DRAFT MINUTES
Parks and Recreation Commission
Minutes of Meeting
SPECIAL MEETING
Date and Time: Wednesday, March 2, 2011, 6:00PM
Meeting Location: Parks and Recreation Department, 5 Broad St.
Members Present: Chairwoman Amy Everitt, Leslie Tuttle, James Shea, Bob Callahan, Chris Burke
Members Absent:
Others Present: Doug Bollen, Director, Director, Salem Parks, Recreation and Community Services
Recorder: Stacy Kilb
1. Discussion and vote – Retaining Golf Facilities Management, Inc. for the management of the Olde Salem Greens Municipal Golf Course; five year contract, with five additional one year terms at City’s option.
Presentation – City Purchasing Agent Thomas Watkins
Also invited: Chris Carter, Representative of Golf Facilities Management
Folder A Track 4
Tom Watkins presents.
Tom Watkins - Golf evaluation committee
Copies of the PowerPoint are handed out to Commissioners and to the audience. . Chris Carter of Golf Facilities Management, Inc. (GFMI) is also present in the audience.
Several steps were involved to get to the RFP, including the proposal itself and a site visit.
The Review Committee consisted of Amy Everitt, Doug Bollen, Chris Burke, Tom O'Shea, Richard Viskay and Tom Watkins. They reviewed the technical proposal, which met all requirements; this company ranked Highly Advantageous or Advantageous in all ranking criteria categories, which provided a breakdown of minimum criteria. Further criteria, such as quality of the operations and management, quality of course maintenance, financial analysis, and benefits to golfers and residents were also taken into consideration.
The Committee agreed that use of this company would be an improvement on what's in place now, due to:
· Provision of a general manager
· Having a Class A-1 on-site PGA golf pro
· Employment of a course ranger
· On-site golf-specific technology and data reporting
· Ability to market to a broader audience
It is also agreed that Dick Drew does an excellent job, but GFMI could do just as well. The company would designate Mr. Garrity of Lynn to be Head Superintendent. Staff would also include a full time mechanic and seasonal maintenance staff.
GFMI would provide up to $45K of capital improvements in each year of 5 the year lease, including:
· $25K in cart path repair
· $19K in tee repair
· $10K in drainage work
Additionally the first year would include installation of a fuel station, which would then be deeded to the City of Salem. Currently there is no fuel station, and gas cans get carted to the gas station, filled and returned, which is not efficient and poses a liability issue. The cost of installation is approximately $30K.
Lease payments to the City are outlined as follows:
Year 1 - 70K
Year 2 - 80k
Year 3 - 90k
Year 4 - 100k
Year 5 - 110k
Note that these figures do NOT include the $45K per year capital improvements mentioned above, which would be in addition to lease payments made.
This proposal shows a steady revenue increase; as the system is now, there is no such guarantee. The GFMI model assumes cost will increase each year and revenues will vary depending on the economy, weather and other external factors. This will be a guaranteed revenue flow to allow for better future budgeting.
If the city hired its own manager/PGA professional, additional costs of $50,000 per year would be incurred, as shown in scenario 2. By privatizing, the City also does not incur the risk of workers’ compensation, unemployment insurance, health insurance costs and other unpredictable, costly benefits.
The Committee feels that the benefits of the current proposal outweigh those of managing the course internally and then managing the accompanying external risks.
Benefits to Salem golfers and residents would include:
· A professional approach that will increase tee times & speedy play
· All current seasonal passes will be honored
· Increased course quality
GFMI has been managing golf courses for 24 years, has experience in clubhouse and course management, and operates a restaurant, function hall and bar in Beverly and also the Hillview Country Club.
Their customers are satisfied and the Committee voted to recommend that Parks & Recreation approve this proposal, but if they do it is still subject to City approval. Of the 63 municipal golf courses in state, only 10 are run with municipal employees.
Chris Carter of GFMI is present to answer questions. Rich Viscay is not present.
Shea asks about Salem residents and rate increases, passes, tee times and the groups that play on weekends.
Mr. Carter answers that rates for 2011 would not change from their current fees. After that, it is year- by-year based on industry and the economy. He does not guarantee that there will be no increases; at the other courses the rates rise about $1 per 9 holes every two or three years. This is a 2 or 3% increase.
As for groups with guaranteed tee times Mr. Carter says he cannot guarantee tee times for groups. At other sites there is a lottery system where tee times get rotated so it is fair for everyone. This would also be fairer for incoming members as some slots would be left open for them.
Seasonal help that is there now will be retained for all past positions. Yearly passes will continue to be sold.
Chairwoman Tuttle opens to the public.
Bob McCarthy, liaison and Council of Ward 1, recuses himself.
Mr. Wayne Janian speaks. He opines that he is totally against privatization and asks about rotating tee times at Gannon. The group is open to members to sign up for a group at a specific tee time. Groups at Gannon are structured to go off at the same times each weekend and are open to members. They will be playing at the same time every weekend. Mr. Janian wonders why they would want to change what is in place now, which is that a group on a weekend pays $1000 extra to tee off at 7AM on Saturdays and 10AM on Sundays, for example. No other members can join the group. Each group has a set time. Mr. Carter asks where the revenue goes; it is a donation that goes into the donation account. It is not listed as revenue. Mr. Carter wants those tee times available to any permit holder. If more
groups show up than tee times there are at Gannon, the extra people get bumped to the next rotation. Mr. Carter reiterates that he wants it to be fair for everyone and groups are rotated in the late morning wave; this is also the case at Beverly but those courses have 18 holes.
Mr. Prevey, the Ward 6 Council, speaks and asks Mr. Watkins about the Evaluation Committee Review, financial analysis and the price proposal from GFMI during years 1-5 and the increase each year. He questions how GFMI plans to come up with the additional $40K per year increase that they project. Mr. Carter answers that increasing play and maximizing rounds is the first goal, and can be done by bringing in more golfers during slow times; there may also be small rate increases in years 2 or 3, and in greens fees, but the main goal is to bring in more players. Currently there are 25-30K rounds of golf being played; golfers paying an additional $1 per round would add that much more money. Mr. Prevey asks if GFMI could cut costs that would also make up the increase. Mr. Carter says they can
maintain golf courses at a lower rate since their overhead is less; staff costs are the biggest expense but some equipment can be shared, etc. There is no pension plan for employees, for example. They can do an as good or better job at a lower cost.
Paul Tremblay, who is on the Committee at Old Salem Greens, speaks. He does not understand why the city cannot provide the same services as a private company. He does not understand where more golfers could be fit in. Pass holders are already a guaranteed source of income and disagrees with letting a private contractor take over a public golf course; they are coming in to make money and will outprice Salem residents in a few years. Many retirees on a fixed income play. City employees that work there now will just be shunted to another department so no money will be saved there. He feels the golf course will not make any more money than it does now.
Bill French speaks. Part of the plan is to hire a PGA pro. How does that benefit the users of the golf course? GFMI has a golf pro at its other courses full time. This person would grow the game of golf, offer instruction and provide well-rounded management. He/she would organize tee times, etc. Mr. French feels it is already in place – the staff on hand does that already. Watkins says no one oversees the day to day operations; with Dick Drew retiring no one will be there doing that. A hired pro would oversee day-to day operations.
Mr. French asks about the capital improvements of "up to" $45K per year also with the gas station improvements. He wants them to be more specific. It is not "up to” $45K, it IS $45K as broken down into cart path repair, drainage and tee repair. There is no schedule yet of when improvements would take place, but GFMI would be locked in to make those improvements each year as per the contract.
Mr. Tremblay speaks again; if a private company can invest this money each year, why can't the City re-invest the profits for the same purpose. If the City is making that kind of profit, why don't we put more money into the course? Instead they take it and put it elsewhere. Chairwoman Tuttle says that this also happens at Winter Island; it is the way the City is set up and is out of Commission control. We can't improve parks since we don't have the money. Watkins reminds the audience that we are not paying the private company; they are paying us. Mr. Tremblay argues that they will not and we are making a profit at Salem greens.
Steve Pinto, City Council speaks. Salem Municipal Golf Course has been owned and operated by the City since 1933, and “if it ain’t broke, don't fix it.” He will vote against privatization if it comes before council and cites several figures related to the course:
70% of users are from Salem and play many thousands of rounds.
30% are from out of town.
33,788 rounds are played each year.
The tournament committee raised $42,320 to be put back into the golf course. He has only seen appropriations from the golf course going out; no money comes back. It is making ample money, and is a nice course. He asks, of courses run by municipalities, how many are 9 holes, and how many are 18. Mr. Carter says of GFMI’s are 18-hole courses currently. Mr. Pinto outlines the uniqueness of the course and that it makes a community special. If we are not losing money, why bring in a private company to run it? Also, why is this meeting being held 5 weeks before opening? Also a Dick Drew is still there, isn't he retiring? Mr. Pinto will urge his colleagues to vote no on privatization.
Joan Lovely, Councilor at Large, speaks, asking Watkins about the membership of the Committee; why weren't there any golfers or laypeople on it? The Evaluation Committee was chosen by Watkins and Bollen and they felt a fine job could be done internally.
Councilor Sosnowski of Ward 2 asks some technical questions. He has gotten emails and phone calls from residents who are in Florida who want this to remain the same; he wants to keep it as is but wants all input first. He asks about the price proposal and cash flow listed on page 2 and wants a definition. Unfortunately Mr. Viscay is not here and that would be a good question for him. Mr. Sosnowski asks Mr. Carter. It has to do with state bidding laws as to how price proposals are compared; it is a common practice to keep a level playing field. Mr. Sosnowski says he will ask Mr. Viscay and also asks about emails that seniors have sent him claiming that playing time will be cut from a 40 hour window to a 12 hour window. Is that true? This is the first Mr. Watkins has heard of that and
there is nothing in the proposal or contract that specifies such a reduction.
Joe Sullivan asks about the financial analysis and discussion ensues regarding profits. According to the paperwork there is a decrease projected for 2011, and he wants to know why. It is pointed out that the numbers run on a fiscal year calendar; thus there is already a loss for FY 2011, which began in July, and that trend is expected to continue.
Burke points out that gross revenues do have a range – from $502K to $589K according to the figures the Commission has. 2010 was the best year yet but profits will resemble the mean of the figures above rather than the higher one, in general. In general profits are about $95K per year but the numbers vary.
Greens fees also used to be lower and Everitt points out that this year’s greens fees will be the same. Also, for FY 2012, if GFMI is not retained, the City will have to hire its own golf pro at a cost of $50K, and will also have to install a fuel station at a cost of $30K.
Mr. Sullivan asks about capital improvements and claims that things such as cart path maintenance, tee and drainage repair are maintenance that occur on a yearly basis anyway and not “improvements.” Burke points out that this point did come up in the previous meeting; re-seeding a tee, for example, is maintenance, but re-sodding as GFMI would do is an improvement. If one goes to Gannon, it is obvious that funds have been returned to that course.
Burke states that he was, at first, against privatization but is now in favor of it having seen GFMI’s track record at other locations. Mr. Sullivan asks what happens to the revenue generated by the carts, and Bollen answers that the carts, pro shop and concessions will all go to GFMI.
Teasie Riley-Goggin speaks. She is upset that a public hearing (not a meeting) did not take place. The vote was in error. She says we have a municipal superintendent who is retiring. If the superintendent of schools retires, do we privatize? It does not make sense. She wants a public hearing to be held.
Jerry Ryan, Ward 4 Councilor, speaks. He claims that the administration wants to say that the golf course does not make money, but it does, therefore it is rash to privatize solely because the superintendent is retiring. HE thinks the Commission should see if the City can keep running the course as it is, since it is making money. There is money going from the golf course and witch house.
Jay Canty speaks. He asks for a definition of the Parks and Recreation Commission. Chairwoman Tuttle states that their mission is to ensure that the majority of citizens can use and enjoy the parks, and that the parks are protected so that everyone in Salem has equal access. Mr. Canti asks is the Commission is influenced by any sort of political agenda, but they have none. Mr. Canti questions the necessity of even having a Parks and Recreation Commission if the golf course is privatized. Chairwoman Tuttle counters that several aspects of maintenance are already privatized, for example the lawn mowing. These are difficult fiscal times. Mr. Canti expresses his disappointment with the private lawn cutting service received, as this was not done in a
timely manner. The Chairwoman says that difficult decisions must be made, even though the Commission does not like making them based on finances, sometimes it must be done. Mr. Canti states that they are “throwing away 76 years of golf on three votes” and goes on to opine that the Commission is not doing its job and must be politically motivated. The Chairwoman examines the finances of the golf course regularly and states that she has the goal of keeping it around for years, but that times have changed and the City can no longer maintain the park system; if it is to be sustainable so that our grandkids can use it down the road, years from now, something has to change as the City will not be able to maintain the facilities in the manner we have grown accustomed to.
Mr. Ryan asks about the Parks Commission, which is regulated by state law. They stopped a school from being built at Gallows Hill. He believes if the City stopped taking money from the golf course and Witch House, it could be used to maintain those facilities.
Wayne Janian speaks again. Dick Drew is getting ready to retire, so the course will not have anyone, but they want to pay a pro. He points out that a man named Bill has assisted Mr. Drew in the past and could take over so they would not have to hire anyone. He also comments on senior passes; right now they are Mon.-Fri. from course opening until 3PM; he worries that they will be changed to Mon.-Thursday 11AM-1PM, as many seniors play in the morning to avoid the heat, but no such changes have been proposed. This question also came up in the previous meeting and changing times was suggested as an alternative to raising rates. Specific limitations were not discussed. Tuesday morning free summer clinics for kids would remain a large component at the course as
they are at all other courses, and other clinics would also be available
Callahan comments that GFMI is a reputable company, and we are not arguing that, but he wants to make the point that the golf course and Parks are public properties only since Commissioners before these would not let private companies come in and take over. If we give up control of any park, we open the door for privatization of every park and he is opposed to privatization. He knows GFMI will follow its proposals, but once a contract is signed they can do whatever they want for the length of that contract.
Mr. Sosnowski speaks again. He asks about the high school teams and how they function now and will in the future. This was in the RFP. They would have free access to the golf course and Mr. Carter would try to maximize their time.
Wayne Janian asks Mr. Carter about the status quo with high schools and clinics; he wonders where they would find time for more rounds of golf. Mr. Carter says they would run the course as efficiently as possible, with speedier play etc. Mr. Janian asks about requiring on weekends that everyone take a cart to speed up play. This will NOT be required.
Mr. Pinto speaks again, saying that when this first came up, Callahan had asked Tom for a compelling reason to do this – they response was to see what's out there [when asking for an RFP]. He thinks this could have been better timed and presented.
Ms. Riley-Goggin speaks again, asking if the Commission plans on having another public hearing before a vote. It has not yet been discussed and is not on the schedule.
Mr. Sullivan asks if they can respond to a financial question about the FY 11 year decrease in revenues. Chairwoman Tuttle says we had a great year last year though rates have not increased since 2004. That lesser projected number comes from the average of prior years. Mr. Sullivan opines that the Commission is basing its vote on this projected 47% decrease. Chairwoman Tuttle counters that the gas station and golf pro will be added and will cost the City additional money. Others are concerned that Olde Salem Greens takes a long time to play, and with a ranger things will move more quickly. The numbers indicate that, in the long run, things are not looking good. The Chairwoman wants to make sure we have a good golf course for the future, since the city is facing
tough financial times. She points out that it may be difficult to justify putting more money into the golf course when teachers, firefighters and other City workers are facing a dire situation. If the City can make money and maintain the golf course in good condition, it is hard to say “no” to privatization.
Mr. Sullivan states that all discussion so far assumes an additional $70K coming in – Chairwoman Tuttle points out that there is an additional $45K in capital improvements in question. Mr. Sullivan continues that, without privatization, we could have more revenue than that coming in next year. The Chairwoman states that privatization would guarantee a cash flow, whereas otherwise the City does still risk a loss. Everitt points out that FY11 has already begun as of July; so although the numbers were good through June of 2010, there was actually a loss for July and August; therefore April, May and June of FY’11 are also presumed to show a loss. Rich Viscay had averaged this past year’s revenues with previous years to arrive at his figures.
Mr. Sullivan opines that it would be a loss to the city if we made more next year.
Joan Lovely asks about who will pay for water. This is the City’s responsibility. Ms. Lovely points out that all City residents pay for water and are affected, and questions why this expense is not passed on to GFMI. Mr. Carter states that most private companies do not pay for water; the Cities they work for take care of it. Watkins says he will ask Mr. Viscay about it.
Mr. Sosnowski speaks on the water issue and asks about rumors of wells drilled and local water used instead of municipal water. Chairwoman Tuttle says it was discussed in the past. Another audience member says that a study done, but no test wells were drilled, and they did not find enough water for the golf course.
Mr. Sosnowski asks about city contracts and if the City is guaranteed the money. It is. GFMI is required to have a performance bond insurance policy.
Hoping to speed things up, Burke states he will now vote against the contract, a reversal of his vote in support of it during the previous meeting. When he was part of the Review Committee he wanted this contract to come before the board, but then last week there was little representation of golfers. He is not against privatization per se and feels that GFMI would maintain the course as well as the City does now, plus made improvements. The employees there always work hard and the company could have done better than the City in addition to making those improvements, and as it is now the course does not make a lot of money. GFMI would not give back much more than we are making now, but at least it would be guaranteed, whereas the City would be harder and harder
pressed to make a profit when it has to pay City employee salaries and pensions.
However, the reason he is voting against privatization at present is a matter of timing. Even if the Parks and Rec Commission votes in favor of privatization, many City councilors at this meeting have stated that they would not vote for it. To send it on to its certain doom would be a waste of time; if it will not pass, the City must advertise for a superintendent soon and there would not be one in place in time for opening if the matter gets voted down in City Council. However, he feels that in the future it may still be appropriate to go with a private management company.
Watkins says the City sees the best way to get course up and running was to contract GFMI with golf pro, superintendent, etc. Burke agrees that this would be true IF it could pass City Council.
Joan Lovely speaks again, pointing out that this matter requires a supermajority of 8 votes in City Council, and if only four Councilors object, Burke is correct in assuming it won’t pass. There is some question as to whether a ruling from the City Solicitor found that a vote of only 6 to 5 was needed, but as this is a five year contract, 8 votes are required. The matter will be looked into.
Watkins states that this would be a good debate to have before City Council and hopes that the Commission will vote in favor for that reason.
There is a lengthy silence.
Everitt moves to adjourn the meeting. If no motion comes forward, the Commissioners don't vote. Joan lovely reminds the board that because the last meeting was improperly posted there was no vote. The Commission knows this. Burke says the Commission owes the matter a vote on record, and Callahan agrees.
No second to adjourn. Callahan motions to move the question, which is to take the vote. Everitt seconds and the motion passes unanimously.
Chairwoman Tuttle calls for a motion to approve privatization but none is made, so instead she calls for a motion to deny privatization. Callahan motions to deny privatization and keep the course as it is, run by the City. He is seconded by Shea.
Shea, Callahan and Burke vote in favor of the motion to deny privatization while Tuttle and Everitt vote against.
Everitt motions to adjourn the meeting, is seconded by Callahan, and all are in favor
The meeting ends at 7:25PM
Respectfully submitted,
Stacy Kilb
Clerk, Salem Parks and Recreation Commission
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