RE: Oak Hills Park Authority Golf Course Learning Center Feasibility Analysis

Transcription

1 November 24, 2015 Tel: (203) Robert Barron, CPFO Director, Office of Management & Budgets City of Norwalk, Connecticut 125 East Avenue, Norwalk, CT RE: Oak Hills Park Authority Golf Course Learning Center Feasibility Analysis Dear Mr. Barron: The following letter and report comprise a summary of the National Golf Foundation s ( NGF ) review of the Oak Hills Park Authority s ( OHPA ) consideration of the addition of a new stateof-the-art golf practice facility and training school (referred to in the golf industry as a Golf Learning Center ) to the Authority s 18-hole Oak Hills Park Golf Course ( Oak Hills GC or OHGC ). The review included a comprehensive evaluation of the subject Oak Hills Park Golf Course, the proposed two-phased plan of improvements, and analysis of the external market environment. The goal of the project is to independently evaluate the feasibility of adding a new driving range to the OHGC. This goal is accomplished by projecting attainable net incremental operating revenues from the range and analyzing these net revenues in the context of the expected cost of construction, which determines the capital cost obligations (debt service) that the range must service to keep it from being a burden to the City and its taxpayers. NGF has considered the Authority s proposal to develop the new driving range and golf learning center to be operated as part of the existing Oak Hills Park GC. The review includes analysis of the proposed addition, and concludes with NGF recommendations on how the project could be completed with the smallest risk to the Oak Hills Park Authority and the City of Norwalk. This NGF review was managed by Richard Singer, MBA, NGF s Senior Director of Consulting Services, with assistance from Ed Getherall, MBA, Director of Consulting Services. Our activities conducted in preparation of this report included several visits and inspections of the subject OHGC, meetings and discussions with architects and planners assisting with proposed changes at OHGC, review of the area market, meetings with key golf course staff, meetings with City of Norwalk and Hills Park Authority officials and visits to several other area golf facilities that were deemed to be directly competitive with the subject OHGC. This executive summary letter is presented to provide an at-a-glance summarization of the full NGF review, detailing the main findings and NGF recommendations for the Oak Hills Park Authority in the context of the proposed new driving range / golf learning center addition. Additional details and support data on this summary can be found in the full body of our report and its appendix. NATIONAL GOLF FOUNDATION CONSULTING, INC. A Subsidiary of the National Golf Foundation 501 N. HIGHWAY A1A, JUPITER, FL (561) FAX: (561)

2 OVERALL SUMMARY In summary, the NGF finds that the subject Oak Hills Park GC is a good public golf course that has seen declines in rounds activity in recent years, and as is common with public golf courses built in the 1960s, the property is in need of upgrade. The addition of a top-quality driving range and golf learning center should meet part of that needed upgrade and will certainly improve the revenue picture at OHGC. However, the site selected for the proposed addition poses some challenges for this development due to size, topography and rock/soil issues, and further engineering study is recommended by NGF. The points listed below represent a brief summary of NGF findings on the OHPA proposal to add a golf driving range and learning center to Oak Hills Park GC. Full detail and elaboration of these items can be found in the attached full report. Key findings include: Oak Hills Park GC has features and amenities to be a successful public golf course. The facility enjoys a good location within a robust regional golf market, with support for existing and proposed amenities demonstrated to be very strong. However, the specific location is not the ideal for a commercial driving range, which will typically perform better when conveniently located near, and visible from, major roadways. The overall condition of the golf course property is good, but there is a need for upgrade to make both the golf course and potential driving range addition more appealing and thus more marketable. The changes proposed in Phase I of the OHPA Master Plan will help improve property condition and make the facility s operation more efficient, providing a good base for the proposed new golf range addition. A new driving range/learning center added to OHGC will have strong and immediate market impact. The NGF has estimated direct range revenue from the new range (shown below), under the assumption of a two-level range facility with 36 total bays, 18 of which will be covered and heated, and all of which will be lighted for night use. The lighting for night use is viewed as critical to the proposed addition, as much of the demand and ultimate use of the new facility is projected to be at night. We have also assumed the inclusion of at least three high-technology performance stations. The NGF review of the OHPA proposal and the site selected for the proposed range addition shows the total cost to develop the 36-bay driving range / learning center will total close to $3.0 million (including all fees). This amount is much higher than the $1.0 to $1.5 million to complete a driving range addition that NGF usually finds to be economically sustainable. Still, this proposed new range is to be located within one of the strongest regional golf markets in the U.S., so it is expected that standards for total project cost could be extended and still equate to economic sustainability. The NGF is not 100% certain that a full, 36-bay driving range structure can be properly and safely fitted into the small site selected for the driving range addition. It is clear that in order to fit the driving range, some existing elements of the golf course will have to be re-located, and the resulting desirability of golf is uncertain. The new driving range will also have to be fully enclosed with 100-foot netting, adding to the development expense. Lastly, the site is also dense with trees, shrubs and rock outcroppings, all of which will further add to the expense of adding a range at this location. As such, the NGF finds the high expense to add a range to this OHGC site will be well above standards regardless of the size of the driving range. Given these findings, OHPA and the City of Norwalk will find that if a smaller version of the proposal is undertaken, the cost will remain high but estimated revenue will be reduced, making the retirement of capital costs (debt service) problematic. 2

3 FINANCIAL ANALYSIS The NGF team prepared an analysis to show the potential economic performance of the new golf range / learning center, considering the development proposal and based on a set of assumptions that may or may not become reality. We feel that these projections represent a fair estimate of performance for this proposed addition based on our complete review of the market, site and existing OHGC operation. We note that this economic performance estimate was prepared to reflect the operation of the new range addition only, with no estimates or assumptions about improved OHGC performance, which NGF fully expects to materialize after the addition is completed. The results of the NGF review show that if a full lighted 36-bay golf range facility can be properly added to the selected site, and developed fully as proposed in the OHPA Master Plan (with both Phase I and Phase II completed), the new range is expected to add $464,000 to $495,000 in total direct range ball sales revenue. Considering all direct expenses estimated for the new facility, including reserves for replacement, the net income available to retire debt service (EBITDA) is projected to be around $285,000 to $295,000. This amount should be sufficient to safely cover the City-estimated $248,300 annual fixed debt service for the range (details in the body of the report) with approximately 15% coverage. This assumes the inclusion of lights for night use and NGF has projected total revenue to be as much as 25% less on a driving range facility without lights at the Oak Hills Park location. If the City and OHPA were to opt for a smaller driving range structure, or even a much smaller single-level grass range with no structure, the estimated revenue would fall considerably in both scenarios, likely short of what would be required to retire development debt. NGF has estimated total revenue on a 26-bay range facility (with 2-level structure) to be $335,000 to $340,000 and on a 13-station grass range (un-covered, un-heated, no lights) to be around $104,000 to $110,000 per year. The table below summarizes the estimated performance in each scenario: Oak Hills Park GC Driving Range Addition Summary of NGF Projections (Year 1) 36-Bay w 36-Bay w/o 26-Bay w 13-Bay Range Size Lights Lights Lights Uncovered Total Development Cost* $2,964,000 $2,964,000 $2,739,000 $1,880,000 Debt Service $248,300 $248,300 $229,400 $157,500 Revenue / Bay $12,900 $9,675 $14,200 $8,000 Utilization 34.00% 26.00% 37.50% 22.5% Revenue $464,400 $348,300 $369,600 $103,800 Direct Op Expense $150,000 $142,500 $135,000 $55,000 Capital Replacement Reserves $30,000 $30,000 $25,000 $10,000 Net Operating Income $284,400 $175,800 $234,600 $48,800 Dollar Coverage of Debt $36,100 ($72,500) $5,200 ($108,700) Percent of Coverage Debt 14.5% -29.2% 2.3% -69.0% *Figure is rounded and includes all associated fees and contingency 3

4 RECOMMENDATION AND SUMMARY STATEMENT Based on our review of the OHPA Master Plan proposal, the area market, the selected site and summary of estimated performance, the NGF offers the following recommendations to the City of Norwalk and the OHPA: A comprehensive engineering study should be completed to determine the exact structure size that can be fit into the selected OHGC range site and meet basic golf industry safety and ease-of-play standards. This study should also address the issue of site clearing and preparation work, detailing the extent and cost of clearing the range site from foliage and rock (both outcropped and sub-surface). The NGF recommends proceeding with the development only if the proposed full 36- bay driving range structure can fit into the selected site properly, lights for night use are included, and the total development cost can be kept below $3.0 million after all direct construction, fees and contingency costs. If the range is developed, the City and OHPA will need to immediately adopt a program of aggressive promotion and marketing to generate maximum exposure of the new facility to golfers in this and nearby markets. This should include a grand opening celebration and promotion. Summary Statement In summary, NGF Consulting believes that there is clear and demonstrated potential market support for a new driving range addition at OHGC, and that if developed, this new range will generate strong annual revenues. However, our review also shows that there are uncertainties related to the site selected for this proposed development, some of which may be insurmountable and require further study. What is certain is that the cost to develop the new driving range will be close to $3.0 million, which is much higher than is typical for a comparable range addition on a more suitable site. Given the high cost of development, the City and OHPA will find that the net income available to cover annual debt service will be within 15% +/- of the annual debt service. This will mean that the City s economic interest in the facility will continue to be at risk and could be affected by uncontrollable factors such as road construction, economic changes and weather. Bob, we appreciate your confidence in the NGF and its consulting services, and have enjoyed the opportunity to be a part of your planning for the proposed Oak Hills Park GC range / learning center addition. I am hopeful that the information and recommendations I have provided will assist you and other City/OHPA officials in your upcoming decisions. I am happy to talk with you or any other City staff or OHPA member to discuss our consulting report, or other matters related to golf facility operations or market/industry trends. Sincerely, Richard B. Singer Director of Consulting Services rsinger@ngf.org

5 Feasibility Analysis and Business Plan Assistance for a Proposed Driving Range and Golf Learning Center at the Oak Hills Park Golf Course in Norwalk, Connecticut Prepared For: City of Norwalk C/O Oak Hills Park Authority 125 East Avenue, Norwalk, CT Prepared By: 501 N. Highway A1A Jupiter, FL (561) November 2015

6 Table of Contents INTRODUCTION... 1 Purpose... 1 Background... 1 SUBJECT FACILITY REVIEW... 2 Site Overview... 2 Location and Access... 2 Inventory of Facilities Oak Hills Park Golf Course... 4 Oak Hills Park Golf Course Condition of Property Review... 4 Overview of Operations and Performance... 5 Oversight and Staffing... 5 Other Operational Issues... 6 Summary of Rounds, Revenue and Expense Performance... 7 Oak Hills Park Golf Course Financial Summary... 9 Estimated Additional OHGC Driving Range Expenses... 9 OHPA Master Plan for Oak Hills Park Golf Course...10 Phase I Improvements Proposed Phase II Improvements Phase II Site Analysis and Review of Estimated Cost Summary Oak Hills Park Golf Course...16 MARKET ANALYSIS...17 Demographics and the Local Economy...17 Basic Demographics Comparative Demographics Oak Hills Park and Key Comparable Facilities Local Economic Factors Golf Market Supply and Demand Indicators...19 National Trends in Golf Local Golf Demand and Supply Local Competitive Golf Market...21 Competitive Golf Course Driving Ranges Map Key Competitors Summary Information Key Competitive Driving Range Summary Profiles Key Competitor Market and Revenue Comparison Key Competitors Operating and Metrics Comparison Analysis of Non-Local Comparable Facilities...25 Non-Local Comparable Facilities Summary Information Non-Local Comps - Comparative Demographics Non-Local Comps Summary Profiles Non-Local Comparables Operating and Metrics Comparison Market Analysis Key Findings...29

7 Market Opportunity Conclusion OHGC Learning Center...30 PROJECTED FINANCIAL PERFORMANCE AND NGF RECOMMENDATIONS...31 Norwalk Fiscal Performance Metrics...31 Activity and Revenue Projections Expense Projections 36-Bay Design Preliminary Financial Analysis 36-Bay Covered Driving Range and Learning Center...33 Basic Assumptions Cash Flow Statement 36-Bay Covered Driving Range and Learning Center Cash Flow Statement 36-Bay Covered Range without Lights Preliminary Financial Analysis 26-Bay Covered Driving Range and Learning Center...35 Key Assumption Variables 26 Bay Driving Range Cash Flow Statement 26-Bay Covered Driving Range and Learning Center Preliminary Financial Analysis 13-Station Outdoor Range...37 Key Assumption Variables 13-Station Outdoor Range Cash Flow Statement 13-Station Outdoor Range Summary and NGF Recommendations...40 Financial Summary NGF Recommendations Limiting Conditions...42 Market Share Conclusions APPENDICES...43 Appendix A Golf Course Life Cycle...44 Appendix B Architect s Rendering...45

8 Introduction PURPOSE NGF Consulting was retained by the City of Norwalk, Connecticut ( City ) to assist in evaluating the possibility of the City adding a new golf driving range and learning center to the existing City-owned 18-hole Oak Hills Park Golf Course ( Oak Hills GC or OHGC ). The City is considering the feasibility of the addition, and the results of this market and financial analysis will be used to help determine the appropriate course of action. BACKGROUND The Oak Hills Park GC is a City-owned golf facility located in Norwalk, proximate to the intersection of Interstate-95 (I-95) and U.S. Highway 7. The property includes an 18-hole golf course and supporting amenities, a restaurant building, tennis courts and other facilities. The park and golf course are managed by the Oak Hills Park Authority ( OHPA ) via lease with the City of Norwalk. NGF understands that the lease was created specifically for management of this golf course beginning in 1998, after 30+ years of direct City management. Under consideration for this report are the overall suitability of adding this new amenity to the OHGC, and the status of the greater Norwalk / Southwest Connecticut area public golf market as it relates to its ability to support the addition. If developed, the new driving range at OHGC will be operated as a public/commercial driving range at OHGC and will include a substantial golf learning center component with lessons, clinics and golf schools for golfers of all skill levels. The purpose of this market and financial analysis is to provide the City with an evaluation of the local golf market and an estimate of the economic potential of the new driving range addition at OHGC if it were to be added as proposed, or under some modified plan of development. The key issues evaluated in this report include: Appropriateness of the proposed new range addition at OHGC in light of the existing facility layout and basic amenity package. Status of the local golf market and its ability to support a new range at OHGC. Economic potential of a new driving range addition at OHGC under several alternatives for development. Amount of capital expense (or debt) that can be supported by the new range. The level of investment warranted for the development of a new driving range and golf learning center at OHGC. This NGF review was managed by Richard Singer, MBA, NGF s Senior Director of Consulting Services, with assistance from Ed Getherall, MBA, Director of Consulting Services. Field activities conducted in completion of this consultant s report included inspections of the subject OHGC, meetings and discussions with architects and planners assisting with proposed changes at OHGC, review of the area market, meetings with key golf course staff, meetings with City of Norwalk and Hills Park Authority officials and visits to several other area golf facilities that were deemed to be directly competitive with the subject OHGC. The team also completed collected materials to aid in the understanding of the area golf market, and reviewed of other materials and records related to Oak Hills Park Golf Course and the Oak Hills Park Authority. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 1

9 Subject Facility Review The subject property is Oak Hills Park Golf Course, an 18-hole facility that is the primary amenity in Oak Hills Park located in the City of Norwalk, Connecticut. The golf course was originally developed in the late 1960 s and is owned by the City of Norwalk and managed via lease by the Oak Hills Park Authority. Oak Hills Park GC is operated as a mid-tier public-access golf course, serving a wide variety of customers, including club/league members, daily fee patrons and tournaments/outings. OHGC is the only public golf course in Norwalk, although there are two private golf courses in the City (Silvermine GC and Shorehaven). None of the three golf courses in Norwalk includes a large driving range. At the time of the NGF review of OHGC, the golf course was producing a positive cash flow from operations, but had some key infrastructure items that were in need of improvement, including cart paths, tees, bunkers and some drainage areas. SITE OVERVIEW Location and Access Oak Hills Park GC is located in the southern part of Fairfield County, a large county located in the Southwest Connecticut region. OHGC is located approximately 14 miles west of Bridgeport, seven miles east of Stamford, 18 miles east of White Plains, NY and about 30 miles from the northern end of New York City. Norwalk is located within a dense part of Southwest Connecticut, which is primarily a bedroom community for New York City, although there appears to be growing light industry and service economy in Norwalk. The immediate elements surrounding OHGC include very low density, single-family residential that increases in density further to the east towards the Highway 7 corridor. Access to the facility is via Fillow Street, which is a minor roadway (one lane each direction) in the area handling a relatively high volume of traffic. Fillow St does not connect directly to either I-95 or Highway 7, requiring golfers to make several turns to get to Fillow St and the OHGC. During the NGF visit the consultants found the roadway infrastructure to be less-than-ideal for the operation of a commercial driving range and signage to the OHGC was not very good until the immediate proximity of Oak Hills Park. Still, the course is generally convenient from I-95, Highway 7 and the Meritt Parkway, assuming you know how to get to Oak Hills. This location offers mixed findings for the City and OHGC in consideration of adding a driving range: Positive Aspects The location in Norwalk is part of an open area of the City, with much less intensity of development, thus providing a scenic, core golf course with minimal adjacent development. The property is located within a primarily residential community, providing a strong core of golfers in immediate proximity. Considering the broader Southwest Connecticut region, OHGC is proximate to a large population that contains a high proportion of golfers and a relatively low number of golf courses in relation to the population (more in next section). National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 2

10 Negative Aspects Although accessible to major roadways, the course is not immediately proximate to, or visible from, these roads, which are two key factors in the historical success of commercial public driving ranges. There is no signage helping golfers less familiar with the golf course find the site. The portion of the OHGC site that is proposed for the new driving range shows uneven topography and significant rocky outcroppings. This will make the construction of a new driving range more expensive than if it were to be developed on a more open and flat portion of property. The property comprises a total of 144 acres, which is about average for an 18-hole golf facility with additional amenities (standard is 135 acres). The configuration is a traditional core golf course, with minimal impact on adjacent home sites. There is significant topography and rock outcroppings, especially in the first six holes of the layout that includes the site proposed for the driving range. As noted, there is much open property in the area immediately surrounding Oak Hills Park, although there are few options for the addition of a driving range within Oak Hills Park. NGF was informed that other options within this site have been ruled out for various reasons, and the portion of the property currently occupied by the cart barn and a small practice hitting area between the 6 th green and the 1 st hole is the site selected for this driving range project. The NGF has proceeded with this analysis under the assumption that this is the only option for a new driving range at OHGC. 6 th Green 1 st Hole Site for Proposed Range Google Earth image showing OHGC and its immediate surrounding elements. This view shows the core golf course with low density adjacent development. The highlights show the area that will host a new driving range. It is likely that the new range addition will require some existing golf course elements to be re-built in new locations (more later in this report). National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 3

11 INVENTORY OF FACILITIES OAK HILLS PARK GOLF COURSE Oak Hills Park Golf Course includes the following elements: 18-hole golf course with maximum playing distance of 6,317 yards. 6,000 square foot (sf) restaurant building that includes a full-service restaurant, bar area, restrooms and an outdoor covered seating area. This space is planned to be modified to include a golf pro shop (more later in this report). 3,800 sf cart storage building. 3,500 sf maintenance building in 40,000+/- sf maintenance compound. 2,000+/- sf building with pro shop, offices and restrooms. Small golf academy kiosk. Small practice hitting area with three (3) artificial turf mats and approximately 160+/- yards of hitting area and a practice sand bunker. The property has a total of about 150+ parking spaces, which is ideal for a public golf course, and more than sufficient for most days of activity, including busier weekends in season and/or during large golf events. However, the parking is divided between approximately 95+/- spaces in the lower section, reserved mostly for golf and another 55 +/- spaces on the higher level proximate to the restaurant and supposedly reserved for the restaurant and employees. On occasions where both the golf and restaurant businesses are full (e.g. during a banquet or nongolf party), there are concerns about having enough parking. This may be a concern if a new driving range facility is added to the property, which could be hosting additional non-golf and non-restaurant patrons. The above elements combine to form a good mix of components for a public golf facility that should be very marketable in this local area. The golf course offers many unique features and a very different feel in the rolling and rocky first six holes, and the more open final 12 holes. The golf course is popular with area golfers and the restaurant appears to have a good reputation on its own, although the OHPA expressed concerns that the restaurant operator is too focused on non-golf patrons and not enough on OHGC golfers. Oak Hills Park Golf Course Condition of Property Review At 46+ years of age, the course is well beyond the life-cycle periods on many key infrastructure items (Appendix A). This illustrates that most infrastructure elements should be considered for replacement in any near term renovation project at OHGC. Other NGF findings on the OHGC property condition are summarized below. We note that NGF did not complete a thorough inspection of property as part of this engagement, and this summary is intended to review key elements in the golf course as it relates to the potential for continued economic success of the facility in light of the proposed driving range / golf learning center addition: The NGF team found a nice golf course with design features that are typically associated with high quality golf, capable of commanding above-median market rates. However, the course has a USGA slope rating of 133, which represents that the golf course is much harder than the standard slope of 117 (14% harder ). Forward tees are also long at over 5,200 yards, making the course difficult for lessskilled players, especially women players. This may have impact on the potential demand for a golf learning center component, in that the subject golf course does not set up well for less-skilled or beginning players. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 4

12 There are key pieces of golf course infrastructure that are in need of upgrade, including the pro shop area, bunkers, tee boxes, irrigation, cart paths and drainage (in some specific areas). Action to improve the last two items (cart paths and drainage) will lead to improvements in rounds and revenue as the golf course can be open more on wet days, thus increasing capacity. NGF found that the OHGC is not organized well in terms of general facility physical layout and flow of customers. Signs in the parking lot do not make clear where golfers go to drop golf bags, go to check in, etc. This could have impact on the new driving range addition and should be improved, possibly moving all pro shop operations into the restaurant building, which is favored by NGF (more below). It is expected that this change would help both the golf course and any possible driving range addition. The overall impression of OHGC is one of a generally tired property that looks as though it is in need of improvements and upgrade to both the golf playing area and the pro shop building. This is common in public sector golf, especially at facilities that are 40+ years of age. The addition of a new driving range facility could be a catalyst to improve both direct and indirect revenue at OHGC, especially if the addition is part of a broader plan to upgrade the entire golf course (as is proposed by OHPA). OVERVIEW OF OPERATIONS AND PERFORMANCE The OHPA is operating OHGC as a fully public golf facility with all staff reporting directly to the OHPA Executive Director, who has an office and is on-site at OHGC. The only exception to this is the restaurant, which is operated via separate sub-lease, the income from which is revenue for the OHGC. It is assumed by NGF that this basic operating structure will remain in place after the completion of any site improvements and/or additions. Oversight and Staffing In addition to the Executive Director, the OHGC employs additional full-time and part-time staff in golf operations and course maintenance. NGF estimates a comparative total of 15.0 full-time equivalent (FTE) positions currently employed in the Oak Hills Park GC operation, including the OHPA Executive Director but not including the one un-staffed Assistant Superintendent position. Pro Shop / Clubhouse Staff (7.5 FTE) OHPA Executive Director (FT) Head Golf Professional (FT) Office Manager (FT) Director of Instruction (PT Paid by Head Golf Pro) Additional part-time golf and operations staff (24 positions inside/outside) Golf Maintenance Staff (8.5 FTE {budget} 7.5 FTE current) Golf Superintendent (FT) Assistant Superintendent (FT currently not staffed) Mechanic (FT) Three (3) Equipment / Groundsmen (FT) Additional part-time maintenance staff (4-6 positions) National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 5

13 The standard golf facility in the U.S. northern climates (8-month golf season) employed a total of 20 FTE personnel in 2013, with 10 in golf maintenance, 7 in pro shop/operations and another 3 for clubhouse/f & B. This level of staffing represents a reduction from 2009 figures as a result of declining income and the need to reduce expense. As a result, many golf operations around the country are operating with lean staff and Oak Hills Park GC is no different. Based on the NGF review of the Oak Hills Park staffing, and in comparison to golf industry norms, it appears that Oak Hills Park GC was operating with a staff that is approximately 2.0 FTEs lower than standard, when F&B/clubhouse staff is removed. It is also assumed in the data that the standard golf facility is operating a driving range and OHGC may find that an additional 2.0 FTEs will be required when the driving range is added, either through additional hires or increased hours from existing part-time staff. Other Operational Issues Other key issues related to the OHGC operation observed by NGF Consulting in this review and that are expected to have direct impact on the possible new driving range addition: Marketing OHPA is very active in marketing the OHGC, especially through the use of technology, which is a clear industry best practice in successful public golf (see next bullet). Review of data shows OHPA spent $10,770 on marketing/advertising in 2014, an amount equal to roughly 0.7% of total revenue. The NGF recommends marketing budgets to be between 1% and 2% of total revenue, especially if promotion of ancillary revenue centers (range, restaurant, banquets, etc.) is a key for the operation. Going forward, OHPA may find that a marketing budget closer to $20,000 to $30,000 will be required to properly market and promote the new driving range/golf learning center addition. Technology/Website OHGC appears to be very advanced in its use of technology and internet marketing. OHGC has an outstanding website ( that is designed and powered by Marketing, a leader in effective golf course websites. NGF notes that the well-designed website is easily found and contains all of the key items NGF typically sees in successful golf facility websites. There are also directions on how to install and use the new smartphone app, the inclusion of which is a growing trend for successful public golf courses. OHGC is using the EZLinks POS system, which is among the more modern and advanced golf course POS systems and has many applications for operations and marketing. All of this technology is viewed by NGF as a strong positive for the addition of a new driving range revenue center, as the technology needed to operate and market the new addition is already in place. Golf Instruction / Academy The OHGC Head Professional is active in promoting and running numerous golf lesson programs, clinics and summer camps. This despite the fact that the course does not have a driving range and is using only a small hitting area with three mats. The Head Pro reported golf instruction programs generate between $60,000 and $85,000 in revenue annually, all of which accrues to the golf professional and his staff. As extensive programming is a key to the success of new driving range additions, this finding was important to NGF. Even though the direct program revenue will accrue to the golf professional, all of the clinics and schools will use the range, thus supporting substantial range ball sales that will accrue directly to OHPA. All NGF projections for range revenue assume the OHGC and its new range operation will include dedicated teaching bays and be highly active in programming, lessons, clinics and golf schools. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 6

14 Leagues + Organized Golf OHGC is active in organized golf events and league activity. OHGC has a strong Oak Hills Men s Golf Association ( with about 265 members (down from previous years) and an active Oak Hills Women s Golf Association ( with 80+ active members. Staff reported to NGF that these and other associations play a very large share of rounds at OHGC, which could be an issue for achieving high volume on the new range, unless these golfers are also active on the driving range. Summary of Rounds, Revenue and Expense Performance The operation of the Oak Hills Park GC appears to be a relatively simple authority-run business, with most revenue derived from golf fees and rentals. Ancillary items such as pro shop merchandise and food and beverage items are operated via sub-lease and thus not included in direct OHPA revenue. Direct expenses to operate the facility are borne by the OHPA and include labor, administrative, maintenance, cart and other expenses. As is typical in golf course operations, much of the total expense is fixed in that the expenses must be borne regardless of how many rounds are played. The following paragraphs summarize the activity, revenue, and expenses for the OHGC facility, and ideas of how this may change in light of new additions being proposed. Rounds Activity Overall, OHGC reported no substantive change in rounds between FY2011 and FY2015, although there has been significant decline since 2006, with the most severe individual decline coming in FY2011. Play has been up modestly in both FY2014 and FY2015. For the U.S. overall, golf rounds had declined approximately 10% between 2008 and 2011, then recovered by about 5% in 2012, with another 3% decline in The table below shows total rounds by fiscal year since FY2004: Oak Hills Park GC Total Rounds FY Fiscal Year Total Rounds Annual % Change , , % , % , % , % , % , % , % , % , % , % , % National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 7

15 OHGC Revenue NGF Consulting s review of performance shows Oak Hills Park GC was able to generate total top-line revenue from all sources as high as $1.57 million in FY2015, a 2.6% increase from FY2014. The data shows a general upward trend in total revenue production between FY2013 and FY2015. The total average revenue per round of golf is holding at around $43+/- per round, which is much higher than the total U.S. standard for mid-fee public golf courses of closer to $25 per round (ancillaries in addition). Total annual gross revenue from all sources at OHGC is much higher than the U.S. standard of around $1.0 million. Oak Hills Park Golf Course Total Revenue FY FY Average Pct of Total Golf fees $952,583 $923,091 $860,609 $960,789 $978,407 $935, % Identification cards 108, , , , , , % Cart revenue 263, , , , , , % Rental income 133, , , , , , % Other revenue 27,448 18,046 11,603 16,598 35,076 21, % Total Revenue $1,485,047 $1,453,117 $1,422,117 $1,529,094 $1,569,246 $1,491, % Annual Change -2.2% -2.1% 7.5% 2.6% 3.0% Total Avg. Rev. per Round $40.84 $43.45 $44.35 $44.10 $43.17 $43.14 OHGC Expenses Expenses to operate the facility have been increasing slightly, and now total just under $1.3 million (excluding depreciation), rising from a level of about $1.2 million in the FY2012-FY2013 period. The overall expense to operate this facility is well above both regional and national averages. The standard U.S. 18-hole golf course spends roughly $1.0 million on total direct operational expenses per year. We note that this includes pro shop and F&B expenses that are not included in the OHGC expenses. Oak Hills Park Golf Course Total Expenses FY Pct of Average FY Total Personnel $777,844 $668,461 $591,792 $731,813 $755,162 $705, % Administrative 128, , , , , , % Park maintenance 329, , , , , , % Cart 35,076 34,176 72,484 69,799 72,301 56, % Tennis Expense % Water Diversion % Total Operating Expense $1,270,491 $1,200,965 $1,191,251 $1,301,234 $1,298,615 $1,252,511 Annual Change -5.5% -0.8% 9.2% -0.2% 2.2% National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 8

16 Oak Hills Park Golf Course Financial Summary NGF s review of performance shows that Oak Hills Park is generating a positive net income on operations, which is a position shared by only about 33% of all public agency golf courses in the U.S. The total net income before depreciation has been steady at between $230,000 and $270,000 since 2012, but significantly reduced from the $400,000+ net income before depreciation reported in FY2008. OHGC was producing net income before depreciation over $300,000 as recently as FY2010. Oak Hills Park Golf Course Summary of Operations FY FY Average Total Revenue $1,485,047 $1,453,117 $1,422,117 $1,529,094 $1,569,246 $1,491,724 Total Operating Expense $1,270,491 $1,200,965 $1,191,251 $1,301,234 $1,298,615 $1,252,511 Facility Net (EBITDA) $214,556 $252,152 $230,866 $227,860 $270,630 $239,213 Depreciation $242,882 $218,238 $220,243 $226,393 $235,487 $228,649 Net Income after Depreciation ($28,326) $33,914 $10,623 $1,467 $35,143 $10,564 Estimated Additional OHGC Driving Range Expenses The expenses shown for OHGC are appropriate for an 18-hole public golf operation in this location, but likely not enough to fully cover the expenses required in a new driving range addition. The additional expenses will mostly be in labor, but the OHPA should not underestimate direct costs for items that tend to wear out quickly in a busy driving range, such as range balls (new replacements needed every year), artificial turf mats (every 2-3 years), netting (patchwork or replacement every 2-4 years), and lights (if included every 2-4 years). We note that these expenses do not include some costs specific to the operation of golf instruction programming, which NGF has assumed will be borne by the golf professional. The NGF estimated additional OHPA expense likely required on an annual basis: Expense Item Est. Annual OHPA Expense Additional Labor (est FTEs) $95,000 Repairs, Maintenance & Supplies $30,000 Additional Expenses (Utilities, Admin., Ins., Mkg. etc.) $25,000 Annual Replacement Reserves $30,000 Total Estimated New Annual Expense for OHPA for Range / Golf Learning Center Operation $180,000 Source: NGF National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 9

17 OHPA MASTER PLAN FOR OAK HILLS PARK GOLF COURSE The NGF has noted our concerns about the overall condition of the Oak Hills Park GC and the need for upgrade, and it is clear that the OHPA shares this concern. In 2015, the Authority has proposed a new master plan for the OHGC, divided into two phases Phase I to address basic infrastructure issues, improve the golf course and move the pro shop into the restaurant building; and Phase II to address the new driving range and golf learning center. As these two phases of the master plan are intertwined with each other and critical to a full understanding of the feasibility of a new range at OHGC, the NGF has reviewed the key issues of each phase separately and provided our summary and recommendation. Phase I Improvements The first phase of the master plan includes significant upgrade to the OHGC in three basic areas: (1) basic infrastructure upgrades; (2) key changes to facilities; and (3) preparation work for Phase II improvements. The total cost of this phase is estimated at $1.5 million, and will be funded through a specific project grant awarded to OHPA by the State of Connecticut Department of Energy and Environmental Protection. A summary of the key improvements and related costs estimates follows below. Basic Infrastructure This includes upgrades to key pieces of golf course playing area and maintenance that were identified as important to the future of OHGC. The plan calls for improvements to cart paths, bunkers, tees, drainage and the maintenance facility. These projects total $845,000 (plus fees) and are viewed by NGF to be critical to keeping the overall OHGC facility relevant and marketable, which is ultimately important to the feasibility of the new driving range as well. Changes to Facilities This piece includes some changes to facilities that will be needed both to enhance the overall golf experience at OHGC and make the new range practical and possible. This piece totals $385,000 (plus fees), with the most important component being moving the pro shop into the restaurant building through a remodel of the bar and restaurant. This will provide for a much more logical flow of golfers, as well as a more welcoming entry experience, and bring golfers closer to the F&B concession operation to stimulate more spending. The new set up will also provide an appropriate entry and welcome port for the new range/learning center facility. Preparation for Phase II As the NGF has learned, the addition of a new driving range at OHGC will be challenging due to the small site selected for the range, its soil and topography condition, and the presence of existing infrastructure (more in the next section). A significant part of Phase I improvements totaling $160,000 (plus fees) include key projects to help accommodate the new range, including the relocation of the 1 st and 2 nd hole tees, cart path re-routing near these holes and the demolition of the existing pro shop building. All three elements are required in order to fit a new driving range on the selected site, although there will be other accommodations that will be required and included in Phase II improvements, the most important of which is the demolition and replacement of the cart barn that is presently located on a key piece of property selected for the new range. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 10

18 Total Estimated Cost of Phase I Improvements The specific line items and total cost for Phase I improvements as provided by OHPA is shown below: PROJECT COST ESTIMATES Phase I - General Park Improvements Amount Continuous Cart Paths and Cart Path Renovations $310,000 Wash/Mix Maintenance Facility $40,000 Renovate Concession Building $30,000 Welcome Center $225,000 Nature, Tennis, and Fitness Center $130,000 Demolish Admin Bldg and Soil Remediation $40,000 Bunkers - Golf Course $180,000 Tees - Golf Course $150,000 Drainage $150,000 New Sand Bunker At Existing Practice Green $15,000 Relocation of Tee Boxes: First and Second Holes $90,000 Cart Path and Landscaping for Relocation $30,000 Subtotal $1,390,000 Fees $110,000 TOTAL ESTIMATED COST PHASE I $1,500,000 Phase I Summary The NGF expresses full support for this program of upgrades, and believes strongly that this improvement will benefit the OHGC and lay important groundwork for the proposed range/learning center addition. The key pieces in this Phase I improvement will help the golf course even if the range is not added, specifically the course infrastructure improvements and the moving of the pro shop into the restaurant building, where it should have been all along and where most first-time customers probably assume it is located. One thing is clear to NGF, the Phase II driving range addition cannot be completed without completion of Phase I, and thus the entire range proposal is likely not feasible without this Phase I project. Proposed Phase II Improvements The improvements proposed in Phase II of the OHPA master plan involve the addition of a new, state-of-the-art covered and heated driving range / golf learning center. OHPA has proposed and created an initial design for a double-deck, south-facing, 36-bay, 270-yard driving range to be located on the portion of the site that is presently used as a golf practice area and cart barn. The proposal is based on a concept that will include a grand entrance presentation with treelined walkway from the clubhouse (now restaurant building) to a fixed two-level range structure. The program will be modern, with amenities typically associated with successful driving ranges, including a significant golf training component. A summary of the components to be included and defined revenue generators follows below: National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 11

19 Components Proposed for Inclusion The Phase II development is planned to include several components that will enhance the OHGC property and the park overall. Elements proposed to be included: Driving Range with 36 total hitting stations (bays) on two levels - each with 18 bays. The stations will be at a standard width of 10 feet; all will be covered, but only the lower level 18 bays will be heated. The range will face south, which is ideal for a driving range so as not to face directly into the sun. The full range will be surrounded by 100-foot nets to provide safety for surrounding elements. A Range Building with modern design and aesthetic appeal. The current plan calls for a greenhouse model with rear-facing windows that can be opened for seasonal variation or closed in winter. Performance Center comprising three separately enclosed bays that will include technology and equipment associated with advanced golf teaching methods. These three bays will be used primarily for golf instruction, but will be available for any patrons to take advantage of the technology when not in use for lessons. A Range House will support the driving range with an entry kiosk and restrooms. A new cart barn will be created at a yet-to-be determined location, most likely proximate to the #13 green and the parking area to make for proper logistics in cart staging and golfer flow. A grand entrance concourse and new practice green were originally proposed, but have been removed due to excessive cost. Expected Revenue Sources Each of the elements proposed for the new range at OHGC will either provide direct revenue, or are needed to provide support for revenue generation. Direct revenues from a driving range typically include: Range Ball Sales The largest revenue driver for a driving range is the sale of baskets of range balls. It is expected that OHPA will charge market rates for the baskets, expected to be around $ $10.00 per bucket. Many modern range facilities have shown success in using automated range ball dispensers and magnetic swipe technology, allowing patrons to re-load cards and swipe them down to $0 balance. This form of range ball delivery to the customer has shown the highest success in generating maximum range ball revenue. Technology Bays Many modern ranges are allowing golf patrons not directly involved in golf instruction to use the technology associated with golf instruction for an additional fee. Phase II Site Analysis and Review of Estimated Cost The NGF team has reviewed the site selected for the proposed new driving range addition, along with architect s renderings (shown in Appendix B). NGF is relying on previous studies and site analyses to determine the physical appropriateness of the proposed Phase II additions. The key issues from a feasibility perspective are determining: (1) what can fit on the site selected for the range; (2) how adding a range at this location will impact surrounding OHGC elements; (3) how much will it cost to add a driving range on the selected site; and (4) whether the cost estimate developed by OHPA appropriate and consistent with industry standards and norms. A summary of these issues follows below. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 12

20 Orientation and Fit The NGF review of the proposed Phase II improvements and how they will be sited on the OHGC property is summarized below: In general, the ideal location for an on-course driving range would be a gently contoured open area as close to the clubhouse as is reasonable. As noted, OHPA has reviewed all possibilities for siting the range and determined the location of the existing practice hitting area, just south of the current pro shop and between the 6 th green and 1 st hole, to be the location for the new range/learning center. The general characteristics of the site, space available, topography, and soil/ rock conditions will make construction of a driving range on this site more expensive than would otherwise be considered standard. The architects that have reviewed the site both agree that the range would be expensive to build, will include a sloped (from R to L) landing area, have exposed rock outcroppings, and be a tight fit with the surrounding #6 and #1 golf holes. In order to accommodate 36, 10-foot tee stations with 18 bays on a top level and 18 bays on a lower level, a total of 190 linear feet will be required for the bays and structure. The NGF review of the site in October 2015, completed with the OHPA Master Plan architect present showed closer to linear feet available in the current configuration. As such, in order to be developed, at least 60+/- additional feet will have to be made available, mostly through moving the hole #1 tee further to the west and closer to hole #7. Even if this can be accomplished in light of safety concerns, a portion of the range structure will likely be in play to some degree on the first hole of the golf course. Any driving range on this site is potentially a hazard to the surrounding elements on the golf course. As such, full perimeter netting with 100 of height will be required. The resulting driving range will not be level and will have some remaining rock outcroppings. The rock outcroppings will also require some type of netted covering to prevent extensive damage to range balls from landing/hitting the rocks. A significant portion of the site is currently covered by trees and underbrush, in addition to rock outcroppings. The existing cart barn is also occupying the site at present. The clearing of these areas in preparation of the range development will require additional expense as compared to standard range construction costs. Site Analysis Summary In summary, it is clear that the proposed new range at OHGC faces significant engineering and design challenges if it is to be developed properly on the selected site. As the NGF team did not include a civil engineering discipline, it is our strongest recommendation that this be reviewed in more detail to firmly establish the exact physical parameters for the addition of a new range on this site, in light of both site constraints and surrounding golf safety issues. Further, even if a full, 36-bay range cannot be fitted on the selected site, there do not appear to be any other physical constraints that would prevent some smaller version of the concept to be developed on the same site, while meeting safety standards. However, much of the cost for the range is tied to site clearing, rock issues, levelling and netting that would still be equally expensive in a smaller range. Thus the only real savings in developing a smaller range at this site will be the smaller range structure that would require fewer square feet. The NGF review of the cost to develop the range follows below. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 13

21 Existing Pro Shop Existing putting green to become entrance concourse 190 wide range structure New Hole #1 tee location Hole #1 tee boxes must be moved 270 yard driving range Hole #2 tee must be moved Google Earth image zooming in on the OHGC range site. The preliminary measurements show that a 190 wide range structure will protrude well into the existing 1 st hole tee box, and require relocation of tees on holes #1 and #2. The resulting range will incorporate an area currently covered by trees, brush and exposed rock. It is uncertain if this rock can be shaved for the range or will have to be blasted. The narrow fit and surrounding elements will require 100 full perimeter netting. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 14

22 Estimated Cost of Phase II Improvements The specific line items and total cost for Phase II improvements as provided by OHPA are shown in the table below, along with NGF discussion on the appropriateness of each line item. PROJECT COST ESTIMATES Phase II Golf School Item Est. Amount NGF Comments Hitting Structure - 36 Bays $750,000 Assumes a structure of appx. $167/sf, which is within NGF norms (under $200/sf.) and includes lighting. Landing Area - Traps, Greens, etc. $550,000 This large budget appears appropriate given the uneven and rocky site. A key variable will relate to how much blasting vs. slicing of rock is required. Nets and Poles $385,000 This is within norms. Assumes the full 1,800 perimeter will be netted with 100 nets, + surface netting for rock outcroppings Turf $385,000 Artificial turf for the entire range area. Equates to appx $100,000/acre of artificial turf. Range Equipment $100,000 NGF typically assumes a standard of appx. $100,000 for basic equipment in a range start-up. Performance Center $50,000 Assumes basic equipment for the 3 training bays. Additional license fees to be borne by the golf pro. Golf Center House with Bathrooms $85,000 Additional / adjacent support structure at $200/sf New Cart Barn $115,000 Standard cart barn is about $100-$125/sf, so this cost leaves room for existing cart barn removal Subtotal $2,420,000 This is a high total for a new range, but within guidelines given the challenges of this site. This total does not include lights for night use. Fees $363,000 A 15% assumption for fees is appropriate. Contingency - Before Fees $181,000 A 6.5% assumption for contingency is appropriate. TOTAL ESTIMATED COST PHASE II $2,964,000 Sf = square foot; lf = linear foot National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 15

23 SUMMARY OAK HILLS PARK GOLF COURSE Oak Hills Park GC is a popular neighborhood golf course located in one of the country s strongest golf markets Southwest Connecticut. The facility enjoys a good location within this market, but it is not the ideal for a commercial driving range, which typically perform better when conveniently located near, and visible from, major roadways. While in generally good condition, this golf facility needs improvement in several areas to make it relevant again to improve revenue and help reverse the decline in rounds experienced in recent years. The improvements proposed by OHPA in its two-phase Master Plan appear to be on the right track for upgrades at this golf course, although OHPA and the City may find that some of the upgrades being considered might not fit properly and/or might be very expensive to complete. Other findings from NGF Consulting s review of OHGC: OHGC offers a good quality mix of amenities that should be marketable in the local Norwalk market. The golf course has a good reputation for design and challenge, but the course may be too hard for beginners and especially long for women players. The course is now 46+ years old and much of its original infrastructure is still in place, yet all grounds appeared to NGF to be well kept and well maintained. The overall condition of the golf course property is good, but there are some areas of deficiency that should be upgraded, the most important of which include drainage and cart path improvements that should lead to improved revenue. The basic property logistics are not ideal and the existing golf course and any range/golf learning center would benefit greatly from some alterations. Specific changes to help improve the facility s basic logistics include moving the pro shop into the existing restaurant building, which is where it was originally designed to be. This will make the golf course property more efficient for both golfers and staff, and provide a good base for the possible addition of a new golf learning center. The proposed two-phased OHPA master plan is expected by NGF to provide a needed boost to the golf operation, regardless of whether a new range is added or not. The Phase I program will help improve golf course condition, logistics and help prepare the property for the Phase II addition of a new driving range/learning center. OHGC is producing lower-than-average rounds activity, with steep declines in total rounds in the last five years that are likely more severe than the market overall. However, the average revenue earned per round of golf is much higher than standard, leading to higher total golf income. It is expected by NGF that any new range added to this golf course is likely to also generate above-average income, helping to improve the overall economic condition of the property. However, the space available to add a new range at OHGC is limited, and as a result the plan to add the golf learning center to OHGC is going to be much more expensive than for a standard golf driving range. The NGF recommends additional input from engineers to establish whether the new range can be added properly while preserving the safety of surrounding golf elements. The key aspects of the selected site to be evaluated more closely include the size/width of the driving range and how to appropriately deal with extensive rock outcroppings and sub-surface rock on the selected site. National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 16

24 Market Analysis The NGF team completed a thorough analysis of the local Norwalk area market to review the supply/demand dynamic that is driving the golf market and the potential to support an additional driving range and golf learning center at Oak Hills Park GC. Below is NGF s summary of the overall market environment for the proposed Oak Hills Park Golf Learning Center, with a focus on variables that may affect activity levels, including area demographics, economy, and supply/demand/competitive factors. DEMOGRAPHICS AND THE LOCAL ECONOMY In the following section, NGF reviews the demographics and key economic factors of the Norwalk, CT and surrounding area, including comparative demographics between the subject OHGC and NGF-identified key comparable facilities. Basic Demographics There are more than 153,000 people (2015 estimate) living within 5 miles of the Oak Hills Park Golf Course site, and more than 365,000 within 10 miles. The area has experienced only modest growth over the last two decades compared to national population growth rates. The 5- mile market is projected to add about 4,000 net new residents by Fairfield County has several positive attributes related to golf demand, including high relative ages and median incomes, and relatively high percentage of Caucasian race; all of these factors are correlated with higher golf participation. Summary Demographics OHGC Site 5 miles 10 miles Connecticut U.S. Population 1990 Census 136, ,139 3,285, ,584,652 Population 2000 Census 145, ,125 3,405, ,399,034 CAGR % 0.72% 0.36% 1.25% Population 2010 Census 150, ,812 3,574, ,745,538 CAGR % 0.36% 0.48% 0.93% Population Projected , ,444 3,614, ,998,423 Population 2020 Projected 157, ,635 3,680, ,811,226 CAGR % 0.61% 0.37% 0.94% Median HH Income (2015 Estimate) $88,527 $93,628 $67,316 $52,747 Median Age (2015 Estimate) Percent Caucasian 76.6% 75.6% 75.6% 71.0% Percent Asian 5.4% 6.7% 4.5% 5.4% CAGR = Compound Annual Growth Rate. Source: NGF Consulting, Tactician Corporation, Applied Geographic Solutions Comparative Demographics Oak Hills Park and Key Comparable Facilities In the table below we provide a comparison of population density and median household income for the 2-mile and 5-mile markets around Oak Hills Park and the three key competitive facilities that we profile later in this section Sterling Farms GC, H. Smith Richardson GC, and Griffith E. Harris GC. As we can see, Oak Hills Park enjoys a higher resident population within 2 National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 17

25 miles, though the populations for the 5-mile rings around both Richardson and Sterling Farms are denser. In terms of median household income, the residential areas around Oak Hills Park have decidedly lower income than those around the three competitors. For example, the 2-mile area surrounding Sterling Farms has a median income of about $107,000, or 63% higher than that of the Oak Hills Park submarket. This is indicative of more of a blue collar presence around Oak Hills Park. While these rings do not necessarily represent the true market for each of these facilities, the localized analysis does give an indication of the characteristics of the immediate local populations and the level of support that can be expected from the fall-out-ofbed markets that surround each location. Local Population and Income 2015 Population Median HH Income 2-Mile Ring 5-Mile Ring 2-Mile Ring 5-Mile Ring Oak Hills Park Golf Course 46, ,105 $65,820 $88,527 Griffith E. Harris Golf Course 6, ,519 $137,973 $95,445 H. Smith Richardson Golf Course 17, ,994 $110,590 $60,993 Sterling Farms Golf Course 28, ,280 $106,919 $86,603 Source: NGF Consulting, Tactician Corporation, Applied Geographic Solutions. Local Economic Factors Fairfield County is the southwestern-most county in Connecticut and contains four of the state s largest cities (Bridgeport, Danbury, Norwalk and Stamford). Per the 2010 census, Fairfield was the most populous county in Connecticut with an estimated 916,829 residents. The city of Norwalk and Fairfield County have large concentrations of headquarters and/or major offices for multinational corporations (at one point in the early 1990s it trailed only New York City and Chicago). Fairfield County has been described as a "hedge fund ghetto" due to the large concentration of investment management firms in the area, including Bridgewater Associates (one of the world's largest hedge fund companies), Aladdin Capital Management and Point72 Asset Management. With high household incomes, moderate unemployment rates (4.8% in September 2015), and a predominately Caucasian population (highest golf participation rates), the Norwalk/Fairfield County overall market shows characteristics correlated with high golf demand. The city of Norwalk itself tends to have higher unemployment rates than the county and State as a whole. However, city officials recently spoke about economic revitalization in Norwalk in This included strong activity in Norwalk's commercial districts, including the 1.4 million squarefoot Merritt 7 Corporate Park, which is now 95 percent leased. The Wall Street redevelopment projects took major steps forward last year, and South Norwalk was particularly active in 2014 with Ironworks being built by Spinnaker Real Estate Partners. Climate - As with any outdoor recreation, weather will have impact on golf participation. NGF data estimates that almost all golf is played with temperatures between 50 and 90 degrees Fahrenheit, unless special accommodations are made (e.g. heated range stalls). Understanding local weather patterns helps determine the number of golf playable days. The data clearly shows that golf can only be played about eight months of the year, unless accommodations are made. This is consistent with monthly rounds averages at OHGC. The following table presents a summary of monthly weather data for Norwalk based on 50-year recorded trends: National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 18

26 Climatological Data Norwalk, CT Area Temperatures Precipitation Precipitation Month Average High Low Inches Days January February March April May June July August September October November December Source: Weatherbase.com; Norwalk, CT Highways U.S. Highway 7 and I-95 provides convenient access to the greater Southwest Connecticut area. Highway 7 also connects to the Meritt Parkway, a second major east-west thoroughfare connecting the region to Westchester County, NY and the greater New York City area. All three roadways are proximate and relatively convenient to OHGC. However, there is notable traffic congestion along all of these roadways at particular times of the day, with congestion tending to be worse heading west during the morning hours and east in the late afternoon/early evening. GOLF MARKET SUPPLY AND DEMAND INDICATORS NGF made several key observations regarding the local Norwalk area golf market, including national trends, local demand/supply, and area golf facility / driving range competition. National Trends in Golf Golf continued its macro trend toward stabilization in FY 2015, negative perceptions of the game as portrayed by mainstream media notwithstanding. Socio-demographic, financial and cultural headwinds certainly persist for golf, and the environment remains highly competitive for golf-related businesses. This has manifested in the nearly decade-long correction in golf course supply, which is expected to continue with closures greatly outpacing openings for the next several years. Still, positive economic indicators, stabilization in participation and rounds played, an increase in weather-adjusted utilization, and the return of private equity funding to the industry are just a few of the under-reported developments in golf that tell the current story of the industry. The NGF data does not support widespread decline in golf, but the golf business will remain highly competitive. The smartest, best-managed and most innovative golf facilities will win market share and have the best opportunity for growth. Local Golf Demand and Supply Regional Rounds Played According to Golf Datatech, rounds played YTD through September 2015 were up 0.7% nationally, but down 0.4% for the New England region. Rounds played for the State of Connecticut are down 4.1% through September, largely due to less favorable weather (i.e., more precipitation) than experienced in National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 19

27 Local Golf Demand NGF Consulting uses predictive models and ongoing consumer research data to compare markets on key measures of golf demand. The indices shown in the table below compare measures of golf demand (participation and rounds played) to a national benchmark of 100. The Latent demand indices for each of the three sub-markets reviewed show the interest in golf from non-golfers compared to a national base of 100. The data shows strong demand for golf in the local submarkets and the State of Connecticut, compared to the national benchmarks. Earlier we showed that the 2-mile fall-out-of-bed market for Oak Hills Park was not as favorable for golf participation as that of its key competitors immediate local markets. With the broader 5-mile trade area, we see that golf demand measures are relatively equal among the four markets studied, though Sterling Farms has 2,800+ more golfers within five miles than Oak Hills Park. Predicted Golf Demand Household Golf Participation Rate Activity (Rounds) Index Latent Demand Index 5-mile Rings No. of Golfers Oak Hills Park Golf Course 16, % Griffith E. Harris Golf Course 13, % H. Smith Richardson Golf Course 15, % Sterling Farms Golf Course 19, % Benchmark Comparison Overall Fairfield County 90, % State of Connecticut 330, % United States 24,726, % Source: National Golf Foundation Driving Range Supply NGF research indicates no stand-alone driving ranges within 10 miles of Oak Hills Park. Area stand-alone driving ranges located farther away include: Belmont Ridgefield Golf Complex, a two-tiered 30-station range located 13 miles away in Ridgefield; Sports Center of Connecticut, a 60-tee range (heated, half weather-protected) that is part of an entertainment complex about 20 miles away in Shelton; and Golf Quest, a 72-tee lighted, heated and weather-protected practice facility located about 22 miles away in Brookfield. NGF does not consider any of these facilities to be direct competitors to the proposed Oak Hills Park Learning Center. Therefore, the comparable and/or directly competitive market for the proposed learning center comprises driving ranges located at area golf courses, including the three main competitors identified previously. Aside from these three, the NGF facilities database indicates a total of two public access golf courses within 10 miles of Oak Hills Park Golf Course Pound Ridge Golf Club in New York and Long Shore Club Park Golf Course, which together have a total of 25 tee stations. Finally, there are 16 private golf clubs in the 10-mile market, all but one of which has a driving range. Total private club tee stations within 10 miles number 239. NGF has compared the public driving range supply and demand (latter measured as estimated number of golfers) metrics in the respective 5-mile markets around Oak Hills Park and the three identified potential competitors. The results, summarized in the table below, show that overall driving range supply in the subject markets is relatively low compared to state and national benchmarks. For example, in the U.S., there are 0.35 driving ranges for every 1,000 golfers. In Oak Hills 5-mile ring, there are only 0.12 ranges per 1,000 golfers, which is about half that of the overall State of Connecticut. In terms of golfers per public tee station, both Sterling Farms and Griffith E. Harris enjoy more support than the Oak Hills Park site. National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 20

28 Public Driving Range Supply 2015 (5-mile Markets) No. of Total Public Ratio # of Golfers No. of Stand- Public Public Golf Access Ranges Per Total Alone Tee Course Driving per 1,000 Public Tee Ranges Stations 5-mile Rings Ranges Ranges Golfers Station Oak Hills Park GC Griffith E. Harris GC H. Smith Richardson GC Sterling Farms GC Benchmark Comparison State of Connecticut , United States 7, , , Source: National Golf Foundation. 1. Fairview Golf Center, 6 miles from Griffith E. Harris, permanently closed on 4/17/ NGF no longer verifies the number of range stations. These numbers represent the stations when last verified. LOCAL COMPETITIVE GOLF MARKET NGF has identified three key comparable facilities that stand out as being the most important competition to the Oak Hills Park GC as it would be operated in 2016 and beyond if a new driving range facility was to be added as proposed. This list was not meant to be exhaustive or to account for all of the potential competition to OHGC. Rather, NGF Consulting is presenting this information to offer a frame of reference in evaluating actual performance of the three facilities that are likely to compete, to one degree or another, with the proposed Oak Hills Park Learning Center. Below we present information and findings on the area competitive golf range market, including summary profiles. Competitive Golf Course Driving Ranges Map National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 21

29 Key Competitors Summary Information The following tables provide summary information for the potential key competitors to OHGC. Key Competitors - Basic Facility Information Facility City Lighted (Y/N) Technology (Y/N) No. of Tee Stations No. of Heated/Covered Stations No. of Outdoor Grass Stations Golf Pro Lessons (Y/N) Key Other Amenity Griffith E. Harris GC Greenwich No No Yes R/GC H. Smith Richardson GC Fairfield No No Yes R/GC Sterling Farms GC Stamford Yes Yes /46 0 Yes R/GC Amenity Code: R=Retail; GC = Golf Course; Italics No. of Tee Stations are from the OHPA Business Plan Proposal and Analysis from May 5, Source: NGF. 1 Two stations include Trackman Key Competitors Bucket Fees Facility Small Med. Large Griffith E. Harris GC $6.00 per token (approx. 45 balls) H. Smith Richardson GC $6.00 per bucket (approx. 45 balls) Sterling Farms GC* $6.00 (40) $9.00 (70) $12.00 (110) *$2 off Monday through Friday before 9 a.m. Source: National Golf Foundation Key Competitive Driving Range Summary Profiles As part of this market review for the proposed range at Oak Hills GC, NGF has identified and profiled three local driving range facilities in the 15-mile market area. All of these facilities include hitting bays, a clubhouse, professional golf lessons, and short game practice areas. The 2-story range at Sterling Farms Golf Course in Stamford is the closest, largest and, by far, busiest competitive driving range to the proposed OHGC Golf Learning Center. The practice facility at this 6,300-yard 18-hole municipal golf course - owned and operated by the City of Stamford Parks & Recreation - includes a covered and lighted driving, as well as chipping and putting areas. The range is a two-tiered structure with 46 total bays, 20 of which are heated. Two bays in a separate structure at the end of the range feature Trackman launch monitor technology. The bays are approximately 10 wide and the total depth of the range is 220 yards to the base of the 100 tall net. Lights were added in 2015, extending the hours of operation to sunrise to as late as 11 p.m. on Friday and Saturday during the summer. During the November through March off-season, the range opens at 7 a.m. and closes at sundown. Sterling Farms hosts between 50,000 and 55,000 rounds of golf annually; about 75% of nontournament rounds come from Stamford residents. In addition to resident and Fairfield County play, the facility general manager reports a strong draw from Westchester County, NY. Total range revenue averaged just over $800,000 annually over the FY 2012 to FY 2014 time period. This is equivalent to about $17,390 per stall, and about $15 per round of golf. The facility National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 22

30 added lights this year and the GM reports a modest increase in play to date, but says it is as yet undetermined whether the extra labor expense will justify any additional revenue. Some players have simply shifted their play from daytime to nighttime. The GM reported to NGF an overall expense ratio for the range of 35% to 40%, with a total labor budget accounting for about $200,000. Other key expenses include ball and mat replacement each year, and daily maintenance items. The next closest competitor to Oak Hills Park s proposed learning center is the Town of Fairfield s H. Smith Richardson practice range, located approximately 11.5 miles northeast of Oaks Hills Park. H. Smith Richardson s practice range is located adjacent to the 18-hole golf course; it is located a short distance from the clubhouse and is best accessed by car. The range is over 250 yards long with 24 open-air hitting bays featuring artificial mats. The short game practice putting greens are located near the clubhouse. The range facility generated just under $144,000 in revenue in FY 2014, or about $3.54 per round on 40,392 total rounds. Total revenue per stall was $5,987. Griffith E. Harris Golf Course is a municipal golf course located 14 miles southwest from Oak Hills Park that includes a practice facility with 15 hitting stations, two practice putting greens, a practice chipping area, and a practice bunker. The practice facility is open-air and located close to the clubhouse. All guests must be accompanied by a member to play. The range generates about $100,000 in annual revenue, or about $2.50 per round of golf, and $6,667 per stall. Key Competitor Market and Revenue Comparison In the table below we provide a comparison of key market and revenue metrics for Oak Hills Park GC and the three primary competitive facilities. Below are some key observations: At about $800,000 in annual range revenue, Sterling Farms is the highest revenue facility among this competitive set, and in the top 5% of on-course ranges nationally. Range revenue per bay/stall is much higher at Sterling Farms GC than at Griffith E. Harris and H. Smith Richardson. Taking into account the much higher range revenue expressed as a function of per round of golf, we can infer that Sterling Farms is doing much more range-only (not associated with rounds) business at its facility. Based on Sterling Farms reported annual range revenues of ±$800,000 and the following inputs, NGF has estimated the overall range utilization percentage at Sterling Farms to be ±40%: 345 open days; 12 average operating hours per day 46 bays/stalls 1.25 customers per hour Weighted average utilization of 50% small 15% medium $9; 35% large $12 Adjusting the inputs to reflect specific revenue, number or stalls and pricing at Griffith E. Harris and H. Smith Richardson, we get estimated utilization percentages of ±21% and ±18%, respectively, for the ranges at these facilities. Several factors help drive the high revenues at Sterling Farms, including the relatively high number of golfers residing within 5 miles of the site (for comparison, nearly 6,000 more than Harris and about 2,800 more than Oak Hills Park GC); the high rounds activity (50,000+), and the relative convenience of location for Sterling Farms, including for residents of southeastern Westchester County. National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 23

31 Key Competitors Operating and Metrics Comparison In the table below we provide a comparison of key operating and market metrics for Oak Hills Park GC and the three primary competitive facilities. Facility No. of Bays Lighted Range 2014 Range Revenue Total Households within 5 Miles 2015 Median HH Income within 5 Miles Estimated Golfers within 5 Miles Estimated Latent Golfers within 5 Miles Public Ranges per 1,000 Golfers Range Revenue per Bay % Cauc. within 5 Miles Oak Hills Park GC ,511 $88,527 16,254 17, % Griffith E. Harris GC 15 No $100,000 43,601 $95,445 13,202 12, $6, % H. Smith Richardson GC 25 No $143,692 73,832 $60,993 15,438 23, $5, % Sterling Farms GC 46 Yes $795,283 70,031 $86,603 19,066 21, $17, % Italics No of Bays and revenue figures are from the OHPA Business Plan Proposal and Analysis from May 5, Source: NGF Consulting, Tactician Corporation, Applied Geographic Solutions. National Golf Foundation Consulting, Inc. Oak Hills Park Authority Driving Range Feasibility 24

32 Facility ANALYSIS OF NON-LOCAL COMPARABLE FACILITIES To augment the analysis of driving range activity, NGF has identified and profiled three additional public golf courses with large-scale driving ranges in suburban northern locations. Two of the three comparable facilities include a driving range structure with multiple covered and heated driving range bays, professional golf lessons, and short game practice areas. Non-Local Comparable Facilities Summary Information The following two tables provide summary information, including bucket fees, for the selected non-local comparable facilities. Non-Local Comparable Facilities - Basic Facility Information City Lighted (Y/N) Technology (Y/N) No. of Tee Stations No. of Heated/Covered Stations No. of Outdoor Grass Stations Golf Pro Lessons (Y/N) Key Other Amenity Oak Marr Golf Fairfax, VA Yes Yes Yes R/GC Eisenhower Park GC Westbury, NY No No Yes R/GC St. Johns Golf Plymouth, MI Yes Yes Yes R/GC Amenity Code: R=Retail; GC = Golf Course Source: NGF. Non-Local Comps Bucket Fees Facility Small Med. Large Oak Marr Golf $7.00 per token (approx. 45 balls) Eisenhower Park $5.00 (40) $7.00 (60) St. Johns Golf $5.00 (40) $8.00 (60) $10.00 (100) Source: National Golf Foundation Non-Local Comps - Comparative Demographics In the table below we provide a comparison of population density and median household income for the 2-mile and 5-mile markets around Oak Hills Park and the three non-local comparable facilities that we profile later in this section. As we can see, these facilities have similar basic demographics, with some measures at certain facilities showing stronger than the subject and some showing weaker. For instance, Eisenhower Park has far denser population bases in its local markets. Local Population and Income 2015 Population Median HH Income 2-Mile Ring 5-Mile Ring 2-Mile Ring 5-Mile Ring Oak Hills Park Golf Course 46, ,105 $65,820 $88,527 Oak Marr Golf 43, ,512 $107,277 $116,507 Eisenhower Park 70, ,850 $80,242 $89,110 St. Johns Golf 22, ,720 $89,262 $88,851 Source: NGF Consulting, Tactician Corporation, Applied Geographic Solutions. National Golf Foundation Consulting, Inc. Oak Hills Park Authority GC Driving Range Feasibility 25

33 Non-Local Comps Summary Profiles Oak Marr Golf Fairfax County, VA The Oak Marr Golf facility in Fairfax, Virginia includes a smaller, 9-hole golf course and permanent two-level covered driving range. The facility includes heated bays only on the lower level, and is lighted throughout for night use. Other site amenities include a golf clubhouse, pro shop, snack bar and golf learning center along with a short (3,000 yard) 9-hole course and driving range with 78 total tee stations (30 covered and heated). Two of the bays feature Trackman launch monitor technology. The bays are approximately 10 feet wide and the total depth of the range is 340 yards in length, all surrounded by nets that are approximately 50 tall. This facility is owned and operated by the Fairfax County Park Authority, except the golf learning center which is leased to a golf professional. Oak Marr is an example of a successful driving range facility at a municipal golf course in a suburban setting, proximate to a major metro area (Washington DC/Northern Virginia). The demographics surrounding Oak Marr are similar to Norwalk / Southwest Connecticut, and the facility is not on a main roadway nor visible from a major roadway or highway. As such, these comparable elements make this facility a good comparable for Oak Hills Park. One difference is the surrounding golf course is a shorter, 9-hole layout that hosts between 27,000 and 30,000 rounds annually. The facility has a strong beginner program and very active golf learning center. The facility is lighted for night use and is open as late as 11:00 pm on weekends in the summer. Total driving range revenue has averaged just over $760,000 annually over the last several years, although range revenue was as high as $900,000 in FY2008. This is equates to about $9,743 per stall, and about $25 per round of golf. The facility includes lights and staff reports as much as 20% to 25% of total range revenue comes after 6:00 PM. The County reported to NGF an overall expense ratio for the range of 25% to 30%, with a total labor budget accounting for about $125,000. Other key expenses include ball and mat replacement each year, and daily maintenance items. Eisenhower Park GC Nassau County, NY Another non-local facility reviewed by NGF is Nassau County, New York s Eisenhower Park Golf Course practice range. This facility includes the County s largest driving range operation along with a three-course, 54-hole municipal golf operation. The driving range includes 60 primary tee stations, plus another 15 on the north side of the large driving range. The tee bays are 10 wide and all tee stations are open, uncovered and not heated. There are lights for night use and the range is open to around 10:00 PM in peak summer. This range is also very large, covering over 400 yards of hitting space, thus allowing hitting stations on both ends of the range (north-south). The range is located on property with three 18-hole municipal golf courses, although the range is across a busy street (Park St), requiring additional separate parking spaces just for the range. The range is heavily programmed with extensive golf schools, clinics and lessons with a contracted golf professional. Eisenhower Park is an example of a successful un-covered / not heated driving range facility at a municipal golf course in a suburban setting, proximate to a major metro area (east of New York metro). The demographics surrounding Eisenhower Park are also similar to Norwalk, but this facility is much more accessible and visible from major roadways in central Nassau County. National Golf Foundation Consulting, Inc. Oak Hills Park Authority GC Driving Range Feasibility 26

34 Total driving range revenue has averaged just over $580,000 annually over the last several years, although range revenue was as high as $700,000 in FY2004. Current income equates to about $7,733 per stall, and about $2.40 per round of golf (Eisenhower hosts about 250,000 rounds of golf annually). The County reported to NGF the range requires one full-time staff and additional part-time staff, equating to about 2.0 to 2.5 total FTEs. The total expense budget for the driving range is not separated out by the County, but a fair estimate is around $200,000 in annual operating expenses, including ball and mat replacement each year, and daily maintenance items. St. Johns Golf Plymouth, MI St. Johns Golf is an example of a combination 27-hole public golf course that includes a full private retail and golf center/range operation on site. The golf course has three separate regulation-length 9-hole courses (27-holes), clubhouse with conference center, 55-station driving range and 5,000 sf pro shop. The range and pro shop are part of a concession with Carl s Golfland, a popular Michigan golf retailer. The driving range includes 30 primary covered and heated tee stations with artificial turf mats, plus another 25 grass stations (uncovered and un-heated). The entire facility is lighted for night use and is open until 9:00 or 10:00 PM. The range is heavily programmed with extensive golf schools, clinics and lessons, and also does a large club fitting and custom golf equipment business in conjunction with the pro shop (Carl s Golfland). The facility is well located in the heart of Plymouth, MI, at the intersection of three major area roadways I-96, I-275 and Highway 14). Plymouth is an upper-end suburb about 20 miles west of downtown Detroit. Total driving range revenue has averaged just over $435,000 annually over the last several years, equating to about $7,900 per stall, and about $10.80 per round of golf (St. Johns hosts about 40,000 rounds of golf annually). National Golf Foundation Consulting, Inc. Oak Hills Park Authority GC Driving Range Feasibility 27

35 Non-Local Comparables Operating and Metrics Comparison In the table below we provide a comparison of key operating and market metrics for Oak Hills Park GC and the selected non-local comparable facilities. Facility No. of Bays Lighted Range 5-Year Average Range Revenue ( ) Total Households within 5 Miles 2015 Median HH Income within 5 Miles Estimated Golfers within 5 Miles Estimated Latent Golfers within 5 Miles Public Ranges per 1,000 Golfers Range Revenue per Bay % Cauc. within 5 Miles Oak Hills Park GC ,511 $88,527 16,254 17, % Oak Marr Golf 78 Yes $762,100 93,705 $116,507 25,291 29, $9, % Eisenhower Park GC 75 No $580, ,018 $89,110 49,764 42, $7, % St. Johns Golf 55 Yes $435,000 66,908 $83,851 25,599 18, $7, % Italics Revenue figures are from the official documents from Nassau and Fairfax Counties, augmented by NGF interviews in Source: NGF Consulting, Tactician Corporation, Applied Geographic Solutions. National Golf Foundation Consulting, Inc. Oak Hills Park Authority GC Driving Range Feasibility 28

36 MARKET ANALYSIS KEY FINDINGS NGF key findings related to the external market environment for the Oak Hills Park Golf Learning Center: The overall national golf market has declined over the last 5 to 10 years, especially among younger adults. However, golf remains vibrant and has shown strong signs of stabilization in recent years, especially when adjusted for yearly weather variations. Driving ranges can thrive even if demand for rounds of golf is down, as some golfers with time and/or money constraints seek to somehow remain active in the game. The local resident demographics are highly favorable for strong golf demand in this area. Connecticut has one of the highest golf participation rates in the U.S., and this local market shows higher participation than the State overall. However, OHGC s fall-out-of-bed market has less favorable demographics relative to correlation with high golf demand, resulting from more of a blue collar nature than we observe around the other competitive facilities, particularly Sterling Farms in Stamford. Another favorable factor for driving ranges in this market is that the overall public driving range supply ratio is relatively low compared to state and national ratios. In other words, there is a low per capita supply of public driving ranges. The range at Sterling Farms GC has generated an average of about $800,000 in revenue over the last several years, which may increase with the addition of lights. This range is clearly the highest revenue facility among this competitive set, and the per-round and per-bay revenue metrics suggest a very high volume of range-only business. This likely relates to several factors, including amenities offered, local demographics, high rounds activity, convenient access (including for golfers residing in southeastern Westchester County, NY), and the relatively high number of golfers residing in proximity to the facility. The non-local comparable driving ranges we examined are also illustrative of the high activity and revenues that year-round driving ranges in dense urban/suburban markets can generate, particularly when there is a relatively low per capita supply of ranges in their immediate markets. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 29

37 MARKET OPPORTUNITY CONCLUSION OHGC LEARNING CENTER Below are NGF s summary market opportunity conclusions that form the basis of the projected financial performance and recommendations presented in the next section of this report. The NGF market review suggests that the Oak Hills Park Golf Learning Center, as proposed, would have significant market support from area golfers, and would likely take some market share from Sterling Hills and other competitors, especially among golfers for whom the Norwalk facility would be more convenient. Based on this review and similar studies NGF has done in active northern golf markets, our estimated ranges of potential revenue per station/bay with various characteristics are: NGF Estimated Driving Range Revenue per Bay Predominance of Range Bays Low Expected/ Average High No covering, no lights, no heat $5,700 $6,700 $7,700 Covered and heated, but no lights $5,900 $9,500 $13,000 Covering, heat and lights $7,900 $12,600 $17,300 Source: National Golf Foundation NGF believes that Sterling Farms GC is the most appropriate comparable facility to consider when projecting utilization rates and revenue estimates for the proposed OHGC Learning Center, assuming the inclusion of lights for night use. Earlier we noted that average annual revenue at Sterling Farms has been about $800,000 in recent years, equating to $17,000+ per stall and an overall range utilization percentage estimated to be about 40%, based on publicly available inputs. However, we note that there are several factors in Sterling Farms favor when it relates to high driving range activity, including highly favorable fall-out-of-bed demographics, high rounds activity, convenient access (including for golfers residing in southeastern Westchester County, NY), and the relatively high number of golfers residing in proximity to the facility (about 2,800 more golfers in 5-mile market than OHGC). Based on Oak Hills Park s location, local demographics and golf demand profile, rounds played and other factors, as well as performance of other facilities profiled, NGF believes that the proposed new OHGC range could realistically expect to earn between $6,700 and $9,500 per stall, reaching as high as $13,000 if lights are included. These per stall revenue figures equate to overall utilization rates ranging from about 17% (no cover, lights, heat) to 34% (covered, heated, lighted). The higher end of this range also assumes a strong draw from area golfers for range-only use, and significant high market share taken from competitors, particularly Sterling Farms. For comparison purposes, NGF estimated driving range utilization percentages of ±21% and ±18%, respectively, at Griffith E. Harris and H. Smith Richardson. For the non-local comparables profiled earlier, we estimate utilization rates of about 21% at St. Johns Golf Club, 35% at Eisenhower Park, and 27% at Oak Marr. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 30

38 Projected Financial Performance and NGF Recommendations NGF Consulting has prepared an analysis to show what the potential economic performance of the new golf range / learning center could be considering the development proposal, and under the assumption of direct OHPA operation of the range within the existing OHGC operation. In this section, we evaluate the new range facility s economic potential and provide estimates of performance based on a set of assumptions that may or may not become reality. We feel that these projections represent a fair estimate of performance for this proposed addition based on our complete review of the market, site and existing OHGC operation. We note that this economic performance estimate was prepared to reflect the operation of the new range addition only, with no estimates or assumptions about improved OHGC performance, which NGF expects to materialize after the addition is completed. NORWALK FISCAL PERFORMANCE METRICS NGF has estimated the economic performance of the new golf learning center under the assumption of two basic revenue generators in the range operation sale of golf range ball baskets and additional up-charges for use of high technology stations, such as Trackman. All additional revenue sources from items such as lessons, clinics, schools, merchandise sales and club rentals are assumed to belong to the golf professional via concession, and are not included in the estimate. This bottom line projections show the net incremental operating revenue available to be used for capital cost reduction (debt service). Activity and Revenue Projections The NGF projections for activity and revenue are based on assumptions related to activity derived from the number of bays available, days of operation, hours of operation, number of customers per hour and the blended average revenue per range basket sold. The number of days available is based on a year-round operation with approximately 20 days off for bad weather (where travel is severely restricted) or holidays. A summary of this exercise is shown below: NGF Estimated Driving Range Activity - OHGC Utilization Assumptions Year 1 Year 2 Year 3 Year 4 Year 5 Est. # of available days 365 Less bad weather 20 Potential golf days Potential Ball Users # stations 36 # / Hour 1.2 # hours/day - average 12 Estimated Utilization % 34.0% 34.0% 34.0% 34.0% 34.0% = Number of "Golfers" 60,800 60,800 60,800 60,800 60,800 National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 31

39 Revenue by Weighted Average Basket Price The NGF projections for revenue are based on assumptions related to range ball pricing and expected utilization between small, medium and large baskets. A summary of this exercise is shown below: Driving Range Revenue By Weighted Average Basket Price No. of Balls Basket Price Weighted Avg. Utilization Golf Ball Revenue Avg. $/Ball Basket Pricing Large Bucket 100 $ % $0.10 Medium Bucket 65 $ % $0.12 Small Bucket 50 $ % $0.12 Weighted Average $ % Range Revenue $464,400 Revenue per Range Station / Bay A second estimate is provided for the first five years of operation on a per station basis. This estimate assumed 36 total range bays, of which 33 are standard and 3 include advanced technology. The advance technology bays would require additional hourly charges for the few hours per day that they are not in use for golf instruction. This is included in the higher estimate of revenue per bay. A summary of this exercise is shown below: Driving Range Revenue Per Station/Bay Estimate Year 1 Year 2 Year 3 Year 4 Year 5 Number of Standard Bays No. of Technology Bays Total Facility Bays Avg. Annual Revenue per Std. Bay $12,800 $12,992 $13,187 $13,385 $13,585 Avg. Annual Revenue per Tech. Bay $14,000 $14,210 $14,423 $14,639 $14,859 Annual Revenue Inflation 1.5% 1.5% 1.5% 1.5% Expense Projections 36-Bay Design The NGF estimated additional OHPA expenses likely required to operate the range/learning center addition are shown in the table below. The additional expenses will mostly be in labor, but also include repairs, utilities, additional marketing and other expenses, as well as a reserve for replacement of key items that tend to wear out quickly in a busy driving range, such as range balls (new replacements needed every year), artificial turf mats (every 2-3 years), netting (patchwork or replacement every 2-4 years), and lights (if included every 2-4 years). We note that these expenses do not include some costs specific to the operation of golf instruction programming, which NGF has assumed will be borne by the golf professional. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 32

40 NGF Estimated Driving Range Expenses (36-Bays Incl. Reserves) Expense Item Year 1 Year 2 Year 3 Year 4 Year 5 Additional Labor (est FTEs) $95,000 $97,400 $99,800 $102,300 $104,900 Repairs, Maintenance & Supplies 30,000 30,800 31,600 32,400 33,200 Utilities, Admin., Ins., Mkg. etc. Expenses 25,000 25,600 26,200 26,900 27,600 Total Base Expenses $150,000 $153,800 $157,600 $161,600 $165,700 Annual Replacement Reserves $30,000 $30,800 $31,600 $32,400 $33,200 Grand Total $180,000 $184,600 $189,200 $194,000 $198,900 Annual Expense Inflation 2.5% 2.5% 2.5% 2.5% PRELIMINARY FINANCIAL ANALYSIS 36-BAY COVERED DRIVING RANGE AND LEARNING CENTER NGF has created a cash flow model for the OHPA operation of a new driving range / golf learning center at OHGC. As the exact timing is unclear, the NGF has used a generic Year 1-5 for our projections. The primary assumption that drives the NGF Consulting financial projections is that the new driving range will be operated in similar fashion to the existing OHGC facility, with enhancements in property, marketing, programming and professionalism. Basic Assumptions The OHGC golf course will continue to operate in similar fashion to today, with the predominance of golf activity derived from daily fee customers. Range activity will be derived from OHGC golf rounds, as well as range-only users, and include standard range use and golf instructional range use. Physically, the new range will include 36 total range bays on two levels with 18 covered and heated bays on a lower level, and 18 covered bays on an upper level. Three of the lower level range bays will be fully enclosed performance bays with advanced technology such as Trackman or a similar ball tracking system. All stations are assumed to be lighted for night use and the range would be open to at least 9:00 PM most days of the year. The total project cost to develop the range will be as shown in the detailed table on Page 15 of this report. The activity and average per bay range revenue is assumed as presented in the metrics analysis shown previously. Revenues are projected based on the NGFrecommended fee structure, along with some historical and industry averages for range income. It is assumed that OHPA income will be derived from range ball sales only, as all ancillary revenue will accrue to the golf professional via to-be-determined performance contract / concession. Though full potential demand may not be realized in year 1, we activity equally across the first five years to illustrate what a typical year should look like. {1.5% annual inflation increase assumed each year}. Direct expenses for the range operation are assumed at the $150,000 base and $30,000 replacement reserve as estimated previously. All expense categories are assumed to have a 2.5% annual inflation. Capital investment reduction is presented based the NGF-estimated Phase II improvement budget of $2,964,000, and the stated City of Norwalk financing terms of 3.0% interest with a 15-year term. Using these inputs, the total level annual debt service comes to $248,300. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 33

41 Cash Flow Statement 36-Bay Covered Driving Range and Learning Center NGF Consulting has utilized the previously mentioned assumptions to create the cash flow statement in the following exhibit. Each category of revenue has been listed separately, and an estimate of the total facility average revenue per round provided. All figures have been rounded to the nearest $1,000 for simplicity. Projected Cash Flow Analysis Oak Hills Park GC Driving Range 36-Bay Design w/lights Revenue Year 1 Year 2 Year 3 Year 4 Year 5 Range Ball Sales $422,400 $428,700 $435,200 $441,700 $448,300 Additional Tech. Bay Sales 42,000 42,600 43,300 43,900 44,600 Total Revenue $464,400 $471,300 $478,500 $485,600 $492,900 Operating Expenses Personnel $95,000 $97,400 $99,800 $102,300 $104,900 Repairs, Maint. & Suppl. 30,000 30,800 31,600 32,400 33,200 Utilities, Admin., Ins., Mkg. etc. 25,000 25,600 26,200 26,900 27,600 Total Operating Expense $150,000 $153,800 $157,600 $161,600 $165,700 Net Operating Income $314,400 $317,500 $320,900 $324,000 $327,200 Annual Replacement Reserve $30,000 $30,800 $31,600 $32,400 $33,200 Net Income bef. Debt (EBITDA) $284,400 $286,700 $289,300 $291,600 $294,000 Debt Service $248,300 $248,300 $248,300 $248,300 $248,300 Net Income after Debt $36,100 $38,400 $41,000 $43,300 $45, Coverage 24,800 24,800 24,800 24,800 24,800 Net Income after Coverage $11,300 $13,600 $16,200 $18,500 $20,900 Cash Flow Statement 36-Bay Covered Range without Lights NGF Consulting has considered how the 36-bay option would perform assuming it is developed without lights and thus no activity after dark. The resulting performance would be very similar to the lighted 36-bay, except: Estimated utilization would fall to 26% Total revenue per bay falls to $9,600 on the standard bays and $10,500 on the technology bays. Total expenses for utilities and some repairs are reduced by are reduced by 30% to $17,500 in Year 1 for a full covered range structure without lighting. The summary of performance is shown in the table below. All figures have been rounded to the nearest $1,000 for simplicity. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 34

42 Projected Cash Flow Analysis Oak Hills Park GC Driving Range 36-Bay Design W/O Lights Revenue Year 1 Year 2 Year 3 Year 4 Year 5 Range Ball Sales $316,800 $321,600 $326,400 $331,300 $336,200 Additional Tech. Bay Sales 31,500 32,000 32,500 32,900 33,400 Total Revenue $348,300 $353,600 $358,900 $364,200 $369,600 Operating Expenses Personnel $95,000 $97,400 $99,800 $102,300 $104,900 Repairs, Maint. & Suppl. 30,000 30,800 31,600 32,400 33,200 Utilities, Admin., Ins., Mkg. etc. 17,500 17,900 18,300 18,800 19,300 Total Operating Expense $142,500 $146,100 $149,700 $153,500 $157,400 Net Operating Income $205,800 $207,500 $209,200 $210,700 $212,200 Annual Replacement Reserve $30,000 $30,800 $31,600 $32,400 $33,200 Net Income bef. Debt (EBITDA) $175,800 $176,700 $177,600 $178,300 $179,000 Debt Service $248,300 $248,300 $248,300 $248,300 $248,300 Net Income after Debt ($72,500) ($71,600) ($70,700) ($70,000) ($69,300) 1.1 Coverage 24,800 24,800 24,800 24,800 24,800 Net Income after Coverage ($97,300) ($96,400) ($95,500) ($94,800) ($94,100) Cash Flow Results (36 Bays) The results of the NGF review show that if a full 36-bay golf range facility can be properly added to the selected site, and developed as proposed in the OHPA Master Plan (with both Phase I and Phase II completed), the range is projected to add $464,000 to $495,000 in total direct range ball sales revenue. Considering all direct expenses estimated for the new facility, including reserves for replacement, the net income available to retire debt service (EBITDA) is projected to be around $285,000 to $295,000. This amount should be sufficient to safely cover the City-estimated $248,300 annual fixed debt service for the range (details in the body of the report) with approximately 15% coverage. This assumes the inclusion of lights for night use and NGF has projected total revenue to be as much as 25% less on a driving range facility without lights at the Oak Hills Park location. PRELIMINARY FINANCIAL ANALYSIS 26-BAY COVERED DRIVING RANGE AND LEARNING CENTER In consideration of the possibility that the full 36-bay range cannot be developed on the selected site, and some smaller structure is developed instead, NGF has created a second cash flow model to show the performance of a smaller, 26-station two-level driving range / golf learning center. This projection has been created using similar basic activity, although it is expected that utilization and per-bay revenue would be slightly higher if fewer bays were available. The key changes to the assumptions behind this estimate are shown below. Key Assumption Variables 26 Bay Driving Range The range can be constructed with a smaller range building, but costs for landing area, nets, poles, turf, equipment, performance bays, golf house and cart barn will all still be required as proposed in the 36-bay facility. The driving range structure itself could be reduced from 4,500 sf to 3,600 sf, thus reducing facility development cost by about $200,000. The resulting total project cost would look as shown below: National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 35

43 Estimated Development Cost Oak Hills Park GC Driving Range 26-Bay Design Item Est. Cost Structure $601,200 Landing Area 550,000 Nets And Poles 385,000 Turf 350,000 Equipment 100,000 Performance Center 50,000 Golf House W/ Rr 85,000 Cart Barn 115,000 Sub-Total $2,236,200 Fees $335,430 Total $2,571,630 Contingency $167,156 Grand Total $2,738,736 Physically, the new range will include 26 total range bays on two levels with 13 covered and heated bays on a lower level and 13 covered bays on an upper level. Three of the lower level range bays will be fully enclosed performance bays with advanced technology such as Trackman or a similar ball tracking system. All stations are assumed to be lighted for night use and the range would be open to at least 9:00 PM most all days of the year. The total utilization, and resulting per-bay revenue is adjusted slightly in this scenario, with estimates shown in the table below: NGF Estimated Driving Range Activity OHGC (26 Bays) Utilization Assumptions Year 1 Year 2 Year 3 Year 4 Year 5 Est. # of available days 365 Less bad weather 20 Potential golf days Potential Ball Users # stations 26 # / Hour 1.2 # hours/day - average 12 Estimated Utilization % 37.50% 37.50% 37.50% 37.50% 37.50% = Number of "Golfers" 48,400 48,400 48,400 48,400 48,400 Driving Range Revenue Per Station/Bay Estimate Year 1 Year 2 Year 3 Year 4 Year 5 Number of Standard Bays No. of Technology Bays Total Facility Bays Avg. Annual Revenue per Std. Bay $14,100 $14,312 $14,526 $14,744 $14,965 Avg. Annual Revenue per Tech. Bay $15,100 $15,327 $15,556 $15,790 $16,027 Annual Revenue Inflation 1.5% 1.5% 1.5% 1.5% National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 36

44 Direct expenses for the range operation are assumed at the $135,000 base and $25,000 replacement reserve as estimated previously. All expense categories are assumed to have a 2.5% annual inflation. Capital investment reduction is based the City of Norwalk financing terms of 3.0% interest with a 15-year term. Using these inputs, the total level annual debt service comes to $229,400. Cash Flow Statement 26-Bay Covered Driving Range and Learning Center NGF Consulting has utilized the previously mentioned assumptions to create the cash flow statement in the following exhibit. Each category of revenue has been listed separately, and an estimate of the total facility average revenue per round has been provided. All figures have been rounded to the nearest $1,000 for simplicity. Projected Cash Flow Analysis Oak Hills Park GC Driving Range 26-Bay Design Revenue Year 1 Year 2 Year 3 Year 4 Year 5 Range Ball Sales $324,300 $329,200 $334,100 $339,100 $344,200 Additional Tech. Bay Sales 45,300 46,000 46,700 47,400 48,100 Total Revenue $369,600 $375,200 $380,800 $386,500 $392,300 Operating Expenses Personnel $85,000 $87,100 $89,300 $91,500 $93,800 Repairs, Maint. & Suppl. 25,000 25,600 26,200 26,900 27,600 Utilities, Admin., Ins., Mkg. etc. 25,000 25,600 26,200 26,900 27,600 Total Operating Expense $135,000 $138,300 $141,700 $145,300 $149,000 Net Operating Income $234,600 $236,900 $239,100 $241,200 $243,300 Annual Replacement Reserve $25,000 $25,600 $26,200 $26,900 $27,600 Net Income bef. Debt (EBITDA) $209,600 $211,300 $212,900 $214,300 $215,700 Debt Service $229,400 $229,400 $229,400 $229,400 $229,400 Net Income after Debt ($19,800) ($18,100) ($16,500) ($15,100) ($13,700) Cash Flow Results (26 Bays) This review shows that as the OHGC driving range facility is reduced in size, the resulting income derived from the fewer bays available, even with increased utilization, is still not enough to cover all expenses and debt service. The debt service will still be high and not reduce in proportion to the smaller size due to aforementioned site issues, the most important of which are the need for netting and clearing foliage and rocks, both still required with a smaller range. PRELIMINARY FINANCIAL ANALYSIS 13-STATION OUTDOOR RANGE The final scenario reviewed by NGF involves the development of a simple, outdoor driving range that does not include any structures or covering. This range would be developed on the same site proposed for the OHPA Phase II program, but entail a more traditional outdoor range that would be used only in the golf season. We formulated the projection using activity, utilization and per-station revenue estimates derived from review of comparable outdoor, uncovered driving ranges. The key changes to the assumptions behind this estimate are shown below. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 37

45 Key Assumption Variables 13-Station Outdoor Range This concept would have a driving range developed without any structures, but costs for landing area, nets, poles, turf, equipment (including performance bay equipment) and cart barn will all still be required as proposed in the 36-bay facility. The resulting total project cost would look as shown below: Estimated Development Cost Oak Hills Park GC Driving Range 13-Station Outdoor Range Item Est. Cost Structure $0 Landing Area 550,000 Nets And Poles 385,000 Turf 350,000 Equipment 100,000 Performance Center 35,000 Golf House W/ Rr 0 Cart Barn 115,000 Sub-Total $1,535,000 Fees $230,250 Total $1,765,250 Contingency $114,741 Grand Total $1,879,991 Physically, the new range will include 13 total range stations on one level with no covering or heat. Two of the stations will include some form of portable technology such as Trackman or a similar ball tracking system. All stations are assumed to be open only during daylight hours and during the 8-month golf season. The total per-bay revenue is adjusted in this scenario, with estimates shown in the table below: Driving Range Revenue Per Station/Bay Estimate Year 1 Year 2 Year 3 Year 4 Year 5 Number of Standard Bays No. of Technology Bays Total Facility Bays Avg. Annual Revenue per Std. Bay $7,800 $7,917 $8,036 $8,156 $8,279 Avg. Annual Revenue per Tech. Bay $9,000 $9,135 $9,272 $9,411 $9,552 Annual Revenue Inflation 1.5% 1.5% 1.5% 1.5% Direct expenses for the range operation are assumed at the $55,000 base and $10,000 replacement reserve as estimated previously. All expense categories are assumed to have a 2.5% annual inflation. Capital investment reduction is based the City of Norwalk financing terms of 3.0% interest with a 15-year term. Using these inputs, the total level annual debt service comes to $157,500. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 38

46 Cash Flow Statement 13-Station Outdoor Range NGF Consulting has utilized the previously mentioned assumptions to create the cash flow statement in the following exhibit. Each category of revenue has been listed separately, and an estimate of the total facility average revenue per round has been provided. All figures have been rounded to the nearest $1,000 for simplicity. Projected Cash Flow Analysis Oak Hills Park GC Driving Range 13-Station Outdoor Range Revenue Year 1 Year 2 Year 3 Year 4 Year 5 Range Ball Sales $85,800 $87,100 $88,400 $89,700 $91,000 Additional Tech. Bay Sales 18,000 18,300 18,600 18,900 19,200 Total Revenue $103,800 $105,400 $107,000 $108,600 $110,200 Operating Expenses Personnel $30,000 $30,800 $31,600 $32,400 $33,200 Repairs, Maint. & Suppl. 10,000 10,300 10,600 10,900 11,200 Utilities, Admin., Ins., Mkg. etc. 15,000 15,400 15,800 16,200 16,600 Total Operating Expense $55,000 $56,500 $58,000 $59,500 $61,000 Net Operating Income $48,800 $48,900 $49,000 $49,100 $49,200 Annual Replacement Reserve $10,000 $10,300 $10,600 $10,900 $11,200 Net Income bef. Debt (EBITDA) $38,800 $38,600 $38,400 $38,200 $38,000 Debt Service $157,500 $157,500 $157,500 $157,500 $157,500 Net Income after Debt ($118,700) ($118,900) ($119,100) ($119,300) ($119,500) Cash Flow Results (13-Station Outdoor Range) This pro forma shows that if the OHGC driving range facility is developed without a 2-level structure of any kind, the resulting income derived from the small traditional golf driving range will not be enough to cover all expenses and debt service. The debt service will still be high, even without the structures, due to site issues, the most important of which are the need for netting and clearing foliage and rocks, both still required with a traditional driving range. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 39

47 SUMMARY AND NGF RECOMMENDATIONS In summary, NGF Consulting believes that there is clear and demonstrated potential market support for a new driving range addition at OHGC, and that if developed, this new range will generate strong annual revenues. However, our review also shows that the site selected for this development poses challenges, ultimately resulting in a total project cost that will be close to $3.0 million, which is much higher than is typical for a comparable range addition on a more suitable site. Given the high cost of development, the City and OHPA will find that while total revenue will be strong, the net income available to cover annual debt service will likely be within 15% to 20% of the annual debt service. This will mean that the City s economic interest in the facility will continue to be at risk and could be affected by uncontrollable factors such as road construction, economic changes and weather. Financial Summary The results of the NGF review show that if a full lighted 36-bay golf range facility can be properly added to the selected site, and developed fully as proposed in the OHPA Master Plan (with both Phase I and Phase II completed), the new range is expected to add $464,000 to $495,000 in total direct range ball sales revenue. Considering all direct expenses estimated for the new facility, including reserves for replacement, the net income available to retire debt service (EBITDA) is projected to be around $285,000 to $295,000. This amount should be sufficient to safely cover the City-estimated $248,300 annual fixed debt service for the range (details in the body of the report) with approximately 15% coverage. This assumes the inclusion of lights for night use and NGF has projected total revenue to be as much as 25% less on a driving range facility without lights at the Oak Hills Park location. If the City and OHPA were to opt for a smaller driving range structure, or even a much smaller single-level grass range with no structure, the estimated revenue would fall considerably in both scenarios, likely short of what would be required to retire development debt. NGF has estimated total revenue on a 26-bay range facility (with 2-level structure) to be $335,000 to $340,000 and on a 13-station grass range (un-covered, un-heated, no lights) to be around $104,000 to $110,000 per year. The table below summarizes the estimated performance in each scenario: Range Size Oak Hills Park GC Driving Range Addition Summary of NGF Projections (Year 1) 36-Bay w Lights 36-Bay w/o Lights 26-Bay w Lights 13-Bay Uncovered Total Development Cost* $2,964,000 $2,964,000 $2,739,000 $1,880,000 Debt Service $248,300 $248,300 $229,400 $157,500 Revenue / Bay $12,900 $9,675 $14,200 $8,000 Utilization 34.00% 26.00% 37.50% 22.5% Revenue $464,400 $348,300 $369,600 $103,800 Direct Op Expense $150,000 $142,500 $135,000 $55,000 Capital Replacement Reserves $30,000 $30,000 $25,000 $10,000 Net Operating Income $284,400 $175,800 $234,600 $48,800 Dollar Coverage of Debt $36,100 ($72,500) $5,200 ($108,700) Percent of Coverage Debt 14.5% -29.2% 2.3% -69.0% *Figure is rounded and includes all associated fees and contingency National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 40

48 NGF Recommendations Based on our review of the OHPA Master Plan proposal, the area market, the selected site and summary of estimated performance, the NGF offers the following recommendations to the City of Norwalk and the OHPA: Undertake a comprehensive engineering study to determine the exact structure size that can be fit into the selected OHGC range site and meet basic golf industry safety and ease-of-play standards. This study should also address the issue of site clearing and preparation work, detailing the extent of, and cost of, clearing the range site from foliage and rock (both outcropped and sub-surface). Proceed with the development only if the proposed full 36-bay driving range structure can fit into the selected site properly, lights can be included, and the total development cost can be kept below $3.0 million after all direct construction, fees and contingency costs. If the range is developed, the City and OHPA will need to immediately adopt a program of aggressive promotion and marketing, working to be sure and generate maximum exposure of the new facility to golfers in Norwalk and nearby markets. This should include a grand opening celebration and promotion. Make the customer experience of paying for and attaining practice balls seamless by providing an automated ball dispenser that accepts prepaid swipe cards, as well as credit and debit cards (no cash or tokens). Enhance the golfer experience and allow them to work on distance control by integrating target greens at various distances, and perhaps even precision pitching targets between 40 yards and 100 yards from the tee. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 41

49 LIMITING CONDITIONS The income estimates presented by NGF Consulting have been prepared based on existing and projected market conditions, the quality of the subject OHPA range facility and the intended segment of the golf market toward which it is oriented. Particular focus was paid to the reality of golf range supply in the immediate local market where several commercial golf driving ranges are operating successfully, and with substantial income (which has been documented). Proper uses of these estimates include: Establishing reasonable parameters for economic performance of the new driving range addition Determining an appropriate level of debt that the new driving range can comfortably support under OHPA operation and City of Norwalk financing terms Establishing the basis for financing determinations Providing guidelines for development cost determinations NGF Consulting is confident that our financial projections can be achieved at the subject facility. From a practical standpoint, those managing the facility will need to respond to variable market conditions as well as unforeseen maintenance needs. Due to the fact that these conditions are more likely to change over time, NGF has limited its projections to a five-year period. Nevertheless, we are confident that the facility will be able to continue to achieve similar results beyond the next five years of operation. Market Share Conclusions When considering projected market share, it is important to realize that the total activity and revenue from a new driving range addition during the first years after development may be lower than the market opportunity appears to suggest. It is typical for an existing public golf facility to achieve only a portion of its total potential in the initial years after an upgrade or amenity addition, even when market demand appears strong. Our estimates of performance for the new OHGC driving range / golf learning center could change should the following conditions occur: Stronger Performance Future range closings Faster population growth than projected Positive regional publicity Lack of loyalty to existing ranges Unforeseen surge in golf interest Excellent yearly weather conditions Weaker Performance New range openings Incorrect price levels Poor customer service Low quality facility Regional economic recession Poor yearly weather conditions It is important to measure a newly developed range addition s likely performance in such a way as to help the City make financial decisions based on realistic expectations. It is obviously possible that either more or fewer range baskets can be sold. We note that our projections for future performance of the new range anticipate strong market acceptance from the very early stages of the new addition. National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 42

50 Appendices A: Golf Course Life Cycle B: Architect s Rendering National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 43

51 APPENDIX A GOLF COURSE LIFE CYCLE National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 44

52 APPENDIX B ARCHITECT S RENDERING National Golf Foundation Consulting, Inc. Oak Hills Park Golf Course Driving Range Feasibility 45