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Home My WebLink AboutFS 2013-04-02 Item 2 - Review - Golf Course Fund Financial AnalysisTO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL Mayor Haggerton Finance & Safety Committee FROM: Peggy McCarthy, Finance Director DATE: March 25, 2013 SUBJECT: Golf Course Fund Financial Analysis ISSUE Review the financial status of the Golf Course fund. BACKGROUND At the budget workshop on October 11, 2012, Council expressed their desire to have the golf course reviewed in 2013 for: 1. Financial condition in general 2. Reserve policy compliance 3. General Fund subsidy, and 4. Operating improvements and alternatives A discussion of these topics follows. DISCUSSION General Financial Condition: The 2012 operating results and updated 6 year financial plan show improvements in the financial health of the Golf Course Fund from prior year results and from what was presented in the 2013-2018 Financial Planning Model and Capital Improvement Program document. Due to deliberate cost containment measures in 2012 and other factors, the golf course experienced more favorable operating results in 2012 than in 2011. An Updated Attachment G is attached to this memorandum and shows actual results for 2011 and 2012 and projected results for 2013-2018. The projected results have been revised to reflect a decrease in the indirect cost allocation which is explained later in this memorandum. In 2012' the fund realized a $263K increase (line 16) bringing the year-end fund balance to $404K, or 24% of total revenues. Operating revenue (line 6) increased 11% and operating and maintenance costs (line 9) declined 1096. The fund received a net General Fund subsidy of $151K comprised of a $225K General Fund transfer in to the Golf Course Fund (line 7) less the $59K admissions tax (line 10\ and $15K indirect cost allocation paid by the Golf Course Fund to the General Fund (line 11). The indirect cost allocation model was reviewed and certain corrections and refinements in allocation factors were made resulting in a $13K reduction to the 2013 allocation. The reduction in 2013 reduces the allocations for 2014'2018 as the allocations for these years are based on the 2013 allocation amount then increased by 2.4% for 2014 and 3% for 2015 to 2018. The changes in factors and the resulting reduction in the 2013 indirect cost allocation are detailed below: 2 INFORMATIONAL MEMO 1 Reduce FTE count by .25% to eliminate 25% of Park and Rec Director FTE from golf course allocation = $925. 2. Reduce number of computers by 2.25 for 2 computers used by the Parks Department staff and .25 computer allocation for the Park and Rec Director = $7,682. 3. Reduce the square footage allocation by appropriately assigning the Foster Park restroom square footage to the Parks Department and eliminating Foster Golf Course restroom square footage as this is maintained by Golf Course staff and not Public Works facility personnel = $4,276. Reserve Policy Compliance: The Reserve Policy requires a reservation or set aside of ending fund balance equal to 20% of the prior year operating revenues. As demonstrated by line 19 of the Updated Attachment G, the reserve requirements are met in all years of the plan. General Fund Subsidy: The projected transfer into the Golf Course fund over the 6-ye8r planning period ranges from a high of $600 thousand in year 2014 to a low of $283 thousand in year 2018. Admissions tax and the indirect cost allocation paid by the Golf Course fund to the General fund ranges from $54K to $62K and from $179K to $206K respectively. The components of the net general fund subsidy calculation are shown below. Net General Fund Subsidy 2013 2014 2015 2016 2017 2018 General Fund subsidy + $400 $ 600 $ 323 $ 329 $ 316 $ 283 Admissions tax 54 56 56 59 60 62 Indirect cost allocation 179 183 189 195 200 206 Net General Fund Subsidy $167 $ 361 $ 78 $ 75 56 $ 15 The net General Fund subsidy is also shown on line 22 of the Updated Attachment G. Operating Improvements: The Parks & Recreation Director, Rick EtiU, will present information on operating improvements and alternatives at a Finance & Safety Committee meeting in the 3rd quarter of the year. RECOMMENDATION Information only. ATTACHMENTS Updated Attachment G Attachment G — as published in the 2013-2018 Capital Improvement Program W:\2013 Info Memos-Co nmNnhmemo Golf Cours FINAL.docx 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 UPDATED ATTACHMENT G City of Tukwila GOLF ENTERPRISE FUND 2013 - 2018 Analysis in 000's 24.1% Fund Balance Components: ACTUAL PROJECTED 6 Year Total REVENUES 2011 2012 2013 2014 2015 2016 2017 2018 Operating: 366 371 Unreserved 502 447 398 479 Green Fees 913 1,002 974 1,020 1,024 1,075 1,079 1,133 6,305 Merchandise Sales 130 140 134 137 138 142 142 145 838 Power Cart Rentals 159 174 175 176 177 178 179 180 1,065 Concession Proceeds 83 90 85 85 86 87 88 89 520 Other Revenue 19 42 24 24 25 26 26 27 152 Total Operating Revenue 1,304 1,448 1,392 1,442 1,450 1,508 1,514 1,574 8,880 General Fund Contribution Total Revenues 775 225 400 600 323 329 316 283 ;',, 2,251 2,079 1,673 1,792 2,042 1,773 1,837 1,830 1,857 II% 11,131 EXPENDITURES Operations & Maintenance 1,490 1,336 1,411 1,449 1,477 1,507 1,538 1,583 8,965 Admission Tax 54 59 54 56 56 59 60 62 347 Indirect Cost Allocation 222 15 179 183 189 195 200 206 1,153 Debt Service 385 0 - - - - - Subtotal 2,151 1,410 1,644 1,688 1,722 1,761 1,798 1,851 i 10,465 Golf Capital - CIP Program 67 - 50 50 50 50 50 50 300 Total Expenditures 2,218 1,410 1,694 1,738 1,772 1,811 1,848 1,901 10,765 FUND BALANCE Change in Fund Balance (139) 263 98 304 1 26 (18) (44) 367 Beginning Balance 280 141 404 502 806 807 833 815 404 Ending Fund Balance 141 404 502 806 807 833 815 771 771 24.1% Fund Balance Components: Reserved (t') 358 408 355 367 366 371 Unreserved 502 447 398 479 448 405 399 Ending Fund Balance 141 404 502 806 807 833 815 771. 771 (b) Reserved fund balance is calculated at 20% of prior year operating revenue. 3/27/2013 3 ATTACHMENT G City of Tukwila GOLF ENTERPRISE FUND 2013 - 2018 Analysis in 000's REVENUES 2010 Actual 2011 Actual 2012 Budget 2012 estimate ' 2013 2014 2015 2016 _ 2017 2018 Total Green Fees 11) 1,018 913 1,20D 1,072 974 1,020 1,024 1,075 1,079 1,133 6,305 Merchandise Sales 132 130 151 130 134 137 138 142 142 145 838 Power Cart Rentals 172 159 195 175 175 176 177 178 179 180 1,065 Concession Proceeds 80 83 120 85 85 85 86 87 88 89 520 Other Revenue 22 19 24 24 24 24 25 26 26 27 152 Transfer In for Bond (2) 3,010 0 0 0 .0 0 0 0 General Fund Contribution (3) 332 775 225 225 400 600 323 329 316 283 2,251 Total Revenues 1,756 5,089 1,915 1,711 1,792 2,042 1,773 1,837 1,830 1,857 11,131 EXPENDITURES Operations & Maintenance (a) 1,530 1,525 1,861 1,299 = 1,411 1,449 1,477 1,507 1,538 1,583 8,965 Admission Tax 61 54 67 53 s 54 56 56 59 60 62 347 Indirect Cost Allocation t5 13 222 15 15 193 197 202 206 211 213 1,222 Debt Service (6) 335 339 0 0 0 0 0 0 0 0 0 Subtotal 1,939 2,140 1,943 1,367 1,658 1,702 1,735 1,772 1,809 1,858 10,534 Golf Capital - CIP Program 9 67 25 66 50 50 50 50 50 50 300 Total Expenditures 1,948 2,207 1,968 1,433 1,708 1,752 1,785 1,822 1,859 1,908 10,834 FUND BALANCE Change in Working Capital (192) 2,882 (53) 278 84 290 (12) 15 (29) (51) 297 Beginning Balance 220 425 28 n 28 200 284 574 562 577 548 200 Ending Balance 28 3,307 (25) 306 284 574 562 577 548 497 497 Working Capital Components: Reserved tbj 20% of revenue 358 408 355 367 366 371 Unreserved 284 216 154 222 181 131 126 Ending Balance 28 3,307 (25) 306 284 574 562 577 548 497 497 fat Revenues in excess of (less than) expenditures (6) Annual reserve balance requirement equals 20% of the prior year operating revenues. 2013 - 2018 Financial Planning Model 4 XXXI 10/2212012