Why city golf courses lose money

Competition, mostly. Poor maintenance. And design of the city’s two courses was bungled, too.

That emerged during Stockton’s bankruptcy trial. The manager of Stockton’s courses, Tom Nelson (quoted in today’s column), gave a direct testimony declaration full of details explaining what’s wrong with the courses physically and economically.

A fairway at Van Buskirk golf course.

Economically:

• ”Shortly after Kemper took over management of the Courses, there were several important changes to the golf industry in the Stockton area. Elkhorn Golf Club in north Stockton, which had previously declared bankruptcy and ceased operations, was purchased by former members and Sierra Golf Management and re-opened as a public, heavily-discounted facility.

“Similarly, Micke Grove Golf Links in Lodi changed management to Fore Golf Partners, a very aggressive discount firm. Lockeford Springs Golf Course in Lodi also began heavily discounting its fees due to local market pressure. During this period, The Reserve at Spanos in Stockton began discounting its fees for the first time due to market changes.

“Due to these changes, the ability to charge full-price, or “rack,” rate has virtually been eliminated, requiring constant discounts and deals in order to attract play and reasonably compete with the Stockton area golf market.”

See the city’s golf budget here:  2015-16_Adopted_Budget_GOLF

Physically (to cite several examples):

• “The Courses currently have no cart paths. This is extremely unusual for golf course, because carts cannot be used for several days after rain. The result is a loss of cart fees, which make up 20-21% of daily fees. It would cost approximately $1 million to add a cart path to each of the Courses.”

• ”The Courses need new irrigation systems. This will require dredging the lake because the silt would otherwise ruin the system’s pipes. Irrigation and dredging for the Courses could cost upwards of several million dollars.”

• “Both the greens and bunkers at the Courses are of original design and construction. These old, “push up” style greens lack proper drainage and soil composition for optimal turf health. The bunkers’ drainage systems have completely collapsed, preventing proper drainage and sand texture for playability. Restoring the greens and bunkers at the Courses could cost several million dollars.”

Nelson’s assessment: “At a rough estimate, approximately $6 million to $8 million in capital improvements and deferred maintenance would be required to make the Courses profitable again.”

Read Nelson’s testimony here.

It is dismaying that city leaders never invested the funds necessary to make the courses profitable. But the people in City Hall were blase about money-losing endeavors. That was the culture: you could always tax more, juggle the books more, borrow more.

That mentality led to the bankruptcy and the city’s current fiscal straight jacket which prevents investment in the golf courses even if city leaders wanted to make it. City golf courses will remain money holes for years to come. About all Stockton can say is that the courses are popular amenities, and the money holes are much smaller than they used to be.

 

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Gary’s mind, on tour

“I’m now down to drinking two 200ML bottles of Seagram’s a day along with a beer. I feel pretty good most of the time. Did I tell you I dropped acid 65 times in my lifetime? I drive for miles every morning to the liquor store when it opens up at 6 AM. I hang out with Local Farmers in nearby Linden (home of the Speed Freak Serial Killers). I own a state of the art recording studio with a remote control in my backyard and it sounds like a million bucks. I own lots of fancy amps and a stack of microphones. Aside from that, I hang around hardware stores a lot and buy stuff.”

—Stockton’s Gary Young, Pavement’s first drummer, interviewed by Noisy. Young’s getting a lot of attention because Pavement just released a double vinyl LP of early Pavement tunes. Here’s today’s Record piece on him.

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This horribly prosperous drought

Two stories from Valley papers today:

South Valley ag takes drought’s brunt – California’s now 4-year-old drought will cost state agriculture $1.84 billion in 2015 along with an estimated 21,000 jobs lost, with the South Valley suffering some of the worst effects, according to University of California at Davis researchersVisalia Times-Delta article

Kern County’s crop value hits a record $7.5 billion — Kern County’s overall crop value reached a record $7.5 billion in 2014, fueled by a robust year in grapes, almonds and dairy. The county’s agricultural gross value rose 12 percent from 2013 to 2014, said Ruben Arroyo, Kern County Agricultural Commissioner. Arroyo delivered the annual report to the Board of Supervisors Tuesday. Fresno Bee articleBakersfield Californian article

There have been a number of stories on this theme recently, that Ag is poor-mouthing but making record profits. Not to downplay the hardships of the drought, but what I take from such stories is that farmers long used more water than they needed. The drought forced them to adjust. It has not forced them all into the poor house.

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Should the city reduce builder fees?

Mayor Anthony Silva wants the city to reduce building fees to jump-start home building.

On the surface, his proposal (or the developer’s proposal, championed by Silva in his perennial quest for establishment political support) looks reasonable.

The city slashes fees; developers build 1,000 homes over three years; supposedly generating 3,700 jobs, at least 60 percent of them, or roughly 2,220, local hires.

However, the proposal causes qualms. In effect all taxpayers are subsidizing temporary jobs for a couple thousand at the cost of reduced services to a city of 300,000.

That’s what fee reduction translates to: less municipal revenue, still fewer services, in a city where services have already been painfully reduced.

That’s why Deputy City Manager Scott Carney said in this story, “If you offer a significant fee-waiver program, you’re creating a disconnect between what the people of Stockton should expect and the resources you have to deliver that.”

Carney also said, “The question really is, what is the return on your investment, and will that return leave the city in a positive financial position or not?”

That is a question that should be answered with figures. What is the basis of the city’s fees? What is the true cost to the city of home building? Do fees cover that cost? How much municipal revenue does building generate? Let’s hope the City Manager’s office presents this information tonight at Council.

If such analysis looks good for the whole city and not just one sector, the proposal deserves serious consideration. If it does not, the City Manager’s office deserves credit for its cautionary advice, the sort of citizens-first fiscal prudence sorely lacking in the run-up to Stockton’s bankruptcy.

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Sure it’s hot but …

Saw this sign out front of a church on Lower Sacramento Road.

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The sadder but wiser city …

… is living within its means, as chronicled in this story. Two more unions have come to terms with the city.

The Stockton Police Management Association, which as late as 2009 filed an astute grievance against the city demanding a 17% raise, accepted a 4.2% cost of living adjustment. In return it surrendered the sickly sweet vacation buy-back benefit.

That benefit allowed employees to save up vacation time over a decades-long career, cash it in for salary at retirement, and use that artificially higher salary figure as a basis for the pensions received until death. Pension spiking, in other words.

The city also increased its contribution to the police brass union’s health insurance. The increases are quite modest: $21 per month for Employee Only; $38 per month for Employee plus 1 Dependent; and $51 per month for Employee plus 2 or more Dependents.

“It’s consistent with the long-range financial plan,” said city spokesperson Connie Cochran. “It was anticipated.”

You can read details in the council agenda here. Items 12.6 and 12.7.

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The verdict on the fatal bank heist

Here’s the long-awaited Police Foundation’s analysis of the fatal bank heist and rolling shootout in which hostage Misty Holt-Singh died.

I’m reading it now. Police have scheduled an 11 a.m. presser to discuss the report. More later.

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Coffee queen’s 60th year on the job

I’ll be off next week, so I won’t be around to hat-tip Dorothy Clare. On Wednesday Clare celebrates her 60th anniversary as owner and Mother Superior of The Ranch coffee shop on Mariposa Road.

Dorothy Clare in 2011. She'd only been at it 56 years then.

Impressive as her staying power is, Claire was not the longest-working Stocktonian the last time I checked. that was Don Nagai of the Rose Barber Shop downtown. If he’s still at it, this would be his 67th year.

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You owe pensions $4,425

“California’s public pension debt in 2013 stood at $4,425 for every man, woman and child in the state, despite strong investment returns by public retirement funds.”

—Sacramento Bee article.

Despite strong investment returns, mind you. Imagine how much you’ll owe Hogzilla when the economy weakens.

 

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Penney’s saved is a Penney’s earned

Hal Monroe, Manager of Stockton’s JCPenney 1982-1989, writes:

“A very interesting column concerning Macy’s 50th Anniversary in Stockton.

“However, I do have to take exception to this quote “Gottschalks went under. J. C. Penney became a discount store.”

“J. C. Penney has never been a discount store in its 113 year history. It may have been perceived as a discount store when Ron Johnson from Apple took over and did away with “sales at a discount” and priced most merchandise at an everyday retail similar to what people were paying when they purchased an item on sale. Needless to say this change did not sit well with customers accustomed to expecting 20%, 30%, 40% off sales.

“Possibly you have not visited the JCPenney store in Weberstown Mall lately. It is a recently remodeled  store with many brand names other than its own brands. Many of the same national brands found in Macy’s.”

Hmmm. Do I have this right? Penney’s discounted many items, which customers liked; but when Penney’s discounted all items, customers disapproved … because they weren’t getting sales prices?! Very interesting. The “anchor price” exerts a powerful hold on the shopper’s sense of value. If Penney’s prices something at $80, ho-hum. But if Penney’s prices something at an anchor price of $100 and then “discounts” it to $80, oh, boy!

So, in order to re-instill customers with a sense of Penney’s bargains, Penney’s raised prices. Small wonder the guy from Apple couldn’t figure it out.

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    Mike Fitzgerald is The Record’s award-winning metro columnist. His column runs in the paper three times a week. Born in San Francisco, he was raised in Stockton. His column covers diverse beats including, sometimes, the offbeat. Read Full
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