Council approves acquisition of golf course to preserve 108 acres of open space

So what are the financial details ? We as MV citizens deserve to know what the cost and if any loans the city will incur.

The financial data is contained in the staff report(s) that were presented at the October 14 meeting (and others previously). This link will go to the most recent agenda. The 9th item in the report contains the financial projections ("Cash Purchase Resources.")
https://dms.cityofmissionviejo.org/OnBaseAgendaOnline/Meetings/ViewMeet…

The city just bought a PIG in a bag! Run of the mill golf courses are losing tons of money daily. If city thinks they can turn this ”run of the mill golf course” around, they’re out of their minds. The citizens of Mission Viejo need to call the city council on every cent for this land purchase and any monies spent after the purchase. The city council is less than transparent on spending monies. What was the total monies spent on the “rehab” of the swim center, not just the initial budget?

What? Open space to "walk?" Go walk 18 holes of golf without a golf cart. There's plenty of space in our area to walk and bike WITHOUT sacrificing the golf course. Now instead of a reasonably priced golf course, golfers will pay through the nose to go to the next closest public course... Beautiful but expensive Tijeras Creek. Oh, and the hundreds of homeowners that bought properties surrounding the course... You just made their day. Good job.

Sincerely disgusted.

Very pleased the City has acquired this space. Definitely don't want or need any high density housing built on this site.
I would suggest previous comments I've seen regarding this property to retain the front 9 holes for the golf course and convert the rest of the space to an City park/open space with hiking trails, waterfalls, ponds, overlooks, a spectacular outdoor environment.
Definitely no sports fields or dog parks.
The current clubhouse could be leased to a private operator who is established that could transform the space to a quality affordable restaurant and offset costs to the City.

From: CA Schlicht <CASchlicht@hotmail.com>
Date: October 14, 2019 at 2:42:26 PM PDT
To: "graths@cityofmissionviejo.org" <graths@cityofmissionviejo.org>, "bgoodell@cityofmissionviejo.org" <bgoodell@cityofmissionviejo.org>, "wbucknum@cityofmissionviejo.org" <wbucknum@cityofmissionviejo.org>, "tkelley@cityofmissionviejo.org" <tkelley@cityofmissionviejo.org>, "esachs@cityofmissionviejo.org" <esachs@cityofmissionviejo.org>
Cc: Dennis Wilberg <DWilberg@cityofmissionviejo.org>, Cheryl Dyas <cdyas@cityofmissionviejo.org>, "gailreavis@cox.net" <gailreavis@cox.net>, Cathy Schlicht <caschlicht@hotmail.com>
Subject: Questions - pending purchase of the CdSGC

October 14, 2019

The pending purchase of the CdSGC

Dear Mayor and Members of the City Council:

As former Mayors, Gail Reavis and Cathy Schlicht wish to present the following.

We all want to keep the Casta del Sol Golf Course as a golf course, but has the City Council and City Administrators been transparent with its communications to the citizens of Mission Viejo on how that will be accomplished?

On October 8, 2019, the City Manager boasted about the amount of support the City received in response to its press releases. However, 100 responses from unknown residences, including city staffers on social media and from an email distribution of 30,000, is inconsequential.

What is so egregious is the City in its Press Releases as well as during the Council meetings, have been negligent in informing its residents of the true costs associated with the purchase, the maintenance, the costs of the rebuilding, the annual subsidy and how the budget will be affected.

So let’s talk about the bottom line.

The Budget

On April 23, 2019, in preparation for the 2019/21 budget cycle, the Council voted for a Resolution that established $29.2 million in reserves based on a risk factor. "The purpose of the risk analysis is to determine the appropriate level of General Fund reserves based upon the City's exposure to various risks." If those risks were legitimate in April, are they less legitimate in October?

The analysis also stated for cash flow needs, as money rolls in and rolls out, that this current budget cycle requires a minimum of $15 million in Reserves to keep the City operating smoothly, without interruption of services.

With each budget cycle, (the current budget was adopted on June 25, 2019) the City produces a Master Financial Plan to aid in long range forecasting. "The MFP analysis allows for a deeper analysis of how past and current spending will affect future operating costs." (page 251)

In plotting future reserve levels, the graph on page 265 of the MFP shows a reserve level of $21.4 in FY 2023/24, followed by a prediction of $17.1 in reserves in FY 2024/25.

With the $13 million cash purchase of the golf course, the city admits our reserves will be reduced to about $20.5 million.

With this purchase, are we fast-forwarding in depleting the reserves by four years? If so, what are the expected reserve balances for the following fiscal year? Or the next budget cycle?

How will this purchase affect future operating costs?

According to the graph on page 263 of the MFP, the City is already at the red line, where expenditures are outpacing revenue.

The Staff Report

The September 24, 2019 Staff Report, based on projections, states there is not "enough net income over the 20-year projection period to restore the General Fund cash reserves to current levels..." It needs to be noted that that statement only refers to the original $13 million purchase and not the further outlay of needed funds for immediate repairs to protect the public health and safety projected to be about $4 million. The NGF Preliminary Feasibility Analysis recommends a total $8 million overhaul of the entire course. Please note that is the cost for the course ONLY, and not the entire property. As a public agency having to adhere to the Prevailing Wage Rates, the City's labor costs would increase by about 40%. The private sector can upgrade and repair its properties at a lessor cost, and probably on-time and within budget.

What actions will be necessary to bring the Reserves back up to the established Management and Budget Policies? Or will the goal posts be moved with the approval of new Management and Budget Policies?

If the council changes the budget policies and does not find a way to restore the reserves, it will make it much more difficult for future councils to balance the budget at current service levels. We are already aware that the budget for police services will be increasing by about 14% over the next four years.

How will reducing the Reserves affect the $17-21 million CIP's (Capital Improvement Program) and its 23 prioritized projects promised on April 23, 2019? Will playgrounds continue to be renovated and the bathroom master plan stay on schedule?

The Staff Report further states that as projections show years with negative income, the General Fund will be required to subsidize operations of the golf property.

Other important information that has not been discussed in depth:

The City is buying the golf property "as is".

"There are no resourses identified for capital improvement needs at this time."

"...the City will be obligated to make annual payments to the Trust estimated to be $65,000 regardless of whether there is net income from golf course operations." Note: this is in reference of the City borrowing $1 million from the retirement trust fund known as Section 115 Trust.

The City's 20 year Revenue and Expense Projection shows an Accumulated Loss of $13.3 million loss.

That figure is only accounting for the $13 million cash purchase price WITHOUT the needed improvements for the needed Clubhouse Upgrade, ADA compliant Restroom, slope renovation, parking upgrade and maintenance yard repairs, the $8 million Golf Course Upgrade, and other necessary improvements and repairs.

NFG Preliminary Feasibility Analysis

The purpose of the NFG Preliminary Feasibility Analysis was to identify deficiencies in the facilities that need to be immediately addressed for safety concerns or in coming years for long-term potential along with the financial implications of the project.

Making minimal necessary short term improvements does not fully remedy deferred maintenance and deferred capital issues at the golf course.

“...expending funds to rectify areas that might in the future be fully rebuilt to new standards and conditions could be a waste of funds depending on the length of time between acquisition and an eventual transformation of the assets into a new facility.” Page 9 & 10

“While records provided to the city show that the golf course has been very profitable for the current owner in recent years, NGF does not believe the current business and maintenance model is sustainable for the long-term, as deferred maintenance and capital will eventually make the course less marketable due to deteriorating course conditions.” “...the elevated maintenance standards that will be required under City ownership will likely result in significantly reduced net cash flows as time goes on.” Page 11

“The NGF team has pointed out that there are no components of the existing golf facility that are not in need to significant upgrade or out right replacement.” “...NGF recommends a full renovation of the golf course. This will involve rebuilding all or most portions of the golf features and infrastructure and would likely involve rebuilding the existing clubhouse in it’s entirety. The maintenance facility, due to its age and proximity to the waterway is also a candidate for rebuilding.” Page 13

“Key elements of the renovation include a new irrigation system to replace the older system that is past its useful cycle. The existing waterways and lakes will be fully reconstructed...All course features, including cart paths, would be rehabilitated and/or replaced.” Page 15

“Redevelopment of the existing clubhouse (preliminary cost estimates not included and golf course renovation estimates) could amount to a win-win for the City and a development partner who may be interested in adding ancillary uses to this area. With 5.5+ acres of available area and the potential to create below grade parking, redevelopment of the clubhouse area may potentially extend to lodging...” Page 15

“Annual cost of repair and maintenance will grow and increasing rate as the assets continue to age and the golf course will eventually begin to lose customers (representing the cost of doing nothing). Still, for City short-term ownership and operation, we have projected that the City can generate positive net income from the current business model, even with a significantly enhanced budget (including maintenance the south parcel) to maintain the facility at a higher standard.” Page 19

(Even if creating a safer golf course and maximizing market potential we’re not objectives of improving the facility, Casta Del Sol Golf Course will still need major capital investment in the near future due to his age and condition.). Page 19

“ there have been no major improvements or renovation projects conducted since the course was initially opened.” Page 40

Here is a list of immediate/short term needs:

Tees, Sand Bunkers, Greens, Fairway and Roughs, Cart Paths, Lakes, Ponds, Waterways & Drainage, Irrigation System, Trees, Slopes, ADA compliance (with an added note: "ADA compliance especially with any City operation of the facility, is essential." page 45, Safety Issues, Pump Station (with an added note: "...represent a potential hazard to golfers due to the electrical service components within the station. This potential hazard is also present to maintenance staff." page 46), Slope & Underbrush, Nets and Fences, Drainage Structures.

The NGF study further states the following: “Absent a full course renovation rebuilding effort, and based on the current age and condition of the assets, we believe the annual cost to repair upgrade and keep the course in marketable condition will continue to escalate at an increasing rate even after many of the recommended mitigation measures or facilitate it. Some infrastructure, such as irrigation system may require widespread replacement work even if a full golf course renovation and redesign is not undertaken.” Page 50-51.

“The probable cost estimate based on conceptual scope and programming is roughly $7.8 million inclusive of soft costs and a 10% contingency amount on construction costs. Other costs such as clubhouse work, on-course restroom facilities and the maintenance facility are over and above the golf course specific work covered.” Page 60

“NGF does not believe that the positive operating income to the city will be sustainable for the long or even intermediate term given the aging infrastructure document it in this report that will likely result in ever increasing maintenance budgets for extraordinary repairs replacement etc. We expect that subsequent due diligence phase is by the city will include analysis of projected facility cash flow‘s assuming a large scale improvement of the golf course and support amenities.” Page 66

Will the Questions be Answered?

If you do not know the answers to the questions as it concerns to the budget and how it affects the future financial health of our city please do not vote until you do know those answers. Prior council members were always careful in handing off a solid budget to the next council. Will you be able to do the same?

It is our intuition that the City will follow the lead of the Mission Viejo Country Club and sell a portion of the property to a developer, which will give the City the needed funding to make the golf course a viable property.

Sincerely,

Gail Reavis
and
Cathy Schlicht
former Mayors of the City of Mission Viejo

So happy the city will keep the golf course.When you either use it or drive by you can see how full it always is with people playing the course. and seeing the school golf teams come in and use it too.
Its a great feature for the city to have its own course, a plus is also no more apartments,condo's or houses going up in our already crowded
city and streets.

Why are there so many grumpy people in MV? Get out and enjoy what our great city has to offer -- walk, bike, golf, whatever. Stop grumping and live!!

Nobody’s being grumpy but we’re concerned about the future financial health of our City.

The decision to buy the golf course property was not based in an analytical way.

We did not even get any objective truths, but the City was using fear as a motivator.

Where was the full, fare and open process? The public meetings were a charade.

Is half the truth a full lie? There was not any public disclosure about the extreme and excellerating deterioration of the property.

The City is buying it “as is” and WITHOUT a current appraisal.

There was not any disclosure that the City is bringing in a hotel.

Important questions on how draining the reserves will affect future budgets were ignored.

Not a single councilmember discussed the September 24 staff report that stated that there is not enough income over the 20 year projection period to restore general fund cash reserves to current levels.

Not a word was spoken that the General Fund will be required to subsidize operations of the golf property and everyone wants to ignore city projections of a $13.3 million loss over 20 years on just the purchase price alone. The property needs over $12 million in repairs, upgrades and health and safety improvements.

The consultants report noted an immediate $4 million is required.

The city attorney on 09/24/19 stated that: "...some of the facilities are a bit short on repair and need some upgrading." He continued with "We wanna assure you that nobody's coming in looking for a huge cash infusion beyond the initial purchase." I ask you to please read the NGF Preliminary Feasibility Analysis and see if the analysis contradicts any statements made by any of our city officials. The golf course property need to be made safer and is in need of "major capital investment in the near future due to its age and condition." Page 19

All for walking/bike trails. No more housing!!!

Hotel? Am I to understand that there was/is a meeting to possibly add a hotel to this wonderful "Open Space" that the city has graciously purchased? If so, this article should be written in a fashion that let's people know what's really going on. We are less than 5 days past this being written and already talk of selling.
If this is true that is a complete bait and switch with the public being lied to! Promoting "Open Space" while actively trying to sell and congest our city.

Mr. Sterling, The reason the City purchased the Casta Del Sol public golf course property is to preserve the golf course and take ownership over the open space south of the golf course to further develop and enhance the City’s trail system and other recreational amenities. We don’t know the source of the comment but there are no current plans to develop a hotel at the golf course site nor sell it. Please note that new development, such as a  hotel for example, would have to go through a formal planning review including Planning and Transportation Commission public hearings.

Cathy mentions a hotel in comments above. Where is the proposed hotel planning on going?
I know that for years the city has been working to obtain this land and the plan hasn't always been "Open Space."
If it's for the correct reasons, I'm all in for more open space, outdoor activity areas, and no more population expansions. Mission Viejo was founded with this in mind and this is why we live here.
If we're making suggestions some dirt trails for bikes somewhere in the city would be nice. Maybe something that connects into Arroyo Trabuco.

The first time "housing" on the golf course property was mentioned was at the 07/09/19 Special Council meeting. Planning and Transportation Commissioner Bob Breton was recommending purchase of the land and the construction of dormitories.

The NFG Preliminary Feasibility Analysis that was released for the 09/24/19 council meeting, at least three times in its report, made recommendations for some type of a lodging component to improve the economics of the golf course.

This is a direct quote from the 10/15/19 OCRegister article titled:
Mission Viejo to buy Casta del Sol Golf Course for $13 million

"Council members also said the course could add new amenities, such as a boutique hotel or a banquet facility, that can generate revenue for the city."

So I did not make it up. I have also heard the chatter about a 30 room boutique hotel.

Time will tell on the direction the council will take the City.

If anybody read the NFG report, it states that without significant capital outlay, the golf course will continue to deteriorate at accelerating speeds. So the $13 million purchase price is just half of the story.