Riverside Park Golf Course Three-Year Business Plan December 2017

Transcription

1 Riverside Park Golf Course Three-Year Business Plan December P age

2 TABLE OF CONTENTS EXECUTIVE SUMMARY 3 COMPANY SUMMARY 7 PRODUCTS AND SERVICES 10 MARKET ANALYSIS SUMMARY 11 MARKET SEGMENTATION 12 MANAGEMENT SUMMARY 16 FINANCIAL PLAN 18 CAPITAL IMPROVEMENT PROGRAM 25 EXHIBIT A GOLF COURSE OPERATING AND MAINTENANCE FORM 26 EXHIBIT B GOLF COURSE RATES 27 2 P age

3 Executive Summary Riverside Park Golf Course (RGC), the only public municipal golf course located in Victoria County (there are two private golf courses - Victoria Country Golf Club and Colony Creek Golf Club), is designed as a 27-hole course but only 18 holes are currently being played. RGC is located within Riverside Park, a six-hundred plus acre park system along the Guadalupe River; the course layout has tree-lined fairways with abundant local wildlife and plays to a par 72 with a maximum yardage of 6,492. The greens are Tifdwarf-Bermuda with Tifway 419 Bermuda fairways; currently, there is no driving range but there is adequate space to develop one. RGC structures include maintenance, equipment and cart buildings, club house / pro-shop, and various private-cart shed storage facilities. The nearest public golf courses, located within miles from Victoria County, are in Dewitt County, Calhoun County, Goliad County, and Jackson County; all of which are nine-hole golf courses. RGC, for the past 60 years, has been managed by a non-profit group, Victoria Park Improvement Association (VPIA), which was established in the 1950 s. VPIA had a long-term golf management lease agreement with the City of Victoria (City) to manage the course for public play; however, in June 2017, VPIA was not able to continue its lease agreement obligations, due to financial constraints/issues. During the interim, the City temporarily closed RGC in order to improve the course grass; implement various golf course maintenance projects; and, develop and implement a Golf Course Management Request-for-Proposal (RFP) process, with the goal of outsourcing RGC s operations with a start date of January After evaluating all the Golf Course Management RFP s, the City decided, with Council s approval, to manage RGC in house because of the potential financial benefits derived from the RFP financial analysis and having capable City staff to manage the golf course operations. The purpose of the three-year business plan is to provide an economic roadmap for the successful operation of the RGC. The plan s objectives included herein are achievable, and their benefits will provide recreational activity to our citizens and visitors while protecting the open space they so value. The plan will address very measurable and precise short-term goals/objectives that monitor progress and failure, with quick response to the trends that evolve. Mission The mission of Riverside Park Golf Course is to provide an enjoyable, well-conditioned course to complement Riverside Park and enrich the recreational opportunities available to the community. Vision Deliver exceptional customer service by meeting and exceeding expectations at all levels. Provide competitively priced golf to residents and visitors. Maintain and operate the golf course with enhanced conditions and excellent playability. Use best practices and innovative technology to improve the golf experience for all customers. Objectives The Riverside Park Golf Course objectives for the first three years of operation consist of the following: Marketing Objectives: Within the first-two years of operations, a market segmentation analysis study will be performed to refine and update the initial assumption of RGC s customer base. 3 P age

4 Strategy: Utilizing the Point of Sales (POS) system allowances for customer data collection (phone, address, gender, age, s, rounds played, etc..) and options to join an list, we can modify our strategies to fit a more defined and known customer base. Implement new, creative marketing and advertising with the right media and message to increase participation and remain competitive in the market place. Strategy: Capitalizing on the continued growth of smartphones and social media we can , post, and inform customers using several different avenues. In the same regard, continually updating our website with current information allows for constant communication with our customers. Hosting local high school and college teams for practice will provide direct communication with coaches, thus leading to potential events. Establish/develop communication plan internally to develop consistency in how the golf course is operated, managed, and maintained. Strategy: Through standard operating procedures and training we ll provide an overall positive experience that customers will share through various outlets. In addition to everyday interaction, staff will be trained to upsell merchandise, mention upcoming events or course maintenance, and inquire about customer experiences. Internally sharing this information through daily meetings and plans of action will keep all staff categories up to date with their performance and the overall view of the facility. Develop and maintain a competitive market analysis study of facilities in the general area addressing rate structures, golf programs being offered, and course conditions. Strategy: Develop and maintain professional relationships with the individuals running the local courses to determined local programs being offered. Establish a data base of golf courses within 60 miles to determine current fees and programs. Develop and maintain a survey to obtain information on the desired golf experience. Strategy: Provide an available survey through the course website that is periodically updated and submissions immediately collected. These reviews facilitate addressing problems in a timely manner. Develop methods to accurately collect customer information at point of sale (POS) in a customer friendly manner. Strategy: Create simple requirements for reservations that utilize the POS system allowances for customer data collection (phone, address, gender, age, s, etc.). As each customer checks in, request additional information which will allow the customer to receive notice of future promotions, course updates, and hosted events. Management Objectives: Assemble an experienced and effective staff (clubhouse, attendees, turf-maintenance). Strategy: Offer job postings that are specific in qualifications and duties to provide a quality list of candidates. Review applications and meet with the applicants to understand more about their experience and interest in the position. Provide basic training to perform job functions, but continue training to broaden knowledge of the operation and items being sold. 4 P age

5 Clubhouse and Course Maintenance Program. Strategy: Conduct weekly meetings to discuss plans of action for all areas, with monthly walk thru and reviews performed by the Parks and Recreation Director, Superintendent, and Head Golf Professional to determine success and items that need to be addressed. Strategy: Utilize course operation and maintenance rating summary (See Exhibit A Golf Course Operating and Maintenance Form) to assess course conditions. Apply this summary to help develop maintenance strategies to achieve and maintain an acceptable rating. Golf Cart and Mowing Equipment Maintenance Program. Strategy: Hire qualified mechanic to be responsible for equipment maintenance and repair program. Develop a weekly schedule of maintenance agreed upon between the Superintendent and mechanic to address all equipment. Providing flex time for items that are high priority and monthly reviews to establish a priority list. Establish/develop communication internally to develop consistency in how the golf course is operated, managed, and maintained. Strategy: Daily communication beginning with pre-shift meetings that express plans of action and items to be completed. Communication between staff is enhanced with the use of 2-way radios for team members on duty, making issues known as soon as possible. Implement innovative technology to simplify the golf experience for customers. Strategy: Utilize a reputable golf software company platform for point of sale and online tee time reservation, whereby it would allow you to effectively manage the golf course operations (tee time utilization, sales, customer database, food & beverage management, inventory management, financial reports). Develop and implement an Operating Business Calendar with staffing hours. Strategy: This will be a work in progress for the first two years to determine staffing needs and customer service performance regarding staffing levels. General layout of this calendar begins with peak playing seasons from March through June and September through November followed by slower playing seasons from December through February and July through August. Financial Objectives: Develop a fiscally responsible pricing plan that creates a sustainable funding mechanism to fund operating expenses, promotes revenue and working capital growth. Strategy: Develop a competitive average green/cart fee per round; and, assume future minor growth in customer base. Strategy: Develop a competitive average green/cart fee for senior play; and, assume future minor growth in customer base. Strategy: Develop an annual fixed revenue cash-flow stream from (1) cart shed rentals with limited number of cart shed rentals for the first year and assume minor increase in the future and (2) annual golf-pass programs with limited number of annual golf-passes for the first year of operations and assume minor increase in the future. Strategy: Establish and maintain an acceptable marketable level of merchandise and food & beverage items with competitive pricing and with minor growth adjustment due to an increase in customer base. 5 P age

6 Strategy: During the first year of operations, an internal facility usage study will be implemented to address underutilized areas of the tee sheet; a special daily fee could be developed to mitigate underutilized tee times. Establish a minimum reserve working capital balance (cash flow reserve) to address possible decline in revenue receipts during the winter months; and, to create a contingency reserve. Strategy: The initial start-up cash will come from the General Fund and other City Funds to fund various clubhouse, course maintenance improvements and to establish a minimum five-month operating working capital reserve. Develop and maintain a golf course capital improvement program to revitalize the golf course and retain/attract loyal local customers; no debt will be used to fund capital improvement projects. Strategy: Identify and develop a list of capital improvement projects with estimated cost; and, develop a high-level five-year capital improvement financial plan. Strategy: Implement a Capital Surcharge Fee by applying a $1 per round fee to establish a capital reserve fund to fund future capital improvement projects. Strategy: Golf carts and mowing equipment will be leased with a five-year term leasing would give RGC more flexibility upfront financial flexibility and the flexibility to upgrade equipment after a few years; and, spread payments over several budgets. Establish policy to manage RGC s operating and maintenance cost. Strategy: Use the City s purchasing policy to purchase goods and services at the lowest possible cost; and, leverage other City department resources and experience to reduce operating cost. 6 P age

7 Company Summary City of Victoria is the owner of Riverside Park Golf Course (RGC) facility. Victoria is located within Victoria County and is the heart of the Golden Crescent of South Texas, equidistant from Austin, Houston, San Antonio and Corpus Christi. This Coastal Plains region of Texas is an area renowned for hunting, fishing and birding. With major highways 77, 59, and 87 all intersecting in Victoria and with a prime position along the NAFTA Corridor, Victoria is known as "The Crossroads of South Texas". With a diverse population of 67,670 (Victoria County 92,767) and encompassing an area of approximately 37 square miles (Victoria County 882 sq. miles), Victoria is a cultural, historical, agricultural, medical, entertainment, educational and economic hub for the area, and is the largest city in the nearly 175,000 population seven county region. Boasting a retail trade area of more than 200,000 shoppers, retails sales in the City are at $1.83 billion and traffic counts indicate more than 125,000 drivers are on the road in Victoria on any given day. Just like Texas, Victoria s economy is experiencing a slowdown; the downturn in energy, among other economic issues, has created headwinds. Victoria s oil and natural gas industry growth (i.e., Eagle Ford Shale) has declined/contracted over the past few years due to lower oil/gas prices. Despite these challenges, Victoria s economy is resilient and continues to grow, but at a much slower pace, compared to previous years. The City of Victoria utilizes a Council-Manager form of government. The elected body is made up of a Mayor, who is elected at large, and six Council Members elected by district. The City Manager, appointed by the City Council, is responsible for the management of the City employees and administration of all City affairs. Through her staff, the City Manager implements policies established by the Council. The City enjoys a AA General Obligation bond rating and a AA- Utility Revenue bond rating from Standard and Poor s. Listed below is a fiveyear summary of the City s operating budget. Fund Type FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Governmental Funds $ 53,927,672 $ 54,113,369 $ 57,169,112 $ 53,110,742 $ 52,204,948 Enterprise Funds 26,727,371 21,861,662 24,936,621 25,752,600 26,953,396 Internal Services Funds 16,319,653 14,322,062 16,145,523 13,805,104 14,530,410 Debt Service Funds 17,515,061 19,607,841 19,812,459 19,756,039 20,702,106 Capital Improvement Funds 35,538,497 45,320,175 11,752,771 6,269,376 16,855,630 Total $150,028,254 $155,225,109 $129,816,486 $118,693,861 $131,246,490 RGC operations are classified as an Enterprise Fund, a fund that provides goods or services to the public for a fee that makes the entity self-supporting; and, RGC makes up 3.3 percent of the 2018 total Enterprise Funds budget or 0.7 percent of the 2018 total City budget. The City has no outstanding short or long-term debt associated to the operations of RGC. Background & History The RGC is located within the City s premier regional park, Riverside Park. The Park contains 660 acres which includes the approximate 200 acres of Riverside Park Golf Course. Riverside Park is nestled along four miles of the Guadalupe River frontage and includes activities such as: trails, disc golf, baseball, sand volleyball, paddling trail access, boat ramp and the Texas Zoo. RGC is the only public municipal golf course located in Victoria County. The nearest public golf courses located within miles from Victoria County are in Dewitt County, Calhoun County, Goliad County, and Jackson County; all of which are nine-hole golf courses. 7 P age

8 RGC is designed with 27-holes, with 18 most recently being played. The prior golf-management company (Victoria Park Improvement Association) closed 9 holes in late 2016 to reduce operating expense; however, the City plans to revitalize the closed 9 holes into a golf range and chipping area and a six-hole practice loop golf course, whereby novices/junior golfers can practice or play. The course layout has tree lined fairways with abundant local wildlife and plays to a par 72 with a maximum yardage of 6,492; greens are Tifdwarf Bermuda with Tifway 419 Bermuda fairways. RGC for the past 60 years has been managed by a non-profit group, Victoria Park Improvement Association (VPIA) established in the 1950 s. VPIA had a long-term lease with the City of Victoria to manage the golf course for public play. VPIA was responsible for all maintenance, development (including capital), and operation of the course and clubhouse. Prior to 2008, VPIA s annual lease payment was zero dollars ($0) per year; however, starting in 2008, VPIA s lease agreement was amended and its annual lease payment was increased to $2,968 per month, due to the City constructing new cart paths for VPIA. In June 2017, VPIA terminated the lease agreement with the City, due to financial constraints/issues. VPIA liquidated all its personal assets to pay outstanding liabilities; all fixed asset structures, i.e. land, building, remained with the City. During the interim, the City temporarily closed RGC in order to improve the course grasses; implement various maintenance/repair projects throughout the course and club house; acquire golf-consultant services; acquire/lease mowing and golf-cart equipment; develop/implement a point-of-sale system; hire a Head Golf Professional, and other staff; and, develop and implement a Golf Course Management Request-for-Proposal (RFP) process, with the goal of outsourcing RGC operations January After evaluating all the Golf Course Management RFP s, the City decided, with Council s approval, to manage RGC in house because of the potential financial benefits derived from the RFP financial analysis and having capable City staff to manage the golf course operations. Start-up Summary City of Victoria will invest $582,300 to implement various golf course and club house maintenance projects, prior to opening, and to establish a minimum five-month operating working capital budget reserve. The initial start-up funding, $582,300, will be provided by the General Fund and other City Funds of which $442,000 was transferred to the Riverside Park Golf Course Fund in July 2017 ( ) and $140,300 will be transferred in December 2017 ( ). The following financial tables recap Riverside Park Golf Course Fund operations from projected/actual numbers thru budget. Riverside Park Golf Course Fund - Financial Operating Summary Riverside Park Golf Course: (a) (b) Beginning Working Capital $ - $187,504 $ 385,923 $ 448,867 Revenue $ 4,080 $960,840 $1,148,220 $1,262,646 Expense (w/cogs) 258, ,721 1,085,276 1,111,152 Start-up Cash 442, , Ending Working Capital $187,504 $385,923 (c) $ 448,867 $ 600,361 (a) Projected actuals, as of September 30, 2017; Riverside Park Golf Course temporarily closed period. (b) First year operating budget. (c) Projected ending working capital balance equates to 5.1 months of budgeted expenses. 8 P age

9 Riverside Park Golf Course: Riverside Park Golf Course Fund - Financial Operating Summary (a) (b) Beginning Working Capital $ - $187,504 $ 385,923 $ 448,867 Revenue: Golf Fee $ - $700,600 $ 446,400 $ 527,040 Capital Surcharge Fee - 22,600 27,900 29,970 Shed Rental & Golf/Trail Passes 4,080 38, , ,700 Golf/Cart Passes , ,500 Senior - Golf/Cart Passes , ,700 Merchandise Sales - 51,980 64,170 68,931 Food & Beverages Sales - 146, , ,805 Total Revenue: $ 4,080 $960,840 $1,148,220 $1,262,646 Cost of Goods Sold: - 95, , ,837 Gross Profit: $ 4,080 $865,751 $1,043,176 $1,149,809 Expenses: General & Administration $ - $ 38,383 $ 45,125 $ 48,172 Golf Course Maintenance 77, , , ,109 Golf Pro Shop Expense 181, , , ,034 Total Expenses: $258,576 $807,632 $ 980,232 $998,315 Net Income (Cash Flow): ($254,496) $ 58,119 $ 62,944 $151,494 Transfer from General Fund 442, , Ending Working Capital $187,504 $385,923 (c) $ 448,867 $600,361 (a) - Projected actuals, as of September 30, 2017; Riverside Park Golf Course temporarily closed period. (b) - First year operating budget. (c) - Projected ending working capital balance equates to 5.1 months of budgeted expenses. 9 P age

10 Products and Services The RGC will offer the following services: hole golf course; a. Hours of operations: i. Monday Thursday; 7am - 7pm ii. Friday Sunday; 6:30am 7pm iii. Closing times will adjust to accommodate yearly time change b. Tee sheet operations: i. Monday Thursday; 7:30am first available 6:30pm last available ii. Friday Sunday; 7am first available 6:30pm last available iii. Time will adjust to accommodate yearly time change c. Golf fees range: i. Daily fees will range from $13-$45 per round per person ii. Rates vary based on time of day and day of the week 2. Pro Golf Shop; a. Type of merchandise: i. Apparel, to include outwear; logo and non-logo items ii. Headwear, to include winter hats iii. Golf balls iv. Accessories, to include towels, tees, divot tools, etc. b. Range of retail prices: i. Apparel: $29-$99 ii. Headwear: $12-$39 iii. Golf balls: $3-$59 iv. Accessories: $1-$19 3. Food and Beverages; a. Type of food & beverages: i. Non-Alcoholic beverages ii. Alcoholic beverages, beer iii. Snacks, to include chips, candy, granola, etc. iv. Prepackaged sandwiches v. Tacos purchased at local establishment vi. Local food trucks b. Food & beverage retail price range: i. $1-$8 per individual item ii. Tacos based on cost iii. Local food trucks establish menu pricing and pay a daily usage fee Future Products and Services RGC s initial business plan goal is to redevelop and grow its customer base by providing exemplary customer service and outstanding golf experience, at a competitive price, with the expectation that RGC will become financially stable and grow its capital reserves. By establishing an adequate capital reserve, it will allow RGC the ability to provide funding for future capital improvement projects, which will enhance the customer s golf experience and services. Some of the future capital improvement projects consist of reengineering the Blue green course into a practice facility (i.e. golf range, chipping area, and bunkers) and a six-hole loop golf course; reestablishing all White green courses to playing condition; improve food & beverage amenities; and explore entertainment facilities for kids while parents are practicing. 10 P age

11 Market Analysis Summary City s competitors and average green/cart fee: Local competitors include Colony Creek and surrounding towns. Colony Creek average fee based on 6 rounds of play per month, basic member package and golf cart plan, is $55.83; fees for guests of members is $50 M-T and $60 F-Sun with guest being limited to only four rounds per year. Surrounding towns average $25 per person per round, all of which are 9-hole golf courses. While not a direct market competitor, based on monthly dues and initiation fees, Victoria County Club is considered a competitor for hosting golf tournaments, and additional rounds played by customer. Local economy make-up: 380,000 people within 65-mile radius and 6.2 million people within 120-mile radius. 40 major employers ranging from 100-3,000 employees. Average hourly wages range from $10 - $37.15, based on job field. Income market targeted: Our target market is any person(s) with disposable recreational income in both local and surrounding areas. Victoria County demographic make-up and per-capita-income: County Population 92,467; Golden Crescent Population 198,368 25% of County Population 55+, 50% of County Population % of Golden Crescent Population 55+, 57% of GC Population 35+ Victoria County Household Income $51,758 Victoria County Per Capita Income $25,987 Golden Crescent range of Per Capita Income of $18,716 - $28,210, with average of $23,079 Golden Crescent range of Median Household Income of $37,094-$51,786 with average of $44,355 Victoria County Annual Payroll $1.6B 11 P age

12 Market Segmentation Our customers can be broadly divided into the following groups/players: 1. Adult 2. Seniors (60 yrs. +) 3. Juniors (0-17 yrs.) 4. Visitors Strategy and Implementation Summary Riverside Park Golf Course will aggressively market to seniors, juniors, and adult players; and to the surrounding area known as the Golden Crescent Regional Area. Market Strategy Riverside will be competitive in all local markets for both daily play and annual passes by providing affordable playing options (See Exhibit B Golf Course Rates). Non-senior golfers, green fees can be found as low as $13 and $35, Monday through Friday; and, $45 for weekends prime-time spots; the initial budget assumes an average of $31 per round. Surrounding towns peak times can be slightly cheaper, however there is miles drive time to be considered, and most importantly only 9 holes of play. RGC will be providing limited cart shed rental units for $60 per month or $720 per year; individuals who are renting cart sheds from RGC will be allowed to use their private golf carts but be required to purchase an annual golf/trail pass at an annual initial fee of $1,536 - assuming 5 rounds per month, fee per round equates to $ If the annual rental fee is added to the annual golf/trail fee, the total annual fee would equate to $2,256 assuming 5 rounds per month, the fee per round equates to $37.60; however, if the golfer plays 6 rounds per month, the fee per round equates to $ Non-senior golfers, RGC will be providing limited annual golf/cart pass program, for those individuals who are not renting cart sheds, at an annual initial fee of $1,800 assuming 5 rounds per month, fee per round equates to $30.00; however, if the golfer plays 6 rounds per month, the fee per round equates to $ Senior golfers, RGC will be competitive in all local/regional senior markets for both daily play and annual passes by providing affordable playing options. Regular green fees will be priced as low as $13 and $29, Monday through Friday; and, $45 for weekends prime-time spots. Limited annual golf/cart pass will be available at an initial annual fee of $1,656 assuming 5 rounds per month, the fee per round equates to $27.60; however, if the golfer plays 6 rounds per month, the fee per round equates to $ RGC overall setting within the park is not to be understated, while other courses are found in subdivisions with houses that encroach upon the golf course or in less developed areas of their respective towns, RGC is located within a 600 plus acres park system that has tree lined fairways with abundant local wildlife near the Guadalupe River. RGC will work with local hotels to create enticing stay and play packages for single nights or several day stays; providing an option to visit attractions around the city and enjoy the different aspects the park has to offer. RGC anticipates the pairing of golf outings/tournaments to support local charity fundraisers or enhance established events such as Bootfest. Creating relationships with other local courses to post RGC course information, golf programs and events and tournaments, at their facilities, even as simple as providing contact information or our website, while offering reciprocation of the same items. 12 P age

13 Creating events that include multiple courses over a couple of days or several weeks. This could include a multiple county league, or three-day weekend event, or team vs. team from each respective golf course. When determining monthly schedules, using available information from local courses so as not to run events at the same time or of the same type. Competitive Edge Only public course within Victoria County: The private courses in town can only be accessed by membership or with a member. The more affordable of the fees is $50 Monday through Thursday and $60 Friday through Sunday. Our fees, even at peak times, will only reach $45 and tee times are always available, with no membership required to access the course. Only public course within miles from other public courses, which are 9-hole courses; and, the only 18-hole public golf course within 90 miles. The number of available tee times, carts, apparel, and hard good options will be greater than that of surrounding public courses. The closest public courses are only 9 holes, which forces you to play the same course twice, which limits the number of tee times available as the day progresses, and increases the number of people on a smaller course, creating slower play more often. The overall quality of RGC will far exceed that of the surrounding public options. While putting surfaces have gotten increasingly better at these courses, our overall turf conditions in fairways, rough, and areas surrounding green complexes is unmatched. RGC s ability to host golf outings and events in a larger market with additional hotel and dining options provides more opportunity to gain business. RGC is an established golf course; built in 1945 with over 70 years in existence; the Blue course was added in the 1990 s. RGC Management make-up: Experienced Parks Director with over seven years experience in managing a public golf course; RGC Head Golf Professional has operational and management experience, along with developing golf programs and outings, which was acquired during his employment at the San Antonio Quarry Golf Course as the Head Golf Professional. Other professional experience is available through the City s departments, which provide resources that can only be found in large companies without the cost of each individual profession. The additional help through the Parks department can streamline individual or major projects, leading to quicker completion times and more efficient labor. Sales Strategy Riverside Golf Course sales strategy is to aggressively gain market shares of Victoria County s non-retired residents, retirees, visitors, and surrounding Golden Crescent Regional Area. RGC will use the following pricing strategy: Regular 18 Hole Green/Cart Fee; $13 - $45; based on day of week and time of day, price will vary. Senior Green/Cart Fee; $19 - $29 Monday through Friday; $45 weekdays. 13 P age

14 Junior Golf Fee; $18 - $25 walking; $8 - $11 riding with paid adult. 9 Hole Green/Cart Fee; $13 - $35 based on day of week and time of day. Limited cart shed rental units for $60 per month or $720 per year; individuals who are renting cart sheds from RGC will be allowed to use their private golf carts but be required to purchase an annual golf/trail pass at an annual initial fee of $1,536. Non-senior golfers, limited annual golf/cart pass program, for those individuals who are not renting a cart shed, at an annual initial fee of $1,800. Senior golfers, limited annual golf/cart pass will be available at an initial annual fee of $1,656. Annual Golf-Passes - Unlimited golf Monday through Friday; weekend tee time reservations limited, but walk-in tee times unlimited, weekend tee times cannot be made more than 45 minutes in advance unless approved by Head Golf Professional. Food & Beverages Strategy Options for snacks, non-alcoholic beverages, alcoholic beverages, and cold quick grab selections. Friday through Sunday food truck vendors available and breakfast tacos available from local restaurants. Merchandise Philosophy Our goal is to deliver products of quality and value that represent the game of golf. The apparel collection is established with well-known brands of the industry and supported by others that offer great options at an even better value. The underlying goal is to provide apparel that looks as good off the course as it does on it. Offering a diverse range of vendors and styles affords us an opportunity to outfit our customers with both classic and current options. Sales Forecast Majority of the operating revenue that is generated at the course is in a form of green and cart fees. The strategies for revenue growth over the next three years are going to focus on increasing play/rounds and maximizing revenue for the rounds played (i.e. increase the total number of annual golf passes; drive rounds to underutilized areas of the tee sheet; develop golf-outing programs; develop junior/adult golf player development program). Operating expenses for the golf course are relatively fixed; it costs about the same amount of money to maintain the course for 26,000 rounds as it does for 32,000 rounds. In essence, net profit increases with each round played because the expenses remain relatively fixed. RGC anticipates a large influx of play within the first few months since RGC is the only viable public golf course within Victoria County and surrounding counties; and, because the golf course has been closed for six months. For this reason, it is vital for RGC to create an environment whereby customers enjoy their golf-outing and will return and play. For the first year of operations, RGC budgeted its initial sales at a conservative level, which would represent the level of play experienced by the prior management golf company prior to closing. In the coming years, as the golf and vacation seasons progress, RGC anticipates a conservative increase in play, annual golf passes, merchandise, and food & beverages sales. The following RGC budgetary revenue strategies will be implemented over the first three years of operations, with possible future modification because of prior years operating results: 1 st Year Strategy establish a $31.00 average green/cart fee, in order to fund operating expenses and increase working capital; RGC average green/cart fee will be competitive with other public course (within miles of Victoria County), which are 9-hole golf courses, and private golf courses. Increase number of golf rounds by developing and promoting an environment whereby customers will return and play, i.e. develop loyal customers promote RGC through word of mouth. First year budget assumes a minimum of 34 cart shed rentals with a promotional annual golf/trail pass; merchandise and food & beverages sales are budgeted conservatively sales are influenced by number of budgeted rounds played 14 P age

15 and by various types of average sale prices; cost of goods sold (COGS) per sales type are influenced by various cost and number of rounds; COGS, which include an initial inventory cost of $10K, equates to 47.8 percent of gross merchandise and food & beverages sales (42.8 percent without the initial inventory cost). Lastly, establish a $1.00 capital surcharge fee, per round, to fund future capital improvement projects. 2 nd Year Strategy since the first year of operations consisted of nine-months of play and RGC assumes an increase in its customer base, the budget assumes an increase in the number of golf rounds by 23.5 percent (from 22,600 to 27,900); the average green/cart fee will remain at $31.00; the number of cart shed rentals - golf/trail annual passes assumes an increase of percent (from 34 to 75) with an adjustment to the annual golf/trail pass fee and no cart shed rental fee increase; RGC will be implementing a new golf/cart annual pass program fee for non-cart shed rental players, which will have a maximum start-number of 75 annual passes; RGC will be implementing a new senior golf/cart annual pass program fee for non-cart shed rental players, which will have a maximum start-number of 75 annual passes; drive golf rounds to underutilized areas of the tee sheet; merchandise and food & beverages sales assumes a 23.5 percent increase, due to an increase in golf rounds. 3 rd Year Strategy increase the number of regular golf rounds by 7.4 percent, due to developing golfoutings and junior/adult golf player development programs; assumes a $1.00 increase in average golf fee and program passes, due to possible increase in operating expenses, i.e. personnel cost and chemicals; continue evaluating tee sheet for underutilized play time; merchandise and food & beverage sales assumes a minor increase, due to an increase in golf rounds; the RGC annual pass programs assume no growth in the third year but will continue to evaluate the programs along with cart shed rental program. Riverside Park Golf Course Fund Sales Forecast Riverside Park Golf Course: (a) Total Rounds: 22,600 27,900 29,970 Revenue: Golf Fee $700,600 $ 446,400 $ 527,040 Capital Surcharge Fee 22,600 27,900 29,970 Cart Shed Rental & Golf/Trail Fee Passes 38,760 (b) 169, ,700 Golf/Cart Fee Passes - 135, ,500 Senior - Golf/Cart Fee Passes - 124, ,700 Merchandise Sales 51,980 64,170 68,931 Food & Beverages Sales 146, , ,805 Total Revenue: $960,840 $1,148,220 $1,262,646 Cost of Goods Sold: 95,089 (c) 105,044 (d) 112,837 Gross Profit: $865,751 $1,043,176 $1,149,809 (a) First year operating budget nine months. (b) Revenue fee could change/increase after adjusting initial proposed fees, currently being reviewed. (c) Includes $10K for initial start-up inventory; cost of goods sold w/o initial start-up equates to $85K. (d) Assumes an established inventory. 15 P age

16 Management Summary Riverside Park Golf Course (RGC) will be managed as follows: Director of Parks and Recreation Oversees all aspects of golf course operation Serves as liaison between golf course personnel and City officials Conducts and participates in monthly and quarterly evaluations Head Golf Professional Accountable for tee sheet utilization and overall shop appearance Manages all levels inventory to include purchasing, receiving, pricing, and reporting Manages department in line with budget design Ensures daily reporting and cash handling is accurate and accounted for Creates entries for new annual pass holders and provides reports regarding pass holders Tournament sales and hosting from booking through payment Will obtain and release employees as needed to maintain a high level of customer service, working within budgetary constraints Conducts and participates in monthly and quarterly evaluations Superintendent Personnel Plan Accountable for course appearance and overall performance Manages all levels of planning, development, and maintenance activities Manages department in line with budget design Will obtain and release employees as needed to maintain quality course conditions, working within budgetary constraints Obtain and renew proper certifications regarding pesticides, pest control, weed control, and associated chemical applications. Conducts and participates in monthly and quarterly evaluations The South Texas climate provides the opportunity to play golf year-round, which will encourage RGC to recruit and train full and part-time employees continuously on an as needed basis. The use of a high volume of staff affords the option of schedule flexibility and increased levels of staff for events while meeting budget demands. Personnel is adjusted to accommodate levels of play associated with seasons to sustain a high level of customer service. The minimum personnel needed for the RGC s first year will be: Club House Staff Head Golf Professional/General Manager (1) Golf Shop Attendants (3-4 employees, part-time) Assist with day to day operations of golf shop; tee times, sales, inventory, manage customer service staff Course pace of play and course conditions Serves as team lead in absence of Head Golf Professional 16 P age

17 Customer Service Staff (6-9 employees, part-time) Assists customers with golf carts before and after playing Cleans, fixes, and stores golf carts according to operating procedures Beverage Cart Attendants (2-3 employees, part-time) Serves F&B options to customers on the golf course Cash and credit card handling for payments of items purchased Liaison for the golf shop staff to help understand pace of play Maintenance Team Superintendent (1) Crew Leader (1) Serves as team leader in absence of Superintendent Directs, instructs, and assists team in completing daily assignments Ensures proper water schedule is followed and adjusts as needed per the Superintendent Helps adjust mowing heights for equipment Mechanic (1) Creates and acts upon maintenance program for all equipment to include golf cart fleet Sharpens reels and blades to ensure proper cut from mowing equipment Adjust mowing heights for all pieces of equipment If needed, can be used as equipment operator Equipment Operators (6) Operates turf equipment as assigned Reports issues of equipment to Superintendent Assists in watering or irrigation issues as needed Assists in other course projects as assigned Equipment Operators (2, part-time) Operates turf equipment as assigned Reports issues of equipment to Superintendent Assists in watering or irrigation issues as needed Assists in other course projects as assigned 17 P age

18 Financial Plan The financial plan brings together all the information previously discussed to provide a good presentation of RGC projected financial results; this will be shown through a three-year financial summary of revenues and expenses - with assumptions, breakeven analysis, and pro forma financial statement budgets. RGC anticipates fluctuating sales and expense for the first year until RGC becomes established and in the minds of our target market. As our existence and reputation becomes known, RGC anticipates steady growth in sales, with minor expense growth. RGC s financial goal for the first three years of operations is to grow revenues and working capital reserves in order to become financially stable; and, expand RGC operations to provide our customers with other golf services such as expanded food services, golf practice range and chipping area, and a six-hole-loop course for player development or other types of golf programs. Over the next three years, RGC working capital is projected to increase from $187,504 to $600,361, which includes transfer of $140,300 from the General Fund and other City Funds. Revenue and Expense Summary Majority of the operating revenue that is generated at the course is in the form of green and cart fees; the strategies for revenue growth over the next three years will focus on increasing play/rounds and maximizing revenue for the rounds played. As financial data is being accumulated, RGC will adjust its budget accordingly. The following table reflects three-year projected revenue and gross profit, with assumptions listed below. Riverside Park Golf Course: Total Rounds: 22,600 27,900 29,970 Revenue: Golf Fee $700,600 $ 446,400 $ 527,040 Capital Surcharge Fee 22,600 27,900 29,970 Cart Shed Rental & Golf/Trail Fee Passes 38, , ,700 Golf/Cart Fee Passes - 135, ,500 Senior - Golf/Cart Fee Passes - 124, ,700 Merchandise Sales 51,980 64,170 68,931 Food & Beverages Sales 146, , ,805 Total Revenue: $960,840 $1,148,220 $1,262,646 Cost of Goods Sold: 95, , ,837 Gross Profit: $865,751 $1,043,176 $1,149,809 1 st Year Revenue Strategy: Rounds - the number of rounds are projected conservatively; VPIA s number of rounds, prior to closing, were higher. Golf Fee an average green/cart fee of $31.00 was used in developing golf fee revenue, which will provide adequate funding to fund operating expenses and increase working capital. Capital Surcharge Fee - a $1.00 capital surcharge fee per round is being implemented to fund future capital improvement projects. 18 P age

19 Cart Shed Rental & Golf/Trail Fee Passes - the first year of operations assumes 34 golf-cart sheds being rented for $60/month along with a initial golf/trail pass program for $600/year - after the budget was developed, staff decided to reevaluate the annual golf/trail pass program fee to make sure it is equitable to other types of golf pass programs being proposed; the proposed revenue budget could increase once the revised cart shed rental golf/trail fee annual program is implemented staff expects to implement the revised program in January Note: individuals who are renting golf-cart sheds from RGC will be allowed to use their private golf carts, but be required to purchase an annual golf/trail pass (See 2 nd Year Revenue Strategy). Golf/Cart Fee Passes - is a program whereby the individual will pay an annual fee for the use of the golf course and cart. The budget assumes no program revenue; however, after the budget was developed, staff developed a golf/cart fee pass program, which will be implemented during the first-year operations. This program is being marketed to those players who do not use the RGC cart shed rental program (See 2 nd Year Revenue Strategy). Senior Golf/Cart Fee Passes - is a program whereby the individual will pay an annual fee for the use of the golf course and cart. The budget assumes no program revenue; however, after the budget was developed, staff developed a senior - golf/cart fee pass program, which will be implemented during the first-year operations. This program is being marketed to those players who do not use the RGC cart shed rental program (See 2 nd Year Revenue Strategy). Merchandise and Food & Beverages Sales / Cost of Goods Sold - were budgeted conservatively; sales are influenced by number of budgeted rounds played and by various types of average sales prices; cost of goods sold (COGS) per sales type are influenced by various cost and number of rounds; COGS, which include an initial inventory cost of $10K, equates to 47.8 percent of gross merchandise and food & beverages sales (42.8 percent without the initial inventory cost). As financial data is accumulated on merchandise and food & beverages sales, RGC will adjust its budget accordingly. 2 nd Year Revenue Strategy: Rounds & Golf Fee - since the first-year of operations consisted of nine-months of play and RGC assumes an increase in its customer base, the budget assumes an increase in the number of golf rounds of 23.5 percent or 5,300; the average green/cart fee will remain at $ Cart Shed Rental & Golf/Trail Fee Passes - the number of cart shed rentals & golf/trail annual pass program assumes an increase of percent (from 34 to a maximum of 75). The cart shed rental fee will remain at $60/month or $720/year; and, the golf/trail annual pass fee will be set at $1,536/year. Note: in developing the budget, an average golf/trail fee of $25.60 per round was assumed, which equates to 60 rounds per year or 5 rounds per month; however, a golfer who plays an average of 72 rounds per year or 6 rounds per month will average a golf/trail fee of $ Golf/Cart Fee Passes - the golf/cart pass program assumes a maximum of 75 passes with an annual fee of $1,800 per pass. Note: in developing the budget, an average golf/cart fee of $30.00 per round was assumed, which equates to 60 rounds per year or 5 rounds per month; however, a golfer who plays an average of 72 rounds per year or 6 rounds per month will average a golf/cart fee of $ Senior Golf/Cart Fee Passes - the senior - golf/cart pass program assumes a maximum of 75 passes with an annual fee of $1,656 per pass. Note: in developing the budget, an average golf/cart fee of $27.60 per round was assumed, which equates to 60 rounds per year or 5 rounds per month; however, a golfer who plays an average of 72 rounds per year or 6 rounds per month will average a golf/cart fee of $ P age

20 Merchandise and Food & Beverages Sales - assumes a 23.5 percent or $46,640 increase, due to an increase in rounds; Cost of Goods Sold - assumes a 23.5 percent increase, without the initial first-year startup inventory cost of $10,000; or, 10.5 percent increase with the initial startup inventory cost of $10, rd Year Revenue Strategy: Rounds & Golf Fee - the number of regular play assumes an increase of 7.4 percent or 2,070 rounds, due to developing golf-outings, junior/adult golf player development programs; and, the budget assumes $1.00 increase in the average green/cart fee, from $31.00 to $ Chart Shed Rental & Golf/Trail Fee Passes - the number of cart shed rentals & golf/trail annual pass program assume no increase; however, the budget assumes an increase in the golf/trail annual pass program fee of $60.00/year, from $1,536/year to $1,596/year. Golf/Cart Fee Passes - the number of golf/cart passes assume no increase; however, the budget assumes an increase in the golf/cart pass program fee of $60.00/year, from $1,800/year to $1,860/year. Senior - Golf/Cart Fee Passes - the number of senior - golf/cart passes assume no increase; however, the budget assumes an increase in the senior - golf/cart pass program fee of $60.00/year, from $1,656/year to $1,716/year. Merchandise and Food & Beverages Sales / Cost of Goods Sold - assumes an increase of 7.4 percent or $18,216 and $7,793 increase, respectively, due to an increase in rounds. The expenses for RGC are relatively fixed; it costs about the same amount of money to maintain the course for 26,000 rounds as it does for 32,000 rounds. However, as with any other type of business, some of the RGC fixed expenses could vary from time to time (increase or decrease). RGC major fixed cost consists of personnel, chemical, power & light, fuel, and golf cart & mowing equipment lease expense; these five fixed-cost makes-up 85.2 percent of the budgeted expenses, 86.6 percent of the budgeted expenses, and 86.5 percent of the budgeted expenses. As financial data is being accumulated, RGC will adjust its budget accordingly. The following table reflects three-years of projected expenses, with assumptions listed below Riverside Park Golf Course: Expenses: Total General & Administration $ 38,383 $ 45,125 $ 48,172 Golf Course Operations: Personnel 301, , ,964 Chemicals 50,000 50,000 54,000 Fuel 14,400 14,400 14,760 Mowing Equipment Lease 70,119 93,492 93,492 Light & Power 51,000 51,000 51,000 Other 54,595 55,533 55,893 Total Golf Course Operations: $541,998 $666,937 $680,109 Golf Club House: Personnel $152, , ,610 Golf Cart Lease 38,777 51,704 51,704 Light & Power 9,000 9,000 9,000 Other 26,950 30,720 30,720 Total Golf Club House Operations: $227,251 $268,170 $270,034 Total Expenses: $807,632 $980,232 $998, P age

21 General & Administration (G & A) consists of the following expenses: armored car services, merchant credit card services, mileage expense, insurance, software maintenance, and merchandise / food & beverages sales & use tax fees G & A budget assumes nine months of operating expense except for insurance and software maintenance expense which were budgeted for twelve months G & A budget assumes twelve months of operating expense G & A budget assumes a building-insurance increase of 3 percent. Personnel Cost: assumes nine months of budgeted operating expense except for the Golf Professional Manager position which is budgeted for twelve months assumes twelve months of budgeted operating expense with no pay increase assumes a 2.5 percent pay increase. Chemicals: assumes twelve months of budgeted operating expense assumes no cost increase assumes an 8 percent cost increase. Fuel: assumes twelve months of budgeted operating expense assumes no cost increase assumes a 2.5 percent cost increase. Mowing Equipment and Golf Cart Lease In developing the RGC budget, the first financial strategy question is whether RGC should purchase or lease golf course equipment. If the golf course equipment is purchased outright then it is a done deal but it is also a large capital expenditure. Leasing would give RGC more flexibility upfront - financial flexibility and the flexibility to know that you can upgrade the equipment after a few years. Leasing can allow RGC to acquire more and better equipment and spread payments over several budget periods, while keeping the course and clubhouse running at their best and providing a better experience for players. Leasing also creates a natural timeline for golf course equipment replacement (range of 5 to 8 years); you simply replace as needed at the end of a lease term. Mowing equipment lease cost for assumes nine months of budgeted operating expense; the remaining three-months are included within carryover encumbrances and accounted for within RGC s beginning working capital balance. Golf cart lease cost for assumes nine months of budgeted operating expense contract lease will be effective January Mowing equipment and golf cart lease cost for s and assumes twelve months of budgeted operating expense, per lease contracts. Light & Power - s thru assume twelve months of budgeted operating expense; the cost per kwh is fixed (per TCAP s five-year energy contract). Other other expenses basically consist of office expense, supplies, telephone expense, repair & maintenance, seeds, sand, golf cart and mowing insurance, etc. Insurance (golf cart and mowers) and seeds budget expense assumes an increase of 3 percent in P age