St. Cloud Downtown plan, and the Stillwater Downtown Framework Plan. Gary Milne Rojek, AIA, WARE — Architect Gary has more than 29 years of experience and has been responsible for design and construction administration of many of BTR's most complex projects. He is the Principal Planner in the office and has spent most of his career developing master plans, due - diligence studies, feasibility studies, and pre- designs for large public and private institutional clients. Gary has particular expertise in bringing large and diverse owner /user groups together to create innovative solutions that benefit the entire community. He was the lead planner for the Plymouth City Center Study and the Hennepin County Southdale Regional Center Feasibility Study in Edina. Jay Demma — Market Research Jay has 15years of experience in demographic and economic analysis. He has held a variety of staff and executive positions at leading research firms in the Twin Cities and Philadelphia. Jay directs projects relating to the demographic and economic impacts of land use change. He has worked on hundreds of research and consulting assignments throughout the United States, providing research expertise on virtually every land use type — particularly housing, commercial /mixed- use, and urban redevelopment. Tony Schertler — Financial Analysis skTony heads Springsted's housing and economic development group. He has more than 15 years of experience working in local government, with 10 years focused on downtown development and redevelopment. Tony is a licensed attorney 8 G'ly of Edina GrandWew DiSWCtSmall Area Plan with an extensive background in land use, real estate development, and urban renewal. He serves on the St. Paul Planning Commission and is co -chair of the Ford Site Planning Task Force. Mikaela has been with Springsted's housing and economic development team for more than 10 years. She specializes in the comprehensive analysis and use of a variety of economic development, redevelopment, and housing programs, including property tax and sales tax increment financing, tax abatement, state grant and loan programs, enterprise zones, community development authorities, and special service /business improvement districts. Scott Israelson, PE, PTOE — Transportation Engineer Scott leads Bonestroo's traffic engineering group. He has 17 years of experience and specializes in traffic impact studies for development, intersection capacity analyses/ evaluations, roundabout analyses, traffic signal design, corridor studies, and safety studies. John Slack, ASLA — Urban Designer John is a registered landscape architect at Bonestroo. He has more than 14 years of professional experience. John's primary responsibilities include urban redevelopment and design, streetscape planning and design, park and recreation design, and site planning. Paul Bilotta, AICP — Redevelopment Planner Paul has more than 20 years experience in private development, economic development, and neighborhood planning around the country, including mixed use and brownfield redevelopment. Prior to joining Bonestroo, he ran a city community development department and served for 12 years as a commercial and residential developer. Ann Voda, AIA, CID, LEED AP — Architect Ann is President and a Principal of BTR and specializes in the programming and design of large public and private sites and buildings, including higher education facilities, residence halls, recreation and performance facilities, U Page 3 July 11, 2011 libraries, and county service centers. She has prepared master plans and pre- designs for many private and public institutions. Ann was awarded a 2009 Women in Business — Industry Leader Award by MinneapoligSt. Paul Business Journal. She has a broad background in evolving urban design trends and land use patterns. Ann worked with Gary to produce the Southdale Regional Center Feasibility Study in Edina. John Mark Lucas — Principal, Greenway Transportation Planning John Mark has 20 years of experience in transit - intensive cities in the U.S., Ireland, United Kingdom, southeast Asia, and China. He has worked extensively on transit studies, parking studies, traffic analysis, and pedestrian and bicycle facility planning for Arup, one of the world's leading consulting engineering firms. His input will bring national and international best practice insight In station planning to the development of local solutions. RELEVANT EXPERIENCE (BONESTROO) Lyn -Lake Small Area Plan — Minneapolis Working with CPED, Bonestroo developed a small area land use plan for the vibrant Lyn - Lake neighborhood in South Minneapolis. The plan defined appropriate land use designations and redevelopment opportunities within the district for new mixed -use infill and residential developments. Grandview District Small Area Plan Status Update f� -� � lE �t�i•rr j ��� At- r •s �, rr 4' 1 Edina Grandview District Small Area Plan September 6, 2011 Overview 1. Where We've Been - Actions to Date 2. What's Next - Preview of Fall Activities 3. Council Action - Approve Team &Work Plan 111.111111 2011 2012 QTR 2 QTR 3 QTR 4 QTR I QTR 2 QTR 3 QTR 4 QTR 1 QTR 2 r N ��J/ _. _ _'._ Z J V' Z W O > 4 W O C C W {y W VI Q W N < W 0 CL -- gNkA za dN (L IL --r' Q aa rd < <d JTiO -u V 467 qTgc` v IL 4px¢� - < 01<. n.= zd vu<i a, i >_ Fr ac0 O 00 '^ V W3 - W t„1' < 1L X N C? W W �_ O V s • Plan Commission • Follow Up Meeting • MET Council Community • City Council • City Council Awards Grant Workshop Concept Approval • Follow Up Meeting Edina Grandview District Small Area Plan September 6, 2011 Where We've Been • Dec. 2009 — Council Authorizes Guide Process 10 i-- �•� � vim- e7�.i # � � N, � i �"".... i A If Edina Grandview District Small Area Plan A , w � September 6, 2011 Where We've Been April -May 2010: 10 Meetings in 20 Days low 1 Edina Grandview District Small Area Plan September 6, 2011 Where We've Been • Dec. 2010 —City Council Adopts the Guiding Principles as "the foundation for development of a small area plan for the Grand View District." — Met Council Awards Livable Communities Grant to Fund Small Area Planning Process Edina Grandview District Small Area Plan September 6, 2011 Where We've Been March 2011 — Council Authorizes Phase II Four Parts: 1. Organization of Community Leadership 2. Selection of Consulting Team 3. Creation of Draft Development Framework 4. Final "Report " Edina Grandview District Small Area Plan September 6, 2011 Where We've Been Since March 1: —April 14: Phase II Kick -Off — Selection of Steering Committee — Appointment of Executive Committee — Creation of Work Groups — Selection of Consulting Team — Drafting of Work Plan Edina GrandView District Small Area Plan September 6, 2011 Where We've Been Organization — 52- Member Steering Committee Ken Potts Kim Melin Randy Halvorson Chris Rofidal Steve Buss Gene Persha Richard Borland Larry Chestler Laura Giertsen Ellen Jones Terry Ahlstrum Dick Ward Bill Neuendorf Tim Mcllwain Bright Dornblaser Andy Brown Suzanne Davison Greg Domke Sandy Fox Dick Crockett Ame Cook Tom Bonneville Kim Montgomery Tim Murphy Tom Ruppert Peter Sussman Lisa Diehl Bob Kojetin David Davison Bernie Beaver Mike Platteter Peyton Robb Dan Gieseke Diane Reinhart James Justice Darcy Winter Paul Nelson David Novak Linda Urban Tom Mattison Ken and Adele Floren Michael Schroeder Kevin Staunton Michael Fischer Brett Johnson Collin Bredeson Deron Lindquist Eric Bredesen Jim Baisch Jim Smith Thomas Raeuchle Edina GrandView District Small Area Plan September 6, 2011 Where We've Been • Four Work Groups —Land Use — Community Needs /Public Realm — Transportation — Finance and Market Analysis • An 8- Member Executive Committee Edina Grandview District Small Area Plan September 6, 2011 Where We've Been Process to Select Consulting Team — RFI Instead of RFP — Retained Right to "Assemble" the Team — Found Talented Team that Understands that we need their help achieving our vision Edina Grandview District Small Area Plan September 6, 2011 Where We've Been • The Team — Team Leaders (Land Use /Community Design): • Mike Lamb &Andrew Dresdner (Cuningham Group) • Bruce Jacobson &Bob Close (Close Landscape Architecture) — Jack Broz (Transportation — HR Green) — Antonio Rosell (Transportation, Community Design — CDG) — Tony Schertler (Finance -- Springsted) Edina Grandview District Small Area Plan September 6, 2011 Where We've Been • The Work Plan — Creates a Roadmap for the Fall (more in "What's Next ") — Drafted by Consulting Team and Executive Committee after Scoping Session — Approved by Steering Committee Edina Grandview District Small Area Plan September 6, 2011 What's Next "Right now, the Grandview District is more a collection of buildings and parking lots than a place. People tell us it's an area they `go to' almost every day; we want to create a `place' that they'll continue to `go to' but also want to `stay at. Edina GrandView District Small Area Plan September 6, 2011 What's Next • Engage Community Stakeholders to Convert the Guiding Principles to a Plan • Three Community Workshops — Discussion and Discovery (Sept. 21) —Ideas and Options (Oct. 25 -27) — Decide and Deliver (Nov. 15 -16) • Check In with Council Edina Grandview District Small Area Plan September 6, 2011 What's Next The Product ( "Deliverable ") —Needs to be Accessible, Enforceable, and Inspiring —Will Include: • Why planning is necessary in the area • Summary of how community stakeholders view the future of Grandview • Direction for future development • A plan for implementation —Multi -Media Format Edina GrandView District Small Area Plan September 6, 2011 Council Action • Approve Engagement of Consulting Team • Approve Work Plan Edina Grandview District Small Area Plan September 6, 2011 Grandview District Small Area Plan Status Update Ir o r,c4�Fi tin.F r� R /Y: Ltf k It 0 IF irr r rr��i Edina GrandView District Small Area Plan September 6, 2011 St® Luis Park. MINNESOTA wwwstlouispark.org August 19, 2011 Chair/ Commissioner Mike Opat, 1" District Vice Chair / Commissioner Mark Stenglein,• 2 °d District Commissioner Gail Dorfman, 3'd District Commissioner Peter McLaughlin, 4th District Commissioner Randy Johnson 5th District Commissioner Jan Callison, 6 District mi Comssioner Jeff Johnson, 7th District Hennepin County Board of Commissioners 300 South 6th Street A2400 Government Center Minneapolis, MN 55487 -0241 Dear Hennepin County Commissioners, I had a chance to view the August 16 HCRRA board meeting regarding the freight rail issue and observed a couple of things that I felt required clarification. During the meeting it was noted.that the report prepared by the City's consultant (SEH) did not make a finding or recommendation that co- location on the Kenilworth Corridor was viable. I thought it important to clarify that SEH provided St. Louis Park with four detailed technical memorandums over about a five month period which examined a wide range of freight rail issues, the findings of which were discussed at length between SEH and the City Council. Given, the detailed analysis and discussions that took place, particularly related to the results of Technical Memorandums #3 and #4, it became clear ' that co-locating freight rail and LRT on the Kenilworth Corridor was as or more viable'than rerouting on the MN &S. In fact, based on SEH's work, and as noted in the City Council's resolution adopted on May 31, the analysis determined that co- location on the Kenilworth Corridor was shorter, had fewer curves and elevation changes, and was significantly less expensive to construct than by using the MN &S. While I would agree that co-location on the Kenilworth corridor is not without its challenges, the I hallenges with rerouting freight rail on the MN &S, as identified in the analysis by SEH, are just as, if not more significant than the Kenilworth option. City and SEH staff would be more than happy to sit down with you to review these technical memorandums in greater detail. It was also noted during the meeting (and in a recent Finance and Commerce article) that because the City had filed an appeal on the Negative Declaration made by MnDOT on the EAW regarding the MN &S, the County should not meet with the City to discuss mitigation related matters as offered by the County in a July 15 letter to the City. Please note that the appeal filed by the City on the EAW, the decision of which had to be made by the City in a very short period of time, is not directed at the County, but rather at MnDOT. In addition, the appeal does not .5005 Minnetonka Blvd. • St. Louis Park, Minnesota 55416 -2216 Phone: (952) 924 -2500 • Fax: (952) 924 -2170 o Hearing Impaired: (952) 924 -2518 Page Two August 19, 2011 require work on SWLRT to stop and will not result in a decision by the Court on the appropriate freight rail route or necessary mitigation measures. The appeal relates solely, to the process being used to determine the environmental impacts associated with the proposed reroute of freight traffic onto the MN &S in St. Louis Park. As such, I would reiterate the August 10 letter Mayor Jacobs sent to Commissioners Dorfman and McLaughlin which indicated the City was willing to meet with the County to discuss mitigation associated with the MN &S. On a final note, we have received a copy of the report submitted to the County Board on Tuesday o the freight rail issue and co- location in the Kenilworth Corridor. We plan to review this doc ent with County staff in the near future and provide our thoughts and comments on the findin s and conclusions made in the report. Manager CC: St. Louis Park Mayor and City Council Richard Johnson, Hennepin County Administrator Phil Eckhert, Director of Housing, Community Works and Transit Kevin Locke, City of St. Louis Park CommunityDevelopment Director Jim Brimeyer, District 6 Representative Metropolitan Council Dave Christianson, Minnesota Department of Transportation 1i6' y3� G zk .. 9� August 15, 2011 } ly CITY OF EDINA Who Are Our Residents? .Duration of Residence in Edina: Less Than 2 years 3% 2 to 5 years 10% 5 -10 years 11% 10,20 years 28% 20-30 years- 16% Over 30 years. 33% Almost 50% of the surveyed residents have lived in Edina 20 years of more. Comparison Data: St. Louis Park Shoreview Eden Prairie Minnetonka Woodbury 40% 34% 33% 31% 19% Census Results 2000 — 2010: Age 2000 2010 # 0-4 2,546 2,584 38 2% 5 -19 8,938 9,743 805 9% 20 -34 5,580 5,750 170 3% 35 -54 14,586 1,31339 -1,247 -9% 55 -64 5,010 6,618 1,608 32% 65 -84 9,181 7,882 -11-299 14%. 85+ 1,584 2,205 441 28% Place Median Ape Scottsdale, AZ 45.4 Clearwater, FL 43.8 Cape Coral, FL 42.4 Ft. Lauderdale, FL 42.2 Hialeah, FL 42.2 Place Scottsdale, AZ Edina, MINI Clearwater, FL Cape Coral, FL Ft. Lauderdale, FL Hialeah, FL Median Age 45.4 44.5 43.8 42.4 42.2 42.2 Who Are Our Residents? 35% of Edina households have one or more residents age 65 or older. Comparison Data: Shoreview St. Louis Park Minnetonka Burnsville Eden Prairie 24% 23% 23% 24% 17% 70% of Edina households have no pre- school or school -aged children living in them. Comparison Data: St. Louis Park 75% Minnetonka 65% Burnsville 62% Lakeville 53% CITY OF EDINA Who Are Our Residents? • Owner /Renter Ratio Households • Average HH Size • Television • Internet Access • Retired 75 %/25% 20,672 2.31/HH 93% 79% W /H /B "How would you r Edina — excellent, ..poor ?" ate the quality of life in ,good, only fair, or Excellent 90% Good 8% Only Fair 1% Poor 0% Comparison Data: Edina 90/8 11:1 St. Louis Park 77/20 4:1 Minnetonka 55/42 1:1 Eagan 47/48 1:1 Eden Prairie 47/51 1:1 Shoreview 55/41 1:1 Burnsville 30/55 1:2 "All in all, do you think things in Edina are generally heading in the right direction, or do you feel things are off on the wrong track ?" Right Direction 92% Wrong Track 7% DK/R 1 Comparison Data: RD WT Edina 92% 7% 13:1 Eagan 91% 8% 11:1 Shoreview 84% 15% 5:1 Burnsville 71% 25%, 3:1 "Other than voting, do you think that if you :.wanted . to, you could have a say in the way things are run in this community ?" YES No DK/R 79% 15% 7%,- Comparison Data: St. Louis Park Edina 78/9 79/15 8:1 5:1 Burnsville 71/25 3:1 Woodbury 65/30 2:1 Shoreview 65/30 2:1 'a's CITY OF EDIN s not What Do They Think Of Edina. ? "Do you consider taxes in Edina to be very high, somewhat high, about average, somewhat low or very low in comparison to neighboring cities ?" 2011 1999 Very High 14%. 6% Somewhat High 30% 29% About Average 37% 38% Somewhat Low 6% 12% Very Low 1 % 0% Don't Know 12% 15% Comparison Data.: VH SH AA SL VL Edina 14 30 37 6 1 Lakeville 10 46 36 1 0 Burnsville 12-. 31 32 3 1 Woodbury 8 30 45 3 G11- s i CITY O r it Da A What.Do They Think Of Edina?. Tax Rates: $300,000 Home in 2010 Burnsville Lakeville Woodbury Edina City Taxes $1,157 $1,121 $1,002 $ 707 Total Taxes $3,461- $3,448 $3,344 $3,310 Tax Rates: $300,000 Home in 2010 Total Taxes $4,273 $4,053 $3,726 $3,719 $3,571 $3,614 $3,310 Citv Taxes Minneapolis $1,827 Hopkins $1,470 Bloomington $1,143 St. Louis Park $1,113 Minnetonka $ 964 Eden Prairie $ 908 Edina $ 707 Total Taxes $4,273 $4,053 $3,726 $3,719 $3,571 $3,614 $3,310 "What factors caused you to move here ?" Good Schools Housing /Neighborhoods ..Close To Job Always Lived Here Reputation 27% 26% 14% "What do you like most about living in Edina" Convenient Location Housing /Neighborhood Close To Family /Friends Good Schools Shopping 25% 13-% 10% 9% 9% "What do you feel is the most serious issue, if anything, facing Edina ?" High Taxes Lack of Redevelopment Nothing 12% 13% 32% "What services would you be willing to see cut to keep property taxes at their current level?"' Unsure Across - The -Board Administration None /Cut Waste 13% 16% 19% 46% M16 CITY OF EDIN two I Conclusions • Long Term, Rooted • Highly Value Schools And Neighborhoods • Support The Direction Of Community • Government Is Responsive • Excellent Quality Of Life • Tax Burden Perception