City of Palo Alto (ID # 4716) City Council Staff Report

City of Palo Alto (ID # 4716)

City Council Staff Report

Report Type: Action Items Meeting Date: 6/23/2014

City of Palo Alto

Summary Title: Approval of Contract and BAO for Golf Course Reconfiguration Project

Title: Approval of One Contract and Two Contract Amendments: (1) Construction Contract with Duininck, Inc. in the Amount of $8,987,809 for the Palo Alto Golf Course Reconfiguration Project, CIP PG-13003; (2) Change Order No. One with Duininck, Inc. in the Amount of $265,399, Reflecting Cost Savings; and (3) Amendment No. One to Contract C13148028 with Golf Group, Ltd. In the Amount of $456,693 for Construction Support and Environmental Mitigation Monitoring Services; Adoption of Two Resolutions: (4) Amending Resolution No. 9296, adopted November 13, 2013, to Extend Statutory Exception for Soil Transfers by Truck on Oregon Expressway until December 31, 2014; and (5) Adopt the Attached Resolution Declaring Intention to Reimburse Expenditures from the Proceeds of Tax-Exempt Obligations (e.g. Certificates of Participation) for Not-To-Exceed Par Amount of $7 Million to Fund a Portion of the Cost of the Palo Alto Municipal Golf Course Reconfiguration Project; and Adoption of Two Budget Amendment Ordinances: (6) In the Amount of $2,501,569 for Golf Course Reconfiguration Project PG-13003, Increasing Appropriations From $8,545,338 to $11,046,907; and (7) In the Amount of $324,800 in Revenues and $324,800 in Expenses to Operate Golf Course During July 1, 2014 – August 31, 2014

From: City Manager

Lead Department: Public Works

Recommendation Staff recommends that Council:

1. Approve, and conditionally authorize the City Manager or his designee to execute, the attached contract with Duininck, Inc. (Attachment A) in the amount of $8,987,809 for the Palo Alto Municipal Golf Course

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Reconfiguration Project, Capital Improvement Program Project PG-13003; and

2. Approve, and authorize the City Manager or his designee to execute, the attached deductive Change Order No. One to the contract with Duininck, Inc. (Attachment B) in the amount of $265,399 to reflect negotiated cost savings measures to be incorporated into the project; and

3. Authorize the City Manager or his designee to negotiate and execute one or more additional change orders to the contract with Duininck, Inc. for related, additional but unforeseen, work which may develop during the project, the total value of which shall not exceed $872,241; and

4. Approve, and authorize the City Manager or his designee to execute,Amendment No. One to Contract No. C13148028 with Golf Group, Ltd. (Attachment C) in the amount of $456,693 for construction support and environmental mitigation monitoring services for the Palo Alto Municipal Golf Course Reconfiguration Project (PG-13003). The amendment includes $344,262 for basic services and $112,431 for additional services. The revised total contract amount is not to exceed $1,002,031, including $779,600 for basic services and $222,431 for additional services; and

5. Adopt the attached resolution extending an exception to Chapter 10.48 [Trucks and Truck Routes] of the Palo Alto Municipal Code for the limited purpose of allowing the transfer of soil from Stanford University along Oregon Expressway to the Palo Alto Municipal Golf Course and adjacent areas (Attachment D); and

6. Adopt the attached resolution declaring intention to reimburse expenditures from the proceeds of tax-exempt obligations (e.g. Certificates of Participation) for not-to-exceed par amount of $7 million to fund a portion of the cost of the Palo Alto Municipal Golf Course Reconfiguration Project (Attachment E); and

7. Adopt the attached Budget Amendment Ordinance (BAO) (Attachment F) in the amount of $2,501,569 for the Palo Alto Municipal Golf Course

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Reconfiguration Project (CIP PG-13003) to increase the total project appropriation from $8,545,338 to $11,046,907; and

8. Adopt the attached Budget Amendment Ordinance (BAO) (Attachment G) in the amount of $324,800 in revenues and $324,800 in expenses to operate the Golf Course for the two months of FY 2015 (July, 1, 2014through August 31, 2014) in the event that inability to secure regulatory permits continues to delay the project.

Executive SummaryStaff completed preparation of final bid documents and certification of the Environmental Impact Report for the Golf Course Reconfiguration Project in early Spring 2014. Staff has advertised the project, received construction bids, and prepared a contract for implementation of the project. The only remaining milestone preventing us from moving ahead with the construction of the project is the receipt of final regulatory permits. The permitting process with the Regional Water Quality Control Board (Water Board) has been particularly challenging, and we do not yet have their permit in hand. The low bid received for the project will expire on July 14 unless a construction contract is awarded. There are significant financial implications to delaying the project until next year. In light of the upcoming Council vacation, the pending expiration of the construction bid, and a desire to start construction as soon as possible in order to increase the likelihood of being able to complete the project and reopen the Golf Course in early fall 2015, staff requests that Council approve the construction contract and conditionally authorize the City Manager to sign the contract once the outstanding permit issues have been resolved. In the event that the permits are not received and the contract cannot be executed prior to July 14, staff will continue to work with the low bidder to clarify the specific cost and schedule impacts of extending its construction bid for an additional 30 calendar days and will return to Council in early August with a modified recommendation.

Background On October 15, 2012, Council awarded a contract to Golf Group, Ltd. (aka Forrest Richardson & Associates) to design a reconfigured Municipal Golf Course, prepare final bid documents (plans, specifications, and cost estimate) for the reconfiguration project, and prepare an Environmental Impact Report (EIR) forthe proposed Golf Course modifications based on a conceptual layout plan

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approved by Council in July 2012. In accordance with the adopted renovationplan, Forrest Richardson prepared construction documents based on a design concept that will reconfigure the Golf Course to conform to its Baylands setting and rebrand the facility as the Baylands Golf Links at Palo Alto. The Golf Course Reconfiguration Project will modify all 18 holes of the Golf Course, a portion of the driving range and practice facility, and replace an outlying restroom facility, while retaining a regulation golf course with a par of 71. The reconfigured Golf Course will incorporate or modify existing low-lying areas into the Golf Course, reduce the area of managed irrigated turf, and introduce areas of native grassland and wetland habitat.

The project design has been developed to achieve the following objectives:

• A golf course that provides enhanced wildlife habitat, improved wetlandareas, and a more interesting course that offers challenges for theexperienced player and that can also be enjoyed by the beginner, whilereducing water and pesticide use and maintenance labor for turf and landscaping.

• Expanded recreation areas to satisfy existing and projected needs.

• Integration of the Golf Course into the Baylands design theme.

• Mitigation for impacts on the Golf Course resulting from the San Francisquito Creek Joint Powers Authority’s (JPA) flood control project.

• Improve Golf Course playing conditions – turf, drainage and irrigation.

• Increase rounds of play and expand recreational opportunities.

In order to increase the chances of retaining a qualifed golf course builder to build the project, staff implemented a prequalification process for potential bidders during Fall 2013. Interested contractors submitted information regarding their company with respect to specific golf course construction experience, audited financial statements, ability to provide required bonds and insurance and on-the-job safety records for staff review. As a primary screening tool, the pre-qualification criteria required prospective bidders to hold status as Certified Golf Course Builders with the Golf Course Builders Association of America. Contractor submittals were reviewed and scored by staff to identify firms with the requisite experience, financial strength, safety record, and client relations to meet or exceed the minimum scoring criteria. As a result of the pre-qualification process, staff identified four golf course builders who had the exclusive right to submit a bid for the construction of the Golf Course Reconfiguration Project.

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On February 3, 2014, Council granted discretionary approval for the the Site and Design Review application for the Golf Course Reconfiguration Project, certified the final EIR for the project and adopted a Park Improvement Ordinance reflecting the physical changes being made to the dedicated parkland at the Golf Course.

DiscussionBid ProcessOn February 24, 2014, a notice inviting formal bids (IFB) for the Golf Course Reconfiguration Project was posted at City Hall and sent to the four pre-qualified golf course builders. The bidding period was 50 days. Bids were received from all four pre-qualified contractors on April 15, 2014, as listed on the attached Bid Summary (Attachment H).

Bid Name/Number Palo Alto Municipal Golf Course Reconfiguration Project, Capital Improvement Program Project PG-13003/IFB # 153403

Proposed Length of Project Through August 1, 2015Number of Bids Mailed to Contractors 4 pre-qualified contractors

Total Days to Respond to Bid 50Pre-Bid Meeting? Yes

Number of Company Attendees at Pre-Bid Meeting

4

Number of Bids Received 4

Bid Price Range $ 8,987,809- $9,940,488

Staff has reviewed all bids submitted and recommends that the bid of $8,987,809submitted by Duininck, Inc. be accepted and that Duininck, Inc. be declared the lowest responsible bidder. Staff recommends that the contract scope of work include the Base Bid plus Add Alternate Bid Items A and B (the construction of finished greens in the designated Youth Golf Area). The low bid is 17% percent above the engineer’s estimate of $7,664,433. The elevated bid prices are primarily attributable to higher than expected irrigation system material costs anda less competitive bidding environment resulting from the improving economy. In accordance with the provisions of the bid documents, the bids are valid through

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July 14, 2014.

Initial Contract Change OrderAs the low bid exceeds the budget established for the Municipal Golf Course Reconfiguration Project CIP, staff has been meeting with the low bidder to identify cost-saving changes that can be made to the project design in order to reduce construction costs without sacrificing project quality or functionality. Based upon discussions with the golf course architect and the low bidder, staff has negotiated a deductive change order that will eliminate or modify several non-essential components of the project without affecting its functionality. For example, cost savings have been achieved by reducing the number of soil moisture sensors, utilizing alternative irrigation system components, and eliminating a bridge and bulkhead design element without impacting the overall scope and appeal of the new golf course. The change order also incorporates cost-saving value engineering ideas generated by the low bidder including changes to irrigation system installation techniques and the donation of labor for the new Youth Golf Area that will result in further cost reductions. The combination of these measures will result in a cost savings of $ 265,399.

Staff recommends that Council approve, and authorize the City Manager or his designee to execute, the attached deductive Change Order No. One with Duininck, Inc. in the amount of $265,399 that will be applicable concurrently with the construction contract. In addition, staff requests authority to execute future change orders to the contract with Duininck, Inc. in the amount of $872,241(which equals 10 percent of the net contract amount following execution of Change Order No. One) for related, additional but unforeseen work which may develop during the project.

Project Regulatory PermitsImplementation of the Golf Course Reconfiguration Project will require the acquisition of regulatory permits from state and federal resource agencies. Specifically, the Project requires a Section 404 Permit from the U.S. Army Corps of Engineers (Corps) (which also involves consultation with the U.S. Fish and Wildlife Service with respect to potential impacts to federally-listed endangered species) and a Section 401 Water Quality Certification from the San Francisco Bay Regional Water Quality Control Board (Water Board). Although the Corps has approved the wetlands delineation submitted by the City for the Golf Course project, permit

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acquisition for the project has been hindered to-date at least partly due to delays related to the JPA’s permit acquisition process with the Water Board for their flood control project. Despite multiple overtures by staff, the Water Board hasbeen hesitant to complete their review of the Golf Course Reconfiguration Project, because they believe that the JPA project may need to change in ways that will in turn require changes in the design of the Golf Course Project. Staff have been working closely with JPA representatives, our environmental consultant (the same environmental consultant is working on both projects), the City Attorney’s Office, outside legal counsel with specific regulatory permitting expertise retained by the City Attorney, and most recently representatives from our local State legislators’ offices in attempts to expedite the permitting process for both projects.

Permit applications for the Golf Course Reconfiguration Project were submitted on December 23, 2013. The resource agencies are required to notify applicants whether their applications are complete within 30 days from the receipt of the application. Since our initial submittal of permit applications, staff has received three sequential letters from the Water Board (dated January 16, February 28, and May 1, 2014) in response to our permit application, citing “deficiencies” with the application. Staff has submitted a series of letters to the Water Board (dated January 31, April 7, and May 16, 2014) responding to each of the items cited in the three deficiency letters. In spite of our repeated efforts to provide supplementary information and justification to help resolve the Water Board staff’s outstanding issues and the City Manager’s personal entreaties to the Executive Officer of the Water Board requesting his personal intervention to expedite the permitting process, the Water Board has still not deemed our application to be complete, and the Water Board will not provide us with a clear road map and timeline to achieve the required project permits. This despite our agreement with the Executive Officer in March that focusing on a roadmap and timeline was essential.

Award of Construction ContractStaff initially planned to request Council award of the construction contract for the Golf Course Project only after all required permits were secured. However, in light of the upcoming Council vacation, the pending expiration of the construction bids on July 14th, and a desire to start construction as soon as possible in order to increase the likelihood of being able to complete the project and reopen the Golf

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Course in early fall 2015, staff requests that Council approve the construction contract and conditionally authorize the City Manager to sign the contract once the outstanding permit issues have been resolved. Staff believes that the outstanding permitting issues are relatively non-substantive in nature and that the likelihood of changes to the appearance and design of the golf courseresulting from the permit review process is relatively low. The Water Board staff efforts to hold up the Golf Course permits pending the Creek JPA project remains a problem.

Staff will continue to negotiate with the Water Board in an effort to secure their approval of the permits needed to construct the project prior to the expiration of the construction bids so that the attached contract can be executed with Duininck, Inc. Beyond the July 14 bid expiration date, price quotations from subcontractors and vendors may no longer be honored, and there are indications that material costs, particularly the cost of irrigation system components and turf grass, will have increased since the April 15 bid date. Duininck, Inc. has indicated a willingness to extend its bid for an additional 30 calendar days on the condition that the City pay the differential cost of any documented price increases that have occurred since the bid submittal date. Staff recommends that Council grant the City Manager conditional authority to execute the contract and change order #1 with Duininck, Inc. subject to the following conditions:

1. The contract and change order #1 must be executed no later than July 14, 2014; and

2. The City must receive the Water Board permit required for the construction of the project or must achieve constructive receipt in the form of written confirmation from the Water Board that prior to the execution of the contract and change order #1; issuance of the permit will be imminent. We will still need the Corps’ permit approval, but our understanding is that it must be subsequent to the Water Board action.

In the event that the contract and change order #1 cannot be executed prior to July 14, staff will continue to work with Duininck, Inc. to clarify the specific cost and schedule impacts of extending its construction bid for an additional 30 calendar days and will return to Council in early August with a modified recommendation.

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Amendment No. One to Golf Course Architect AgreementDuring construction of the Golf Course Reconfiguration Project, there will be a continuing need for the professional services of Golf Course Architect Forrest Richardson and his environmental sub-consultants. Services include construction support services such as review of contractor submittals, responses to requests for information from the construction contractor, construction progress payment and change order review, and periodic site visits by Forrest Richardson to provide design guidance, inspect project progress, and ensure conformance with the Golf Course design aesthetic and functionality. In addition, Dale Siemens, a close associate of Forrest Richardson with extensive golf course construction experience, will be retained as a subcontractor to serve as an on-site project representative conducting quality control inspections and acting as the liaison between the contractor, City staff, and the Golf Course Architect. The final component of the construction stage services is monitoring of the environmental mitigation measures stipulated in the EIR to be implemented during construction of the project. Monitoring tasks, including contractor training, site surveys and implementation of measures for the protection of sensitive plants, birds, wetlands, and cultural and paleontological resources, and other environmental control measures, will be performed by ICF International or Dr. Jeffrey Froke in their role as sub-consultants to Forrest Richardson. The construction stageservices described above have been incorporated into Amendment No. One to the professional services agreement with Golf Group, Ltd. (aka Forrest Richardson & Associates), which is attached for Council consideration and approval.

Resolution Modifying the City’s Truck Ordinance (PAMC Chapter 10.48)Both the Golf Course Reconfiguration Project and the related San Francisquito Creek Joint Powers Authority (JPA) flood control project require a substantial amount of suitable imported fill material. Soil is needed to raise the level of the golf course and to construct the new flood control levees. On June 17, 2013, Council awarded a contract to Don Tucker & Son for the importation and stockpiling of soil for use on the Golf Course Reconfiguration Project and the JPA’s flood control project. The contractor is paying the City for the right to stockpile up to 364,000 cubic yards for the Golf Course Project and 127,000 cubic yards for the JPA Project at a soil stockpile site on the west side of the Golf Course. The soil importation process is expected to generate up to $1.3 million that will be used to directly offset the cost of the golf course construction work.

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There has been and continues to be a substantial amount of construction occurring at the Stanford University campus that is generating excess soil from basement excavations. The juxtaposition of the Golf Course Reconfiguration Project and the Stanford construction activity provides a unique opportunity to share the soil resources in a way that will benefit both parties. The shortest route between Stanford and the project site is Oregon Expressway. Although Oregon Expressway is not a standard truck route, Council adopted a resolution on November 13, 2012, authorizing the use of Oregon Expressway as a truck route for the limited purpose of transporting soil from the Stanford campus to the Golf Course. Under the terms of the original resolution, the special designation truck route designation for Oregon Expressway expires on June 30, 2014. Don Tucker has been utilizing this special truck route provision to facilitate the import of soil to the Golf Course. As a result of the cost savings generated by this shorter haul route, Don Tucker is paying the City $0.50 per cubic yard more for Stanford soil imported via Oregon Expressway. Don Tucker has imported approximately 80,000 cubic yards of soil to the Golf Course to-date. Because much more soil will be required to complete the two projects, he will continue to import and place soil on the Golf Course after the golf course contractor has begun work and through the end of the year. Because it is advantageous for the City to encourage the transport of soil from Stanford sites beyond June 30, 2014, staff recommends that Council adopt the attached resolution, extending the term of the Oregon Expressway truck route designation through December 31, 2014.

Financial AnalysisIn order to help assess the potential financial performance of the Golf Course during and after construction, staff entered into a contract with the National Golf Foundation (NGF) in 2012 to provide an independent Return on Investment analysis on the design options and long-range Golf Course plan (Attachment I). Since the NGF report was completed in 2012, staff has continued to revise the Golf Course pro-forma as new information that impacts the current and future Golf Course financial status has been acquired. Examples of new information include the fact that the project has been delayed a year from the original scheduling estimates, we have begun pre-construction work on the Golf Course by stockpiling soil on the course and have experienced reduced golf rounds played as a result, we have negotiated contract amendments with Golf Professional Brad Lozares and ValleyCrest Maintenance, and we have received actual bids for the project work and have drafted a construction contract with the

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lowest bidder. As a result, staff has prepared an updated pro-forma for the Golf Course illustrating anticipated revenues and costs during pre-construction, construction and post-construction stages in light of the latest information available (Attachment J).

Council’s last review of estimated project costs and Golf Course pro-forma occurred on February 3, 2014. For comparison, the attached financial analysis (Attachment K) discusses the changes in project cost and the resulting changes to the projected future operational profit/loss status of the Golf Course that have occurred since the last Council update.

Project Funding and Certificates of ParticipationStaff estimates that $10.4 million will be required to complete the Golf Course reconfiguration. Staff anticipates receiving $1.3 million in revenue from the soilsbroker currently under contract to import soil for use in the project and $3.0 million from the San Francisquito Creek Joint Powers Authority (JPA) for a mitigation payment. The timing for receipt of these resources is not precisely known as of this writing.

Assuming full payment for imported soil and the mitigation payment from the JPA, $6.1 million in additional revenue will be required for the project. It is expected that the Golf Course reconfiguration will take approximately 16 months. To minimize capitalized interest costs (interest that would have to be paid from the time funds are borrowed until the course is re-opened to the public) and consequent debt burden, staff recommends utilizing existing cash reserves to support the project until a few months before the project is completed or sometime in late FY 2015. At that time, staff would return to Council for approval of financing via Certificates of Participation (COPs) in order to replenish the funds from which cash was borrowed. Staff has received confirmation from Bond Counsel that this strategy of issuing debt after construction has begun is legitimate as long as the bond reimbursement resolution is passed prior to construction, which is why the resolution to that effect is included in this item.

Using existing cash in the City’s portfolio which is earning a yield of 2.03 percent makes financial sense in light of an estimated 4.5 percent rate the City would pay during the construction period for capitalized interest. The current cash drawdown schedule by Fiscal Year for the project is as follows:

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-000s-FY 2014 FY 2015 FY 2016 Total$623 $8,288 $1,505 $10,416

Assuming receipt of funds during the construction period revenue from importedsoil and the JPA payment, the City would draw $6.1 million from other funds such as the Infrastructure Reserve and Stanford Development Agreement monies. Once COP proceeds are received, these funds would be replenished and used for implementation of the City’s Infrastructure Plan.

In addition to the $6.1 million needed for direct project costs, costs for the debt issuance and capitalized interest incurred in FY 2016 would be included in the debt financing. Staff estimates a total borrowing of $6.6 million will be required to cover these and reconfigurations expenses. As with past requests for debt issuances, staff is requesting a maximum authority to issue up to $7.0 million in COPs in the event of some unforeseen change.

Based on a $6.6 million borrowing for 20 years and at an estimated 4.5% interest rate, annual average debt service for the Golf Course is estimated at $493,000.

TimelineImplementation of the Golf Course Reconfiguration Project is scheduled to conform to the following milestone dates:

June 23 – August 13, 2014 Award of construction contract

To be determined Start of constructionClosure of Golf Course for public use

To be determined Issuance of Certificates of Participation

September 1, 2015 Open Baylands Golf Links for public use

Resource ImpactThe construction phase of the project is estimated at $10.44 million, of which $7.95 million is available in Capital Improvement Program Project PG-13003, Golf

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Course Reconfiguration Project. The balance of the funds required to pay for project costs is recommended to be provided with the approval of the attached Budget Amendment Ordinance (Attachment F) in the amount of $2.5 million. In addition, the project budget already assumes $3 million in revenue from the San Franscisquito Creek JPA and $5 million in certificate of participation procceds. In addition, staff is requesting the recognition of $1.3 million in revenue from the use of imported soil, in addition to increasing the certificate of participation proceed amount by $1,148,637 for a total aggregate amount of $6,148,637.

Environmental ReviewAn Environmental Impact Report (EIR) was prepared to evaluate the proposed potential impacts of the Palo Alto Municipal Golf Course Reconfiguration Projectand to identify the appropriate mitigation measures in accordance with the provisions of the California Environmental Quality Act (CEQA). Council, acting on behalf of the City of Palo Alto in its role as lead agency for purposes of CEQA, adopted a resolution on February 3, 2014, certifying the final EIR for the project.Attachments:

• A - Contract with Duininck, Inc. (PDF)

• B - Contract Change Order No. One with Duininck, Inc. (PDF)

• C - Amendment No. One to Contract with Golf Group Ltd. (PDF)

• D - Resolution Amending Palo Alto Municipal Code Chapter 10.48 (Truck Routes) (PDF)

• E - Resolution regarding issuance of Certificates of Participation (COPs) for Golf Course Reconfiguration Project (PDF)

• F - Budget Amendment Ordinance for Golf Course Reconfiguration Project (CIP PG-13003) (DOC)

• G - Budget Amendment Ordinance for Community Services Department (Golf Course) Operating Budget (DOC)

• H - Bid Summary (PDF)

• I - National Golf Foundation Golf Course Pro-Forma analysis (2012) (PDF)

• J - Updated Golf Course Pro-Forma (2014) (PDF)

• K - Golf Course Reconfiguration Project Financial Analysis (PDF)

• L - Public comment via e-mail(PDF)

Attachment A

CONSTRUCTION CONTRACT

Contract No. C14153403

City of Palo Alto

and

Duininck, Inc.

Palo Alto Municipal Golf Course Reconfiguration Project

CIP PG‐13003

Invitation for Bid (IFB) Package 2 Rev. January 2014 CONSTRUCTION CONTRACT

CONSTRUCTION CONTRACT TABLE OF CONTENTS

SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS. ......................................................... 5

1.1 Recitals. ................................................................................................................................................... 5

1.2 Definitions. ............................................................................................................................................ 5

SECTION 2 THE PROJECT. .................................................................................................................... 5

SECTION 3 THE CONTRACT DOCUMENTS. ......................................................................................... 6

SECTION 4 CONTRACTOR’S DUTY. ...................................................................................................... 7

SECTION 5 PROJECT TEAM. ................................................................................................................. 7

6.1 Time Is of Essence. .............................................................................................................................. 7

6.2 Commencement of Work. ................................................................................................................ 7

6.3 Contract Time. ...................................................................................................................................... 7

6.4 Liquidated Damages. .......................................................................................................................... 8

6.4.1 Other Remedies. ....................................................................................................... 8

6.5 Adjustments to Contract Time. ....................................................................................................... 8

SECTION 7 COMPENSATION TO CONTRACTOR. ................................................................................ 8

7.1 Contract Sum. ....................................................................................................................................... 8

7.2 Full Compensation. ............................................................................................................................. 8

SECTION 8 STANDARD OF CARE. ........................................................................................................ 9

SECTION 9 INDEMNIFICATION. ........................................................................................................... 9

9.1 Hold Harmless. ..................................................................................................................................... 9

9.2 Survival. .................................................................................................................................................. 9

SECTION 10 NONDISCRIMINATION. ................................................................................................... 9

SECTION 11 INSURANCE AND BONDS. ............................................................................................... 9

SECTION 12 PROHIBITION AGAINST TRANSFERS............................................................................... 10

SECTION 13 NOTICES ……………………………………………………………………………………………………………………. 10

13.1 Method of Notice ………………………………………………………………………………………………………………10

13.2 Notice Recipents ……………………………………………………………………………………………………………….10

13.3 Change of Address. ........................................................................................................................... 11

SECTION 14 DEFAULT. ......................................................................................................................... 11


14.1 Notice of Default. .............................................................................................................................. 11

14.2 Opportunity to Cure Default. ........................................................................................................ 11

SECTION 15 CITY'S RIGHTS AND REMEDIES. ...................................................................................... 12

15.1 Remedies Upon Default. ................................................................................................................. 12

15.1.1 Delete Certain Services. .......................................................................................... 12 15.1.2 Perform and Withhold. ........................................................................................... 12 15.1.3 Suspend The Construction Contract. .................................................................... 12 15.1.5 Invoke the Performance Bond. .............................................................................. 12 15.1.6 Additional Provisions. ............................................................................................. 12

15.2 Delays by Sureties. ............................................................................................................................ 13

15.3 Damages to City. ................................................................................................................................ 13

15.3.1 For Contractor's Default. ........................................................................................ 13 15.3.2 Compensation for Losses. ...................................................................................... 13

15.4 Suspension by City ............................................................................................................................ 13

15.4.1 Suspension for Convenience. .......................................................................................... 13

15.5 Termination Without Cause. ......................................................................................................... 14

15.5.1 Compensation. ......................................................................................................... 14 15.5.2 Subcontractors. ........................................................................................................ 14

15.6 Contractor’s Duties Upon Termination. ..................................................................................... 14

SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES. ...................................................................... 15

16.1 Contractor’s Remedies. ................................................................................................................... 15

16.1.1 For Work Stoppage. ................................................................................................. 15 16.1.2 For City's Non‐Payment. ......................................................................................... 15

16.2 Damages to Contractor. .................................................................................................................. 15

SECTION 17 ACCOUNTING RECORDS. ................................................................................................ 15

17.1 Financial Management and City Access. ................................................................................... 15

17.2 Compliance with City Requests. ................................................................................................... 16

SECTION 18 INDEPENDENT PARTIES. ................................................................................................. 16

SECTION 19 NUISANCE. ...................................................................................................................... 16

SECTION 20 PERMITS AND LICENSES. ................................................................................................ 16

SECTION 21 WAIVER. .......................................................................................................................... 16

SECTION 22 GOVERNING LAW AND VENUE. ...................................................................................... 16


SECTION 23 COMPLETE AGREEMENT. ................................................................................................ 17

SECTION 24 SURVIVAL OF CONTRACT. ............................................................................................... 17

SECTION 25 PREVAILING WAGES. ...................................................................................................... 17

SECTION 26 NON APPROPRIATION. ................................................................................................... 17

SECTION 27 AUTHORITY. .................................................................................................................... 17

SECTION 28 COUNTERPARTS .............................................................................................................. 18

SECTION 29 SEVERABILITY. ................................................................................................................. 18

SECTION 30 STATUTORY AND REGULATORY REFERENCES . ............................................................. 18

SECTION 31 WORKERS’ COMPENSATION CERTIFICATION. ................................................................ 18


CONSTRUCTION CONTRACT

THIS CONSTRUCTION CONTRACT entered into on June 2, 2014 (“Execution Date”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and DUININCK, INC. ("Contractor"), is made with reference to the following:

R E C I T A L S: A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. Contractor is a corporation duly organized and in good standing in the State of Minnesota, Contractor’s License Number 816687. Contractor represents that it is duly licensed by the State of California and has the background, knowledge, experience and expertise to perform the obligations set forth in this Construction Contract. C. On February 24, 2014, City issued an Invitation for Bids (IFB) to contractors for the Palo Alto Municipal Golf Course Reconfiguration Project (“Project”). In response to the IFB, Contractor submitted a Bid. D. City and Contractor desire to enter into this Construction Contract for the Project, and other services as identified in the Contract Documents for the Project upon the following terms and conditions.

NOW THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by and between the undersigned parties as follows:

SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS.

1.1 Recitals.

All of the recitals are incorporated herein by reference. 1.2 Definitions.

Capitalized terms shall have the meanings set forth in this Construction Contract and/or in the General Conditions. If there is a conflict between the definitions in this Construction Contract and in the General Conditions, the definitions in this Construction Contract shall prevail.

SECTION 2 THE PROJECT.

The Project is the Palo Alto Municipal Golf Course Reconfiguration Project, located at 1875 Embarcadero Road, Palo Alto, CA 94303. ("Project").


SECTION 3 THE CONTRACT DOCUMENTS.

3.1 List of Documents. The Contract Documents (sometimes collectively referred to as “Agreement” or “Bid Documents”) consist of the following documents which are on file with the Purchasing Division and are hereby incorporated by reference.

1) Change Orders 2) Field Orders 3) Contract

4) Bidding Addenda 5) Special Provisions 6) General Conditions 7) Project Plans and Drawings 8) Technical Specifications 9) Instructions to Bidders 10) Invitation for Bids 11) Contractor's Bid/Non‐Collusion Affidavit

12) Reports listed in the Contract Documents 13) Public Works Department’s Standard Drawings and Specifications (most current version at

time of Bid) 14) Utilities Department’s Water, Gas, Wastewater, Electric Utilities Standards (most current

version at time of Bid) 15) City of Palo Alto Traffic Control Requirements

16) City of Palo Alto Truck Route Map and Regulations

17) Notice Inviting Pre‐Qualification Statements, Pre‐Qualification Statement, and Pre‐

Qualification Checklist (if applicable) 18) Performance and Payment Bonds

3.2 Order of Precedence.

For the purposes of construing, interpreting and resolving inconsistencies between and among the provisions of this Contract, the Contract Documents shall have the order of precedence as set forth in the preceding section. If a claimed inconsistency cannot be resolved through the order of precedence, the City


shall have the sole power to decide which document or provision shall govern as may be in the best interests of the City.

SECTION 4 CONTRACTOR’S DUTY.

Contractor agrees to perform all of the Work required for the Project, as specified in the Contract Documents, all of which are fully incorporated herein. Contractor shall provide, furnish, and supply all things necessary and incidental for the timely performance and completion of the Work, including, but not limited to, provision of all necessary labor, materials, equipment, transportation, and utilities, unless otherwise specified in the Contract Documents. Contractor also agrees to use its best efforts to complete the Work in a professional and expeditious manner and to meet or exceed the performance standards required by the Contract Documents.

SECTION 5 PROJECT TEAM.

In addition to Contractor, City has retained, or may retain, consultants and contractors to provide professional and technical consultation for the design and construction of the Project. The Contract requires that Contractor operate efficiently, effectively and cooperatively with City as well as all other members of the Project Team and other contractors retained by City to construct other portions of the Project. SECTION 6 TIME OF COMPLETION. 6.1 Time Is of Essence.

Time is of the essence with respect to all time limits set forth in the Contract Documents. 6.2 Commencement of Work.

Contractor shall commence the Work on the date specified in City’s Notice to Proceed. 6.3 Contract Time.

Work hereunder shall begin on the date specified on the City’s Notice to Proceed and shall be completed not later than August 1, 2015.

within calendar days () after the commencement date specified in City’s Notice to Proceed.

By executing this Construction Contract, Contractor expressly waives any claim for delayed early completion.


6.4 Liquidated Damages. Pursuant to Government Code Section 53069.85, if Contractor fails to achieve Substantial Completion of the entire Work within the Contract Time, including any approved extensions thereto, City may assess liquidated damages on a daily basis for each day of Unexcused Delay in achieving Substantial Completion, based on the amount of Three Thousand Five Hundred dollars ($3,500.00) per day, or as otherwise specified in the Special Provisions. Liquidated damages may also be separately assessed for failure to meet milestones specified elsewhere in the Contract Documents, regardless of impact on the time for achieving Substantial Completion. The assessment of liquidated damages is not a penalty but considered to be a reasonable estimate of the amount of damages City will suffer by delay in completion of the Work. The City is entitled to setoff the amount of liquidated damages assessed against any payments otherwise due to Contractor, including, but not limited to, setoff against release of retention. If the total amount of liquidated damages assessed exceeds the amount of unreleased retention, City is entitled to recover the balance from Contractor or its sureties. Occupancy or use of the Project in whole or in part prior to Substantial Completion, shall not operate as a waiver of City’s right to assess liquidated damages.

6.4.1 Other Remedies. City is entitled to any and all available legal and equitable remedies City may have where City’s Losses are caused by any reason other than Contractor’s failure to achieve Substantial Completion of the entire Work within the Contract Time.

6.5 Adjustments to Contract Time. The Contract Time may only be adjusted for time extensions approved by City and memorialized in a Change Order approved in accordance with the requirements of the Contract Documents.

SECTION 7 COMPENSATION TO CONTRACTOR.

7.1 Contract Sum.

Contractor shall be compensated for satisfactory completion of the Work in compliance with the Contract Documents the Contract Sum of Eight Million Nine Hundred Eighty‐Seven Thousand Eight Hundred Nine Dollars ($8,987,809).

[This amount includes the Base Bid of $8,947,809 and Additive Alternate A of $25,000 and Additive Alternate B of $15,000.]

7.2 Full Compensation.

The Contract Sum shall be full compensation to Contractor for all Work provided by Contractor and, except as otherwise expressly permitted by the terms of the Contract Documents, shall cover all Losses arising out of the nature of the Work or from the acts of the elements or any unforeseen difficulties or obstructions which may arise or be encountered in performance of the Work until its Acceptance by City, all risks connected with the Work, and any and all expenses incurred due to suspension or discontinuance of the Work, except as expressly provided herein. The Contract Sum may only be adjusted for Change Orders approved in accordance with the requirements of the Contract Documents.


SECTION 8 STANDARD OF CARE.

Contractor agrees that the Work shall be performed by qualified, experienced and well‐supervised personnel. All services performed in connection with this Construction Contract shall be performed in a manner consistent with the standard of care under California law applicable to those who specialize in providing such services for projects of the type, scope and complexity of the Project.

SECTION 9 INDEMNIFICATION.

9.1 Hold Harmless.

To the fullest extent allowed by law, Contractor will defend, indemnify, and hold harmless City, its City Council, boards and commissions, officers, agents, employees, representatives and volunteers (hereinafter individually referred to as an “Indemnitee” and collectively referred to as "Indemnitees"), through legal counsel acceptable to City, from and against any and liability, loss, damage, claims, expenses (including, without limitation, attorney fees, expert witness fees, paralegal fees, and fees and costs of litigation or arbitration) (collectively, “Liability”) of every nature arising out of or in connection with the acts or omissions of Contractor, its employees, Subcontractors, representatives, or agents, in performing the Work or its failure to comply with any of its obligations under the Contract, except such Liability caused by the active negligence, sole negligence, or willful misconduct of an Indemnitee. Contractor shall pay City for any costs City incurs to enforce this provision. Except as provided in Section 9.2 below, nothing in the Contract Documents shall be construed to give rise to any implied right of indemnity in favor of Contractor against City or any other Indemnitee. Pursuant to Public Contract Code Section 9201, City shall timely notify Contractor upon receipt of any third‐party claim relating to the Contract.

9.2 Survival.

The provisions of Section 9 shall survive the termination of this Construction Contract.

SECTION 10 NONDISCRIMINATION.

As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Contractor acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and will comply with all requirements of Section 2.30.510 pertaining to nondiscrimination in employment.

SECTION 11 INSURANCE AND BONDS.

Within ten (10) business days following issuance of the Notice of Award, Contractor shall provide City with evidence that it has obtained insurance and shall submit Performance and Payment Bonds satisfying all requirements in Article 11 of the General Conditions.


SECTION 12 PROHIBITION AGAINST TRANSFERS.

City is entering into this Construction Contract in reliance upon the stated experience and qualifications of the Contractor and its Subcontractors set forth in Contractor’s Bid. Accordingly, Contractor shall not assign, hypothecate or transfer this Construction Contract or any interest therein directly or indirectly, by operation of law or otherwise without the prior written consent of City. Any assignment, hypothecation or transfer without said consent shall be null and void, and shall be deemed a substantial breach of contract and grounds for default in addition to any other legal or equitable remedy available to the City. The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor is a partnership or joint venture or syndicate or co‐tenancy shall result in changing the control of Contractor, shall be construed as an assignment of this Construction Contract. Control means more than fifty percent (50%) of the voting power of the corporation or other entity. SECTION 13 NOTICES. 13.1 Method of Notice. All notices, demands, requests or approvals to be given under this Construction Contract shall be given in writing and shall be deemed served on the earlier of the following: (i) On the date delivered if delivered personally; (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and addressed as hereinafter provided; (iii) On the date sent if sent by facsimile transmission; (iv) On the date sent if delivered by electronic mail; or (v) On the date it is accepted or rejected if sent by certified mail. 13.2 Notice Recipients. All notices, demands or requests (including, without limitation, Change Order Requests and

Claims) from Contractor to City shall include the Project name and the number of this Construction Contract and shall be addressed to City at:

To City: City of Palo Alto City Clerk 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 Copy to: City of Palo Alto Public Works Administration 250 Hamilton Avenue Palo Alto, CA 94301 Attn: Joe Teresi City of Palo Alto Utilities Engineering 250 Hamilton Avenue Palo Alto, CA 94301 Attn:


In addition, copies of all Claims by Contractor under this Construction Contract shall be provided to the following:

Palo Alto City Attorney’s Office 250 Hamilton Avenue P.O. Box 10250 Palo Alto, California 94303

All Claims shall be delivered personally or sent by certified mail. All notices, demands, requests or approvals from City to Contractor shall be addressed to:

Duininck, Inc. P.O. Box 208 Prinsburg, MN 56281 Attn: Chris Duininck

13.3 Change of Address. In advance of any change of address, Contractor shall notify City of the change of address in writing. Each party may, by written notice only, add, delete or replace any individuals to whom and addresses to which notice shall be provided.

SECTION 14 DEFAULT.

14.1 Notice of Default.

In the event that City determines, in its sole discretion, that Contractor has failed or refused to perform any of the obligations set forth in the Contract Documents, or is in breach of any provision of the Contract Documents, City may give written notice of default to Contractor in the manner specified for the giving of notices in the Construction Contract, with a copy to Contractor’s performance bond surety.

14.2 Opportunity to Cure Default.

Except for emergencies, Contractor shall cure any default in performance of its obligations under the Contract Documents within two (2) Days (or such shorter time as City may reasonably require) after receipt of written notice. However, if the breach cannot be reasonably cured within such time, Contractor will commence to cure the breach within two (2) Days (or such shorter time as City may reasonably require) and will diligently and continuously prosecute such cure to completion within a reasonable time, which shall in no event be later than ten (10) Days after receipt of such written notice.


SECTION 15 CITY'S RIGHTS AND REMEDIES.

15.1 Remedies Upon Default.

If Contractor fails to cure any default of this Construction Contract within the time period set forth above in Section 14, then City may pursue any remedies available under law or equity, including, without limitation, the following:

15.1.1 Delete Certain Services.

City may, without terminating the Construction Contract, delete certain portions of the Work, reserving to itself all rights to Losses related thereto.

15.1.2 Perform and Withhold. City may, without terminating the Construction Contract, engage others to perform the Work or portion of the Work that has not been adequately performed by Contractor and withhold the cost thereof to City from future payments to Contractor, reserving to itself all rights to Losses related thereto.

15.1.3 Suspend The Construction Contract. City may, without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, suspend all or any portion of this Construction Contract for as long a period of time as City determines, in its sole discretion, appropriate, in which event City shall have no obligation to adjust the Contract Sum or Contract Time, and shall have no liability to Contractor for damages if City directs Contractor to resume Work.

15.1.4 Terminate the Construction Contract for Default. City shall have the right to terminate this Construction Contract, in whole or in part, upon the failure of Contractor to promptly cure any default as required by Section 14. City’s election to terminate the Construction Contract for default shall be communicated by giving Contractor a written notice of termination in the manner specified for the giving of notices in the Construction Contract. Any notice of termination given to Contractor by City shall be effective immediately, unless otherwise provided therein.

15.1.5 Invoke the Performance Bond. City may, with or without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, exercise its rights under the Performance Bond.

15.1.6 Additional Provisions. All of City’s rights and remedies under this Construction Contract are cumulative, and shall be in addition to those rights and remedies available in law or in equity. Designation in the Contract Documents of certain breaches as material shall not waive the City’s authority to designate other breaches as material nor limit City’s right to terminate the Construction Contract, or prevent the City from terminating the Agreement for breaches that are not material. City’s determination of whether there has been noncompliance with the Construction Contract so as to warrant exercise by City of its rights and remedies for default under the Construction Contract, shall be binding on all parties. No termination or action taken by City after such termination shall prejudice any other rights or remedies of City provided by law or equity or by the Contract Documents upon such termination; and City may proceed against Contractor to recover all liquidated damages and Losses suffered by City.


15.2 Delays by Sureties.

Time being of the essence in the performance of the Work, if Contractor’s surety fails to arrange for completion of the Work in accordance with the Performance Bond, within seven (7) calendar days from the date of the notice of termination, Contractor’s surety shall be deemed to have waived its right to complete the Work under the Contract, and City may immediately make arrangements for the completion of the Work through use of its own forces, by hiring a replacement contractor, or by any other means that City determines advisable under the circumstances. Contractor and its surety shall be jointly and severally liable for any additional cost incurred by City to complete the Work following termination. In addition, City shall have the right to use any materials, supplies, and equipment belonging to Contractor and located at the Worksite for the purposes of completing the remaining Work.

15.3 Damages to City. 15.3.1 For Contractor's Default.

City will be entitled to recovery of all Losses under law or equity in the event of Contractor’s default under the Contract Documents.

15.3.2 Compensation for Losses.

In the event that City's Losses arise from Contractor’s default under the Contract Documents, City shall be entitled to deduct the cost of such Losses from monies otherwise payable to Contractor. If the Losses incurred by City exceed the amount payable, Contractor shall be liable to City for the difference and shall promptly remit same to City.

15.4 Suspension by City 15.4.1 Suspension for Convenience.

City may, at any time and from time to time, without cause, order Contractor, in writing, to suspend, delay, or interrupt the Work in whole or in part for such period of time, up to an aggregate of fifty percent (50%) of the Contract Time. The order shall be specifically identified as a Suspension Order by City. Upon receipt of a Suspension Order, Contractor shall, at City’s expense, comply with the order and take all reasonable steps to minimize costs allocable to the Work covered by the Suspension Order. During the Suspension or extension of the Suspension, if any, City shall either cancel the Suspension Order or, by Change Order, delete the Work covered by the Suspension Order. If a Suspension Order is canceled or expires, Contractor shall resume and continue with the Work. A Change Order will be issued to cover any adjustments of the Contract Sum or the Contract Time necessarily caused by such suspension. A Suspension Order shall not be the exclusive method for City to stop the Work. 15.4.2 Suspension for Cause. In addition to all other remedies available to City, if Contractor fails to perform or correct work in accordance with the Contract Documents, City may immediately order the Work, or any portion thereof, suspended until the cause for the suspension has been eliminated to City’s satisfaction. Contractor shall not be entitled to an increase in Contract Time or Contract Price for a suspension occasioned by Contractor’s failure to comply with the Contract Documents. City’s right to suspend the Work shall not give rise to a duty to suspend the Work, and City’s failure to suspend the Work shall not constitute a defense to Contractor’s failure to comply with the requirements of the Contract Documents.


15.5 Termination Without Cause. City may, at its sole discretion and without cause, terminate this Construction Contract in part or in whole upon written notice to Contractor. Upon receipt of such notice, Contractor shall, at City’s expense, comply with the notice and take all reasonable steps to minimize costs to close out and demobilize. The compensation allowed under this Paragraph 15.5 shall be the Contractor’s sole and exclusive compensation for such termination and Contractor waives any claim for other compensation or Losses, including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect or incidental damages of any kind resulting from termination without cause. Termination pursuant to this provision does not relieve Contractor or its sureties from any of their obligations for Losses arising from or related to the Work performed by Contractor.

15.5.1 Compensation.

Following such termination and within forty‐five (45) Days after receipt of a billing from Contractor seeking payment of sums authorized by this Paragraph 15.5.1, City shall pay the following to Contractor as Contractor’s sole compensation for performance of the Work : .1 For Work Performed. The amount of the Contract Sum allocable to the portion of the Work properly performed by Contractor as of the date of termination, less sums previously paid to Contractor. .2 For Close‐out Costs. Reasonable costs of Contractor and its Subcontractors:

(i) Demobilizing and (ii) Administering the close‐out of its participation in the Project (including, without limitation, all billing and accounting functions, not including attorney or expert fees) for a period of no longer than thirty (30) Days after receipt of the notice of termination.

.3 For Fabricated Items. Previously unpaid cost of any items delivered to the Project Site which were fabricated for subsequent incorporation in the Work.

.4 Profit Allowance. An allowance for profit calculated as four percent (4%) of the sum of the above items, provided Contractor can prove a likelihood that it would have made a profit if the Construction Contract had not been terminated.

15.5.2 Subcontractors.

Contractor shall include provisions in all of its subcontracts, purchase orders and other contracts permitting termination for convenience by Contractor on terms that are consistent with this Construction Contract and that afford no greater rights of recovery against Contractor than are afforded to Contractor against City under this Section.

15.6 Contractor’s Duties Upon Termination.

Upon receipt of a notice of termination for default or for convenience, Contractor shall, unless the notice directs otherwise, do the following: (i) Immediately discontinue the Work to the extent specified in the notice; (ii) Place no further orders or subcontracts for materials, equipment, services or facilities,

except as may be necessary for completion of such portion of the Work that is not discontinued;

(iii) Provide to City a description in writing, no later than fifteen (15) days after receipt of the notice of termination, of all subcontracts, purchase orders and contracts that are outstanding, including, without limitation, the terms of the original price, any changes, payments, balance owing, the status of the portion of the Work covered and a copy of


the subcontract, purchase order or contract and any written changes, amendments or modifications thereto, together with such other information as City may determine necessary in order to decide whether to accept assignment of or request Contractor to terminate the subcontract, purchase order or contract;

(iv) Promptly assign to City those subcontracts, purchase orders or contracts, or portions thereof, that City elects to accept by assignment and cancel, on the most favorable terms reasonably possible, all subcontracts, purchase orders or contracts, or portions thereof, that City does not elect to accept by assignment; and

(v) Thereafter do only such Work as may be necessary to preserve and protect Work already in progress and to protect materials, plants, and equipment on the Project Site or in transit thereto.

Upon termination, whether for cause or for convenience, the provisions of the Contract Documents remain in effect as to any Claim, indemnity obligation, warranties, guarantees, submittals of as‐built drawings, instructions, or manuals, or other such rights and obligations arising prior to the termination date.

SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES.

16.1 Contractor’s Remedies.

Contractor may terminate this Construction Contract only upon the occurrence of one of the following:

16.1.1 For Work Stoppage. The Work is stopped for sixty (60) consecutive Days, through no act or fault of Contractor, any

Subcontractor, or any employee or agent of Contractor or any Subcontractor, due to issuance of an order of a court or other public authority other than City having jurisdiction or due to an act of government, such as a declaration of a national emergency making material unavailable. This provision shall not apply to any work stoppage resulting from the City’s issuance of a suspension notice issued either for cause or for convenience.

16.1.2 For City's Non‐Payment. If City does not make pay Contractor undisputed sums within ninety (90) Days after receipt of

notice from Contractor, Contractor may terminate the Construction Contract (30) days following a second notice to City of Contractor’s intention to terminate the Construction Contract.

16.2 Damages to Contractor.

In the event of termination for cause by Contractor, City shall pay Contractor the sums provided for in Paragraph 15.5.1 above. Contractor agrees to accept such sums as its sole and exclusive compensation and agrees to waive any claim for other compensation or Losses, including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect and incidental damages, of any kind.

SECTION 17 ACCOUNTING RECORDS.

17.1 Financial Management and City Access.

Contractor shall keep full and detailed accounts and exercise such controls as may be necessary for proper financial management under this Construction Contract in accordance with generally accepted accounting principles and practices. City and City's accountants during normal business hours, may inspect, audit and copy Contractor's records, books, estimates, take‐offs, cost reports, ledgers, schedules, correspondence, instructions, drawings, receipts, subcontracts, purchase


orders, vouchers, memoranda and other data relating to this Project. Contractor shall retain these documents for a period of three (3) years after the later of (i) Final Payment or (ii) final resolution of all Contract Disputes and other disputes, or (iii) for such longer period as may be required by law.

17.2 Compliance with City Requests.

Contractor's compliance with any request by City pursuant to this Section 17 shall be a condition precedent to filing or maintenance of any legal action or proceeding by Contractor against City and to Contractor's right to receive further payments under the Contract Documents. City many enforce Contractor’s obligation to provide access to City of its business and other records referred to in Section 17.1 for inspection or copying by issuance of a writ or a provisional or permanent mandatory injunction by a court of competent jurisdiction based on affidavits submitted to such court, without the necessity of oral testimony.

SECTION 18 INDEPENDENT PARTIES.

Each party is acting in its independent capacity and not as agents, employees, partners, or joint ventures’ of the other party. City, its officers or employees shall have no control over the conduct of Contractor or its respective agents, employees, subconsultants, or subcontractors, except as herein set forth.

SECTION 19 NUISANCE.

Contractor shall not maintain, commit, nor permit the maintenance or commission of any nuisance in connection in the performance of services under this Construction Contract.

SECTION 20 PERMITS AND LICENSES.

Except as otherwise provided in the Special Provisions and Technical Specifications, The Contractor shall provide, procure and pay for all licenses, permits, and fees, required by the City or other government jurisdictions or agencies necessary to carry out and complete the Work. Payment of all costs and expenses for such licenses, permits, and fees shall be included in one or more Bid items. No other compensation shall be paid to the Contractor for these items or for delays caused by non‐City inspectors or conditions set forth in the licenses or permits issued by other agencies.

SECTION 21 WAIVER.

A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein, whether of the same or a different character.

SECTION 22 GOVERNING LAW AND VENUE.

This Construction Contract shall be construed in accordance with and governed by the laws of the State of California, and venue shall be in a court of competent jurisdiction in the County of Santa Clara, and no other place.


SECTION 23 COMPLETE AGREEMENT.

This Agreement represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended only by a written instrument, which is signed by the parties.

SECTION 24 SURVIVAL OF CONTRACT.

The provisions of the Construction Contract which by their nature survive termination of the Construction Contract or Final Completion, including, without limitation, all warranties, indemnities, payment obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect after Final Completion or any termination of the Construction Contract.

SECTION 25 PREVAILING WAGES.

This Project is not subject to prevailing wages. The Contractor is not required to pay prevailing wages in the performance and implementation of the Project, because the City, pursuant to its authority as a chartered city, has adopted Resolution No. 5981 exempting the City from prevailing wages. The City invokes the exemption from the state prevailing wage requirement for this Project and declares that the Project is funded one hundred percent (100%) by the City of Palo Alto. This Project remains subject to all other applicable provisions of the California Labor Code and regulations promulgated thereunder. Or

The Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations. Copies of these rates may be obtained at the Purchasing Office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of Sections 1775, 1776, 1777.5, 1810, and 1813 of the Labor Code.

SECTION 26 NON APPROPRIATION.

This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Construction Contract are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement.

SECTION 27 AUTHORITY.

The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities.


SECTION 28 COUNTERPARTS

This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement.

SECTION 29 SEVERABILITY.

In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected. SECTION 30 STATUTORY AND REGULATORY REFERENCES. With respect to any amendments to any statutes or regulations referenced in these Contract Documents, the reference is deemed to be the version in effect on the date that the Contract was awarded by City, unless otherwise required by law. SECTION 31 WORKERS’ COMPENSATION CERTIFICATION. Pursuant to Labor Code Section 1861, by signing this Contract, Contractor certifies as follows: “I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self‐insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the Work on this Contract.”

IN WITNESS WHEREOF, the parties have caused this Construction Contract to be executed the date and year first above written.

CITY OF PALO ALTO ____________________________

Purchasing Manager City Manager APPROVED AS TO FORM: ____________________________ Senior Asst. City Attorney APPROVED: ____________________________ Director of Public Works

DUININCK, INC. By:___________________________ Name:________________________ Title:__________________________ Date: _________________________

Contract Change Order City of Palo Alto Department: Public Works Eng Services Contract Number: C14153403

APPENDIX B – CONTRACT CHANGE ORDER PAGE 1 OF 4

Contract Change Order #1 Project Title: Municipal Golf Course Reconfiguration Project Project No.: PG-13003

Contract Number: C14153403 Date: June 2, 2014

Contractor: Duininck, Inc. Change Order: 1

Description of Change Order

Background Information: The low bid received for the project exceeded the available project budget. Staff and the golf course architect negotiated the terms of this change order with the low bidder to reduce the cost of the project without compromising the quality and functionality of the reconfigured golf course.

Change Order Justification: The contract modifications listed below are necessary to lower the project cost to within the available project budget.

Description of Work to be Performed: See attached itemization of the cost savings proposals accepted by the City.

Incorporates Field Order Number(s): N/A

Cost Time

This change order will:

No cost change: N/A Increase cost by $ 0.00

Decrease cost by $ 265,399.00 N/A

This change order will:

No change time

Increase time by 0 days

Decrease time by 0 days The date of completion as of this change order is

August 1, 2015 G/L account number (s):

Basis for change in cost:

Unit price(s) Lump sum

Cost plus

(10% self performed work;15% subcontracted)

Other:

lnavarr

Text Box

Attachment B

Contract Change Order #1 - continued

CONTRACTOR CERTIFICATION: The undersigned Contractor approves this Change Order as to the changes, if any, in the contract price specified for each Line Item and as to the extension of time allowed, if any, for completion of the entire work on account of each Line Item, and agrees to furnish all labor and materials and perform all work necessary to complete any additional work specified therein, for the consideration stated therein. It is understood that the time and cost adjustments set forth in this Change Order include full compensation for any impacts or delays associated with the Line Items addressed in this Change Order.

CLAIM PROCEDURE: Any items in Contractor's Change Order Request that are not included in this Change Order are hereby deemed rejected as of the date of this letter. If Contractor wishes to dispute this rejection, it may submit a Claim pursuant to Section 4.2 of the Contract General Conditions within thirty (30) days of the date of this Change Order.

AcceptedffirA Con~ctor: Accepted for City of Palo Alto:

By: IJJI)/ / --..... By:

. 1. -0 Title: -PA,-'Z-"'" ...t~'i2- "}/\ p.~ ~~ e 'Z- Title: Public Works Engineering - Sr. Engineer

Date: Sj\b /1t-1 Date:

Scope of Work

ci z ~ 0 u; 0:::

0 0 0 Description Reason for Change D- c( W 0 0 Amount

Total for this change order $ 0.00

PAGE 20F 4 ApPENDIX B -CONTRACT CHANGE ORDER

Contract Change Order City of Palo Alto Department: Public Works Eng Services Contract Number: C14153403

APPENDIX B – CONTRACT CHANGE ORDER PAGE 3 OF 4

Document Preparation

By:

Title: Joe Teresi Senior Engineer

Date:

City Approval – Division Head Signature required on all change orders

By :

Title : Brad Eggleston Assistant Director, Public Works Engineering Services

Date:

City Approval – Department Head: Signature required when any individual Change Order exceeds $10,000.

By:

Title: Mike Sartor Director of Public Works

Date:

Contract Change Order #1 – continued

Summary of Amounts Payable Under Contract (For Internal Purposes Only)

Original Contract Amount: $ 8,987,809.00

Previous Change Orders $ 0.00

This Change Order $ (265,399.00)

Revised Contract Amount: $ 8,722,410.00

Compare to:

Original Contract Authorization:

$ 8,722,410.00 Contingency: 872,241.00

Contract Amendment Authorizations

$ 0.00 Contingency added: 0.00

Contingency Authorizations:

$ 872,241.00 Used to date (0.00)

Total Authorized Funding: $ 9,594,651.00 Balance remaining 872,241.00

Change orders shall not be initiated for Council-approved contracts if the revised contract total exceeds the total authorized funding amount.

Item # Quantity Unit Unit Cost Total 5 Reduce total soil sensor count to 5 greens. Reduce from 44 each sensors at 2 per green, to

a total of 10 sensors at 5 green locations. Reduce communication wire quantity, data loggers and pedestals. Install at green numbers 1, 6, 11, 13 and 18 1 LS (31,340.00)$ (31,340.00)$

6 Alternate Gate Valve - Change Section 38.1.14.1 to allow use of CMF Global - AquaFuse HDPE Ball Valve or Harco Poly-Valve w/ JM Eagle supplied by Ewing. See attached submittal information. 8" PE Valve 17 EA (925.00)$ (15,725.00)$ 6" PE Valve 20 EA (133.00)$ (2,660.00)$ 4" PE Valve 3 EA (91.25)$ (273.75)$ 2" PE Valve (lateral isolation valve) 281 EA (25.00)$ (7,025.00)$ Item Total (25,684.00)$

7 10" basin detail revisions. Change to 12" in size and install per the attached Duininck Catch Basin Detail (allows for pipe size and direction changes) -HDPE 215 EA (28.00)$ (6,020.00)$

17 Bulkhead and Bridge convert to earthen crossing instead. Minor associated costs for additional grassing or earthwork to be adjusted later (if needed) upon field direction. Bollards to remain in scope. 1 LS (105,000.00)$ (105,000.00)$

20 RR Building conduit reduction. Delete spare 3" conduit requirement and allow Contractor to re-size conduit as needed as part of the design build requirement. 1 LS (3,620.00)$ (3,620.00)$

12 Change the Specification Section 17.1.7 to read: Soils used as topsoil for native planted areas (Baylands and Native areas) may contain rocks and stones. However , upon finish grading these areas, the Contractor shall provide a final finish surface free of visible loose stones and rocks. Add clarification that Section 16.2.19 does not apply to the native grassed areas. Dozer track finish is an acceptable quality of finish with rock picking as discussed to allow mowing equipment access and avoid damage from large rocks.

1 LS (25,650.00)$ (25,650.00)$

B Other Contractor Value Engineering savings or offsetting additional Items:

B1 Native Mix A Keep the Seashore Bentgrass at the current rateKeep the California Brome at the current rateSubstitute Slough Sedge for the True Foothill Sedge at the same seeding rate.Blue Wildrye at the same rateMolate Red Fescue at the same rateSubstitute Slender Hairgrass for Purple Needlegrass at the same seeding rate. Native Mix B**Substitute Alkali Bullrush for Brown Headed Rush at three times the seeding rate due to lower seed count. Slough Sedge at the current rateSubstitute Meadow Barley for Alkali Barley at the same rate**Subject to 2014 harvest. Other Juncus var. available if needed.

1 LS (22,850.00)$ (22,850.00)$

B2 Irrigation installed by vibratory plow; HDPE DR 13.5 of 2" pipe with HDPE compatible service fitting in lieu of 2" sch 40 PVC pipe and Lasco PVC service fitting. Duininck to supply Owner with Electrofusion Generator Machine and (10) 2" electrofusion repair couplers. This also includes Duininck training the Valley Crest/Maintenance staff on the use and repair for a total HDPE integral system.

1 LS $ (24,885.00) $ (24,885.00)C Assuming Contact will be awarded as the base, Alt A, and Alt B please see revised discount-

ALT1 In working with the City of Palo Alto and as per discussions we also propose to donate our construction labor and equipment of the Youth Area/First Tee facility. Greens are to be built using 10" of greensmix on herringbone drainage system. This includes (4) greens included in Alternate Bid Items A and B. 1 LS $ (20,350.00) $ (20,350.00)

Change Order 1 Total Deduct $ (265,399.00)

Duininck Bid Proposal $ 8,947,809.00

Alt A $ 25,000.00

Alt B $ 15,000.00

Total Value Engineering Contract Price $ 8,722,410.00

DLS Page 1 of 1 5/16/2014 9:02 AM

1 Revision April 28, 2014

AMENDMENT NO. ONE TO CONTRACT NO. C13148028 BETWEEN THE CITY OF PALO ALTO AND

GOLF GROUP, LTD.

This Amendment No. One to Contract No. C13148028 (“Contract”) is entered into June 18, 2014 by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and GOLF GROUP, LTD., an Arizona corporation authorized to do business in the State of California, dba FORREST RICHARDSON & ASSOCIATES, located at 2337 East Orangewood Avenue, Phoenix, AZ 85020 (“CONSULTANT”).

R E C I T A L S

A. The Contract was entered into between the parties for the provision of golf course architecture and environmental services for the design of the Palo Alto Municipal Golf Course Reconfiguration Project.

B. The parties wish to amend the Contract to increase the scope of services to include construction stage services and environmental mitigation monitoring services, increase compensation, and extend the contract schedule.

NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree:

SECTION 1. Section 1, SCOPE OF SERVICES is hereby amended to read as follows:

“CONSULTANT shall perform the Services described in the attached Exhibit “A-2” as an addition to the Scope of Services described in Exhibits “A” and “A-1” of the original Contract and in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY.”

SECTION 2. Section 2, TERM is hereby amended to read as follows:

“The term of this Agreement shall be from the date of its full execution through the duration of the construction stage services rendered by CONSULTANT for the Project unless terminated earlier pursuant to Section 19 of the Agreement.”

SECTION 4. Section 4, NOT TO EXCEED COMPENSATION is hereby amended to read as follows:

“The compensation to be paid to CONSULTANT for performance of the Basic Services described in Exhibit “A-2” in addition to the compensation for performance of the Basic Services described in Exhibits “A” and “A-1” of the original Contract, including payment for professional services and reimbursable expenses, shall not exceed seven hundred seventy-nine thousand six hundred dollars ($779,600). In the event Additional Services are authorized, the total

DocuSign Envelope ID: DA17B836-1991-4C43-BD62-9B3D602DBDF7

lnavarr

Text Box

Attachment C


compensation for services and additional services and reimbursable expenses shall not exceed one million two thousand thirty-one dollars ($1,002,031). The applicable labor rates are set out in Exhibit “C-1” of the original Contract.

Additional Services for this Contract Amendment, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C” and “C-2”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibits “A”, “A-1”, and “A-2”.

SECTION 4. The following exhibit(s) to the Contract is/are hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference:

a. Exhibit “A-2” entitled “SCOPE OF CONSTRUCTION STAGE ANDENVIRONMENTAL MITIGATION MONITORING SERVICES”.

b. Exhibit “B-1” entitled “AMENDMENT NO. ONE SCHEDULE OFPERFORMANCE”.

c. Exhibit “C-2” entitled “AMENDMENT NO. ONE COMPENSATION”.

SECTION 5. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written.

CITY OF PALO ALTO

City Manager

APPROVED AS TO FORM:

Senior Asst. City Attorney

GOLF GROUP LTD.

By:

Name:

Title:


Vice Pres.

Forrest L. Richardson

https://trust.docusign.com

Attachments:

EXHIBIT "A-2": SCOPE OF CONSTRUCTION STAGE AND ENVIRONMENTAL MITIGATION MONITORING SERVICES

EXHIBIT "B-1": AMENDMENT NO. ONE SCHEDULE OF PERFORMANCE EXHIBIT “C-2”: AMENDMENT NO. ONE COMPENSATION



EXHIBIT “A-2” SCOPE OF CONSTRUCTION STAGE AND

ENVIRONMENTAL MITIGATION MONITORING SERVICES

BASIC SERVICES

The CONSULTANT’s Basic Services consist of the services described below:

Task (6) Construction Support Services (Golf Course Architect) Task (7) Construction Support Services (Project Representative) Task (8) Environmental Mitigation Monitoring Services (ICF/Golfauna)

Task 6 - Construction Support Services (Golf Course Architect)

(a) The CONSULTANT shall assist and support the CITY during the construction of the Project, including attending a pre-construction conference; providing clarifications/interpretations of plans and specifications; preparing and/or reviewing required shop drawings and submittal reviews; assisting with the preparation of contract change orders; providing recommendations for changes required by design discrepancies, utility conflicts, or other unforeseen circumstances that may develop during construction; and preparing punch lists prior to final acceptance of the Work.

(b) The CONSULTANT shall make periodic site visits to observe progress and assist the CITY during the construction of the Project. Administration of the construction of the Project shall be the responsibility of the CITY unless additional services are contracted between the parties for construction administration services. The CONSULTANT has provided a Construction Management Services scope of work as a potential Additional Service to this Contract to be utilized at the discretion of the CITY.

(c) Construction Support will commence with the award of the construction contract (or individual contracts in the case of multiple contractors being engaged for this project or the Project being incrementally constructed) and will terminate when the CITY has determined final completion of the Work covered by the CONSULTANT’s plans and specifications. Final completion of the Work shall mean acceptance by the CITY of the Work upon completion of the Work to the CITY’s satisfaction.

(d) The CONSULTANT, as a representative of the CITY during the Construction Support phase, shall advise and consult with the CITY, and all of the CITY’s instructions to the Contractor(s) working on the Project shall be issued simultaneously to the CONSULTANT. The CONSULTANT shall have authority to act on behalf of the CITY to the extent provided in the design Agreement.

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(e) The CONSULTANT shall at all times have access to the Project wherever it is in progress.

(f) The CONSULTANT or his representative(s) shall make periodic visits to the site of the Project to familiarize himself generally with the progress and quality of the Work to determine in general if the Project is proceeding in accordance with the Construction Documents prepared by the CONSULTANT. On the basis of these on-site observations, the CONSULTANT shall endeavor to guard the CITY against defects and deficiencies in the Work of the Contractor(s). The quantity of on-site observation visits of the CONSULTANT shall be not less than thirty (30) and not more than forty (40) during the construction of the Work. An on-site visit is defined as one (1) personnel on-site for two (2) or more hours per calendar day inclusive of travel time to and from the site.

(g) The CONSULTANT shall review and approve shop drawings, samples, change orders and other submissions of the Contractor(s) only for conformance with the design concept of the Project and for compliance with the information given in the Construction Documents.

(h) Upon completion of any portion of the Work, and prior to payment to the Contractor(s) of amounts due for such portion of the work, the CONSULTANT shall certify to the CITY in writing the percentage of the Work of the Contractor(s) which has been performed and completed in conformance with the Construction Documents.

Task 7 - Construction Support Services (Project Representative)

(a) A Project Representative(s) shall be mutually selected by the CONSULTANT and the CITY with duties, responsibilities and limitations of authority to be set forth in writing, as agreed to by the City and the CONSULTANT. Provisions shall be included to permit the CONSULTANT to impart instructions and interpretations to the Project Representative(s) for the purpose of implementing the golf course plans and their design intent. The Project Representative mutually agreed upon by all parties shall be the firm DL Siemens Inc, who shall be represented by Dale Siemens, California Contractors License #872425, Class A, 1039 E. Santa Ana Ave, Fresno, CA.

(b) The on-site observations by Project Representative(s) of the Work as it progresses is for the purpose of providing further protection for the CITY against the failure of the Work to conform to the Construction Documents, but providing the services of the Project Representative(s) shall not modify the rights or obligations of the CONSULTANT as provided herein.

(c) The Project Representative(s) shall be under contract by the CONSULTANT.

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(d) Through the on-site observations by Project Representative(s) of the Work as it progresses, the CONSULTANT shall consult with the CITY on matters pertaining to performance of the Work and conformance to the design and specifications of the golf course aspects of the Work.

(e) The Project Representative(s) shall perform the following construction administration services from award of the construction contract by the CITY through final acceptance of the Project:

(1) Provide regular, on-site observations averaging 3 days per week of the Project Representative’s time to ascertain progress, compliance and quality of the work performed by the Contractor(s)

(2) Review of weekly progress reports by the Contractor(s)

(3) Provide coordination of the site visits of the CONSULTANT

(4) Coordinate required meetings for scheduling, approvals and administration including:

(a) Leading weekly or bi-weekly on-site progress construction meetings including minutes and notes thereof.

(b) Processing and tracking of contractor submittals as required by the project documents

(c) Review, comment and updating of Contractor’s project progress schedule.

(5) Provide contract administration and coordinate timely payment approvals consistent with that of the CONSULTANT

(6) Impart instructions and interpretations from the Golf Course Architect to the Contractor

(7) Meet with the CITY in person or via telephone and/or email to convey pertinent information regarding the project status, discuss issues, make advisements, and record CITY decisions and directives in matters of the construction.

(8) The Project Representative shall not be empowered to, nor shall he make decisions on behalf of the CITY. The Project Representative shall only be empowered to convey CITY decisions timely to the Contractor and/or Golf Course Architect.

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(9) Coordinate, document and accept comments, observations, concerns of CITY

provided staff, consultants or maintenance contractors with regard to the project progress and conformance with the Construction Documents.

(10) Coordinate the projects grow-in acceptance schedule and “punch-list”

between the Golf Course Contractor and the CITY’s Golf Course Maintenance Contractor.

Task 8 - Environmental Mitigation Monitoring Services (ICF/Golfauna) (a) Mitigation Measure AQ1: Implement Tailpipe Emission Reduction for Project

Construction (ICF) ICF will assist with the following compliance portion of the mitigation measure:

The City’s construction Contractor shall develop a plan for submittal to the City that demonstrates that the off-road equipment (more than 50 horsepower) to be used in construction of the Project (i.e., owned, leased, and subcontractor vehicles) will achieve a Project-wide fleet-average 20 percent NOX reduction. Acceptable options for reducing emissions include the use of late-model engines, low-emission diesel products, alternative fuels, engine retrofit technology, after-treatment products, add-on devices such as particulate filters, and/or other options as such become available.

ICF will collect monthly construction equipment data log sheets and quantify

emissions based on data log sheets to verify off-road construction equipment of more than 50 horsepower will achieve a Project-wide fleet-average 20 NOX reduction.

Deliverable: Prepare a memorandum detailing the methodology and results and

whether the Project-wide fleet-average 20 NOX reduction is achieved. Assumptions: ICF International can provide example construction equipment log

sheets for the construction contractor. It is assumed that monthly construction equipment log sheets will be compiled by the City’s construction Contractor and submitted to ICF International by the 15th day of the next month.

Schedule/Timing: Assumes 20 months of data collection. (b) Mitigation Measure BIO-1: Develop and Implement Worker Awareness Training

to provide one day of worker training and handout to workers (Golfauna)

Golfauna will create worker awareness handout and training sign-in sheet and provide one day of worker training for the Contractor’s forces.

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Deliverables: One-day training session for Contractor’s crew. Worker training handout and sign-in sheet. Assumptions: One day is the minimum amount of time required for the training. Any additional training will be provided on an as-needed basis as an Additional Service. Schedule/Timing: Immediately before construction begins. Advance notice needed to create training handout.

(c) Mitigation Measure BIO-2a: Conduct Preconstruction Botanical Surveys (ICF)

ICF will conduct a one-day survey for all suitable habitat for spring flowering plants. Deliverable: Memo and map of findings. Assumptions: One day survey. Plants previously surveyed in August 2013 do not need to be surveyed again. Schedule/Timing: Mid-April (but if construction will start in April can be done early in the month).

(d) Mitigation Measure BIO-3: Establish Buffer Zones for Nesting Raptors and Migratory Birds (Golfauna)

Golfauna will conduct a one-day site visit prior to September (not needed after September) to survey all vegetation for bird nests. This survey needs to be conducted prior to any vegetation removal. Deliverable: Nesting bird memo and map of findings, and buffers/guidance if necessary. Assumptions: It is assumed that the nesting bird and burrowing owl survey will be conducted on the same day. Assumes that only one survey will be necessary, implying that the whole site becomes active at the same time. If parts of the site become active at different times, additional surveys will be necessary at additional cost. If nests are found, Golfauna will consult with CA Department of Fish & Wildlife and will establish buffer and monitor active nesting sites until birds have fledged. Additional surveys may be required to confirm that birds have fledged, at additional cost. Schedule/Timing: Survey to be conducted seven days prior to the commencement of construction.

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(e) Mitigation Measure BIO-4: Implement Survey and Avoidance Measures for Western Burrowing Owls Prior to Construction Activities (Golfauna)

Golfauna will conduct a one-day survey prior to construction to determine if owls are present on-site. Deliverable: Memo and map, and buffers/guidance if necessary. Assumptions: It is assumed that the nesting bird and burrowing owl survey will be conducted on the same day. Schedule/Timing: Survey to be conducted seven days prior to the commencement of construction.

(f) Mitigation Measure BIO-5: Implement Survey and Avoidance Measures for California Clapper Rail and California Black Rail Prior to Construction Activities (Golfauna)

A qualified biologist from Golfauna will conduct the protocol survey. The surveys need to be conducted separately for the two species. Deliverable: Memo and maps. Buffers/guidance/monitoring/species avoidance plan, if necessary. Oversee the installation of exclusionary fencing, if necessary. Assumptions: One survey for each species of Rail. If species found on-site, exclusionary fencing will be required. It is assumed that the City’s Contractor will install the fence per Golfauna biologist’s direction. Schedule/Timing: 48 hours prior to the start of construction.

(g) Mitigation Measure BIO-6: Implement Survey and Avoidance Measures for Salt

Marsh Harvest Mouse and Salt Marsh Wandering Shrew Prior to Construction Activities (Golfauna)

A qualified biologist and species specialist from Golfauna will conduct a survey of the site to identify potential mouse/shrew habitat areas and to search for live specimens. It is assumed that it will take up to four days for city staff or the Contractor to remove pickleweed by hand from wetland areas to be impacted by the Project. A qualified biologist from Golfauna will be onsite during the pickleweed removal.

Deliverable: Memo and maps. Buffers/guidance/monitoring/species avoidance plan, if necessary. Oversee the pickleweed removal and installation of exclusionary fencing, if necessary.

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Assumptions: It is assumed that the City’s Contractor will remove the pickleweed and, if necessary, install the exclusionary fence per the Golfauna biologist’s direction. It is assumed that Salt Marsh Harvest Mouse and Salt Marsh Wandering Shrew will not be found onsite. If the species are observed, then 50 hours will be required to write a species avoidance plan and conduct agency coordination, at additional cost. Schedule/Timing: Hand removal of pickleweed by City staff or the Contractor must occur prior to start of construction.

(h) Mitigation Measure BIO-7: Avoid and Protect Jurisdictional Wetlands during Construction (ICF) ICF biologist will be out on the site for one day pin-flagging (staking) wetlands for fencing installers. Deliverable: Oversee the installation of protective fencing. Assumptions: It is assumed that the City’s Contractor will install the fence per ICF biologist’s direction. Schedule/Timing: Prior to start of construction. (i) Mitigation Measure CUL-1: Conduct Worker Awareness Training for Archaeological Resources Prior to Construction (ICF)

ICF cultural resource specialist will conduct one-day training for Contractor’s construction crew regarding what to look for with respect to archaeological resources. Deliverable: Training of Contractor’s construction crew. Assumptions: One-day training. CUL-1 and CUL-4 training will be combined. Schedule/Timing: Prior to start of construction.

(j) Mitigation Measure CUL-3: Conduct a Preconstruction Paleontological Resources Field Survey and Paleontological Resources Inventory and Evaluation (ICF)

ICF cultural resource specialist will conduct one-day paleontological resources field survey within native soils to determine potential for finding any resources.

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Deliverable: Memo summarizing field survey. Assumptions: One-day field survey. Schedule/Timing: Prior to start of construction work within native soils. (k) Mitigation Measure CUL-4: Conduct Worker Awareness Training for

Paleontological Resources Prior to Construction (ICF)

ICF cultural resource specialist will conduct one-day training for Contractor’s construction crew regarding what to look for with respect to paleontological resources. Deliverable: Training of Contractor’s construction crew. Assumptions: One-day training. CUL-1 and CUL-4 training will be combined. Schedule/Timing: Prior to start of construction.

(l) Respond to Water Board Letter and Update Mitigation and Monitoring Plan (MMP) (ICF)

ICF will provide a formatted response letter as a forward to the updated MMP and include each comment from the Water Board (3rd letter of Incomplete) and a brief response to each question, in most cases referencing the Updated MMP. Deliverable: A maximum of one (1) round of revisions to address the City comments, and one (1) final response letter. ICF will update the MMP per the time available and per what seems reasonable to provide for a project of this size; ICF will consult with the City on approach for addressing comments; This includes the creation of two new figures; ICF will provide feedback on the native seed mix. Deliverable: A maximum of one (1) round of revisions to address City comments, and one (1) final report, plus two new graphics will be produced; one which shows existing versus created wetlands, and one which shows a cross- section of wetland restoration.

(m) Jurisdictional Wetland Delineation (additional work and exhibits) (ICF)

ICF will coordinate with the US Army Corps of Engineers regarding field

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Meeting to verify the Project wetlands delineation. Prepare materials for and attend verification meeting. Make modifications to the wetland delineation map based on field verification meeting with Corps staff. Print copies of Wetlands Delineation report/figures and provide to City. Deliverable: Revised Wetlands Delineation Map

ADDITIONAL SERVICES The following services may be provided by the Consultant if approved in advance by the City’s Project Manager. MitigationMeasureBIO‐2b:ConfineConstructionDisturbanceandProtectSpecial‐StatusPlantsduringConstruction(Golfauna)(As‐needed) Thismitigationmeasureisonlyrequiredifspecial‐statusplantsareobserved

during the pre‐construction survey. Golfauna staff will consult with CADepartment of Fish & Wildlife, identify exclusion areas, and overseeinstallationofprotectivefencing.

Deliverable:Onedaytooverseetheinstallationoffencing. Assumptions: 2‐3 of hours to consult with agencies is assumed. It is

assumed that the City’s Contractor will install the fence per Golfaunabiologist’sdirection.

Schedule/Timing:2‐3dayspriortoconstructionMitigation Measure BIO‐2c: Compensate for Loss of Special‐Status Plants(Golfauna)(As‐needed)Thismitigationmeasureisonlyrequiredifspecial‐statusplantsareobservedduringthepre‐constructionsurvey.Golfaunawillprepareacompensationplanforlossofspecial‐statusplantspecies.Deliverable:CompensationPlanforlossofspecial‐statusplantspecies.Assumptions:Theremaybecostsfromothercontractors,primarilyassociatedwithpreservingapopulationofthespeciesofinterest,orwithanurserycollectingseedandcreatinganewpopulation.Thesetasksarenotincludedinthescopeofwork.Schedule/Timing:2‐3dayspriortoconstruction

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MitigationMeasure BIO‐2d: Develop and Implement Special‐Status Plant SpeciesMonitoringPlan(Golfauna)(As‐needed)*

Thismitigationmeasureisonlyrequiredifspecial‐statusplantsareobservedduringthepre‐constructionsurvey.Golfaunastaffwillprepareamonitoringplan. TypicallyCADepartmentofFish&Wildliferequiresmonitoring foraperiodoffiveyears.Servicesaretoconductmonitoringfortwodaysayearforfiveyears.

Deliverable:Monitoringplanandannualmonitoringreports. Assumptions:Fiveyearmonitoringperiod. Schedule/Timing:Duringbloomingperiodforspeciesobservedtwiceayear.

* Services required after September 2015 may be assigned to the City under separate agreement.

MitigationMeasureBIO‐2e:Deposit LandscapeWaste Exclusively in Developed orRuderalAreasAbsentofSpecial‐StatusPlantSpecies(ICF)(As‐needed)

If special‐status plants are found during pre‐construction survey, ICF willprepareahandoutandgivetrainingtotheCity’sGolfCourseoperationsandmaintenance staff regardingwhere to deposit landscapewaste in order toavoidimpactingspecial‐statusplants.Deliverable: O&Mworker awareness training. Special‐status plant specieshandoutandtraineesign‐insheet.Assumptions: One day training for City’s Golf Course operations andmaintenancestaff.Schedule/Timing: After construction, but before golf course becomesoperational(e.g.,startofO&Mactivities).

Mitigation Measure (CUL-2): Stop Work if Cultural Resources, Including Human Remains, are Encountered during Ground-Disturbing Activities (ICF) (As-needed)

In the unlikely event of finding any human remains, ICF cultural resources specialist will visit the site and advise the crew regarding recovery of artifacts. Deliverable: Site visit and guidance. Memo of findings and recommendations for further action.

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Assumptions: Does not assume preparation of a treatment plan or coordination with Native American tribes. Assumes 16 hours of monitoring. Schedule/Timing: As needed during construction.

Mitigation Measure CUL-5: Stop Work if Paleontological Resources are Encountered during Ground-Disturbing Activities (ICF) (As-needed)

In the unlikely event of finding any paleontological resources, ICF cultural resources specialist will visit the site and advise the crew regarding recovery of artifacts. Deliverable: Site visit and guidance. Memo of findings and recommendations for further action. Assumptions: Does not assume preparation of a treatment plan. Assumes 16 hours of monitoring. Schedule/Timing: As needed during construction.

Ongoing Mitigation Monitoring and Resource Agency Coordination Support (As-needed)

Additional time is provided in the scope of work to advise the City regarding mitigation measures and to provide specialists on-call to visit the site on short notice as need be. Additional items may come up during coordination with the resource agencies permitting the Project. This is intended to be as‐needed support for permitting and resource agency coordination for items that may arise with the Corps, Water Board, BCDC, USFWS, and/or CDFW to ensure that all permitting needs have been met and, if not, to understand their needs for permitting issuance.

Additional Project Administration Costs and Development of Contingency Plan

Forrest Richardson and subconstultants shall provide additional project administration tasks if the start of construction on the Golf Course Reconfiguration Project is delayed beyond May 2014. Forrest Richardson shall prepare a revised set of construction documents that redesign the Golf Course to avoid impacting the existing on-site wetlands to be implemented as a contingency if the City is not able to secure permits for the project as originally designed (Contingency Plan). Forrest Richardson shall coordinate with Duininck, Inc. to secure pricing for the revised project design.


EXHIBIT “B-1” AMENDMENT NO. ONE SCHEDULE OF PERFORMANCE

CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed.

Milestones Completion

No. of Weeks From NTP

Task 6 - Construction Support Services (Golf Course Architect) 70

Task 7 - Construction Support Services (Project Representative) 70 Task 8 - Environmental Mitigation Monitoring Services (ICF/Golfauna) 70

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EXHIBIT “C-2” AMENDMENT NO. ONE COMPENSATION

The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as exhibit C-1 up to the not to exceed budget amount for each task set forth below.

The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A-2” (“Basic Services”) and reimbursable expenses shall not exceed $344,262. CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $456,693. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.

CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, does not exceed $344,262 and the total compensation for Additional Services does not exceed $112,431.

BUDGET SCHEDULE NOT TO EXCEED AMOUNTS FEES REIMBURSABLES

Task 6 $ 98,378 $ 30,000 (Construction Support Services - Golf Course Architect)

Task 7 $ 160,913 (Construction Support Services – Project Representative) Task 8 $ 53,221 $ 1,750 (Environmental Mitigation Monitoring Services - ICF/Golfauna)

Sub-total Basic Services $ 312,512

Reimbursable Expenses $ 31,750 Total Basic Services and Reimbursable expenses $ 344,262

Additional Services (Not to Exceed) $ 112,431

Maximum Total Additional Compensation $ 456,693


REIMBURSABLE EXPENSES

The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are:

(a) Telephone and communications charges; computer-aided-drafting/design (CADD) plots, photocopies and other reproductions; all expendable surveying supplies; and any required and approved travel expenses, plus a per diem amount of $50 per day per person for food when traveling or on-site for six (5) or more continuous hours.

(b) Mileage at a rate of fifty-nine (59) cents per mile for use of personal or company

vehicles. All requests for payment of Reimbursable Expenses shall be accompanied by appropriate

backup information. Any expense anticipated to be more than $31,750 shall be approved in advance by the CITY’s project manager.

ADDITIONAL SERVICES

The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expense, for such services based on the rates set forth in Exhibit “C-1”. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. Potential Additional Service tasks are outlined in Exhibit “A-2” of this Agreement.


FEE BREAKDOWN The fees listed above are based upon the following cost breakdown submitted by the CONSULTANT: Task 6 (Construction Support Services - Golf Course Architect) Task 7 (Construction Support Services – Project Representative)

Month Year Monthly Fee Golf Course Architect

Monthly Fee Project Representative

Project Representative Notes

Construction Support

Project Representative* Notes

June 2014 $ 7,027.00 $11,493.75 Active - 3 days per weekJuly 2014 $ 7,027.00 $11,493.75 Active - 3 days per weekAugust 2014 $ 7,027.00 $11,493.75 Active - 3 days per weekSeptember 2014 $ 7,027.00 $11,493.75 Active - 3 days per weekOctober 2014 $ 7,027.00 $11,493.75 Active - 3 days per weekNovember 2014 $ 7,027.00 $11,493.75 Active - 3 days per week

December 2014 $ 3,513.50 $5,746.88Limited - 5 to 6 days per month

January 2015 $ 3,513.50 $5,746.88Limited - 5 to 6 days per month

February 2015 $ 3,513.50 $5,746.88Limited - 5 to 6 days per month

March 2015 $ 3,513.50 $5,746.88Limited - 5 to 6 days per month

April 2015 $ 7,027.00 $11,493.75 Active - 3 days per weekMay 2015 $ 7,027.00 $11,493.75 Active - 3 days per weekJune 2015 $ 7,027.00 $11,493.75 Active - 3 days per weekJuly 2015 $ 7,027.00 $11,493.75 Active - 3 days per weekAugust 2015 $ 7,027.00 $11,493.75 Active - 3 days per weekSeptember 2015 $ 7,027.00 $11,493.75 Active - 3 days per week Total 2015 $ 98,378.00 $160,913.00 Reimbursable 2015 $ 30,000.00 n/a*

Total NTE 2015 $128,378.00 $160,913.00

* Reimbursable Expenses are included in basic Monthly Fee.

Task 8 (Environmental Mitigation Monitoring Services - ICF/Golfauna)

Task 8a (Mitigation Measure AQ-1) (ICF) $ 19,402

Task 8b (Mitigation Measure BIO-1) (Golfauna) $ 2,046

Task 8c (Mitigation Measure BIO-2a) (ICF) $ 1,901


Task 8d (Mitigation Measure BIO-3) (Golfauna) $ 853

Task 8e (Mitigation Measure BIO-4) (Golfauna) $ 341

Task 8f (Mitigation Measure BIO-5) (Golfauna) $ 5,610

Task 8g (Mitigation Measure BIO-6) (Golfauna) $ 5,610

Task 8h (Mitigation Measure BIO-7) (ICF) $ 1,314

Task 8i (Mitigation Measure CUL-1) (ICF) $ 1,065

Task 8j (Mitigation Measure CUL-3) (ICF) $ 1,120

Task 8k (Miitgation Measure CUL-4) (ICF) $ 636

Task 8l (Respond to Water Board letter/update MMP) (ICF) $ 9,546

Task 8m (Jurisdictional Wetland Delineation) (ICF) $ 3,777

TASK 8 TOTAL $ 53,221

Estimated Additional Services

Mitigation Measure BIO-2b (Golfauna) $ 1,364

Mitigation Measure BIO-2c (Golfauna) $ 3,410

Mitigation Measure BIO-2d (Golfauna) $ 10,912

Mitigation Measure BIO-2e (ICF) $ 1,940

Mitigation Measure CUL-2 (ICF) $ 2,088

Mitigation Measure CUL-5 (ICF) $ 2,088

Additional Mitigation Monitoring & Agency Coordination $ 17,200

Contingency for Golf Course Architect Construction Services $ 12,838

Contingency for Project Representative Construction Services $ 16,091

Additional Project Administration $ 4,500

Development of Contingency Plan $ 40,000

ADDITIONAL SERVICES TOTAL $112,431


Not Yet Approved

140604 sdl 00710403B 1

Resolution No. _____ Resolution of the Council of the City of Palo Alto Amending Resolution Number 9296, Section 2, Extending the Term of an Exception to Chapter 10.48 [Trucks and Truck Routes] of the Palo Alto Municipal Code For the

Limited Purpose of Allowing a Transfer of Soil from the Stanford University Campus to the Palo Alto Municipal Golf Course and Adjacent

Areas

The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The Council adopted Resolution Number 9296 on November 13, 2012. The adopted resolution is attached as “Attachment A.” This resolution pertains to the permitted time, within which the transfer of soils from the Stanford University campus to the San Francisquito Creek Joint Powers Authority’s regional flood control project and the Palo Alto Municipal Golf Course reconfiguration project (the “Projects”) may occur, consistent with Palo Alto Municipal Code section 10.48.090(c). SECTION 2. Section 2 of Resolution Number 9296 is hereby amended in its entirety to read, as follows: “The Council hereby approves the following limited exception to the application of Chapter 10.48 (Truck and Truck Routes) to the Projects: Trucks depositing soil from construction at the Stanford University campus that are transported to the Palo Alto Municipal Golf Course and immediately adjacent areas for use in the construction of the San Francisquito Creek levee project or for use in the Golf Course reconfiguration project may accomplish such deliveries by travelling on Oregon Expressway. Any such trips shall take place between 9 a.m. and 4 p.m. This exception shall sunset on December 31, 2014.” // // //

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Attachment D

Not Yet Approved

140604 sdl 00710403B 2

SECTION 3. An EIR for the San Francisquito Creek Flood Reduction, Ecosystem Restoration, and Recreation Project, San Francisco Bay to Highway 101 project was certified by the San Francisquito Creek Joint Powers Authority on October 25, 2012. An EIR for the Palo Alto Municipal Golf Course Reconfiguration Project was certified by Council on February 3, 2014. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: __________________________ ______________________________ City Clerk Mayor APPROVED AS TO FORM: ______________________________ City Manager __________________________ Senior Asst. City Attorney ______________________________ Director of Public Works

Resolution No. 9296 Resolution ofthe Council ofthe City of Palo Authorizing an Exception to

Chapter 10.48 [Trucks and Truck Routes] of the Palo Alto Municipal Code For the Limited Purpose of Allowing a Transfer of Soil from the

Stanford University Medical Center Construction Project to the Palo Alto Golf Course and Adjacent Areas

The Council of the City of Palo Alto RESOLVES as follows:

SECTION 1. Findings.

A. There is a unique opportunity to transfer soil from the Stanford University Medical Center project to the San Francisquito Creek JPA regional flood control project and/or the Palo Alto Golf Course reconfiguration and playing fields project.

B. John ArriHaga, a local developer, has offered to transport soil from the SUMC project to the Palo Alto Golf Course for the flood control project and later use at the golf course and possible future playing fields at no cost to the City or the SFCJPA.

C. This local transfer will significantly reduce greenhouse gases, especially if trucks are permitted to travel on Oregon Expressway, which is the shortest vehicle route between the SUMC project site and the flood control project site.

D. The Council desires to make a limited exception to Palo Alto Municipal Code Section 10.48.090.

SECTION 2. Limited Exception to Palo Alto Municipal Code Chapter 10.48 for Flood Control Project.

The City Council hereby approves the following exception to the provisions of Chapter 10.48 (Trucks and Truck Routes): Trucks depositing soil from construction at the Stanford University campus at the Palo Alto Golf Course and immediately adjacent areas for use in the construction of the San Francisquito Creek levee project or for use in the Golf Course reconfiguration project or the Palo Alto Playing Fields and landscape buffer projects may accomplish such deliveries by traveling on Oregon Expressway. Any such trips shall take place between 9 a.m. and 4p.m. This exception shall sunset on June 30, 2014.

II

II

II

II

121114 jb 0130994 1

SECTION 3. An EI.R for the San Francisquito Creek Flood Reduction, Ecosystem

Restoration, and Recreation Project, San Francisco Bay to Highway 101 project was certified by the San Francisquito Creek Joint Powers Authority on October 25, 2012.

INTRODUCED AND PASSED: November 13,2012

AYES: BURT, ESPINOSA, HOLMAN, PRICE, SCHARFF, SCHMID, SHEPHERD

NOES:

ABSENT:

ABSTENTIONS: KLEIN, YEH

APPROVED:


df7~ Mayor

.-. ~. it ( . c:r-."

Senior Asst. City Attorney

121114 jb 0130994 2

140506 sdl 00710388 [Type text]

****NOT YET APPROVED*****

RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO

DECLARING INTENTION TO REIMBURSE EXPENDITURES FROM THE PROCEEDS OF TAX-EXEMPT OBLIGATIONS

TO BE ISSUED BY THE CITY A. The City proposes to undertake the project referenced below, to issue, execute

and deliver a financing lease, either on a private placement basis or using certificates of participation, on a tax-exempt basis (the “Lease”) to finance such project, and use a portion of the proceeds of the Lease to reimburse expenditures made for the project prior to the issuance of the Lease.

B. United States Income Tax Regulations section 1.150-2 provides generally that

proceeds of tax-exempt debt are not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed, one of which is a requirement that prior to the payment of any such expenditure, the issuer declares an intention to reimburse such expenditure.

C. It is in the public interest and for the public benefit that the City declares its official

intent to reimburse the expenditures referenced herein. NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE, as follows: SECTION 1. The City intends to cause the Lease to be executed and delivered for the

purpose of paying the costs of the Palo Alto Municipal Golf Course Reconfiguration Project, more particularly described in Exhibit A (the "Project").

SECTION 2. The City hereby declares that it reasonably expects (i) to pay certain costs of

the Project prior to the date of execution and delivery of the Lease, and (ii) to use a portion of the proceeds of the Lease for reimbursement of expenditures for the Project that are paid before the date of execution and delivery of the Lease.

SECTION 3. The maximum principal amount of the Lease is expected to be Seven Million

dollars ($7,000,000).

/ / / / / /

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Attachment E

140506 sdl 00710388 2

SECTION 4. The Council finds that the adoption of this resolution does not constitute a

project under the California Environmental Quality Act and CEQA Guidelines, and therefore, no environmental assessment is required.

INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ ________________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ ______________________________ Senior Asst. City Attorney City Manager ______________________________ Director, Administrative Services ______________________________ Director, Community Services

140506 sdl 00710388 3

EXHIBIT A

Project Description The Palo Alto Municipal Golf Course Reconfiguration Project (Project) will reconfigure the entire Golf Course to an 18-hole, par 71, regulation-length course measuring 6,685 yards from the back tees. Following the designation of approximately 10.5 acres of the existing Golf Course for a future recreation facility and the loss of 7.4 acres to be incorporated into a widened San Francisquito Creek, the resultant area of the reconfigured Golf Course will be reduced to approximately 156 acres. The existing driving range will be expanded to the north by approximately 8,000 square feet to accommodate six new driving stations. A new Youth Golf Area including elements designed to attract young people to the game of golf will be established along Embarcadero Road south of the existing driving range. At the far western end of this area will be a practice putting green with sand bunkers. The Project will include new 6.5-foot-wide concrete golf cart paths, concrete footpaths at the practice putting green area, and compacted gravel maintenance path connections between the concrete cart paths. The Project will also include a new 300 square foot restroom building located on the Golf Course. The Project will reduce the Golf Course managed turf area by 40 percent from 135 acres to 81 acres. During replacement, nonnative plants and trees will be replaced with native grasses, and low-lying Baylands zones will be planted with indigenous halophyte plants (i.e., plants that survive in saline soil). The Golf Course will include three types of vegetated zones: managed turf area, non-turf native grass zones, and Baylands native zones. The Project will also include a dramatic increase in topographic variability throughout the course, including buffer mounds which will act as a visual and acoustical barrier between the Golf Course and the future recreation area. The buffer mounds will be 15 to 25 feet tall. Of the 711 trees on the existing Golf Course site, 123 trees will remain, and 588 will be removed. The loss of trees will be mitigated through a combination of new 300 native trees to be planted on the course as part of the Project, the protection of 500 naturally-occurring oak saplings on the Arastradero Preserve, and the restoration of two acres of native bay ecosystem habitat at a site in Byxbee Park near the Golf Course. The Project will replace the existing Golf Course irrigation system with a new high-density polyethylene (HDPE) pipe system with limited metal components to eliminate corrosion and leaks. The sprinkler heads will be individually controlled and adjustable to provide full or part circle coverage. The Project will also include underground soil sensor units which will monitor soil moisture levels to prevent overwatering. Overall water usage for Golf Course irrigation is expected to be reduced by at least 30 percent.

Attachment FORDINANCE NO.xxxx

ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 2015 TO PROVIDE AN ADDITIONAL APPROPRIATION OF $2,501,569TO CAPITAL IMPROVEMENT PROGRAM PROJECT NUMBER PG-13003, GOLF COURSE RECONFIGURATION AND BAYLANDS ATHLETIC CENTER IMPROVEMENTS PROJECT AND RECOGNIZE$1,300,000 IN REVENUE FROM RECLAIMED SOIL IMPORTS AND APPROVE THE NEED OF AN ADDITIONAL $1,148,437 IN CERTIFICATE OF PARTICIPATION PROCCEEDS FOR AN AGGREGATE AMOUNT $6,148,437 TO FINANCE THE CONSTRUCTION OF THE GOLF COURSE RECONFIGURATION.

The Council of the City of Palo Alto does ordain as follows:

SECTION 1. The Council of the City of Palo Alto finds and determines as follows:

A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 16, 2014 did adopt a budget for Fiscal Year 2015; and

B. On July 23, 2012 City Council approved the Golf Course Reconfiguration Project (CIP Project PG-13003) that includes a reconfiguration of the Course and 10.5 acres for playing fields or other recreational amenities; and

C. The City Council amended the Fiscal Year 2013 Golf Course Reconfiguration project budget to provide funding in the amount of $545,338 from the Infrastructure Reserve to expand the contract with Golf Course Architect Forrest Richardson, to develop Golf Course design options and complete the required Environmental Impact Report; and

D. The Fiscal Year 2014 capital budget included an appropriation of $8,000,000 for construction bringing the total appropriation for CIP Project PG-13003 to $8,545,338, an amount insufficient to cover the revised project cost of $11,046,907; and

E. To date, $598,470 has been expended in CIP Project PG-13003, leaving an available balance of $7,946,868, requiring additional funding of $2,501,569 for a total of $10,448,437; and

F. The Fiscal Year 2014 budget for CIP Project PG-13003 assumed $3,000,000 in revenue from the San Franscisquito Creek Joint Powers Authority and $5,000,000 in certificate of participation proceeds, which is an insufficient amount to cover current project needs; and

G. Additional revenue of $1,300,000 from the use of reclaimed soil has been identified to offset the cost of construction; and

H. Therefore, an additional amount of $1,148,437 in certificate of participation proceeds, the aggregate principal amount of $6,148,437, will be needed for the financing of the Golf Course Reconstruction Project for Council consideration in Fiscal Year 2015.

SECTION 2. The sum of Two Million Five Hundred OneThousand Five Hundred Sixty Nine ($2,501,569) is hereby appropriated to CIP Project PG-13003, Golf Course Reconfiguration and Baylands Athletic Center Project.

SECTION 3. The sum of One Million Three Hundred Thousand ($1,300,000) is hereby recognized as revenue from reclaimed soil for CIP Project PG-13003, Golf Course Reconfiguration and Baylands Athletic Center Project.

SECTION 4. The sum of One Million One Hundred Forty Eight Thousand Four Hundred Thirty Seven ($1,148,437) is hereby recognized as revenue as from additional certificate of participation proceeds for CIP Project PG-13003, Golf Course Reconfiguration and Baylands Athletic Center Project.

SECTION 5. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance.

SECTION 6. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effectiveupon adoption.

SECTION 7. Per the requirements of the California Environmental Quality Act (CEQA), this project is categorically exempt from CEQA, per Section 15311, Accessory Structures.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

ATTEST:

_________________________City Clerk

__________________________Mayor


_________________________Senior Assistant City Attorney

__________________________City Manager

__________________________Director of Public Works

__________________________Director of Administrative Services

Attachment G

ORDINANCE NO. xxxx

ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE GENERAL FUND BUDGET FOR FISCAL YEAR 2015 TO INCREASE GOLF COURSE REVENUE ESTIMATES BY $324,800 AND PROVIDE ADDITIONAL APPROPRIATION OF $324,800 IN THE COMMUNITY SERVICES DEPARTMENTBUDGET FOR GOLF COURSE OPERATIONS FOR A TWO MONTH PERIOD.

The Council of the City of Palo Alto does ordain as follows:

SECTION 1. The Council of the City of Palo Alto finds and determines as follows:

A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 16, 2014 did adopt a budget for Fiscal Year 2015; and

B. As part of the approval of the Fiscal Year 2014 Adopted Capital Budget, the City Council approved the Golf Course Reconfiguration Project; and

C. The Fiscal Year 2015 Adopted Operating Budget assumed the closure of the Golf Course effective July 1, 2014; and

D. In anticipation of the Golf Course Reconfiguration Project, the City applied for permits from the State Water Board; and

E. Due to delays in receiving permit approval which has delayed construction as well as contractual obligations with the City’s concessionaires at the Golf Course, staff recommends keeping the Golf Course open through August 31, 2014 or until the State Water Board approves regulatory permits, whichever is sooner.

SECTION 2. The revenue estimate for Charges for Services in the General Fund is increased by Three Hundred and Twenty FourThousand Eight Hundred Dollars ($324,800) for Golf Course related activities.

SECTION 3. The expenditures budget for Golf Course related activities is increased by Three Hundred and Twenty Four Thousand Eight Hundred Dollars ($324,800) for Golf Course related activities.

SECTION 4. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance.

SECTION 5. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption.

SECTION 6. The actions taken in this ordinance do not constitute a project requiring environmental review under theCalifornia Environmental Quality Act (CEQA).

INTRODUCED AND PASSED:

AYES:

NOES:

ABSTENTIONS:ABSENT:ATTEST: APPROVED:

City Clerk Mayor

APPROVED AS TO FORM:City Manager

City Attorney Director of Planning and Community Environment

Director of Administrative Services

Attachment HBAYLANDS GOLF LINKS – PALO ALTO

BID SUMMARY

Dunnick Wadsworth

Landscapes Unlimited Frontier

Item Quantity Units Unit Cost Total Bid Item Quantity Unit Unit Price Bid Amount Bid Amount Bid Amount Bid Amount

1 Mobilization/Bond (NTE 1.5% of Total Bid) 1 LS $105,000 $105,000 1 1 LS $133,000 $133,000 $141,400 $67,500 $128,5002 Staking/Layout 1 LS $35,000 $35,000 2 1 LS $120,000 $120,000 $88,500 $45,000 $24,4853 Existing Tree Protection 120 ea $65 $7,800 3 1 LS $75,000 $75,000 $48,493 $29,000 $57,8004 Construction Mitigation Measures Cost Estimate 1 LS $30,000 $30,000 4 1 LS $85,000 $85,000 $10,000 $38,000 $228,670

Schedule 1 Total $177,800 Subtotal $413,000 $288,393 $179,500 $439,455

5 Demo Cart Paths/Bury 1 LS $54,500 $54,500 5 1 LS $25,000 $25,000 $40,963 $42,500 $138,4006 Demo Existing Features 1 LS $54,000 $54,000 6 1 LS $35,000 $35,000 $10,000 $15,500 $34,7207 Tree Removal/Bury 650 Ea $100 $65,000 7 1 LS $115,000 $115,000 $156,730 $95,000 $59,808

Schedule 2 Total $173,500 Subtotal $175,000 $207,693 $153,000 $232,928

8 Strip Existing Sod, Bury or Till 135 AC $400 $54,000 8 1 LS $25,000 $25,000 $40,000 $55,000 $179,8409 Baylands Areas/Pond Earthwork (cuts) 70000 CY $2 $112,000 9 1 LS $201,000 $201,000 $166,500 $116,768 $227,02510 Fairway Topsoil Management (Harvest /place Sand Cap) 38000 CY $3 $106,400 10 1 LS $135,000 $135,000 $260,000 $174,420 $485,36011 Place Import Fill from Stockpile 60000 CY $3 $162,000 11 1 LS $225,000 $225,000 $325,000 $356,000 $158,50012 Oversee/Shape GC Placement of Import by Others 260000 CY $1 $260,000 12 1 LS $185,000 $185,000 $520,000 $390,000 $279,030

Add unit fopr import 13 10000 cy $3 $30,000 $32,500 $35,600 $17,300Deductive unit for export 14 -10000 cy $1 -$10,000 -$32,500 -$13,000 -$17,300

13 SWPPP & Winter-Over Construction 1 LS $70,000 $70,000 15 1 LS $140,000 $140,000 $301,542 $290,000 $60,50014 Rough Shaping 20 Holes $6,300 $126,000 16 1 LS $175,000 $175,000 $213,800 $285,000 $308,75016 Bunker Shaping - New 44 Each $1,200 $52,80015 Grade/Shape Buffer Mounding 1 LS $17,000 $17,000 17 1 LS $10,000 $10,000 $7,000 $15,000 $21,555

Schedule 3 Total $960,200 Subtotal $1,116,000 $1,833,842 $1,704,788 $1,720,560

17 New Subsurface Drainage Piping 4" Perf 18328 LF $5 $91,641 18 17500 lf $8 $140,000 $139,125 $151,375 $134,75018 New Subsurface Drainage Piping 6" Non-Perf 27012 LF $6 $162,072 19 1 ls $265,000 $265,000 $350,881 $246,000 $281,94019 New Catchments 235 EA $130 $30,55020 Drain Observation Risers 50 EA $75 $3,75021 Drain Outfalls 24 EA $350 $8,40022 Connect New Drains to Existing Inlets 21 EA $550 $11,55023 Bury/Raise/Connect to Existing Backbone Drain Inlets 21 Ea $2,000 $42,000 20 1 LS $35,000 $35,000 $27,517 $22,000 $19,93024 Drainage Culvert Pipes 1 LS $12,000 $12,000 21 1 LS $75,000 $75,000 $10,540 $6,500 $8,50025 Greens Construction USGA Method 147300 SF $6 $810,150 22 1 LS $745,000 $745,000 $745,743 $709,500 $741,62526 Tee Construction 141000 SF $1 $197,400 23 1 LS $175,000 $175,000 $165,539 $213,000 $256,04027 Bunker Construction New 43840 SF $4 $175,360 24 1 LS $225,000 $225,000 $424,031 $177,000 $238,600

Schedule 4 Totals $1,544,873 Subtotal $1,660,000 $1,863,376 $1,525,375 $1,681,385

28 Irrigation - In play areas 1 LS $1,527,300 $1,527,300 25 1 LS $1,987,000 $1,987,000 $1,860,296 $1,875,000 $1,940,22529 Irrigation - Native areas 1 LS $184,000 $184,000 26 1 LS $115,000 $115,000 $80,040 $124,000 $116,60030 Irrigation - Buffer Mounding 1 LS $35,000 $35,000 27 1 LS $35,000 $35,000 $14,690 $21,20035 Irrigation – Embarcadero Road Area 1 LS $15,000 $15,000 28 1 LS $25,000 $25,000 $27,670 $129,000 $14,31031 Irrigation - Athletic Field Supply Pipeline 1 LS $24,100 $24,100 29 1 LS $15,000 $15,000 $21,330 $19,000 $24,65032 Irrigation - Youth Area 1 LS $40,500 $40,500 1 LS33 Irrigation - Practice Area 1 LS $40,000 $40,000 1 LS34 Irrigation - Tree Bubblers 1 LS $26,300 $26,300 1 LS36 Irrigation Staking, Programming and Asbuilts 1 LS $42,000 $42,000 30 1 LS $45,000 $45,000 $42,270 $39,500 $44,00037 Replacement of Irrigation Pump Station 1 LS $220,000 $220,000 31 1 LS $235,000 $235,000 $305,982 $287,500 $315,000


38 Cart Paths and Foot Paths 208000 SF $3 $624,000 32 214000 sf $3 $642,000 $691,220 $716,900 $642,00039 Path Roll Curb 3000 LF $1 $3,30040 Cart Path 4" Curbing 3000 LF $4 $12,000 33 5500 lf $7 $38,500 $44,000 $23,375 $41,19541 Maintenance Routes (Gravel) 2000 LF $8 $16,400 34 14206 sf $2 $21,309 $17,473 $17,757 $15,200

Schedule 6 Totals $655,700 Subtotal $701,809 $752,693 $758,032 $698,395

42 Finish Shaping 1 LS $40,000 $40,000 35 1 LS $175,000 $175,000 $113,476 $125,000 $198,52543 Fine Grade Prep & Soil Amend Paspalum Area 79 AC $2,800 $221,200 36 1 LS $330,000 $330,000 $193,445 $203,000 $83,79444 Fine Grade/Soil Prep Native areas 55 AC $780 $42,900 37 1 LS $185,000 $185,000 $112,241 $40,000 $42,15848 Native Area "A" Hydro Seeding (with Amendments) 42 AC $4,325 $181,650 38 1 LS $130,000 $130,000 $152,722 $205,500 $202,00049 Baylands Area "B" Hydro Seeding (with Amendments) 13 AC $4,160 $54,080 39 1 LS $40,000 $40,000 $45,146 $62,000 $57,00045 Paspalum Sod 25.0 AC $25,265 $631,620 40 1 LS $635,000 $635,000 $634,914 $775,500 $715,48046 Sprigged Paspalum Areas 53.0 AC $5,200 $275,600 41 1 LS $260,000 $260,000 $306,777 $255,000 $312,64047 Seed & Amend Greens 148000 SF $0 $32,560 42 1 LS $35,000 $35,000 $29,032 $32,000 $49,70050 Bridge & Bulkheads 1 LS $57,000 $57,000 43 1 LS $110,000 $110,000 $49,243 $54,500 $113,16451 New Trees 300 Ea $300 $90,000 44 1 LS $100,000 $100,000 $67,305 $70,000 $74,64053 Landscape Along Embarcadero 1 LS $23,000 $23,000 45 1 LS $50,000 $50,000 $39,501 $22,000 $50,75252 Fence at Youth Golf Area 1 LS $30,000 $30,000 46 1 LS $25,000 $25,000 $40,478 $44,500 $41,58358 Grow-In 1 LS $75,000 $75,000 46A 1 LS $115,000 $115,000 $87,553 $150,000 $324,985


54 Driving Range Poles and Netting 1 LS $35,000 $35,000 47 1 LS $30,000 $30,000 $60,795 $89,500 $89,01055 Concrete Range Tee 1 LS $30,000 $30,000 48 1 LS $10,000 $10,000 $10,885 $12,400 $13,13356 New Synthetic Turf 1 LS $6,000 $6,000 49 1 LS $10,000 $10,000 $4,799 $4,500 $25,62357 Grassing of Range Area 1 LS $6,000 $6,000 50 1 LS $5,000 $5,000 $21,421 $32,000 $5,400


59 Restroom (Inc locking doors) 1 LS $88,550 $88,550 51 1 LS $125,000 $125,000 $140,669 $298,000 $128,31060 RR Sewer 1 LS $20,000 $20,000 52 1 LS $25,000 $25,000 $32,740 $70,000 $53,73261 RR Electrical Supply 1 LS $14,000 $14,000 53 1 LS $30,000 $30,000 $36,484 $200,000 $52,517


62 Base Bid Total $7,620,433 Base Bid Total ---> $8,947,809 $9,477,901 $9,540,095 $9,882,854

PLAN G

DLS Page 1 of 1 6/18/2014 5:25 PM

Financial Pro Formas and SupportingAnalysis for Reconfiguration Options

A, D, F, GFor Palo Alto Municipal

Golf Course

Prepared For:

City of Palo AltoRob de Geus, Division Manager

Recreation & Golf Services1305 Middlefield RoadPalo Alto, CA 94301

Prepared By:

1150 South U.S. Highway One, Suite 401Jupiter, FL 33477

(561) 744-6006

April, 2012

rdegeus

Text Box

ATTACHMENT I

Financial Pro Formas and Supporting Analysis forReconfiguration Options A, D, F, G

Palo Alto Municipal Golf Course

Table of Contents

INTRODUCTION ....................................................................................................................... 1

PALO ALTO MUNICIPAL GOLF COURSE RECONFIGURATION OPTIONS .......................... 2

Goals and Objectives .......................................................................................................... 2Option A.............................................................................................................................. 3

Additional Work ............................................................................................................................. 4Option D.............................................................................................................................. 4

Additional Work ............................................................................................................................. 5Option F.............................................................................................................................. 5

Additional Work ............................................................................................................................. 6Option G ............................................................................................................................. 7

Additional Work ............................................................................................................................. 8Deferment of Certain Improvements ................................................................................... 9

MARKET OVERVIEW ..............................................................................................................10

Demographics Summary....................................................................................................10Golf Market Overview.........................................................................................................11

National Trends in Golf Demand and Supply..............................................................................11Local and Regional Golf Supply and Demand Indicators............................................................13

Competitive Golf Market.....................................................................................................15Summary Information – Primary Competitors .............................................................................16Summary of Findings – Primary Competitors .............................................................................18

Palo Alto Golf Course Market Positioning Assessment ......................................................19

FINANCIAL PERFORMANCE MODELS FOR PALO ALTO GOLF COURSE .........................20

Recent Historical Palo Alto GC Performance .....................................................................20Projections Based on “Option A” ........................................................................................22

Key Assumptions.........................................................................................................................22Pro Forma Estimate for ‘Option A’ Scenario – FY2012 – FY2021..............................................26

Projections Based on “Option D” ........................................................................................29Key Assumptions.........................................................................................................................29Pro Forma Estimate for ‘Option D’ Scenario – FY2012 – FY2021..............................................32

Projections Based on “Option F” ........................................................................................35Key Assumptions.........................................................................................................................35Pro Forma Estimate for ‘Option F’ Scenario – FY2012 – FY2021 ..............................................36

Projections Based on “Option G”........................................................................................39Key Assumptions.........................................................................................................................39Pro Forma Estimate for ‘Option G’ Scenario – FY2012 – FY2021 .............................................42

Financial Projections Summary..........................................................................................45Summary of Options....................................................................................................................45

Summary Results ........................................................................................................................46Justifications for Revenue Projections ........................................................................................47Other Considerations Regarding Improvement Options .............................................................48

Option “G” Sensitivity Analysis ...........................................................................................49Option “G” Sensitivity Analysis - Summary for 2017 ...................................................................49Option G Sensitivity Spreadsheets..............................................................................................50

OTHER ISSUES AND CONSIDERATIONS..............................................................................56

Market Position / Re-Branding Opportunity ........................................................................56Economics of Potential Long-Term / Additional Improvements...........................................58

Cart Storage Building ..................................................................................................................58Expanded Meeting Space ...........................................................................................................59Range Performance Center ........................................................................................................59

Management Structure.......................................................................................................60Long Range Concerns .......................................................................................................61Potential Economic Development Of The Airport & Golf “Baylands Gateway” Area............64Private Funding Possibilities ..............................................................................................65

APPENDICES...........................................................................................................................66

Appendix A – Comparative Supply Ratios – Palo Alto GC & Key Municipal Competitors ...67Appendix B – Comparative Scoring of Reconfiguration Options.........................................68Appendix C – Water & Power Use Discussion & Assumptions...........................................71Appendix D – Review Of Probable Cost Estimates ............................................................73Appendix E – Potential Long-Term Master Plan Improvements..........................................75

National Golf Foundation Consulting, Inc. – City of Palo Alto Report – 1

Introduction

National Golf Foundation Consulting, Inc. was retained by the City of Palo Alto in furtherance ofthe City’s due diligence relative to the San Francisquito Creek Flood Control Project, which willinvolve the reconfiguration of six or more holes at the Palo Alto Golf Course. NGF’s objectivewas to help the City identify the expected financial impact from the improvements related to thereconfiguration work under Plan Options A, D, F, and G.

Specifically, NGF has crafted 10-year cash flow pro formas that project the estimated netfinancial impact of the proposed improvements, allowing the City to evaluate each of the fourreconfiguration options under consideration from an objective standpoint. Our analysis includesexpected impact on rounds played, fee structure, revenue generation, operating expenses, andcapital spending/debt. The pro formas also provide an estimate for lost revenues during the timethat the course is impacted and/or closed.

Other aspects of the NGF review include:

A market overview of the Palo Alto area, with an emphasis on area demographicsand key golf demand and supply indicators.

A competitive review, including a qualitative assessment of the impact that thepotential reconfigurations would have on Palo Alto Golf Course’s market/competitiveposition.

A review of Forrest Richardson’s work regarding the potential implications from therenovation options on facility branding and marketing.

NGF will also offer its opinion about the long-term implications and potential financialimpact of improvements associated with the longer range master plan, includingclubhouse expansion, cart storage, event areas, range performance center, rangeenlargement, entry/parking, and the youth training area.

NGF will evaluate relevant options available to the City of Palo Alto for the continuedoperation of Palo Alto Golf Course, including (but not limited to) continuing on an as-is basis or outsourcing all management and maintenance to a full-servicemanagement company. Viable options will be identified, and a discussion of thecosts, benefits, and financial implications of each operating scenario presented.

The study effort was managed by NGF Director of Consulting Services Richard B. Singer andSenior Project Director Ed Getherall. Activities conducted in completion of this report included:field research; statistical and financial analysis; meetings with key City staff from the Recreation& Golf Services, Administration, Community Services, and Finance Departments; meetings withthe Head Golf Professional, Golf Course Superintendent, and ValleyCrest Area Director; a tourof the golf course; and, interviews with area golfers.

Following is the consultants’ report summarizing key findings and recommendations.Throughout this report, we may refer to shortened names for: the City of Palo Alto (“City”), thePalo Alto Municipal Golf Course (“Palo Alto Golf Course”, “Palo Alto GC” or “PAGC”), andNational Golf Foundation Consulting, Inc. (“NGF Consulting” or “NGF”).


Palo Alto Municipal Golf CourseReconfiguration Options

NGF Consulting was provided four course reconfiguration options prepared by ForrestRichardson, ASGCA. These options were identified by the titles “Option A,” Option D,” “OptionF” and “Option G,” and each have unique characteristics. The options represent four possiblescenarios for adjusting the course to accommodate the SFCJPA flood mitigation project.Options A, D, F and G were culled from seven proposed alternatives (Options B, C, and E wereeliminated prior to our review) as the most viable and potentially opportune for the City.

The process for developing options has been thorough, with extensive input from golfers, staff,concessionaires and the public at large. NGF Consulting has reviewed notes and summariesfrom these meetings to better understand the goals and objectives desired by those who willuse and operate the facility following reconfiguration.

GOALS AND OBJECTIVES

Among the goals and objectives set forth to guide the design process for reconfigurationoptions, in addition to the fundamental goal to accommodate the flood project, included:

Establish a more natural, aesthetic landscape that incorporates a “Baylands” theme Improve tree care and variety via a theme to use appropriate tree selection Find ways to eliminate geese and burrowing animals from ruining the course Improve bunkers (condition, strategy and aesthetics) Improve overall course conditioning (drainage, irrigation, turf, etc.) Adjust yardage so the course is shorter for beginners, women and seniors Create a “wow factor” to remain competitive with other regional facilities Add interest to the course strategy (dog-legs, differentiation of holes, etc.) Find ways to offer player development opportunities (short game area, range, etc.)

Additionally, there was a strong desire to address long range issues that face the aging facilitybeyond those on the golf course itself. The City commissioned its own scope of work to addressthese issues concurrently with the course reconfiguration planning. These long range areasincluded the following:

Clubhouse planning Entry, parking and signage Practice areas Cart storage and staging On-course restrooms Branding and image Trail connections from the Baylands and existing trails


The objective of the additional long-range planning was to look beyond the golf course to ensurethat reconfiguration options would not preclude improvements to the areas on the above list.Specific goals and objectives included the following:

Find ways to bring non-golfers to the facilities (group events, restaurant, etc.) Expand the clubhouse to seat 200 so larger groups can be accommodated Develop areas to hold multiple outings/events simultaneously Improve the arrival experience, entry aesthetics, trail connections and security Develop a cart storage area/facility Make overall improvements to the clubhouse and grounds (exterior and interior) Improve and expand the practice range Create new player development and practice opportunities Plan for upgrading the on-course restroom facility Develop a new brand and image consistent with the reconfiguration goals and design

A common thread among the long range planning components was a strong design to return thefacilities, with golf course approaching its 60th year and the clubhouse its 30th, to a “Point ofPride” status within the community. Along with this primary objective come the benefits ofleveraging the facility for economic development, tourism and as a home to annual and specialevents. Secondarily, the community has a strong desire to see the golf course be morecompatible with the Baylands environment. This goal is echoed by Mr. Richardson in hisreconfiguration options, each of which adds more naturalized areas to the golf course. Inaddition, long range design concepts associated with the clubhouse, entry and image go hand-in-hand with this goal.

OPTION A

Option A represents the minimum reconfiguration in order to facilitate the San FrancisquitoCreek realignment as required by the SFCJPA. This option shifts holes laterally from west toeast, retaining much of the same routing of the existing course. Golf holes are moved away fromthe levee on a minimal basis. Improvements are primarily restricted to the holes moved, with theremaining holes largely unchanged. Bunker work and naturalization enhancements are madethroughout the course in order to provide a more consistent golf experience and landscape.

The highlights of changes in this option include:

6.5 golf holes relocated 5 new greens constructed Par 72 6,900 / 6,500 / 5,200 yards All bunkers reconstructed and/or new 38.5 acres transformed to naturalized areas (non-managed turf) Revised Hole No. 18 (naturalized hazard) Adjusted Hole No. 12 Adjusted Hole Nos. 13 and 14


The total projected cost for this option is $3,537,622, including all professional fees,project management and contingency.

Additional Work

Additional (“alternate”) items within the golf course itself may be undertaken by the Cityconcurrently with the development of Option A. These optional items include:

Sand capping of new turf areas (new fairways to be constructed) Use (spreading) of imported soil from the Stanford University Medical Center Project Reconstruction of all greens (13 additional to those covered) Re-turfing of all existing fairways (23.5 acres additional) Replacement of the balance of the existing irrigation system Reconstruction and features at the existing practice green area Construction of a new on-course restroom facility

Projected Cost for Additional Items: $ 3,250,500

Among the additional (alternate) work, Mr. Richardson and NGF recognize that the fullreplacement of the existing irrigation system will become an eventual necessity. Ourunderstanding is that the existing system, installed in 1998, presents regular issues due todeteriorating pipe fittings. Now entering its 14th year of service, the system is on the decline dueto the high salts inherent within the soils. Even if the balance of the system remains incommission for another six years (20 years is a reasonable longevity for irrigation systems)there exists good probability that emergency repairs and costs may escalate. For this reason,we have studied this additional cost ($857,500) as an alternative scope to be considered forOption A.

OPTION D

Option D represents an enhanced reconfiguration version from Option A. This option facilitatesthe San Francisquito Creek realignment as required by the SFCJPA. The primary differencefrom Option A is that Option D realigns holes with more variety, departing from the commonparallel routing of the existing course. Golf holes are moved away from the levee, but go beyondOption A to form new views and variation. Bunker work and naturalization enhancements aremade throughout the course in order to provide a more consistent golf experience andlandscape. These are more prevalent than that afforded through Option A.


8.5 golf holes relocated 8 new greens constructed Par 72 6,900 / 6,400 / 5,000 yards All bunkers reconstructed and/or new 43 acres transformed to naturalized areas (non-managed turf) New Island Green Hole No. 13 (elevated tee and Bay view) New Double Green Nos. 3 and 15 New Hole No. 5 (elevated green and Bay View) New Hole No. 7 (split fairway)


New Hole No. 18 (par-5 and naturalized hazard) New Hole No. 4 New Hole No. 17 New Hole No. 16 Future space afforded for a new practice green/short game area


Additional Work

Additional (“alternate”) items within the golf course itself may be undertaken by the Cityconcurrently with the development of Option D. These optional items include:

Sand capping of new turf areas (new fairways to be constructed) Use (spreading) of imported soil from the Stanford University Medical Center Project Reconstruction of all greens (10 additional to those covered) Re-turfing of all existing fairways (21.5 acres additional) Replacement of the balance of the existing irrigation system Reconstruction and features at the existing practice green area Construction of a new on-course restroom facility Future development of a new practice green/short game area


As with Option A, we recognize that the full replacement of the existing irrigation system willbecome an eventual necessity. The same comments apply to Option D as noted for Option A.We have studied the additional cost ($740,000), which is lower for Option D as more of theexisting system is covered within areas impacted by the reconfiguration, as an alternative scopeto be considered for Option D.

OPTION F

Option F represents an opportunity to remove land from golf course use and transform it to usefor athletic field(s). This option was added to the reconfiguration scope of the golf coursearchitect based on previous studies with the same objective. For Option F, a general constraintplaced on the planning work was to retain yardage (6,800 yards) and a par of 72. Safety fromthe new trail system and within adjoining holes was to be maintained with no compromise tostandard guidelines.

Option F facilitates the San Francisquito Creek realignment as required by the SFCJPA. Theoption is primarily distinguished by the removal of approximately 2.5 acres from the golf courseparcel. This land area is shown as athletic field use, accommodating a full NCAA sized soccerfield or combination of fields and field types of the same proportion and area. This area wouldhave limited room for parking expansion.

Option F realigns holes with more variety than in Option A. As with Option D, the reconfigurationdeparts from the common parallel routing of the existing course. Golf holes are moved awayfrom the levee to form new views and variation. Bunker work and naturalization enhancementsare made throughout the course in order to provide a more consistent golf experience and


landscape. As a result of the “domino effect” of moving holes to make room for the athletic fieldarea, these enhancements are as prevalent as that afforded through Option D.


12.5 golf holes relocated 12 new greens constructed Par 72 6,700 / 6,300 / 5,000 yards All bunkers reconstructed and/or new 43.4 acres transformed to naturalized areas (non-managed turf) New Island Green Hole No. 13 (elevated tee and Bay view) New Double Green Nos. 3 and 15 New Hole No. 5 (elevated green and Bay View) New Hole No. 7 (split fairway) Revised Hole No. 18 (naturalized hazard) New Hole No. 4 New Hole No. 17 New Hole No. 16 New Hole No. 3 New Hole No. 3 New Hole No. 15 New practice green/short game area developed along with reconfiguration Temporary preparation of the athletic field area (not field development or

improvement)


Additional Work

Additional (“alternate”) items within the golf course itself may be undertaken by the Cityconcurrently with the development of Option F. These optional items include:

Sand capping of new turf areas (new fairways to be constructed) Use (spreading) of imported soil from the Stanford University Medical Center Project Reconstruction of all greens (6 additional to those covered) Re-turfing of all existing fairways (21.5 acres additional) Replacement of the balance of the existing irrigation system Reconstruction and features at the existing practice green area Construction of a new on-course restroom facility


As with Options A and D, we recognize that the full replacement of the existing irrigation systemwill become an eventual necessity. The same comments apply to Option F as noted for previous


options. We have studied the additional cost ($425,000), which is lower for Option F (than for Aor D) as more of the existing system is covered within areas impacted by the reconfiguration, asan alternative scope to be considered for Option F.

OPTION G

Option G represents a plan to remove more land from golf course use, transforming this land touse for multiple athletic field and non-golf recreation purposes. This option was added to thereconfiguration scope of the golf course architect based on the direction of the City toinvestigate whether the viability of the golf course could be preserved while opening more area(than with Option F) for non-golf recreation.

The constraint placed on the planning work was to retain a regulation layout with a par of 70 or71. Safety from the new trail system and within adjoining holes was to be maintained with nocompromise to standard guidelines.

NGF Consulting was in the very early stages of our consulting work for the City when Option Gwas put into motion. Among the foremost questions we were asked was whether a significantlyshorter course and/or a significantly lower par would be advisable for the City of Palo Alto. Ourconclusion was that the Palo Alto market, especially in the City’s situation as a single-courseowner, is best served in this locale by a regulation 18-hole golf course with a par of 72 beingpreferred. This conclusion is based on several factors, including the following:

A strong history of this golf course producing annual rounds in excess of 80,000 Stated preferences by the current customer base to maintain length and par Viability to host group golf events “demanding” a full-length course experience Competitiveness to area courses Long term viability to host regional events (qualifying, larger tournaments, etc.) Regional offerings of shorter courses Plan options that accommodate more flexible (shorter) yardages flexibility as part of

the reconfiguration work

NGF Consulting shared this conclusion with the City and the golf course architect,recommending that Option G should, if possible, preserve a regulation length of about 6,500yards (back tees) and a par of 72 preferred. If pressed to choose between a reduction in par (to71) or a reduction in yardage lower than 6,500, we opined that it would be better to preserveyardage at 6,500 and allow par to drop to 71. (Note: A par 71 course measuring 6,500 yards isperceived as more difficult, and can be marketed such, than a course measuring the sameyardage but holding a par of 72. This is because the ratio of par to yardage is morechallenging.)

Option G also facilitates the San Francisquito Creek realignment as required by the SFCJPA.The option involves the removal of approximately 10.5 acres from the golf course parcel. Thisland area is shown as athletic field use (three full sized NCAA soccer fields or combination offields and field types of the same proportion and area), and additionally shows areas for a smallplayground, wetlands park and picnic space, and trails connecting to the San FrancisquitoCreek levee trails, Baylands and neighborhood.

Option G realigns holes with more variety than in Option A. As with Option D and F, thereconfiguration departs from the common parallel routing of the existing course. Golf holes aremoved away from the levee to form new views and variation. Bunker work and naturalization


enhancements are made throughout the course in order to provide a more consistent golfexperience and landscape. As with Option F, but to an even greater extent, virtually all areas ofthe existing course would be reconstructed, enhanced and improved.


18 golf holes relocated 18 new greens constructed Par 71 6,600 / 6,100 / 5,000 yards All bunkers reconstructed and/or new 43 acres transformed to naturalized areas (non-managed turf) Irrigated Turf Reduced from 135 acres to 92 acres New Island Green Hole No. 12 (elevated tee and Bay view) New Double Green Nos. 3 and 15 New Hole No. 5 (elevated green and Bay View) New Hole No. 7 (split fairway) New Hole No. 18 (par-5, naturalized hazard) New Hole No. 4 New Hole No. 14 New Hole No. 10 New Hole No. 17 New Hole No. 16 New Hole No. 3 New Hole No. 3 New Hole No. 15 New practice green/short game area developed along with reconfiguration Full irrigation system replacement (all areas of the 18-hole golf course) Reconstruction and features at the existing practice green area Construction of a new on-course restroom facility Temporary preparation of the field/recreation area (not field development or

improvement)The total projected cost for this option is $7,573,262, including all professional fees,project management and contingency.

Additional Work

Additional (“alternate”) items within the golf course itself may be undertaken by the Cityconcurrently with the development of Option G. These optional items include:

Sand capping of new turf areas (new fairways to be constructed) Use (spreading) of imported soil from the Stanford University Medical Center Project Reconstruction of all greens (3 additional to those covered) Re-turfing of all existing fairways (21.5 acres additional) Replacement of the balance of the existing irrigation system



Unlike other options, Option G includes full irrigation replacement. This is because there is noviable method of leaving only three golf holes without replacement. Variables include pumpingpressure, control zones and other logistics that had to be considered.

DEFERMENT OF CERTAIN IMPROVEMENTS

Other additional work listed under each option above has not been incorporated to the proformas prepared by NGF Consulting due to the complexity of attaching incremental rounds,revenues and expenses to these improvements. However, both NGF and Mr. Richardsonbelieve that deferring some or all of the alternative (optional) improvements, including long-range work to the clubhouse building, grounds, entry, practice areas, etc., will likely have anegative affect on revenues and constrain somewhat the City’s ability to “re-brand” Palo AltoGC.

Over the years, NGF Consulting has witnessed the implications of rounds and revenues on golffacilities that have deferred maintenance and/or capital improvements. Eventually, golf courseconditions and/or the overall golf experience fall to a level where rounds, pricing and, as aresult, revenues are constrained, as is the municipality’s ability to effectively market the golfcourse as anything other than a “value” provider. Golf consumers begin to migrate away fromfacilities that are not well maintained when there are other proximate facilities offering betterconditions and/or equal or even slightly higher price points.

Among the optional/alternative improvements associated with Palo Alto Golf Course, we find themost pressing are:

Course conditions, especially greens, drainage and turf condition Yardage flexibility (to attract beginners, youth, women and seniors) Geese and burrowing animal intrusion and damage On-course restroom replacement Clubhouse condition and available space

Most of the above are well corrected or mitigated though the reconfiguration options. However,replacement of the irrigation system, as an example, is not fully afforded within the base work ofOptions A, D and F. Especially in the case of A and D, this alternate cost may be prudent toexamine closer as conditions cannot dramatically improve course-wide without a plan to replacethe system. If the system is allowed to run for a long period without replacement, revenue isbound to drop incrementally as turf conditions decline. In terms of substantive clubhouseimprovements, such as expanding the meeting space, improvements are not likely to pay forthemselves under the current operating structure whereby only 7% of food & beverage revenueaccrues to the City.

Yardage flexibility is accommodated in most of the options, but more so as more work iscovered. Options D, F and G adequately allow for more flexibility and will therefore have thepotential to attract more player types. The geese and burrowing animal issues, according to thegolf course architect, will be positively mitigated by all reconfiguration options. Yet, plan optionswith more area impacted will likely result in more appropriate habitat and areas for theseanimals to use rather than the turf areas currently intended for golfers.


Market Overview

Below, NGF Consulting provides a summary of key “external” factors that characterize the tradearea in which the Palo Alto Golf Course operates. We include basic demographic variables thathave the potential to affect the economic performance of the golf facility, as well as an analysisof supply and demand indicators in the public golf market.

DEMOGRAPHICS SUMMARY

Utilizing research materials provided by Applied Geographic Solutions, Inc. (a supplier ofdemographic research based on U.S. Census results), NGF Consulting has examined relevantcharacteristics of the local population. In the following tables, NGF Consulting indicates thepopulation, median age, and median household income trends for San Mateo and Santa Claracounties, as well as the 3-, 10-, and 15- mile market rings surrounding the golf course and thetotal United States.

Palo Alto Golf Course 3 mi 10 mi 15 mi

SanMateo

County

SantaClara

County U.S.

Summary Demographics

Population 1990 Census 94,021 697,234 1,482,687 649,622 1,496,702 248,710,012Population 2000 Census 100,652 765,828 1,662,257 707,161 1,682,585 281,421,906CAGR 1990-2000 0.68% 0.94% 1.15% 0.85% 1.18% 1.24%Population 2010 Census 104,099 806,139 1,750,080 718,376 1,781,728 308,699,447CAGR 2000-2010 0.34% 0.51% 0.52% 0.16% 0.57% 0.93%Population 2016 Projected 105,110 817,407 1,775,178 725,980 1,805,397 325,288,086CAGR 2010-2016 0.16% 0.23% 0.24% 0.18% 0.22% 0.88%Median HH Inc $94,304 $96,743 $91,334 $88,233 $88,860 $53,908Median Age 37.5 37.2 37.1 39.4 36.2 36.9

CAGR = Compound Annual Growth Rate

From the data collected for this study, NGF Consulting has made the following observationsregarding the demographics of Palo Alto and surrounding areas:

The 10-mile and 15-mile markets around Palo Alto GC are dense, with 2010estimates of about 806,000 and 1.775 million residents, respectively, in these twosubmarkets. The 10-mile market has added more than 40,000 net new residentssince 2006, while the 15-mile market grew by nearly 88,000 people. Populationgrowth is projected to be very moderate through 2016.

The Median Ages in the subject market areas are generally similar to the nationalmedian age of 36.9 years, though San Mateo County overall is significantly higher at39.4 years. In general, the propensity to play golf with greater frequency increaseswith age, making relatively older markets more attractive to golf facility operators, allother factors being equal.

Median Household Incomes in the area are much higher than the national median.For instance, the 10-mile market exhibits incomes nearly 80% higher than thenational median income of $53,908. In general, higher income residents are morelikely to participate in golf, and they play more frequently than lower income


residents. These high figures are mitigated considerably by the very high cost ofliving in the Bay Area.

GOLF MARKET OVERVIEW

Below we provide an overview of recent and emerging national trends with respect to golfparticipation and municipal golf, as well as a summary of golf demand and supply indicators inthe local markets for Palo Alto Golf Course. NGF Consulting utilizes predictive models asbenchmarks for estimating potential market strength. The methodology for determining therelative strength of the subject market is described in the following section.

National Trends in Golf Demand and Supply

ParticipationGolf participation in the U.S. has grown from 3.5% of the population in the early 1960s to about9.2% of the population today. NGF estimates that the number of golfers fell slightly in 2011 to26.1 million; it was encouraging news that the number of golfers gained in 2010-11 held steadyvs. previous years while the number of lost golfers dropped significantly. For research purposes,a golfer is defined as a person age 6 or above who plays at least one round of golf in a givenyear.

All U.S. Golfers(in millions)

1985 1990 1995 2000 2005 2010

All golfers age 6+ 19.5 27.4 24.7 28.8 30.0 26.1Source: National Golf Foundation

The number of rounds of golf also fell 2.3% during the past year, from 486 million in 2009 to 475million in 2010 (most recent year NGF has published), corroborating the decline in the numberof golfers. In the Pacific Region, which includes California, the statistics are somewhat morefavorable:

Regional Profile

Participation Rate Number of Golfers Percent of GolfersTotal Annual

Rounds (millions)

Pacific Region 7.3% 3,276,000 12.5% 50.4United States 9.2% 26,122,000 100.0% 475.0

Source: Golf Participation in the U.S., 2011 edition, National Golf Foundation

Considering the severity of the recession and its effects on both discretionary income and time,golf has held up rather well. Multiple NGF studies of golfers since 2008 would attribute thegradual decline in golfers and rounds primarily to the impact of lower job security and concernover personal finances, not waning appeal for the game.

Over the past 50 years, golf demand grew at about 4% per year while facility supply grew atabout 2% per year. However, since 1990, the situation has reversed – demand has grown atonly 0.5% per year while facility supply has grown at 1.4% per year. With the increase in supply,


we are seeing a marked increase in competition, and the supply is greater than the demand insome markets.

In addition to increased competition, other factors have contributed to a decline in the number ofrounds per course nationally from 2002 to 2011. In the NGF’s most recent survey of core golfersconducted in September 2011, we found that fearful financial outlooks, weak consumerconfidence, and negative golfer attitudes have also played a role. The combination of these hascaused many golf facilities to become distressed, particularly those that have a high debt loadbecause of higher construction costs and the perceived need to build high-end courses.

The number of golf course closings quadrupled from an annual average of 24 courses per yearin the 1993-2001 time period to more than 100 courses in 2005. In 2006, there was negativenet growth in golf facilities for the first time in six decades, with 146 18-hole equivalentsclosing and 119.5 opening. In 2007, there were 113 openings and 121.5 closures, and in2008, 72 golf course openings and 106 closures. In 2009, 49.5 openings minus 139.5 closuresequated to a net loss of 90 18-hole equivalents. Closures continue to be disproportionatelypublic, stand-alone 9-hole facilities or short courses (executive or par-3 length) with a valueprice point. Net growth in supply has been negative now for four consecutive years, with thelargest drop of 90 courses in 2009. However, U.S. openings averaged 200+ (net) for 20 years,and total 18-hole equivalent supply is up 5% since 2000, indicating a slow market correction isunderway. In October 2011, NGF projected 2011 net growth of about negative 106.5 (openingsminus closings), and projected actual closures for 2011 would be closer to 150.

NGF estimates that national rounds played experienced an overall drop from 2000 to 2010 of-9.5%. By the end of 2011, rounds had further declined 2.5% in the U.S., but rounds in thePacific Region had increased 1.2% and California was up 2.3%.

On the positive side, the growth in golf course development has slowed considerably nationallyand in the majority of local markets, a trend that should help ease some of the competitivepressure. Another positive trend is the aging of America. Baby Boomers are rapidly approachingretirement age when golf activity flourishes. The baby boomers represent not only the largestsingle demographic in the US, but they also approach retirement age with more disposableincome than any previous generation.


Local and Regional Golf Supply and Demand Indicators

The following table summarizes some key golf supply and demand measures for the localmarkets based on NGF research and golf demand predictive models.

Palo Alto Golf Course 3 mi 10 mi 15 mi

SanMateo

County

SantaClara

County U.S.

Golf Demand Indicators

# of Golfing Households 6,989 55,008 116,506 49,136 116,439 21,237,600Number of Rounds Played 226,453 1,769,537 3,717,852 1,571,308 3,765,371 498,831,616Golfing Household Index 101 104 103 105 106 100Rounds Played Index 140 142 141 143 146 100

Golf Supply Summary

Total Golf Facilities 2 13 25 14 33 15,902Public Golf Facilities 2 8 16 6 20 11,633Private Golf Facilities 0 5 9 8 13 4,269Total Golf Holes 36 207 378 279 576 268,443Public Golf Holes 36 117 225 108 342 191,214Private Golf Holes 0 90 153 171 234 77,229

Household/Golf Supply Indicators

Households per 18 Holes: Total 19,132 25,655 29,805 16,754 19,127 7,733Households per 18 Holes: Public 19,132 45,390 50,073 43,282 32,214 10,856Households per 18 Holes: Private NA 59,007 73,636 27,336 47,082 26,879

Households Supply Index: Total 242 325 378 212 242 100Households Supply Index: Public 171 405 447 387 288 100Households Supply Index: Private 0 221 275 102 176 100

Golf Course Construction Activity 2001-2010

Total holes added past 10 years 0 0 18 0 72 24,318Public holes added past 10 years 0 0 0 0 54 17,469Private holes added past 10 years 0 0 18 0 18 6,849Percent Total Holes Added 0.00% 0.00% 4.80% 0.00% 12.50% 9.10%Percent Public Holes Added 0.00% 0.00% 0.00% 0.00% 15.80% 9.10%Percent Private Holes Added NA 0.00% 11.80% 0.00% 7.70% 8.90%


Golf participation rates in the subject markets around Palo Alto GC are very similar tothe national benchmark, while rounds demanded per household are about 40%higher than the national figure. The high rounds demanded per household areindicative of the year-round golf climate, the high number of golf courses, and ademographic profile that is generally conducive to high golf demand, particularly as itrelates to median household income.

There are thirteen total, including eight public, golf facilities (including Palo Alto GC)in the 10-mile market area, while there are 25 total facilities, including 21 public,within 15 miles of Palo Alto GC.

As the tables indicates, the subject markets have significantly more households per18 holes of golf than the nation overall. For example, in the 10-mile market areasurrounding Palo Alto GC, there are nearly four times as many households per total18 holes and 4.5 times as many households per public 18 holes than in the overallU.S. (We contrast these supply ratios to some of Palo Alto’s key competitors inAppendix A).

There was a spate of new golf course construction in the Bay Area in the 1990s andearly 2000s. For the nine-county Bay Area region, 27 total golf facilities were addedbetween 1997 and 2006. This included 6 private (comprising 90 holes) and 21 public(360 holes) facilities. However, as with the rest of the country, new golf courseconstruction has slowed to a crawl in the subsequent years, and the NGF databasereveals no new golf course projects currently in planning or under construction within15 miles of Palo Alto GC.

Palo Alto and the greater Bay Area are home to a large number of major corporateand public employers, including many high-tech and internet companies. These largeemployers are prime targets for soliciting tournament/outing play, and could be a keyelement to boosting play levels and revenues at the Baylands GC. Outings aregenerally sold at the highest green fee, and also expose a number of golfers to thefacility for the first time.

Visitors to the Palo Alto area have the potential to significantly impact demand at golfcourses. Though visitation numbers were not available for Palo Alto specifically, it isestimated that about sixteen million people visit San Francisco alone each year, andthe overall Bay Area has considerably more visitors than that. NGF research showsthat roughly one-third of all golfers participate in the activity while traveling, playing.557 rounds per day of travel. This supplemental market should be a target ofmarketing efforts once the improved Baylands Golf Club is opened.


COMPETITIVE GOLF MARKET

One of the objectives of this effort is to identify any opportunities that may exist for the improved“Baylands Golf Club” to increase market share, fees and revenues. In this section, we presentan overview of the public access golf market in which the current Palo Alto GC operates, with afocus on key competitors. The map below shows the location of these facilities in relation toPalo Alto Golf Course.

In the tables that follow, NGF Consulting presents summary operational information for the golffacilities identified as direct competition to the Palo Alto Golf Course. NGF Consulting identifiedthe primary competitors based on a number of factors, including price point, location, NGFexperience in this market, and input from both facility management and City staff.


Summary Information – Primary Competitors

The table below provides summary information regarding the golf courses we have identified asPalo Alto GC’s primary competitors.

Palo Alto Municipal Golf Course Key Competitors – Summary Information

Golf Facility Location TypeYearOpen Par / Slope

Front Tee /Back Tee

Location Relativeto PAGC

*

Palo Alto Municipal Golf Course Palo Alto MU 18H 1956 72 / 122 5,744 / 6,833 --

Crystal Springs Golf Course Burlingame MU 18H 1924 72 / 127 5,580 / 6,628 16 mi NW

Poplar Creek Golf Course San Mateo MU 18H 1933 70 / 115 4,768 / 6,042 14.5 mi NW

San Jose Municipal Golf Course San Jose MU 18H 1968 72 / 119 4,200 / 6,700 13 mi SE

Santa Clara Golf & Tennis Club Santa Clara MU 18H 1987 72 / 118 5,521 / 6,723 8.5 mi SE

Santa Teresa Golf Club San Jose DF 27H 1963 71 / 126 4,011 / 6,742 24.5 mi SE

Shoreline Golf Links Mountain View MU 18H 1983 72 / 129 5,437 / 6,996 2.5 mi SE

Spring Valley Golf Course Milpitas DF 18H 1956 70 / 113 5,453 / 6,116 15 mi E

Sunnyvale Golf Course Sunnyvale MU 18H 1969 70 / 118 5,170 / 5,742 5.5 mi SE

*Air miles from subject site, rounded to half-mile; actual driving distances will likely be greater.Type: DF – Daily Fee; MU – Municipal


The table below shows summary facility information regarding Palo Alto Municipal Golf Course and its primary competitors. Reportedrounds for 2007 are from the 2008 Economic Research Associates report to the City. Average green/cart revenue per round for SanJose and Santa Teresa are estimated based on ERA 2007 numbers.

Summary Operating Data – Palo Alto Municipal Golf Course and Primary Competitors

Golf FacilityTotal 2007

RoundsTotal 2011

Rounds

AverageGreen / Cart

Fee perRound

18-HoleResident

Green Fee(WD/WE)

18-HoleNon-

ResidentGreen Fee(WD/WE)

Per Person18-Hole Cart

Fee

18-HoleTwilight

Green Fee(WD/WE)

18-HoleSenior

ResidentGreen Fee(WD/WE)

18-HoleSuper-TwiGreen Fee(WD/WE)

Palo Alto Municipal GC 76,241 66,740 $30.20 / $4.50 $37/$47 $39/$49 $14 $30/$34 $28/DNA1 $26/$28

Crystal Springs Golf Course 73,654 63,000* $24 / $8 DNA $44/$66 $16 $36/$43 $30/DNA $26/$36

Poplar Creek Golf Course 86,315 70,709 $33.11 / N/A $33$45 $38/$53 $13.50 $27/$33 $22/DNA1 $19/$25

San Jose Municipal GC 86,991 78,000* $32 / $5 DNA $37/$51 $14 $26/$33 $23/DNA $20/$24

Santa Clara Golf & Tennis 87,120 81,000 $26 / $10 $25/$34 $37/$50 $14 $17/$23 res$26/$29 n/r DNA2 $12/$14 res

$16/$18 n/r

Santa Teresa Golf Club 75,0003 65,000* $29.60 / $5.70 DNA $40/$46/$60 $13.50 $25/$29/$34 DNA $17/$19/$25

Shoreline Golf Links 67,135 50,000 $28 / $5.60 $31/$47 $38/$54 $12 $25/$28 $21/DNA1 $17/$17

Spring Valley Golf Course N/A N/A N/A DNA $37/$55 $14 DNA/$45 $28 M-F $27/$30

Sunnyvale Golf Course 80,513 72,535 $28 / $4.50 DNA/$44 $35/$48 $13.50 $25/$26 res$25/$30 n/r DNA1 $16/$20

KEY*NGF Consulting estimate N/A – Information not available DNA – Does not apply / Not offeredNote: For San Jose, Santa Teresa, “afternoon” rates used for twilight and “twilight” for supertwilight; for Spring Valley, “midday” and afternoon used for twi / supertwi.1 Non-resident seniors pay $33 at Palo Alto, $28 at Shoreline; senior discounts at Poplar Creek are for residents only.2 Santa Clara offers senior monthly ticket; Sunnyvale offers senior discount card.3 Rounds listed are for regulation 18-hole course only.


Summary of Findings – Primary Competitors

Based on data reported to NGF Consulting by area golf operators, Palo Alto GolfCourse is positioned quite similarly to its chief municipal competitors. The reportedaverage green fee revenue per round among the subject municipal facilities in 2011generally fell between $28 and $32, while average cart revenue per round was mostcommonly between $4.50 and $5.70.

Posted green fees have been generally flat in this market for the last several years,with only periodic marginal increases aimed at cost recovery at some courses.

Non-resident green fees fall within a relatively narrow range among Palo Alto GCand its municipal competitors, but NGF did note that Palo Alto is at the low end of thenon-resident pricing spectrum, particularly on weekends. We believe that animproved and re-branded Palo Alto facility should be able to absorb $5 to $10increases for non-resident rounds, depending on the reconfiguration option chosenand varying by fee category.

Of the municipal golf courses profiled (leased Santa Teresa excluded), all but SanJose Municipal offered a fee discount for residents (Sunnyvale restricted the discountto weekends).

Most people NGF spoke to consider the city of Mountain View’s Shoreline Golf LinksCourse to be Palo Alto GC’s most direct competitor. Shoreline’s reputation in termsof maintenance standards has reportedly taken a hit in recent years, and the golfcourse appeared to be in only fair condition during NGF’s visit. Shoreline hasdropped about one-third of its rounds since the mid 2000s and was the least activefacility among the key competitors in 2011, with a reported 50,000 rounds. Due to itslocation, Shoreline probably suffers more than most Bay Area golf courses with theCanadian Geese problem. There were also a large number of coots on the courseduring our visit.

As was the case with nearly every golf market NGF examined nationally, averageannual rounds played at many Bay Area golf courses dropped by 25% or morebetween the late 1990s / 2000 and the middle part of the 2000s. Based on roundsreported to NGF as part of this study effort, rounds played among the directcompetitive set have continued to decline since the 2006-07 time period, thoughvariations in the most recent years are at least partly attributable to weathervariations.

Even with the falling activity levels, rounds played per 18 holes among the subjectmunicipal golf courses remain among the highest we’ve observed anywhere in theU.S. Santa Clara Golf & Tennis and San Jose Municipal, at ±80,000 rounds in recentyears, are currently the most active among the competitive set.

Because of heightened competition and today’s economic realities, fee discounting(e.g., through internal yield management, use of internet wholesalers such asgolfnow.com), even among high-end daily fee courses, is now common in the BayArea golf market. As a result, the lines can become blurred between “rack” rates andwhat the majority of customers are actually paying for a round of golf. This disparityis not common among the municipal golf courses we surveyed.


PALO ALTO GOLF COURSE MARKET POSITIONING ASSESSMENT

NGF has attempted to provide a qualitative, or subjective, review of how Palo Alto GC, underboth its current configuration and the alternate reconfiguration options being considered, stacksup against its key competitors as identified above. The objective of this relative assessment is toprovide some justification for assuming an increase in market share (and sustainable greenfees) for Palo Alto GC, especially with the more intensive renovation options.

NGF Consulting has scored the key competitors to the plan options (A, D, F and G) for Palo AltoGC. A baseline score is also provided for the existing Palo Alto golf course and facility. Thisscoring has been accomplished by looking at the amenities, course quality and reputationassociated with each competitive facility. Reliance has been made on available reviews, NGFdata, discussions with Bay Area golf writers/course reviewers and our visits to the subjectcourses.

To rank the reconfiguration plans for Palo Also we relied on the schematic planning workdeveloped as of this date, together with our ratings for the plan options. Scores are expressedas A+, A, A-, B+, B, etc. through D-. Because of the options (alternate) work to be considered,no overall “average” grade is provided. Rather, categories of comparisons are provided. Suchscorings are both subjective and objective, combining impressions with facts about the facilities,and in this case, proposed plans. Because of the subjective component of this review, personalopinion and disagreement with some of the relative scoring should be expected. As such, thescoring should be used as a method for the reader to form opinions in combination with theother reporting covered within this report.

Comparison of Palo Alto GC to Key Competitors

Golf FacilityClubhouseFacilities

PracticeFacilities

ConsumerReputation

GolfConditions*

Palo Alto (Existing) C- C+ C+ C

Palo Alto (Option A) C- C+ B B-Palo Alto (Option D) C- C+ A- B+Palo Alto (Option F) C- B A A-Palo Alto (Option G) C- B+ A+ A

San Jose Golf Course D A- A- B-Santa Clara Golf & Tennis B A- A- C+Shoreline Golf Links B+ B+ C C-Sunnyvale Golf Course C- D- D- C+

Crystal Springs Golf Course A- B+ B+ BPoplar Creek Golf Course A- D B- BSanta Teresa Golf Club B- B B- B-Spring Valley B- B- C+ C+

*As observed January-February 2012


Financial PerformanceModels for Palo Alto Golf Course

As part of this study effort, NGF Consulting has prepared an analysis to show what the potentialeconomic performance of Palo Alto Municipal Golf Course could be considering thereconfiguration options presented in this report. In this section, we estimate the facility’seconomic performance based on a set of assumptions that may or may not become reality. Wefeel that these estimates represent the best effort to create a “fair estimate of performance” forthis facility based on our understanding of the golf facility operation, its place in the market andthe changes proposed in the various renovation options.

The Palo Alto Municipal GC performance has been projected under the assumption that theoperation is continued ‘as-is’ with three separate contracts for maintenance, pro shop andfood/beverage. The basic contract terms in place in FY2012 are assumed to continue throughFY2021. The NGF has also assumed a “standard” set of external assumptions for regionaleconomic performance, consumer discretionary income, and weather, with neither severedeclines nor increases in any of these measures through 2021.

RECENT HISTORICAL PALO ALTO GC PERFORMANCE

In order to put the pro forma projections in context, we have summarized the five-yearperformance history of Palo Alto GC in the table below.

Palo Alto Municipal Golf CourseHistorical Revenue Performance (2008-2011)

Revenues FY2008 FY2009 FY2010 FY2011

Green Fees $2,169,230 $2,073,809 $1,958,234 $1,859,473Cart Fees 345,656 313,224 339,090 302,815Driving Range 346,447 365,908 399,773 343,878Monthly Play Cards 161,368 161,544 135,848 154,933Tournament / League Fees 2,227 2,651 1,921 2,190Class Program / Other Fees 0 0 0 11,844Total Golf Course Revenues $3,024,928 $2,917,136 $2,834,866 $2,675,133

Other Revenue

Merchandise Sales 718,450 737,050 684,725 663,400Food Sales 667,000 0 610,725 637,800Liquor Sales 172,000 0 141,850 149,000F & B Concession Payments

Fixed Lease $0 $43,811 $0 $0Variable Portion $58,730 $0 $52,680 $55,076Utility Payment $25,920 $19,440 $28,080 $25,920Total F & B Concession Payments $84,650 $63,251 $80,760 $80,996

Pro Shop Concession Payments

Fixed Lease $0 $0 $0 $0Merchandise (4%) $28,738 $29,482 $27,389 $26,536Total Pro Shop Concession Payments $28,738 $29,482 $27,389 $26,536

Total Gross Margin to City $3,138,316 $3,009,869 $2,943,015 $2,782,665

Rounds Played 77,989 75,511 69,791 67,381


Palo Alto Municipal Golf CourseHistorical Expense and Net Income Performance (2008-2011)

Expenses FY2008 FY2009 FY2010 FY2011

Salaries & Benefits $951,786 $929,335 $721,596 $259,455Range Fees 138,579 152,745 142,267 130,152Cart Fees 131,789 127,836 121,630 117,529Club Fees 6,473 6,198 5,424 5,576Fixed Lozares Management Fee 373,435 409,989 388,898 381,544Contract Maintenance - - - 475,000Repairs & maintenance 34,791 39,295 33,321 21,943Advertising & Publish 5,560 6,583 4,299 10,765Supplies and Materials 129,891 144,037 119,458 43,742Gen., Rents, Fac. & Equip 5,959 2,736 944 675Water Expense 279,326 409,132 271,495 361,870Other Direct Charges 36,998 39,255 38,882 45,263Indirect Charges 108,641 132,072 110,343 102,571Total City Operating Expenses $2,203,228 $2,399,213 $1,958,557 $1,956,085

Net Income From Operations (Loss) $935,088 $610,656 $984,458 $826,580

Income from Sale of Property $35,230D/S Income $33,629 $32,855 $32,200 $0Total Non-Operating 33,629 32,855 32,200 35,230Total Income (Incl. Non-operating) $968,717 $643,511 $1,016,658 $861,810

Debt Service $559,795 $555,686 $560,674 $559,539Payment to General Fund $94,849 $94,849 $47,684 $94,849Cost Plan Charges $337,590 $318,969 $332,155 $41,455Total Debt / Other Charges $992,234 $969,504 $940,513 $695,843

Net Income or (Loss) ($23,517) ($325,993) $76,145 $165,967

Source: City of Palo Alto

Rounds played at Palo Alto GC decreased steadily from FY2008 to FY2011, falling by atotal of 10,608, or 13.6%. During the same time, both golf revenues and net income fromoperations declined by 11.6%.

Despite the significant decline in rounds and revenues, net income after debt service,general fund payments and cost plan charges improved by nearly $500,000 betweenFY2009 and FY2011 due to a reduction in operating expenses and a significantdecrease in cost plan charges associated with the conversion to privatized golf coursemaintenance.


PROJECTIONS BASED ON “OPTION A”

NGF Consulting has created a cash flow model for the continued operation of Palo AltoMunicipal Golf Course (to be re-branded as “Baylands Golf Club) under the assumption of the“Option A” improvements. These improvements assume the basic minimum upgrades neededto improve the facility within the SFCJPA flood mitigation project, with no substantial change tothe character of the golf course. The NGF revenue estimate has been combined with thepresent operating structure to provide a full estimate of Baylands GC performance for the next10 years, assuming successful completion of the “Option A” upgrades. The NGF has projectedgrowth to over $2.8 million in total gross facility revenue to the City (from all sources) by 2016.

Key Assumptions

The Base assumptions in preparing the projected financial performance estimates coversseveral categories, including rounds activity, green fees, average revenues (carts, range,concessions, etc.), total revenue, expenses, capital and debt. Under all scenarios, we haveassumed use of more complimentary and discount rounds in the initial years after reopening forthe purposes of gaining back lost customers, stimulating trial, and general promotions.

Rounds PerformanceThe rounds activity performance assumptions include:

Rounds in FY2012 assume a 3% reduction from FY2011 total rounds based onactual performance in the first 6 months of FY2012 as reported by staff.

Rounds in FY2013 assume ‘as-is’ operation on 18 holes for the first 9 months, thenoperation on only 9 holes for the last 3 months. During the last three months areduction of 50% off historical rounds for the corresponding month is assumed. Allrounds from April-June 2013 are assumed to be 9-hole rounds.

Rounds in FY2014 assume operation on 9 holes for the first 6 months, thenoperation with an upgraded 18 holes for January-June 2014. All rounds from July-December 2013 are assumed to be 9-hole rounds with a reduction of 50% offhistorical totals for the corresponding month.

Rounds projections assume increases to a stabilized level of 68,200 by 2017.

The overall distribution of rounds by category is shown in the table below:


Palo Alto Municipal Golf Course (Baylands GC)Projected Activity for Option A (2012-2021)

As-Is9-Mos. 18-H /

3 Mos. 9-H6-Mos. 18-H /

6 Mos. 9-H

Operate on 18-holes withmodest upgrade

to the golf course design

FY2012 FY2013 FY2014 FY2015 FY2016

FY2017

-2021

Weekday

18-Hole 5,400 3,500 2,200 5,200 5,300 5,600Senior Non-Resident 6,300 4,200 2,300 5,850 6,200 6,5009-Hole 1,500 6,400 11,500 1,500 1,600 1,700Senior 900 600 500 900 1,000 1,000Junior 1,400 1,000 600 1,350 1,400 1,500Early Bird 700 500 300 600 700 700Twilight 11,300 7,800 4,500 10,800 11,000 11,600Specials 7,500 5,400 3,500 9,400 7,600 8,000Junior Card 1,100 800 500 1,050 1,200 1,200Senior Card 800 600 400 900 1,000 1,000Non-Resident Senior Card 4,000 2,600 1,500 3,750 4,000 4,200Sub-Total Weekday 40,900 33,400 27,800 41,300 41,000 43,000

Weekend

18-Hole 10,200 7,000 4,000 8,550 9,800 10,3009 Hole 1,900 8,700 12,500 1,850 2,000 2,100Junior 800 600 400 800 900 900Twilight 6,200 4,100 2,400 5,800 6,000 6,400Sub-Total Weekend 19,100 20,400 19,300 17,000 18,700 19,700

Complimentary Play 2,500 1,700 1,200 2,500 2,500 2,500

Tournaments 2,200 1,500 1,000 2,000 2,500 3,000

TOTAL ROUNDS 64,700 57,000 49,300 62,800 64,700 68,200

Average Fees / RevenueThe average green fees per round by category are shown in the table that follows. Keyassumptions driving this estimate include:

There is no change in average fees for FY2012 over FY2011.

The only adjustment in FY2013 is for the 9-hole rate, which has been adjusteddownward to reflect the various forms of discounting expected to be present whenthe facility is operating on only 9 holes in the final 3 months of FY2013 and the first 6months of FY2014. NGF has assumed 9-hole green fee will go as low as $12.00 perround in some discount categories (e.g., late afternoon replay rate).

Upon re-opening on 18 holes (assumed January 1, 2014), average fees in eachcategory are increased approximately 5% over FY2012 (rounded).

For FY2015 through FY2021, NGF has assumed 1% annual increases in all feecategories.

Average Cart fee and driving range revenue per round in FY2012 is based on theactuals in FY2011. For FY2013, average cart / range revenue per round is reducedby 20% (from 2011) to reflect the operation on only 9 holes the last 3 months. For


FY2014, average cart and range revenue is reduced by 30% (from FY2011) to reflect6 months on 9 holes. By FY2015, average cart and range revenue is restored at the2011 level and then increased by 1% per year through 2021.

Average merchandise sales in FY2012 are based on the actual in FY2011. Averagesales are reduced by 20% (from 2011) in FY2013 to reflect 9 holes-only the last 3months, and 30% in FY2014 to reflect 6 months on 9 holes. By FY2015, averagesales are restored to the 2011 level with 1% increases through 2021.

Average food and bar sales in FY2012 are based on the actual in FY2011. Averagesales are reduced by 20% (from 2011) in FY2013 to reflect 9 holes-only the last 3months, and 30% in FY2014 to reflect 6 months on 9-holes. By FY2015, averagesales are restored to the 2011 level with 1% increases through 2021.

The average green fees by category and ancillary revenue per round are shown inthe table below (assume 1% annual increases for FY2018-2021 as noted):

Palo Alto Municipal Golf Course (Baylands GC)Projected Average Green Fees for Option A (2012-2021)

As-Is

9-Mos.18-H /3

Mos. 9-H

6-Mos.18-H /6

Mos. 9-H

Operate on 18-holes withmodest upgrade to the golf

course design

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

Weekday

18-Hole $37.00 $37.00 $39.00 $39.39 $39.78 $40.18Senior Non-Resident $32.00 $32.00 $33.50 $33.84 $34.17 $34.529-Hole $23.00 $18.00 $17.00 $25.00 $25.25 $25.50Senior $28.00 $28.00 $29.50 $29.80 $30.09 $30.39Junior $14.75 $14.75 $15.50 $15.66 $15.81 $15.97Early Bird $23.00 $23.00 $24.00 $24.24 $24.48 $24.73Twilight $30.00 $30.00 $31.50 $31.82 $32.13 $32.45Specials $19.00 $19.00 $20.00 $20.20 $20.40 $20.61Junior Card $19.70 $19.70 $20.75 $20.96 $21.17 $21.38Senior Card $23.50 $23.50 $24.75 $25.00 $25.25 $25.50Non-Resident Senior Card $27.50 $27.50 $29.00 $29.29 $29.58 $29.88Weekend

18-Hole $47.00 $47.00 $49.50 $50.00 $50.49 $51.009 Hole $27.00 $24.75 $25.75 $28.75 $29.04 $29.33Junior $15.80 $15.80 $16.50 $16.67 $16.83 $17.00Twilight $34.00 $34.00 $35.75 $36.11 $36.47 $36.83Tournaments $34.60 $34.60 $36.50 $36.87 $37.23 $37.61Avg. Cart Fee / Round $4.54 $3.63 $3.18 $4.54 $4.58 $4.63Avg. Range Revenue / Round $5.15 $4.12 $3.61 $5.15 $5.20 $5.26Merchandise Sales / Round $9.94 $7.95 $6.96 $9.94 $9.94 $10.14Food per Round $9.56 $7.64 $6.69 $9.56 $9.65 $9.75Bar per Round $2.23 $1.79 $1.56 $2.23 $2.26 $2.28


Other Revenue Assumptions Total green fee revenue includes all discount (10-play) cards and monthly passes.

Ancillary revenue per round (carts, merchandise, range, food, bar, other) is derivedfrom total rounds, including complimentary rounds.

Concession revenue to the City of Palo Alto assumes the same current contractbasics through FY2021, with no minimums after April 2013. The City is assumedto collect: (1) 7% of all F & B revenue; and (2) 4% of merchandise sales.

Expense Assumptions Labor expenses are for City oversight only. These include allocations for contract

oversight, Parks and Recreation Director, Division manager, etc. The estimate isintended to include both salary and benefits allocation and is increased by 4.5% peryear through FY2021.

Commissions paid to the pro shop vendor include 38% of driving range grossrevenue and 40% of gross cart revenue (as per contract).

The pro shop management fee is fixed at $28,775 per month for the full duration ofthe NGF projection.

Reimbursements for merchant fees (mostly credit card fees) are assumed to be1.4% of total facility revenue.

Contract maintenance expense to the City of Palo Alto assumes:

$62,500 per month for FY2012.

$62,500 per month for the first 9 months, then $37,500 per months for thelast 3 months of FY2013.


$66,667 per month in FY2015, growing at 1.5% annually through 2021.

Other expenses such as repairs, maintenance, supplies, club fees, materials andother indirect expenses are all based on actual figures for FY2011 with 20%reduction in FY2013 and 30% reduction in FY2014, returning to FY2011 levels inFY2015 plus 1.5% increases assumed through FY2021.

Advertising and publishing expense is reduced by 50% during construction andoperation on 9 holes, totaling 15% reduction in FY2013. Upon re-opening the golfcourse this expense is assumed to increase to $45,000 to account for enhancedmarketing of the upgraded facility and re-theme as “Baylands GC.” Advertising andpublishing expense is then reduced in subsequent years to a “standard” of around$17,000 per year.

Water expense has been highly variable and NGF projections are based on the 4-year average (2008-2011), with assumptions of reductions in use as describedpreviously:

25% reduction during construction

28% reduction upon re-opening

Annual increases are assumed at 20% for 2013, 15% for 2014, 9% for 2015,3% for 2016, 2% for 2017 and 4.5% for FY2018 through FY2021.


Other direct charges (including electric) are based on actual figures for FY2011 with20% reduction in FY2013 and 30% reduction in FY2014. A slight reduction expectedupon re-opening the golf course in FY2015 (as described by the architect). Annualincrease of 1.5% is assumed from FY2015 through FY2021.

Debt Service and Other Non-Operating Expense Assumptions Non-operating revenue attributed to debt service is assumed to continue at 6% of

debt service payment as long as payments continue (through FY2019).

Debt service payments were provided by the City of Palo Alto.

The payment to the General Fund ($94,849) expires after FY2012.

There is a new payment of ± $107,000 to the General Fund from FY2015 – FY2019for repayment of a loan for the difference between the estimated capital cost forOption A and the expected reimbursement from the SFCJPA.

The Cost Plan Charges are based on actual 2011 charges with historical 3% growththrough the end of FY2021.

The NGF has added a new “Operating & Capital Reserve” line to the pro formabeginning in FY2015, set at 10% of green fee revenue.

Option A also assumes that the full irrigation replacement will be completed inFY2020 (or by 2020) at a cost of $750,000 (real 2012 dollars).

Pro Forma Estimate for ‘Option A’ Scenario – FY2012 – FY2021

Utilizing the above assumptions and activity/revenue estimates, NGF Consulting has prepared apro forma for the next 10 years of operation, including FY2012 (already underway). The tableshows that the renovated Baylands Golf Club could produce net income to the City in the rangeof $690,000 to $950,000 (before debt, cost plan and reserve) through the term of the currentdebt program. After the City is no longer responsible for debt payments (beginning in FY2020),the facility is expected to produce net income to the City, after all expenses and charges, in therange of ±$620,000, although a one-time expense of $750,000 is projected for 2020 to upgradethe irrigation system. As this is a projection, all figures after FY2012 have been rounded to thenearest $100 for simplicity.


Palo Alto Golf Course Revenue / Expense - Option A

RevenuesFY2011Actual

FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected

Golf Course Revenues

Green Fees (Incl. Cards) $2,016,537 $1,960,100 $1,605,200 $1,313,900 $1,967,700 $2,090,000 $2,233,100 $2,255,400 $2,278,000 $2,300,700 $2,323,800Cart Fees 302,799 293,500 206,900 156,600 284,900 296,500 315,600 318,800 322,000 325,200 328,500Driving Range 343,911 333,400 235,000 177,800 323,600 336,700 358,500 362,100 365,700 369,400 373,100Tournament / League Fees 2,196 2,100 1,900 1,600 2,100 2,100 2,200 2,200 2,200 2,200 2,200Other 11,813 11,500 8,100 6,100 11,100 11,500 12,300 12,300 12,600 12,600 12,800

Total Golf Course Revenues $2,677,256 $2,600,600 $2,057,100 $1,656,000 $2,589,400 $2,736,800 $2,921,700 $2,950,800 $2,980,500 $3,010,100 $3,040,400

Concession Payments

Food and Beverage Concession

Variable Portion $55,076 $53,400 $37,600 $28,500 $51,800 $53,900 $57,400 $58,000 $58,600 $59,200 $59,700Utility Payment $25,920 $25,900 $26,400 $26,400 $26,900 $26,900 $27,400 $27,400 $27,900 $27,900 $28,500

Total from F & B Concession $80,996 $79,300 $64,000 $54,900 $78,700 $80,800 $84,800 $85,400 $86,500 $87,100 $88,200

Pro Shop Lease

Merchandise (4%) $26,536 $25,700 $18,100 $13,700 $25,000 $25,700 $27,700 $27,700 $28,200 $28,200 $28,800

Total From Pro Shop Concession $26,536 $25,700 $18,100 $13,700 $25,000 $25,700 $27,700 $27,700 $28,200 $28,200 $28,800

Total Gross to City $2,784,788 $2,705,600 $2,139,200 $1,724,600 $2,693,100 $2,843,300 $3,034,200 $3,063,900 $3,095,200 $3,125,400 $3,157,400

Operating ExpensesFY2011Actual

FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected

Salaries & Benefits $259,455 $139,000 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500Range Fees 130,152 126,700 89,300 67,600 123,000 127,900 136,200 137,600 139,000 140,400 141,800Cart Fees 117,529 117,400 82,800 62,600 114,000 118,600 126,200 127,500 128,800 130,100 131,400Club Fees 5,576 5,700 4,600 4,000 5,700 5,800 5,900 6,000 6,100 6,200 6,300Fixed Lozares Management Fee 345,333 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300Merchant Fees Reimbursement 36,211 36,400 28,800 23,200 36,300 38,300 40,900 41,300 41,700 42,100 42,600Contract Maintenance 475,000 750,000 675,000 625,000 800,000 812,000 824,200 836,600 849,100 861,800 874,700Repairs & maintenance 21,943 22,300 17,800 15,600 22,300 22,600 22,900 23,200 23,500 23,900 24,300Advertising & Publish 10,765 10,900 9,300 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500Supplies and Materials 44,417 45,100 36,100 31,600 45,100 45,800 46,500 47,200 47,900 48,600 49,300Water Expense 361,870 246,000 277,400 207,000 195,000 200,900 204,900 214,100 223,700 233,800 244,300


Palo Alto Golf Course Revenue / Expense - Option A


FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected

Other Direct Charges (Incl. Electric) 45,263 45,900 36,700 32,100 44,700 45,400 46,100 46,800 47,500 48,200 48,900Indirect Charges 102,571 104,100 83,300 72,900 104,100 105,700 107,300 108,900 110,500 112,200 113,900

Total City Operating Expenses $1,956,085 $1,994,800 $1,831,700 $1,683,700 $2,024,100 $2,051,000 $2,096,900 $2,133,100 $2,170,100 $2,208,400 $2,247,800

Net Income From Operations (Loss) $828,703 $710,800 $307,500 $40,900 $669,000 $792,300 $937,300 $930,800 $925,100 $917,000 $909,600

Non-operating

Income from Sale of Property 35,230

D/S Income $0 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0

Total Non-operating $35,230 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0

Total Income (Incl. Non-operating) $863,933 $740,700 $333,200 $66,600 $694,700 $818,100 $963,200 $956,700 $951,000 $917,000 $909,600

Debt Service $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $432,200 $432,300 $431,200 $0 $0Payment to General Fund $94,849 $94,800 $0 $0 $107,600 $107,600 $107,600 $107,600 $107,600 $0 $0

New Debt Service $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Additional Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $750,000 $0Reserve for Replacement $0 $0 $0 $0 $196,800 $209,000 $223,300 $225,500 $227,800 $230,100 $232,400

Cost Plan Charges $41,455 $42,700 $44,000 $45,300 $46,700 $48,100 $49,500 $51,000 $52,500 $54,100 $55,700

Total Debt / Other Charges $695,843 $636,500 $472,200 $474,300 $779,300 $795,500 $812,600 $816,400 $819,100 $1,034,200 $288,100

Net Income or (Loss) $168,090 $104,200 ($139,000) ($407,700) ($84,600) $22,600 $150,600 $140,300 $131,900 ($117,200) $621,500


PROJECTIONS BASED ON “OPTION D”

The NGF cash flow model for operation under “Option D” assumes a more significant upgradeto the facility with a “more dramatic transformation” as described by the golf course architect.The NGF revenue estimate has been combined with the present operating structure to provide afull estimate of Baylands GC performance for the next 10 years, assuming successfulcompletion of the “Option D” upgrades. The NGF has projected growth to over $3.0 million intotal gross revenue (from all sources) to the City by 2016.

Key Assumptions

The Base assumptions in preparing the projected financial performance match those presentedin the projection for Option A, except the following changes noted below:


Rounds in FY2013 assume ‘as-is’ operation on 18 holes for the first 9 months, thenoperation on only 9 holes for the last 3 months. During the last three months areduction of 50% off historical rounds for the corresponding month is assumed. Allrounds from April-June 2013 are assumed to be 9-hole rounds.

Rounds in FY2014 assume operation on 9 holes for the first 7 months, thenoperation with an upgraded 18 holes for February - June 2014. All rounds from July2013 through January 2014 are assumed to be 9-hole rounds with a reduction of50% off historical totals for the corresponding months.

Rounds in FY2015 through FY2021 assume increases to a stabilized level of 73,300by 2017.



Palo Alto Municipal Golf Course (Baylands GC)Projected Activity for Option D (2012-2021)

As-Is

9-Mos. 18-H /3 Mos.

9-H

5-Mos. 18-H /7 Mos.

9-H

Operate on 18-holes with upgradedgolf design and more appealing

features

FY2012 FY2013 FY2014 FY2015 FY2016

FY2017

-2021

Weekday

18-Hole 5,400 3,500 1,800 5,500 5,800 6,100Senior Non-Resident 6,300 4,200 2,100 6,200 6,550 6,9009-Hole 1,500 6,400 11,000 1,600 1,600 1,700Senior 900 600 300 1,100 1,150 1,200Junior 1,400 1,000 400 1,350 1,400 1,500Early Bird 700 500 200 800 850 900Twilight 11,300 7,800 3,700 11,200 11,750 12,400Specials 7,500 5,400 3,000 7,550 8,000 8,400Junior Card 1,100 800 400 1,150 1,250 1,300Senior Card 800 600 300 1,000 1,050 1,100Non-Resident Senior Card 4,000 2,600 1,200 3,950 4,200 4,400Sub-Total Weekday 40,900 33,400 24,400 41,400 43,600 45,900

Weekend

18-Hole 10,200 7,000 3,500 9,900 10,450 11,0009 Hole 1,900 8,700 11,900 2,000 2,150 2,200Junior 800 600 300 900 950 1,000Twilight 6,200 4,100 2,100 6,000 6,350 6,700Sub-Total Weekend 19,100 20,400 17,800 18,800 19,900 20,900

Complimentary Play 2,500 1,700 1,000 2,500 2,500 2,500

Tournaments 2,200 1,500 800 3,000 3,500 4,000

TOTAL ROUNDS 64,700 57,000 44,000 65,700 69,500 73,300


The only adjustment in FY2013 is for the 9-hole rate, which has been adjusteddownward to reflect the various forms of discounting expected to be present whenthe facility is operating on only 9 holes in the final 3 months of FY2013 and the first 7months of FY2014.

Upon re-opening on 18 holes (assumed January 1, 2014), average fees in eachcategory are increased approximately 10% over FY2012 (rounded).

Average Cart fee and driving range revenue per round in FY2012 is based on theactuals in FY2011. For FY2013, average cart / range revenue per round is reducedby 20% (from 2011) to reflect the operation on only 9 holes the last 3 months. ForFY2014, average cart and range revenue is reduced by 30% (from FY2011) to reflect7 months on 9 holes. By FY2015, average cart and range revenue is restored at the2011 level and then increased by 1% per year through 2021.


Average merchandise sales in FY2012 are based on the actual in FY2011. Averagesales are reduced by 20% (from 2011) in FY2013 to reflect 9 holes-only the last 3months, and 30% in FY2014 to reflect 7 months on 9 holes. By FY2015, averagesales are restored to the 2011 level with 1% increases through 2021.

Average food and bar sales in FY2012 are based on the actual in FY2011. Averagesales are reduced by 20% (from 2011) in FY2013 to reflect 9 holes-only the last 3months, and 30% in FY2014 to reflect 7 months on 9 holes. By FY2015, averagesales are restored to the 2011 level with 1% increases through 2021.


Palo Alto Municipal Golf Course (Baylands GC)Projected Average Green Fees for Option D (2012-2021)

As-Is

9-Mos.18-H /3

Mos. 9-H

5-Mos.18-H /7

Mos. 9-H

Operate on 18-holes withupgraded golf design and more

appealing features

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

Weekday


18-Hole $47.00 $47.00 $52.00 $52.52 $53.05 $53.589 Hole $27.00 $24.75 $27.25 $28.75 $29.04 $29.33Junior $15.80 $15.80 $17.50 $17.68 $17.85 $18.03Twilight $34.00 $34.00 $37.50 $37.88 $38.25 $38.64Tournaments $34.60 $34.60 $38.00 $38.38 $38.76 $39.15


Expense Assumptions Contract maintenance expense to the City of Palo Alto assumes:

$62,500 per month for FY2012.








Annual increases are assumed at 20% for 2013, 15% for 2014, 9% for 2015,3% for 2016, 2% for 2017 and 4.5% for FY2018 through FY2021.

Other direct charges (including electric) are based on actual 2011 totals, based onactual figures for FY2011 with 20% reduction in FY2013 and 30% reduction inFY2014. A slight reduction expected upon re-opening the golf course in FY2015 (asdescribed by the architect). Annual increase of 1.5% is assumed from FY2015through FY2021.

Debt Service and Other Non-Operating Expense Assumptions There is a new payment of ± $223,700 to the General Fund from FY2015 – FY2019

for repayment of a loan for the difference between the estimated capital cost forOption D and the expected reimbursement from the SFCJPA.

Option D also assumes that the full irrigation replacement will be completed inFY2020 (or by 2020) at a cost of $500,000 (real 2012 dollars).

Pro Forma Estimate for ‘Option D’ Scenario – FY2012 – FY2021

Utilizing the above assumptions and activity/revenue estimates, NGF Consulting has prepared apro forma for the next five years of operation, including FY2012 (already underway). The tableshows that with a more comprehensive renovation, the Baylands GC could produce net incometo the City in the range of $930,000 to $1.27 million (before debt, cost plan and reserve) throughthe term of the current debt program. After the City is no longer responsible for debt payments(beginning in FY2020), the facility is expected to produce net income to the City in the range of$915,000 per year, although there is a one-time expense of $500,000 for irrigation in 2020.


Palo Alto Golf Course Revenue / Expense - Option D


FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected


Green Fees (Incl. Cards) $2,016,537 $1,960,100 $1,605,200 $1,213,500 $2,204,500 $2,361,900 $2,522,200 $2,547,500 $2,572,900 $2,598,700 $2,624,600Cart Fees 302,799 293,500 206,900 139,700 298,100 318,500 339,200 342,600 346,100 349,500 353,000Driving Range 343,911 333,400 235,000 158,700 338,600 361,700 385,300 389,200 393,100 397,000 401,000Tournament / League Fees 2,196 2,100 1,900 1,400 2,200 2,300 2,400 2,400 2,400 2,400 2,400Other 11,813 11,500 8,100 5,500 11,600 12,300 13,200 13,200 13,500 13,500 13,800


Concession Payments




Pro Shop Lease

Merchandise (4%) $26,536 $25,700 $18,100 $12,200 $26,100 $27,600 $29,700 $29,700 $30,300 $30,300 $30,900




FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected



Palo Alto Golf Course Revenue / Expense - Option D


FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected



Net Income From Operations (Loss) $828,703 $710,800 $307,500 ($52,800) $906,700 $1,078,800 $1,243,100 $1,240,800 $1,239,000 $1,235,100 $1,232,000

Non-operating

Income from Sale of Property 35,230D/S Income $0 $29,900 $25,700 $25,700 $25,700 $25,800 $25,900 $25,900 $25,900 $0 $0


Total Income (Incl. Non-operating) $863,933 $740,700 $333,200 ($27,100) $932,400 $1,104,600 $1,268,500 $1,266,700 $1,264,900 $1,235,100 $1,232,000

Debt Service $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0Payment to General Fund $94,849 $94,800 $0 $0 $223,700 $223,700 $223,700 $223,700 $223,700 $0 $0

Additional Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $500,000 $0Reserve for Replacement $0 $0 $0 $0 $220,500 $236,200 $252,200 $254,800 $257,300 $259,900 $262,500


Total Debt / Other Charges $695,843 $636,500 $472,200 $474,300 $919,100 $938,800 $948,600 $961,800 $964,700 $814,000 $318,200

Net Income or (Loss) $168,090 $104,200 ($139,000) ($501,400) $13,300 $165,800 $319,900 $304,900 $300,200 $421,100 $913,800


PROJECTIONS BASED ON “OPTION F”

The NGF cash flow model for operation under “Option F” assumes a more significant upgrade tothe facility, with a two-thirds complete renovation the addition of a soccer field and a comparable“dramatic transformation” as proposed in Option D. The NGF estimate shows the Baylands GCrevenue performance under Option F over the next 10 years would be comparable to Option D.

Key Assumptions

The Base assumptions in preparing the projected financial performance match those presentedin the projection for Option D, except the following changes noted below:

Rounds and Average Fee PerformanceThe rounds activity and average fee performance assumptions are the same as proposed in“Option D,” except:

Rounds in FY2014 assume operation on 9 holes for the first 9 months, thenoperation with an upgraded 18 holes for April - June 2014. All rounds from July 2013through March 2014 are assumed to be 9-hole rounds with totals reduced by 50% foreach corresponding month.

Palo Alto Municipal Golf Course (Baylands GC)Projected Activity for Option F (2012-2021)

As-Is

9-Mos. 18-H /3 Mos.

9-H

3-Mos. 18-H /9 Mos.

9-HOperate on 18-holes with nearly

complete renovation

FY2012 FY2013 FY2014 FY2015 FY2016

FY2017

-2021

Weekday18-Hole 5,400 3,500 1,000 5,500 5,800 6,100Senior Non-Resident 6,300 4,200 1,100 6,200 6,550 6,9009-Hole 1,500 6,400 12,800 1,600 1,600 1,700Senior 900 600 200 1,100 1,150 1,200Junior 1,400 1,000 300 1,350 1,400 1,500Early Bird 700 500 200 800 850 900Twilight 11,300 7,800 2,000 11,200 11,750 12,400Specials 7,500 5,400 2,200 7,550 8,000 8,400Junior Card 1,100 800 300 1,150 1,250 1,300Senior Card 800 600 200 1,000 1,050 1,100Non-Resident Senior Card 4,000 2,600 800 3,950 4,200 4,400Sub-Total Weekday 40,900 33,400 21,100 41,400 43,600 45,900Weekend18-Hole 10,200 7,000 2,100 9,900 10,450 11,0009 Hole 1,900 8,700 13,700 2,000 2,150 2,200Junior 800 600 200 900 950 1,000Twilight 6,200 4,100 1,000 6,000 6,350 6,700Sub-Total Weekend 19,100 20,400 17,000 18,800 19,900 20,900Complimentary Play 2,500 1,700 1,100 2,500 2,500 2,500Tournaments 2,200 1,500 500 3,000 3,500 4,000TOTAL ROUNDS 64,700 57,000 39,700 65,700 69,500 73,300

Average green and ancillary fees in “Option F” are identical to those presented for“Option D.”


Expense Assumptions Contract maintenance expense to the City of Palo Alto assumes:

$62,500 per month for FY2012

$62,500 per month for the first 9 months, then $37,500 per months for thelast 3 months of FY2013

$37,500 per month for the first 9 months, then $66,667 per months for thelast 3 months of FY2014






Annual increases are assumed at 20% for 2013, 15% for 2014, 9% for 2015,3% for 2016, 2% for 2017 and 4.5% for FY2018 through FY2021


Debt Service and Other Non-Operating Expense Assumptions The NGF has assumed that the $2,855,400 in additional cost needed to complete

Option F, over and above the amount estimated to be reimbursed by the SFCJPA,will be funded via the issuance of a new debt program (revenue or GeneralObligation Bond), with terms of 4.5% interest for 20 years, with payments beginningin FY2015.

Option F also assumes that the full irrigation replacement will be completed inFY2020 (or by 2020) at a cost of $250,000 (real 2012 dollars).

Pro Forma Estimate for ‘Option F’ Scenario – FY2012 – FY2021

Based on the inputs described above, the pro forma estimate for future performance under“Option F” shows that with this more comprehensive renovation, the Baylands GC couldproduce net income to the City in the range of $960,000 to $1.34 million (before existing andnew debt, cost plan and reserve) through the term of the current debt program. After the City isno longer responsible for its older (1999 issue) debt payments, beginning in FY2020, the facilityis expected to produce net income to the City in the range of $720,000 per year, although thereis a one-time expense of $250,000 for irrigation in 2020.


Palo Alto Golf Course Revenue / Expense - Option F


FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected


Green Fees (Incl. Cards) $2,016,537 $1,960,100 $1,605,200 $969,500 $2,204,500 $2,361,900 $2,522,200 $2,547,500 $2,572,900 $2,598,700 $2,624,600Cart Fees 302,799 293,500 206,900 126,100 298,100 318,500 339,200 342,600 346,100 349,500 353,000Driving Range 343,911 333,400 235,000 143,200 338,600 361,700 385,300 389,200 393,100 397,000 401,000Tournament / League Fees 2,196 2,100 1,900 1,300 2,200 2,300 2,400 2,400 2,400 2,400 2,400Other 11,813 11,500 8,100 4,900 11,600 12,300 13,200 13,200 13,500 13,500 13,800


Concession Payments




Pro Shop Lease

Merchandise (4%) $26,536 $25,700 $18,100 $11,000 $26,100 $27,600 $29,700 $29,700 $30,300 $30,300 $30,900




FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected



Palo Alto Golf Course Revenue / Expense - Option F


FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected




Non-operating




Debt Service $559,539 $499,000 $428,200 $429,000 $428,200 $430,800 $423,200 $432,300 $431,200 $0 $0Payment to General Fund $94,849 $94,800 $0 $0 $0 $0 $0 $0 $0 $0 $0

Additional Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $250,000 $0New Debt Service $0 $0 $0 $0 $219,500 $219,500 $219,500 $219,500 $219,500 $219,500 $219,500Reserve for Replacement $0 $0 $0 $0 $220,500 $236,200 $252,200 $254,800 $257,300 $259,900 $262,500


Total Debt / Other Charges $695,843 $636,500 $472,200 $474,300 $914,900 $934,600 $944,400 $957,600 $960,500 $783,500 $537,700


NOTE: Option F would likely include additional revenue from soccer fields of approximately $78,000 per field per year.


PROJECTIONS BASED ON “OPTION G”

The NGF projection model for “Option G” represents a significant change from other optionspresented. This option would involve a complete renovation of the Palo Alto Municipal GolfCourse (to be re-branded as “Baylands Golf Club). The project would involve a full closure ofthe golf course from April 2013 through March 2014, re-opening as a brand new golf course withthe highest quality golf features commanding higher fees than any other option presented. Thefull golf course irrigation system would be replaced and three new soccer fields would be addedto the site. Subsequent to the initial draft report, the City Finance Committee recommended thatthis option include rebuilding of all 18 greens, re-turfing of all fairways, construction of an on-course restroom, and rebuilding the practice green area. These changes should further enhancethe product’s marketability and the golfer experience.

The NGF revenue estimate has been combined with the present operating structure to provide afull estimate of Baylands GC performance for the next 10 years, assuming successfulcompletion of the proposed “Option G” upgrades. The NGF has projected growth to almost $3.2million in total gross revenues (from all sources) to the City by 2016.

Key Assumptions

The Base assumptions in preparing the projected financial performance estimates coversseveral categories, including rounds activity, green fees, average revenues (carts, range,concessions, etc.), total revenue, expenses, capital and debt.


Rounds in FY2012 assume a 3% reduction from FY2011 total rounds based onactual performance in the first 6 months of FY2012.

Rounds in FY2013 assume ‘as-is’ operation on 18 holes for the first 9 months. Thegolf course then closes entirely for the next 12 months (April 2013 –March 2014), re-opening as an upgraded new facility on April 1, 2014.

Upon re-opening, rounds are assumed to grow to 67,900 in FY2015, stabilizing at75,700 rounds by 2017.



Palo Alto Municipal Golf Course (Baylands GC)Projected Activity for Option G (2012-2021)

As-Is

9-Mos. 18-H / 3 Mos.

closed

3-Mos. 18-H / 9 Mos.

ClosedOperate on 18-holes with maximum

renovation and upgrade

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 -2021

Weekday

18-Hole 5,400 4,000 1,000 5,500 5,800 6,100Senior Non-Resident 6,300 4,700 1,300 6,200 6,550 6,9009-Hole 1,500 1,100 400 1,550 1,600 1,700Senior 900 600 250 1,100 1,150 1,200Junior 1,400 1,000 400 1,450 1,500 1,600Early Bird 700 500 200 800 850 900Twilight 11,300 8,400 2,800 11,500 12,150 12,800Specials 7,500 5,600 2,200 7,650 8,050 8,500Junior Card 1,100 800 300 1,150 1,250 1,300Senior Card 800 600 200 1,000 1,050 1,100Non-Resident Senior Card 4,000 3,000 1,000 4,000 4,300 4,500Sub-Total Weekday 40,900 30,300 10,050 41,900 44,250 46,600

Weekend

18-Hole 10,200 7,600 2,500 10,050 10,650 11,2009 Hole 1,900 1,400 500 2,000 2,100 2,200Junior 800 600 200 900 950 1,000Twilight 6,200 4,600 1,500 6,050 6,350 6,700Sub-Total Weekend 19,100 14,200 4,700 19,000 20,050 21,100

Complimentary Play 2,500 1,800 650 3,500 3,500 3,500

Tournaments 2,200 1,600 600 3,500 4,000 4,500

TOTAL ROUNDS 64,700 47,900 16,000 67,900 71,800 75,700


There is no change in average fees for FY2012 over FY2011.

Upon re-opening on 18 holes (assumed April 1, 2014), average fees in eachcategory are increased approximately 15% over FY2012 (rounded).

For FY2015 through FY2021, NGF has assumed 1% annual increases in all feecategories.

All other ancillary revenue centers mirror estimates made in Options D and F.



Palo Alto Municipal Golf Course (Baylands GC)Projected Average Green Fees for Option G (2012-2021)

As-Is

9-Mos. 18-H / 3 Mos.

closed

3-Mos. 18-H / 9 Mos.

Closed

Operate on 18-holes withmaximum renovation and

upgrade

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

Weekday


18-Hole $47.00 $47.00 $54.00 $54.54 $55.09 $55.649 Hole $27.00 $24.75 $28.50 $28.75 $29.04 $29.33Junior $15.80 $15.80 $18.00 $18.18 $18.36 $18.55Twilight $34.00 $34.00 $39.00 $39.39 $39.78 $40.18Tournaments $34.60 $34.60 $40.00 $40.40 $40.80 $41.21

Other Revenue Assumptions Total green fee revenue includes all discount (10-play) cards and monthly passes.

Ancillary revenue per round (carts, merchandise, range, food, bar, other) is derivedfrom total rounds, including complimentary rounds.

Concession revenue to the City of Palo Alto assumes the same current contractbasics through FY2021, with no minimums after April 2013. The City is assumedto collect: (1) 7% of all food and beverage revenue; and (2) 4% of merchandisesales.

Expense Assumptions Labor expenses are for City oversight only. These include allocations for contract

oversight, Parks and Recreation Director, Division manager, etc. The estimate isintended to include both salary and benefits allocation and is increased by 4.5% peryear through FY2021.

Commissions paid to the pro shop vendor include 38% of driving range grossrevenue and 40% of gross cart revenue (as per contract).

The pro shop management fee is fixed at $28,775 per month while the golf course isopen. No management fees are assumed for April 2013 through March 2014.

Reimbursements for merchant fees (mostly credit card fees) are assumed to be1.4% of total facility revenue.


Contract maintenance expense to the City of Palo Alto assumes:

$62,500 per month for FY2012

$62,500 per month for the first 9 months of FY2013

No contract maintenance expense for April 2013 through March 2014

$68,750 per month (fixed) upon re-opening in April 2014 (3 months inFY2014), then $68,750 per month in FY2015, growing at 1.5% annuallythrough 2021


Advertising and publishing expense is reduced by 50% during construction andoperation on 9 holes, totaling 15% reduction in FY2013. Upon re-opening the golfcourse this expense is assumed to increase $45,000 to account for enhancedmarketing of the upgraded facility and re-theme as “Baylands GC.” Advertising andpublishing expense is then reduced in subsequent years to a “standard” of around$17,000 per year.




Annual increases are assumed at 20% for 2013, 15% for 2014, 9% for 2015,3% for 2016, 2% for 2017 and 4.5% for FY2018 through FY2021


Debt Service and Other Non-Operating Expense Assumptions The NGF has assumed that the $4,570,000 in additional cost needed to complete

Option G, over and above the amount reimbursed by the SFCJPA, will be funded viathe issuance of a new debt program (revenue or General Obligation Bond), withterms of 4.5% interest for 20 years, with payments beginning in FY2015.

Pro Forma Estimate for ‘Option G’ Scenario – FY2012 – FY2021

Based on the inputs described above, the pro forma estimate for future performance under“Option G” shows that with this complete renovation, the Baylands GC could produce netincome to the City in the range of $1.07 to $1.42 million (before existing and new debt, cost planand reserve) through the term of the current debt program that ends in 2019. After the City is nolonger responsible for its older (1999 issue) debt payments, the facility is expected to producenet income to the City, after all expenses and other charges, in the range of $740,000 per year.


Palo Alto Golf Course Revenue / Expense - Option G


FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected


Green Fees (Incl. Cards) $2,016,537 $1,960,100 $1,445,100 $544,300 $2,341,500 $2,510,600 $2,680,900 $2,707,800 $2,734,800 $2,762,200 $2,789,800Cart Fees 302,799 293,500 173,900 72,600 311,100 332,300 353,900 357,400 361,000 364,600 368,200Driving Range 343,911 333,400 197,500 82,400 353,400 377,400 401,900 405,900 410,000 414,100 418,200Tournament / League Fees 2,196 2,100 1,600 500 2,200 2,400 2,500 2,500 2,500 2,500 2,500Other 11,813 11,500 6,800 2,800 12,000 12,700 13,700 13,700 13,900 13,900 14,200

Total Golf Course Revenues $2,677,256 $2,600,600 $1,824,900 $702,600 $3,020,200 $3,235,400 $3,452,900 $3,487,300 $3,522,200 $3,557,300 $3,592,900

Concession Payments




Pro Shop Lease

Merchandise (4%) $26,536 $25,700 $15,200 $6,400 $27,000 $28,500 $30,700 $30,700 $31,300 $31,300 $31,900


Total Gross to City $2,784,788 $2,705,600 $1,898,100 $748,600 $3,130,700 $3,351,200 $3,575,400 $3,610,400 $3,647,100 $3,682,800 $3,720,300


FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected



Palo Alto Golf Course Revenue / Expense - Option G


FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected


Total City Operating Expenses $1,956,085 $1,994,800 $1,575,100 $759,400 $2,061,600 $2,097,500 $2,146,000 $2,182,300 $2,219,400 $2,257,900 $2,297,400

Net Income From Operations (Loss) $828,703 $710,800 $323,000 ($10,800) $1,069,100 $1,253,700 $1,429,400 $1,428,100 $1,427,700 $1,424,900 $1,422,900

Non-operating



Total Income (Incl. Non-operating) $863,933 $740,700 $348,700 $14,900 $1,094,800 $1,279,500 $1,454,800 $1,454,000 $1,453,600 $1,424,900 $1,422,900


New Debt Service $0 $0 $0 $0 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300 $351,300Operating & Capital Reserve $0 $0 $0 $0 $234,200 $251,100 $268,100 $270,800 $273,500 $276,200 $279,000


Total Debt / Other Charges $695,843 $636,500 $472,200 $474,300 $1,060,400 $1,081,300 $1,092,100 $1,105,400 $1,108,500 $681,600 $686,000


NOTE: Option G would likely include additional revenue from soccer fields estimated by City at approximately $78,000 per field per year ($234,000 for 3 fields).


FINANCIAL PROJECTIONS SUMMARY

Summary of Options

Comparative table for options in 2015 and 2020 are shown below:

Summary in 2015

Summary in FY2015

Modest UpgradeOption

A

Moresignificant

upgrade / nicerfeaturesOption

D

Nearlycomplete

renovationOption

F

Maximumrenovation

OptionG

TOTAL ROUNDS 62,800 65,700 65,700 67,900

ANNUAL ROUNDS REVENUE $1,967,709 $2,204,512 $2,204,512 $2,341,455

AVERAGE GREEN FEE PER ROUND $31.33 $33.55 $33.55 $34.48

RevenuesFY2015

ProjectedFY2015

ProjectedFY2015

ProjectedFY2015

Projected

Total Golf Course Revenues $2,589,400 $2,855,000 $2,855,000 $3,020,200

Concessions

Total from F & B Concession $78,700 $81,100 $81,100 $83,500

Total From Pro Shop Concession $25,000 $26,100 $26,100 $27,000

Total Gross to City $2,693,100 $2,962,200 $2,962,200 $3,130,700

Expenses

Water 195,000 161,000 182,400 225,600

Maintenance Contract 800,000 852,000 800,000 825,000

Total to Pro Shop Contract 618,600 633,200 633,200 646,300

All Other Expenses 410,500 409,300 408,300 407,300

Total City Operating Expenses 2,024,100 2,055,500 2,023,900 2,061,600

Net Income From Operations (Loss) $669,000 $906,700 $938,300 $1,069,100

Total Income (Incl. Non-operating) $694,700 $932,400 $964,000 $1,094,800

Total Debt/Other Charges $779,300 $1,501,100 $914,900 $1,060,400

Net Income or (Loss) ($84,600) ($568,700) $49,100 $34,400

Footnotes Partial irrigation Partial irrigation Potential foradditional

$78,000 Soccerrevenue

Potential foradditional$234,000

Soccer revenue


Summary in 2020

Summary in FY2020

Modest UpgradeOption

A

Moresignificant

upgrade / nicerfeaturesOption

D

Nearlycomplete

renovationOption

F

Maximumrenovation

OptionG

TOTAL ROUNDS 68,200 73,300 73,300 75,700



RevenuesFY2015

ProjectedFY2015

ProjectedFY2015

ProjectedFY2015

Projected


Concessions




Expenses

Water 233,800 193,000 218,700 219,500

Maintenance Contract 861,800 918,000 861,800 888,800

Total to Pro Shop Contract 657,900 683,100 683,100 698,300

All Other Expenses 454,900 453,700 452,500 451,300

Total City Operating Expenses $2,208,400 $2,247,800 $2,216,100 $2,257,900

Net Income From Operations (Loss) $917,000 $1,235,100 $1,266,800 $1,424,900

Total Income (Incl. Non-operating) $917,000 $1,235,100 $1,266,800 $1,424,900

Total Debt/Other Charges $1,034,200 $814,000 $783,500 $681,600

Net Income or (Loss) ($117,200) $421,100 $483,300 $743,300

Footnotes Partial irrigation Partial irrigation Potential foradditional

$78,000 Soccerrevenue

Potential foradditional$234,000

Soccer revenue

Summary Results

The results of the NGF Consulting financial projections for Palo Alto Golf Course, based on thevarious reconfiguration options and the analysis and assumptions presented in this report, showthat the facility will generate, to varying degrees based on the renovation option, improvedrounds and revenue performance compared to the base “as is” scenario. In relation toestimating lost rounds and revenues during construction, NGF has assumed for all optionsunder which the facility will remain open for 9-hole play that the City will still be able to provide aquality golf experience that is minimally disruptive to the golfer.


Key observations regarding projected “Baylands Golf Club at Palo Alto” financial performance:

NGF has estimated that total revenues to the City will decrease by varying amountsduring construction for the four options evaluated. For instance, under Option A, thetotal two-year cumulative reduction in gross revenue to the City is nearly $1.5 million.This is based on estimated FY 2012 gross revenues. However, because of expensereductions (e.g., range and cart payments, contract maintenance, water, indirectcharges) during the time of construction, net income from operations (before debt,other costs) is estimated to decrease by ±$1.08 million over the two-year period,based on actual estimated FY 2012 net operating income.

Option G, which involves a 12-month closure of all 18 holes, naturally results in thegreatest reduction in revenue, with only $748,600 gross income from operations inFY 2014, when the course is closed for 9 months. The two-year cumulative loss ingross revenue to the City, using FY 2012 as a base, is estimated at nearly $2.7million, while the loss in net income is estimate at ± $1.1 million.

Rounds played, after years of decline, are projected to rebound under all of thereconfiguration options, with options D and F at stabilized total rounds at 73,300,representing a 5,100 round improvement over Option A. Option G – full renovation –results in the highest stabilized activity level, at nearly 76,000 annual rounds.

Option D, which is expected to cost ±$600,000 more than base Option A, isprojected to produce significantly higher net operating income than Option A,resulting in a quick pay back of the investment.

Stabilized Net Operating Income (before debt and other costs such as capital,reserve, and cost plan) is projected to be highest under Option G, with 2021 NOIprojected at about $1.42 million. Option F is second with ±$1.26 million, followedclosely by Option D at about $1.23 million.

After additional debt associated with improvements is considered, Option G isprojected to produce overall Net Income to the City that is moderately lower than thatof Option D. However, further down the road when the debt for Option G is paid off, itis expected to produce the highest Net Income for the City of Palo Alto.

Justifications for Revenue Projections

NGF is confident, given the inputs (e.g., expected quality and appeal following improvements)for each option, that the rounds, fees, revenues, and expenses projected under each scenarioare reasonable and achievable. The highest stabilized rounds activity we have projected underany scenario was less than 76,000 total rounds, a level that was achieved as recently as 2007-08 (and was far exceeded in the past) with a product that was inferior to what a reconfiguredand re-branded golf course will bring to market. Also, we feel we have been conservative interms of the fee increases that the improved facility will be able to sustain. Likewise, we believeit is more difficult to estimate the impact on revenues during the time of construction, as thereare many variables, not the least of which are golfer behavior and preferences.

Pro formas are, by their nature, models based on a set of assumptions that may or may notbecome reality and which are subject to a number of uncontrollable factors (e.g., weathervariations, the economy, quality/quantity of the competition), but NGF believes that ourprojections represent a “reasonable” estimate of performance for the “Baylands” facility basedon the factors discussed in this report. Among the factors considered when crafting ourprojections for each model are:


Expected higher quality of the Palo Alto Municipal Golf Course (level of improvementdepends on intensity of Reconfiguration Option chosen, level of “additional” work).

Re-branding and effective marketing of the “Baylands Golf Club at Palo Alto”, alongwith more proactive direct selling of larger tournaments and events.

Reinventing the product should re-energize the current customer base, resulting inincreased frequency of play, and also position the facility to compete more effectivelyfor non-resident rounds. Results of ERA’s 2008 survey revealed that the number onereason Palo Alto GC was not the primary course of respondents was “coursequality/play experience”. Maintenance conditions that will position the facility in themid-to-upper tier of municipal golf courses in this market.

Non-resident green fees at Palo Alto, especially on weekends, are at the low end ofthe price range among the direct municipal competitors. With an improved product,there should be little resistance to modest price increases at the “Baylands”.Maintaining a strong price/value proposition will ensure that the improved golf courseremains very competitive in the area market despite expected modest fee increases.

Palo Alto Municipal Golf Course is operating at rounds levels that are will below peaklevels from 1990s and early-to-mid 2000s. The facility has achieved rounds playedlevels close to what NGF Consulting is projecting under the most favorable option asrecently as FY 2008.

The Bay Area remains one of the most active markets for municipal golf in thenation. At the peak of the market, Palo Alto and several of its chief competitorsrealized annual activity levels approaching, or even exceeding, 100,000 rounds.Though play levels may never approach these extraordinary numbers again, webelieve the market has the potential to make a recovery.

NGF believes there is a lack of truly outstanding direct competitors to Palo Alto GC.Also, it is likely that no new golf course inventory will be added to this market for theforeseeable future.

Potential for regional economic recovery, increased discretionary income, etc. TheBay Area and Silicon Valley have some specific economic attributes that act asnatural demand drivers for quality golf courses, including high incomes, an extremelyrobust corporate presence, and one very high visitation numbers.

Other Considerations Regarding Improvement Options

Aside from the expected economic impact of the various base Reconfiguration Options, thereremain questions that will need to be addressed as the City weighs the reconfiguration options,their respective forecasts in terms of rounds/revenue and what additional work will still berequired in the instance of doing less now and deferring certain improvements to later. Theoverriding decision to be made is plan option (A, D, F or G) to go with and how that fundamentaldecision will affect future decisions. For example, reconfiguration Option A, while least costly ofthose to be considered, precludes routing improvements beyond those of the few holes beingshifted and places overall restrictions on future improvements to the golf asset. Largely, the golfcourse would remain the same in its anatomy for the long term under A, but of course the golfcourse may be in much better condition and may be complemented by better support amenitiesin the future. The misconnection may be the course itself — much nicer, but as our gradingexercise concludes, not to the level of the other options because of their improvements to hole-orientation, variety and excitement.


The success rate for increased revenues, better reputation and the ability to be true to the ideaof a transformed golf experience, increases with a more intensive re-working of the golf course.The decision on which option to adopt will need to take into account many factors, together withthe financial forecasts prepared.

OPTION “G” SENSITIVITY ANALYSIS

As noted, pro forma projections have been made under a set of assumptions that may or maynot come to fruition. Also, projections are subject to several uncontrollable factors such asyearly weather variations, economic conditions, and the nature of the competition. Therefore, inthe interest of conservatism we have prepared a sensitivity analysis for Option G (identified bythe City as the preferred option) of two key variables related to revenues – rounds played andaverage green fee. Specifically, we have run three scenarios that present deviations from the“base” model presented above: (1) Rounds reduced to moderately lower than projected FY 12performance, continuing downward trend; (2) Average green fee increasing over current by justless than half the 15% projected increase in base model; and (3) Rounds and average greenfees both lower, in combination. Because of the virtually limitless number of combinations, othervariables, such as fixed operating expenses, remain the same as in the base scenario.

The sensitivity scenarios reveal that the lower than projected (base) green fee growth wouldresult in a reduction in net income of approximately 47% over the base case. Reduced roundsresult in a ±$500,000 reduction in net income, while the “worst case” – both rounds and greenfee increases below the projected base model – produces about $640,000 lower net income.

Option “G” Sensitivity Analysis - Summary for 2017

Summary in FY2017

Expected CaseOption G

ReducedRoundsOption G

Reduced FeesOption G

ReducedRounds + Fees

Option G

TOTAL ROUNDS 75,700 63,100 75,700 63,100



RevenuesFY2017

ProjectedFY2017

ProjectedFY2017

ProjectedFY2017

Projected


Concessions




Expenses

Total City Operating Expenses 2,146,000 2,088,800 2,143,300 2,086,600

Net Income From Operations (Loss) $1,429,400 $883,300 $1,238,700 $726,000

Total Income (Incl. Non-operating) $1,454,800 $908,700 $1,264,100 $751,400

Total Debt/Other Charges $1,092,100 $1,046,200 $1,072,800 $1,030,200

Net Income or (Loss) $362,700 ($137,500) $191,300 ($278,800)


Option G Sensitivity Spreadsheets

Palo Alto Golf Course Revenue / Expense - Option G (Reduced Rounds Sensitivity)

FY2011Actual

FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected

Total Rounds 66,740 64,700 47,900 16,000 53,150 58,100 63,100 67,900 67,900 67,900 67,900




Concession Payments




Pro Shop Lease

Merchandise (4%) $26,536 $25,700 $15,200 $6,400 $21,100 $23,100 $25,600 $27,500 $28,100 $28,100 $28,600




FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected

Salaries & Benefits $259,455 $139,000 $145,300 $151,800 $158,600 $165,700 $173,200 $181,000 $189,100 $197,600 $206,500Range Fees 130,152 126,700 75,100 31,300 105,100 116,100 127,300 138,400 139,700 141,100 142,500Cart Fees 117,529 117,400 69,600 29,000 97,400 107,600 118,000 128,200 129,500 130,800 132,100Club Fees 5,576 5,700 4,600 1,700 5,700 5,800 5,900 6,000 6,100 6,200 6,300Fixed Lozares Management Fee 345,333 345,300 259,000 86,300 345,300 345,300 345,300 345,300 345,300 345,300 345,300Merchant Fees Reimbursement 36,211 36,400 25,500 9,800 32,800 36,400 40,100 43,700 44,200 44,600 45,100Contract Maintenance 475,000 750,000 562,500 206,300 825,000 837,400 850,000 862,800 875,700 888,800 902,100Repairs & maintenance 21,943 22,300 17,800 6,700 22,300 22,600 22,900 23,200 23,500 23,900 24,300Advertising & Publish 10,765 10,900 8,700 45,000 30,000 17,000 17,300 17,600 17,900 18,200 18,500Supplies and Materials 44,417 45,100 36,100 13,500 45,100 45,800 46,500 47,200 47,900 48,600 49,300


Palo Alto Golf Course Revenue / Expense - Option G (Reduced Rounds Sensitivity)

FY2011Actual

FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected

Water Expense 361,870 246,000 250,900 133,000 183,000 188,500 192,300 201,000 210,000 219,500 229,400Other Direct Charges (Incl. Electric) 45,263 45,900 36,700 13,800 41,500 42,100 42,700 43,300 43,900 44,600 45,300Indirect Charges 102,571 104,100 83,300 31,200 104,100 105,700 107,300 108,900 110,500 112,200 113,900


Net Income From Operations (Loss) $828,703 $710,800 $323,000 ($10,800) $437,800 $663,000 $883,300 $1,090,500 $1,086,700 $1,080,600 $1,075,200

Non-operating



Total Income (Incl. Non-operating) $863,933 $740,700 $348,700 $14,900 $463,500 $688,800 $908,700 $1,116,400 $1,112,600 $1,080,600 $1,075,200





Net Income or (Loss) $168,090 $104,200 ($123,500) ($459,400) ($543,700) ($342,800) ($137,500) $39,300 $32,700 $427,900 $418,400

NOTE: Option G would likely include additional revenue from soccer fields of approximately $78,000 per field per year ($234,000 for 3 fields).


Palo Alto Golf Course Revenue / Expense - Option G (Reduced Fees Sensitivity)

FY2011Actual

FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected

Total Rounds 66,740 64,700 47,900 16,000 67,900 71,800 75,700 75,700 75,700 75,700 75,700




Concession Payments




Pro Shop Lease

Merchandise (4%) $26,536 $25,700 $15,200 $6,400 $27,000 $28,500 $30,700 $30,700 $31,300 $31,300 $31,900




FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected



Palo Alto Golf Course Revenue / Expense - Option G (Reduced Fees Sensitivity)

FY2011Actual

FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected




Non-operating








Net Income or (Loss) $168,090 $104,200 ($123,500) ($499,400) ($115,200) $37,700 $191,300 $175,500 $170,300 $566,700 $558,500

NOTE: Option G would likely include additional revenue from soccer fields estimated by City to be approximately $78,000 per field per year ($234,000 for 3 fields).


Palo Alto Golf Course Revenue / Expense - Option G (Reduced Rounds + Fees Sensitivity)

FY2011Actual

FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected

Total Rounds 66,740 64,700 47,900 16,000 53,150 58,100 63,100 67,900 67,900 67,900 67,900




Concession Payments




Pro Shop Lease

Merchandise (4%) $26,536 $25,700 $15,200 $6,400 $21,100 $23,100 $25,600 $27,500 $28,100 $28,100 $28,600




FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected



Palo Alto Golf Course Revenue / Expense - Option G (Reduced Rounds + Fees Sensitivity)

FY2011Actual

FY2012Projected

FY2013Projected

FY2014Projected

FY2015Projected

FY2016Projected

FY2017Projected

FY2018Projected

FY2019Projected

FY2020Projected

FY2021Projected



Net Income From Operations (Loss) $828,703 $710,800 $323,000 ($50,800) $310,200 $520,700 $726,000 $918,600 $913,200 $905,300 $898,200

Non-operating



Total Income (Incl. Non-operating) $863,933 $740,700 $348,700 ($25,100) $335,900 $546,500 $751,400 $944,500 $939,100 $905,300 $898,200




Total Debt / Other Charges $695,843 $636,500 $472,200 $474,300 $994,300 $1,017,100 $1,030,200 $1,059,600 $1,062,300 $635,000 $638,900

Net Income or (Loss) $168,090 $104,200 ($123,500) ($499,400) ($658,400) ($470,600) ($278,800) ($115,100) ($123,200) $270,300 $259,300

NOTE: Option G would likely include additional revenue from soccer fields estimated by City at approximately $78,000 per field per year ($234,000 for 3 fields).


Other Issues and Considerations

MARKET POSITION / RE-BRANDING OPPORTUNITY

NGF Consulting has reviewed the image and brand recommendations made to the City as partof the expanded scope of services to address long range considerations. We conclude thatcloser integration of the golf course to the Palo Alto Baylands Preserve, “The Baylands”, shouldpositively affect the City’s efforts to brand this area as a destination for Palo Alto residents andvisitors alike. Celebrated as an open space and nature preserve area, the Baylands representsa rich and positive locale within Palo Alto and the Silicon Valley Region and will be enhancedwith an improved and re-branded golf product.

Currently, Palo Alto Municipal Golf Course effectively lacks a brand image, and the facility isvery closely associated with the long-time golf concessionaire – so much so that the websiteaddress for the golf course is bradlozaresgolfshop.com, and recorded phone messages mentiononly the golf shop and not the golf course. We believe that a name change to “Baylands GolfClub at Palo Alto” represents a positive move that will have the effect of repositioning the golfcourse, distancing it from a “muni” layout. Additionally, it will signal a transformation from anolder, “worn down” layout to one that has renewed excitement and positive change. Therecommendation to retain “Palo Alto” as part of the course image and brand is a good way toconnect with the existing name, as well as the City itself. Use of “Golf Club” in lieu of “GolfCourse” is an additional signal that the golf experience is not only something new, but at ahigher quality.

The marketing theme “Public only in price, access and pride” is an excellent message to remindthe customer that the golf facility remains accessible, open to the public and priced to provideone of the better golfing values in the Bay Area. This message also reinforces thetransformation, ideally a win-win for the golf consumer to receive high quality at a “municipal”price point.

Sample magazine ads provided as part of the Marketing and Theme recommendations hit onimportant concepts, including:

Silicon Valley Location Tradition – The design legacy of Billy Bell The Transformation (i.e., the changes) The “Green” Environmental Commitment of the Facility

Our belief is that proper implementation (adequate budgets, quality control and proper mediaplacement) of the program will have a dramatic effect on driving new business to the “new” golffacility. Equally important will be the affect that these messages and the new brand will have onexisting customers, and residents of Palo Alto and its neighboring communities who currentlyplay golf elsewhere. In essence, the program for re-branding, introducing a new image andtheme, and the marketing program, has the potential to have a very positive affect on roundsand associated revenues.


A commitment on the City’s part to becoming certified with Audubon international as a“Sanctuary Golf Facility” is an integral part of the ability to market the course as a “green” awareand operated golf facility. This goal should be undertaken regardless of which reconfigurationoption is opted by the City and should be workable given the operation and/or marketingbudgets afforded. (Note: Beginning this process now, prior to any reconfiguration work, will helpguide the reconfiguration work and will also establish a greater degree of improvement by whichto attain the Audubon status for the facility).

Plan Option A poses the greatest challenge to be consistent with the image, brand andmarketing changes recommended because it does not go as deep into the many areas of thecourse in terms of new features and reconstructed areas. However, the fact that Plan Option Awill dramatically reduce turf through the course-wide work to create native areas and new“Baylands” themed areas should be an adequately appreciated change. Plan Options D, F andG will have no issues aligning with any of the themes and messages recommended.

With emphasis on a quality, outstanding golf facility, the City may be able to realize what wehave referred to as a “destination” public golf experience. In the Bay area we would point tosuch courses as Pasatiempo in Santa Cruz and Harding Park in San Francisco as meeting thisdefinition. These two courses are good examples of courses that have attained a reputationthrough the following attributes:

Legacy of the original design Transformation from marginal to excellent conditions Commitment by the municipal owners to reinvest in the assets Quality rebuilding efforts Good marketing of the finished courses and facilities

While both of the above examples are classic era designs (Pasatiempo by Alister MacKenzie,and Harding Park by Willie Watson) it is still appropriate to reference their successes relative towhat Palo Alto Golf Course could attain. Whether undertaken under one, larger reinvestmentproject, or carried out over time, the potential transformation of Palo Alto Golf Course isbolstered by a number of factors inherent in the facility:

A design legacy that can be leveraged — William P. and William F. Bell, the formerresponsible for designs such as Stanford, Riviera and Bel-Air

A location that sits at the heart of Silicon Valley A seaside setting that has greater potential to take advantage of its natural

landscape — the Baylands environment, Bay and adjoining Sanfrancisquito Creek A population base that is robust for golf rounds by non-residents A location that is in one of the top tourist areas in the nation

Obviously, undertaking more intensive reconfiguration (such as with Plan G) will transform moreof the existing course and is likely to meet this goal on a stronger basis. So, too, may investingin more of the alternate, optional improvements, including many of the long range improvementsbefore the City for consideration.


ECONOMICS OF POTENTIAL LONG-TERM / ADDITIONAL IMPROVEMENTS

Forrest Richardson has proposed that the City study the feasibility of certain facilityimprovements that are in addition to the base improvements recommended withinReconfiguration Options A, D, F, and G (please see Appendix E for summary table of potentialimprovements and estimated costs). Though NGF believes that many of these improvementswould improve the overall quality of the golfer (and non-golf customer) experience, as well asthe image of the facility in the eyes of area golfers, it is not practical to assign incrementalrounds played and revenue dollars to many of these improvements (e.g., exterior and entryupgrades, signage/parking, rebuilding practice greens, “alternate” golf course improvements,designated youth area). Practically, these improvements, to varying degrees individually andcertainly as a sum of their parts, are likely to draw more patrons overall, keep them on-sitelonger, and increase their propensity to spend while at the golf course.

We have confined our break-even analysis to several potential improvements that tie moredirectly to revenue: (1) The cart storage building; (2) Expanded meeting space; and (3) RangePerformance Center.

Cart Storage Building

At just $4.54 per round in FY 2011, the average gross cart fee revenue per round at Palo AltoGolf Course significantly trails the average of its chief competitive set (see ERA 2008 report forCity). While the low cart utilization is partially a function of the “walkability” of the golf course,ridership and revenues have also likely been constrained by the very limited cart storage. PaloAlto GC has only 46 carts available, some of which are older gasoline powered carts stored inopen storage outside the clubhouse (fewer than 35 carts can be stored below the clubhouse). Amore typical inventory for most regulation length 18-hole golf courses is ±70 carts. We are toldthat for larger tournaments, additional carts must be leased and brought in from off-site. Insummary, NGF believes it is likely that the limited cart inventory and storage space availablehas constrained ridership and may have actually negatively affected demand for daily fee and,especially, tournament play on occasion.

As part of Forrest Richardson’s overall capital improvement plan for Palo Alto GC, he hasincluded construction of a new cart storage building at an estimated cost of $440,000. In thetable below, we illustrate the number of years it will take for the City to break even on thisinvestment, assuming different levels of incremental gross cart rental revenue per round, thecurrent rent percentage of 60%, and stabilized rounds activity under Options D and F – 73,300rounds. Of course, as noted, it is possible that having additional carts will have a positive effecton rounds played as well, but for purposes of conservatism we are illustrating only increases incart revenue per round. We also assume that all expenses associated with the cart lease andmaintenance will remain the responsibility of the vendor, and that there will be no incrementalCity operating costs associated with the new building.

Palo Alto Golf CourseBreak-Even Analysis for Cart Storage Building

Average Gross Cart Revenue Per Round Increase$0.50 $1.00 $1.50 $2.00 $2.50

Incremental Gross Revenue* $36,650 $73,300 $109,950 $146,600 $183,250Incremental Revenue to City* $21,990 $43,980 $65,970 $87,960 $109,950Years to B/E* 20.0 10.0 6.7 5.0 4.0

*Assumes $440,000 estimated cost and stabilized rounds played of 73,300 from Options D,F


Expanded Meeting Space

The existing restaurant at Palo Alto GC has limited meeting space that has significantlyconstrained meeting and banquet business at the facility. Not being able to accommodate largerevents of ±250 people precludes the facility from competing for the most lucrative, high marginfood & beverage business. As such, expanding the meeting/banquet space is anothercomponent of the long range improvement plan prepared for the City by Mr. Richardson.

Based on the estimated cost provided of $1.7 million, and assuming the City incurs all of thecost of the improvement, the annual debt service on a 20-year note at 3.5% would be $120,000(rounded). NGF has calculated that the incremental annual gross food & beverage revenuenecessary to generate $120,000 in additional rents to the City to meet the annual debt service ismore than $1.71 million. This calculation is based on the current rent percentage of 7%.

In its 2008 study, ERA noted: “Based on the experience of similar golf course oriented banquetfacilities and the demographics of the area, expanding the clubhouse to accommodate specialevents with up to 250 attendees would add $600,000 to $700,000 in annual special eventrevenue. This rental income would justify about one-half of the cost of the improvements.” NGFconcurs that achieving this level of incremental gross revenue would likely be an achievablegoal, but with updated cost estimates, this level of revenue would justify only about 40% of theinvestment cost. Therefore, the balance of the City investment in the expanded facility wouldhave to be justified through the incremental rounds and associated revenues attributable directlyto the expanded meeting facilities. Based on current and projected average green + cart (Cityshare) fee revenue per round, it would take 2,000 to 3,000 of these rounds to help fund theexpanded facilities. Of course, the equation would change markedly if gross revenues accruedto the City under an alternate operating structure.

Range Performance Center

In the table below, we provide a similar break-even analysis to the one for the cart storagebuilding. Mr. Richardson’s cost estimate for the range performance center, plus the additional 6-bay range expansion (we assume both are undertaken together), is $600,000. In the tablebelow, we illustrate the number of years it will take for the City to break even on this investment,assuming different levels of incremental gross driving range revenue per round (gross per roundwas $5.15 in FY 11), the rent percentage of 62%, and stabilized rounds activity under Options Dand F – 73,300 rounds. Of course, it cannot be determined what percentage of range activity isa function of number of bays as opposed to rounds played, so we have chosen to do asensitivity analysis by increasing average revenue per round rather than per tee station. Anotherfactor driving this methodology is that the performance center bays will be used for teaching,and will likely have less utilization than the already existing bays.

We also assume that all incremental expenses associated with the expanded range remain theresponsibility of the concessionaire, and that there will be no incremental City operating costsassociated with the new building. Finally, we assume that the City receives no lesson revenue.


Palo Alto Golf Course – B/E Analysis for Range Performance Center + 6-Bay Expansion

Average Gross Range Revenue Per Round Increase

$0.50 $0.75 $1.00 $1.25 $1.50

Incremental Gross Revenue* $36,650 $54,975 $73,300 $91,625 $109,950Incremental Revenue to City* $22,723 $34,085 $45,446 $56,808 $68,169Years to B/E* 26.4 17.6 13.2 10.6 8.8

*Assumes $600,000 estimated cost and stabilized rounds played of 73,300 from Options D,F

MANAGEMENT STRUCTURE

NGF was told that some City staff would like to further explore - via issuance of an RFP inadvance of the Pro Shop and Maintenance agreements expiring in April, 2013 - the implicationsof changing the operating structure at Palo Alto Golf Course to a management contract. Wehave been asked to offer our opinion as to whether this type of structure would be moreeffective, or produce higher net operating income to the City, than the current “hybrid” structurethat involves both a management fee and a concession on the golf operations side, privatizedmaintenance, and a separate food & beverage concession.

As Economic Research Associates (ERA) noted in their 2008 Operations Review of the PaloAlto Municipal Golf Course, the current agreement for golf operations evolved due to IRSregulations related to the tax-exempt financing utilized for the late 1990s renovation of the golfcourse. Specifically, at least 50% of the compensation within a management agreement mustbe fixed fee in such a case. ERA, after doing the full operations analysis, concluded that thecurrent pro shop deal was “slightly favorable” to the concessionaire.

After running cash flow models under various operating scenarios, ERA concluded that City NetIncome was maximized with private maintenance (subsequently put in place) and “market rate”concession terms. However, they also noted that “market rate”, which involved lowerconcession rents to the City and an elimination of the management fee, was not permissible bythe IRS without a restructuring of the current debt. ERA concluded that, among the operatingmodels that were permissible within the current debt framework, the structure that is now inplace at Palo Alto Golf Course – no change in contract terms, but with private maintenance –produced the highest City Net Income. A full-service Management Agreement produced thesecond highest City Net Income.

Without doing a full operations review, NGF does not have sufficient information to criticallyevaluate ERA’s analysis or to identify the operating structure that would be the best fit for PaloAlto GC. While there are a number of advantages to the full service management contractstructure, it is also true that “no one size fits all”. There are many factors and variables toconsider when evaluating options, and it would be unfair to both the City and the currentvendors for a consultant to make a recommendation regarding the optimal structure withoutbeing retained to do a full facility analysis. Carefully evaluating the value proposition that each ofthe current vendors brings to the table would be just one component of such an analysis. Forinstance, the golfer survey that ERA implemented as part of their 2008 study showed that BradLozares was rated quite high by golfers, indicating considerable goodwill and “equity” built up inthe golf shop. Similarly, NGF has been told of improved maintenance conditions (as well asconsiderable cost savings) since ValleyCrest was brought on.


Having said that, we do feel confident recommending that the City retain the currentstructure at least through the completion of the renovation project. However, delayingconsideration of a fundamental change in operating structure should not precludemodifying terms. For instance, the City and the golf vendor may come to an agreementresulting in lowering the management fee to reflect reduced responsibilities andconcession revenues during renovation (especially under Option G), while still adheringto IRS guidelines. Not only will the project substantially disrupt business, but significantunknowns include the timing of the project and how the newly improved facility will cash flowafter being brought back to market and “re-branded”. Also, the food & beverage contract doesn’texpire until 2018, so some of the advantages of the single operator management structure maybe lessened unless an early termination to the agreement can be successfully negotiated withthe current vendor. Finally, negotiating a new agreement during construction, when proposersthemselves will not have full information about how the improved facility will cash flow, mayresult in the City not entering into the best deal possible.

NGF believes that these are just a few of the important variables that make issuing an RFP atthis stage less than optimal. We recommend that the City wait until after renovation iscompleted and the improved facility has been up and running for a year or more beforeconsidering a substantive change in structure. This strategy will provide additional informationthat will put the City in a better position to make an informed decision regarding operatingstructure (for instance, the City may find that the improved “Baylands Golf Club” has significantupside revenue potential, thus making it relatively more attractive to control all revenues underthe management contract structure).

LONG RANGE CONCERNS

Concerns raised through the public process of reviewing reconfiguration options have includedthe following long term implications:

High salts present in the native soils Intrusion by geese and burrowing animals Potential for the adjacent airport to negatively affect the golf experience

In essence, the question raised is: “Can the Palo Alto Golf Course be expected to become asignificantly better golf experience given these issues?”

NGF Consulting relies on the opinions of professionals associated with individual golf facilities toaddress certain questions. For example, in the case of the high salts we look to agronomists,the course superintendent and/or the golf course architect. In the case of animal intrusion,because these are often site specific, we look to nearby facilities to see how they have dealtwith the issue.

High SaltsSoils high in salts are not uncommon to golf courses located along coastal waterways andoceans. In the case of Palo Alto the soils are not only affected by the location by San FranciscoBay, but by the poorly draining soil types. Additionally, the use of effluent (recycled) water,which typically has higher salt content, exacerbates the condition. While our work has notincluded agronomic evaluation, we have endeavored to understand the general situation bycomparing outcomes we have observed at other golf operations.


“Links courses,” those layouts along the dunes formed coasts of the British Isles and similarlocales around the world, are prone to salty soils. Yet, with their sandy soil basis, these sitessupport good turf because the salts are leached regularly downward by natural rains. This is thehallmark of links courses, and why their development on these natural, sandy soils were soappropriate. When soils are not sandy and porous, the build-up of salts becomes problematic.This is the case at Palo Alto Golf Course, where management over the years has been toperiodically irrigate with fresh water, driving salts downward, and to add gypsum to the soils.Additionally, the most recent remodeling work added a cap of sand and better soil mix to severalfairways, making them much easier to manage and support healthy turf. These best practiceshave resulted in reasonably healthy turf growth despite the salty soil conditions.

According to staff, while salts are high, the turf has “learned” to adapt. There is a definitedifference between fairways where the sand cap has been placed and areas where drainage isnot as good and where older native soils are present. Also, Paspalum turf varieties haveflourished at the golf course in a few areas. These areas appear to have much better successrates of healthy growth because the nature of Paspalum grass is to tolerate salts to asignificantly higher degree.

NGF Consulting posed the question of managing high salts to Forrest Richardson & Associates,specifically asking what additional measures would be afforded through the reconfigurationoptions to address this issue. The response summary is as follows:

Management of existing sand capping and healthy turf rootzone material (theuppermost layers of rootzone) will be managed through the reconfiguration, replacingthat material as “topsoil” to new fairway and turf areas; this cost is represented in theprobable cost estimates presented to the City for reconfiguration options.

New soils will be imported as possible within the budgets, potentially from theStanford University Medical Center project(s); these additional costs (and revenuepotential) have been accounted in probable cost estimates.

Paspalum turfgrass will be used to sod all new areas of fairways, roughs and tees(Note: The specific variety is yet to be determined).

The irrigation system will provide dual watering capabilities, able to deliver potablewater to selected areas and a mix of effluent (higher salt counts) and fresh water;this capability allows flushing (leaching of salts downward) as is being donecurrently.

Significantly improved drainage is afforded in each reconfiguration option, helping toprevent build-up of salts by quicker transportation of surface water away from turfareas and the soil rootzone, and thereby reducing the build-up of salts that occurswhen water is allowed to stand and slowly seep into the rootzone.

These are prudent measures that are common among golf course sites with high salts presentin the soil. Additionally, we understand that the City has a goal to reduce salt counts within itseffluent water system, a goal that is not necessarily aimed at improving conditions at the golfcourse, but will have a definite value to City’s golf operation asset.

While the success rate of overall condition improvement cannot be guaranteed, we can look atcomparable operations where high salts are effectively managed. There are numerousexamples of this throughout California, including the Bay Area. California examples include


Monarch Bay (San Leandro), Las Positas (Livermore), Metropolitan (Oakland), Olivas Links andBuenaventura (Ventura), and Irvine (Shady Canyon Club).

Many courses with salt issues are turning to Paspalum turfgrass as an answer. Some of theexample courses cited have moved to 100% Paspalum grass. NGF Consulting notes that thistrend is widespread in Florida, the Caribbean, Mexico, South Texas, and Hawaii. In Hawaii, forexample, Paspalum varieties have literally transformed the golf landscape from a strugglingBermudagrass region to one that now predominantly uses Paspalum in order to overcome highsalts from water, soils and the proximity to the ocean. Even in Monterey we are seeingPaspalum use. At the Monterey Peninsula Club, for example, some areas located on the shorethat were never in good condition, have been completely re-planted with Paspalum and are nowin excellent condition.

Our conclusion is that Palo Alto can enjoy a good success over the long term at the existing golfcourse site. Managing salts will have a good result, not only through good maintenancepractices, but in combination with the reconfiguration work, which should make the City’s effortsto manage salts more productive, less costly and, ultimately, more impacting to a positive golfexperience.

Our caution is that the plan options (A, D, F and G) each have an associated result that isspecific to the investment. Plan A, for example, addresses only a minority of the course turfareas (drainage, rootzone, topsoil management, irrigation, etc.) and will therefore not producepositive results across the full golf course. Plan G, at the other end of the spectrum, resolvesvirtually all areas.

Animal IntrusionManaging Canadian Geese infestation is often dependent on regulations and restriction placedon locales. Our advice to the City is to study available mitigation measures and to carefully notethe measures taken by neighboring courses. Geese populations have been successfullymanaged through the following measures:

Trained dogs, such as border collies Reducing standing water and open water (ponds, lakes, swamps) Increasing habitat surrounding the golf course that will appeal to geese populations Implementing noise, reflective or other repellants Sterilization agents to stop generational return of geese to the golf course areas

Among the most successful operations in Northern California are the courses of the MontereyPeninsula, notably Pebble Beach Companies and the private clubs in the area. With fewexceptions, these operators have used trained dogs to manage geese away from their turfareas. An on-site dog specifically trained to manage geese populations remains the mostefficient measure to rid geese infestation from golf courses in the U.S. Not only is this methodhumane, but it has the benefit of a lower cost than many other measures, and is lessinterruptive to the golf experience. We understand there is added complexity relative to theadjacent airport operation and the requirements associated with making sure that geese are notdiverted to the airport, but away from both the golf course and the airport. For this reason, werecommend that the City take a look at jointly working out a plan for both the golf and airportneeds.


With regard to the ground squirrel infestation, we understand that this is being met with ongoingmitigation efforts that are allowed under state guidelines. Also, the increase of naturalized areasafforded by all reconfiguration options will help drive habitat away from turf and in-play areas ofthe golf course.

Airport EffectsMany golf facilities are located immediately adjacent to airports, and yet enjoy a good reputationand high quality of golfing experience. We see no undue negative associated with the relativelysmall private plane airport, especially given that the flight paths do not directly overtop the golfcourse itself.

Moreover, Silicon Valley appears to be utilizing the airport for corporate flights in favor of thelarger regional airports that pose delays and complexities due to their scheduled, commercialflight business. This fact may actually prove beneficial to the golf operation should the golfcourse and its facilities be elevated a “destination” level of quality and reputation. The result withnominal airport use is that more visitors to Palo Alto will know about the golf course and be ableto get a firsthand view of its offerings.

SummaryBased on experience and input from Forrest Richardson, NGF Consulting believes that long-term mitigation of the concerns of this site is workable and worth the premiums required formaintenance and management. In many cases, golf courses are located on degraded landbecause that land cannot be used for other purposes. We suspect this is the case in Palo Altoand would find it difficult to justify alternate solutions to the renovations that might beconsidered: (a) continued operation in a declined state; (b) abandonment of the asset in favor ofa new location, given land values in the area; or (c) abandonment of the recreation amenityaltogether, given its high use and the financial forecasts presented.

POTENTIAL ECONOMIC DEVELOPMENT OF THE AIRPORT & GOLF“BAYLANDS GATEWAY” AREA

The golf course “corner” and shared entry with the airport are considered a “gateway” to theBaylands Preserve areas. As such, this intersection has great potential to become more thanjust a golf clubhouse and airport with nominal retail offerings.

According to the Community Services Department, forward and creative thinking has beenaimed at the potential for this area to become a more user-friendly and service-orienteddestination. Thus far, thinking has included whether the area could support a modest collectionof cafes, retail shops, and perhaps even a hotel. While no formal plans have beencommissioned, the City has discussed a general, long range approach to looking more in depthat this possibility.

Such development, especially if it included a small hotel, would add natural demand drivers inimmediate proximity to the golf course, thus resulting in increased rounds and revenues. As anexample, a 130-room business hotel in a high demand locale may have as many as 28,000room nights based on an average 60% occupancy rate. Using a multiplier of 1.3 guests perroom, this equates to approximately 36,000 guests per year. Using a percentage of 10% golfersand assuming that the golf course could get even 20% of these guests to play, the resultingbump would be near 1,000 additional golfers per year. Also, these golfers would comprise non-residents paying the highest applicable rates, and traveling golfers typically exhibit less price


sensitivity and would be likely to also spend money on the practice range, pro shop, and/orrestaurant.

PRIVATE FUNDING POSSIBILITIES

Of course, aside from receiving compensatory money from the San Francisquito Creek JointPowers Authority, the City may have to grapple with how to fund additional money required ifReconfiguration Options D, F, or G is chosen, and/or if any work identified as “additional” or“alternate” in this report it undertaken. One of the mechanisms that would obviously be verypreferable to the City is raising private money to fund some, or even all, of the needed money.Based on preliminary discussion held between Forrest Richardson, NGF, and the City, theprivate funding mechanism may take a combination of the following avenues that the City willhave to explore further:

Naming rights for some components of the facility (e.g., range performance center,certain holes, tee markers, designated youth area); this may be feasible do to thenumber of very wealthy individuals in Palo Alto, as well as the very strong corporate(especially high-tech/ internet-based) presence.

Grants – for example, the First Tee, which is very active in the area. Lease-Back – some within the City have mentioned the possibility of finding a

design/build entity that might be interested in undertaking all of the improvements,including soccer fields if Option F or G is chosen, and restructuring the financingpackage to get the entire project, including some or all optional master planimprovements, done at one time. In this case, the ±$3 million the City receives fromthe SFCJPA could be used toward paying off the old debt and a new arrangementput in place for the work to rebuild the golf course.

The Stanford Soil Import is a wildcard in the equation. It could bring revenue into theequation, but likely not more than $500,000. This may provide a partial fundingmechanism to help pay for some of the miscellaneous suggested work that will nothave a revenue stream attached directly to it (entry experience, trails, signage,parking, etc.).


Appendices

APPENDIX A – COMPARATIVE SUPPLY RATIOS – PALO ALTO GC & KEYMUNICIPAL COMPETITORS

APPENDIX B – COMPARATIVE SCORING OF RECONFIGURATION OPTIONS

APPENDIX C – WATER & POWER USE DISCUSSION & ASSUMPTIONS

APPENDIX D – REVIEW OF PROBABLE COST ESTIMATES

APPENDIX E – POTENTIAL LONG-TERM MASTER PLAN IMPROVEMENTS


APPENDIX A – COMPARATIVE SUPPLY RATIOS – PALO ALTO GC & KEYMUNICIPAL COMPETITORS

NGF has presented a comparison of some key golf supply measures for Palo Alto GC and itskey municipal competitors, with the 5-mile radius around each facility the basis for comparison.We note that all of the subject facilities, except for Santa Teresa, have very highhousehold/supply ratios, which is one of the key factors that explains the very high roundsfigures realized per 18 holes among municipal golf courses in this market.

Also of note, in its 2009 publication “The Future of Public Golf in America,” NGF hypothesizedthat the best predictor of a public golf course’s success was the number of golfers per 18 holeswithin a 10-mile radius, with 4,000 identified as the key number for projected financial stability.As shown in the second table below, all of the subject courses (again with exception of SantaTeresa) exceed this number for the 5-mile market.

Golf Facility Supply – 2011 (5-Mile Radius)

5-mile RingsTotal No. of

Golf FacilitiesTotal No. ofGolf Holes

Householdsper 18 holes

Householdsper 18 Hole

Index(US=100)

Palo Alto Golf Course 4 72 19,836 251Poplar Creek Golf Course 5 81 17,942 227San Jose Municipal Golf Course 6 90 31,377 398Santa Clara Golf & Tennis Club 6 90 21,027 266Santa Teresa 6 135 7,841 99Shoreline Golf Links 4 72 24,206 307Sunnyvale Golf Course 8 126 19,435 246

Source: National Golf Foundation

Golfers per 18 Holes (5-Mile Radius)

5-mile RingsGolfing

Households

Est. No. ofGolfers

1Total 18-HEquivalent

Golfers per18 holes

Palo Alto Golf Course 14,206 21,309 4 5,327Poplar Creek Golf Course 14,243 21,365 4.5 4,748San Jose Municipal Golf Course 30,527 45,791 5 9,158Santa Clara Golf & Tennis Club 17,855 26,783 5 5,357Santa Teresa 12,250 18,375 7.5 2,450Shoreline Golf Links 16,695 25,043 4 6,261Sunnyvale Golf Course 24,118 36,177 7 5,168Total U.S. “Threshold” for Successful Public Golf (10-mile Ring) 4,000

1 Golfing Households x 1.5Source: National Golf Foundation


APPENDIX B – COMPARATIVE SCORING OF RECONFIGURATIONOPTIONS

As a useful tool in formulating pro forma projections, NGF has compared the ReconfigurationOptions using a “scorecard approach” whereby attributes and benefits are assigned scores (1-10). This method allows a side-by-side comparison, providing a way to review pluses andminuses associated with each option. We base our scoring on several factors, including thefollowing:

Details presented (plans, conceptual images, etc.) Public comments and historical use of the facility (rounds and use) NGF Market Analysis (local and regional trends and golf participation) Competition within the market area Details and other givens regarding the changes to take place (golf design consultant

involved, how far along the proposed changes have been studied, budgets, etc.) Long term viability of the changes and market acceptance Known preferences of golfers relative to course conditioning, consistency, etc. Quality of the consultants involved

In situations where golf facilities are proposed to be reconfigured, there are both subjective andobjective considerations. Additionally, there is often difficulty in verifying to what degreeproposed changes will be carried out. Fortunately in the case of the Palo Alto Golf Course, theCity and SFCJPA have accommodated a very thorough process and detail so we are able tolook at the plans, before and after images, and other documentation that quantify the changesassociated with the options.

Scoring is one factor considered in estimating potential changes in the financial performance ofthe golf facility. For example, a golf course with significantly more practice opportunities,especially when such use is in demand, will potentially bring in new use and associatedrevenue. In the case of a significant transformation of a golf course from an average or belowaverage experience to one with new holes, views and overall landscape improvement, it is likelythat an increase in use and/or revenue will be realized. And, where we can see potential tomarket the facility beyond the immediate area, it is possible to realize an added price-per-roundfor non-resident use. In this latter example we often cite the ability of golf courses such asTorrey Pines to adopt a green fee structure that holds low rates for residents of the area whilecharging market rates that are very high for players from out of state. In the case of TorreyPines, the gap between resident rates and visitor rates are among the widest in the golfbusiness. Though this type of gap will not be realistic for Palo Alto, we do expect that,depending on the reconfiguration option chose, non-residents will effectively be “subsidizing” tosome degree a high quality, but still affordable, golf experience for city residents.

The following ratings use a 1-10 scale where 1 is the lowest and 10 is the highest. This rankingincludes some financial considerations, but is ancillary to the pro forma financial analysis foreach option. The rankings here are used to form some of the forecasts within the pro formaanalyses. Scoring is based on the base reconfiguration work for each option (i.e., less alloptional/alternate work listed). A summary table of rankings is presented following the categorydescriptions.


The following are categories used to form the scoring:

Yardage & Par – Accommodation of yardage (regulation length) for a course and parthat will be viable and competitive within the market and region

Interruption of Play During Reconfiguration – Ability of the plan to retain some holes(9-hole play) and practice during reconfiguration work

Consistency of Bunkers & Hazards – Overall impact of the plan relative to bunkerconsistency, aesthetics and other hazards

Consistency of Greens – Overall result of greens quality and consistency

Drainage Improvement – Overall positive impact on drainage; eliminating wetconditions

Irrigation Improvement – Overall positive impact on irrigation control, consistencyand associated turf quality

Pace-of-Play – Degree to which the plan accommodates positive pace-of-play andlong range ability to manage for good pace

Improved Visual Impact – Overall landscape enhancements (added naturalizesareas and visual impact)

Improved Views – Accommodation of more views to the Bay and territorial vistas

Improved Golf Experience Impact - Overall plan benefits to strategy, excitement ofholes, variation of direction, orientation to wind, etc.)

Competitiveness with Area Courses – Ability of the course to compete with coursesin the immediate area

Competitiveness with Regional Courses – Ability of the course to compete withcourses in the region

Likelihood for Destination Visits – Ability of the course to attract specific visitsexpressly to play the course

Ability to Leverage “Green” Marketing – Consistency of the plan with a “green”environmental message (Baylands tie-in, more naturalized areas, natural landscape,etc.)

Consistency with Long Range Planning – Integration of the plan with future planning(clubhouse, practice, etc.)

Turf Reduction (irrigation) – Reduction of managed turf acreage for less water useand reduced pumping

Turf Reduction (managed care) – Reduction of managed turf in relation to the abilityto shift maintenance emphasis from out-of-play areas to golf features and areasmore appreciated by the golfer


Comparative Scoring of Reconfiguration Options

Option A Option D Option F Option G

Yardage & Par 8 8 8 6

Interruption of Play during Reconfiguration 5 4 3 1

Consistency of Bunkers & Hazards 7 8 9 10

Consistency of Greens 3 5 6 8

Drainage Improvement 4 6 8 9

Irrigation Improvement 3 6 7 10

Pace-of-Play 5 10 7 7

Improved Visual Impact 4 6 7 8

Improved Views 2 7 7 8

Improved Golf Experience Impact 3 7 8 8

Competitiveness with Area Courses 5 8 8 8

Competitiveness with Regional Courses 2 6 7 8

Likelihood for Destination Visits 1 5 7 7

Ability to Leverage “Green” Marketing 5 7 8 9

Consistency with Long Range Planning 7 9 9 9

Turf Reduction (irrigation) 4 6 8 9

Turf Reduction (managed care) 4 7 8 9


APPENDIX C – WATER & POWER USE DISCUSSION & ASSUMPTIONS

NGF Consulting was not charged with a full water or power use analysis. However, forecastingcosts associated with each reconfiguration option requires reasonable estimates on the affectsof a more efficient irrigation system combined with less turf acreage.

Our conclusions on water and power use are based on the following assumptions, derived fromCity Staff and the golf course architect/design team:

Current irrigation (managed) turf acreage: 135 New irrigation areas efficiency over/above the existing system: +10% Current irrigation inefficiency due to leaks and breaks (loss): -5% Current power inefficiency: -10% New power efficiency realized with full course better watering times/durations: +15% Annual cost for irrigation repair due to age and condition: $30,000

Using the data and assumptions, NGF Consulting has developed the following forecast forwater and power use differences with each reconfiguration option.

Option A Total irrigated turf following reconfiguration: 96.5 acres Water use reduction based on new irrigated acreage: 28% Approximate area of reconfigured course with new irrigation system: 35 acres Percentage of irrigated Area with New Irrigation: 36% Water use reduction of new usage based on efficiencies of new system area: 3.6%

(10% efficiency x 36% = 3.6%) Water efficiency of new usage gained due to fewer leaks/breaks: 2% (5% efficiency x

36% = 2%) Power efficiency realized with better watering times/duration: +5%

ConclusionsReduced Water Cost Est. (effluent) $ - 0 -Reduced Water Cost Est. (potable) $72,800 (28% x $260,000)Reduced Water Cost Est. (potable efficiencies) $5,645 ([3.6% + 2%] x $100,800)Reduced Power Cost Est. (efficiencies realized) $1,200(5% x $24,000)

Total Est. Reduction in Water & Power Cost $79,645 / annual

Option D Total irrigated turf following reconfiguration: 92 acres Water use reduction based on new irrigated acreage: 32% Approximate area of reconfigured course with new irrigation system: 40 acres Percentage of irrigated Area with New Irrigation: 43% Water use reduction of new usage based on efficiencies of new system area: 4.3%


43% = 2%)


Power efficiency realized with better watering times/duration: +10%

ConclusionsReduced Water Cost Est. (effluent) $- 0 -Reduced Water Cost Est. (potable) $83,200 (32% x $260,000)Reduced Water Cost Est. (potable efficiencies) $7,258 ([4.3% + 2%] x $115,200)Reduced Power Cost Est. (efficiencies realized) $2,400 (10% x $24,000)


Option F Total irrigated turf following reconfiguration: 91.5 acres Water use reduction based on new irrigated acreage: 32% Approximate area of reconfigured course with new irrigation system: 58 acres Percentage of irrigated Area with New Irrigation: 63% Water use reduction of new usage based on efficiencies of new system area: 6%


63% = 3%) Power efficiency realized with better watering times/duration: +12.5%

ConclusionsReduced Water Cost Est. (effluent) $ - 0 -Reduced Water Cost Est. (potable) $83,200 (32% x $260,000)Reduced Water Cost Est. (potable efficiencies) $10,711 ([6.3% + 3%] x $115,200)

Reduced Power Cost Est. (efficiencies realized) $ 3,000 (12.5% x $24,000)


Option G Total irrigated turf following reconfiguration: 92 acres Water use reduction based on new irrigated acreage: 32% Approximate area of reconfigured course with new irrigation system: 92 acres Percentage of irrigated Area with New Irrigation: 100% Water use reduction of new usage based on efficiencies of new system area: 10%

(10% efficiency x 100% = 10%) Water efficiency of new usage gained due to fewer leaks/breaks: 5% (5% efficiency x

100% = 5%) Power efficiency realized with better watering times/duration: +15%

ConclusionsReduced Water Cost Est. (effluent) $ - 0 -Reduced Water Cost Est. (potable) $83,200 (32% x $260,000)Reduced Water Cost Est. (potable efficiencies) $23,040 ([15% + 5%] x $115,200)Reduced Power Cost Est. (efficiencies realized) $3,600 (15% x $24,000)



APPENDIX D – REVIEW OF PROBABLE COST ESTIMATES

NGF Consulting has reviewed the probable cost estimates provided to the City forreconfiguration Options A, D, F, and G. In order to objectively evaluate proposed budgets welook for a baseline of comparison. The best resources are similar public sector golf courseprojects involving reconfiguration. All golf course projects are unique, as are the conditions ofthe site, construction costs, availability of construction materials (sand, proximity of sod growing,etc.), and terrain. Additionally, in a situation where the proposed modifications to the course areunderway, as in this case, we look to other projects by the same golf course architect.

The best comparisons are three projects by Forrest Richardson, ASGCA:

Buenaventura Golf Course (City of Ventura, California) Peacock Gap Golf Course (San Rafael, California – privately owned) Olivas Links (City of Ventura, California)

The Buenaventura project was undertaken to rebuild an existing 18-hole facility originallydesigned by William P. and William F. Bell. The scope was to largely retain hole corridorsthrough existing mature trees, but to re-turf all of the golf course. The project involvedapproximately 88 acres of full re-turfing, greens rebuilding (19), new ponds (3) and completerebuilding of all features (bunkers, tees and fairways). This project had a stated budget of $4.5million which also included site work for a new maintenance area, a new maintenance buildingand improvements to the entry and parking areas. The work was completed in 2005 and wasfunded by the City of Ventura through a capital bond program. NGF was told that the golf coursespecific work totaled approximately $3.6 million and the market conditions at that time were verysimilar to current conditions.

The Peacock Gap project was a complete re-build of an 18-hole golf course (also an originaldesign of William F. Bell), associated re-routing work for safety reasons, a new pond, newdrainage, full new irrigation system, and all new features including a new practice range. Thetotal acreage involved was approximately 94 acres and included similar naturalized areadevelopment as has been proposed for Palo Alto. The project was carried out over two phasesbeginning in 2004 for a reported investment of $5.1 million. Of note is that topsoil managementwas very similar to that covered in the Palo Alto Probable Cost Estimates.

The Olivas Links project is most similar to Palo Alto among these three examples. This coursewas originally designed by William P. and William F. Bell and also borders a river at its estuarytermination point. The course was prone to flooding and had very poor soil conditions as a resultof effluent irrigation and inherent salts by way of its seaside locale. Also a part of the capitalbond program of the City of Ventura, this 2006-07 work was contracted at $5 million in terms ofdirect golf course improvements. These included full re-building using on-site soils. Paspalumgrass was used for fairways, with Bentgrass on the greens. Our estimation of the timing of thiswork was that it fell during the most aggressive contracting time in the past 10-15 years. Thework appears to have been publically bid with six qualified bids, each very close to the lowestbid at the $5 million point. The City spent additional funds to relocate and replace theirmaintenance facility over and above the golf course construction contract.

Though there are variables that could affect cost, such as the ultimate timing of the project anda change in regional economic conditions, NGF’s general assessment given our exchanges withForrest Richardson on this matter is that the probable cost estimates prepared for the City(Options A, D, F and G) appear to cover the scope of the work shown for the options, and are


conservative in approach. According to representatives of the Golf Course Builders Associationof America (GCBAA) the Bay Area represents one of the most costly working locales inNorthern California based on available labor, housing and the general cost of fuel, operationsand logistics. We note that the architect, recognizing this reality, has included a significantdegree of project management and contingency in estimates prepared for the City - importantcomponents that we often see omitted at this stage of planning.


APPENDIX E – POTENTIAL LONG-TERM MASTER PLAN IMPROVEMENTS

The tables below summarize some of the long-term and/or optional improvements that havebeen presented by Forrest Richardson to the City of Palo Alto for consideration.

Clubhouse Improvements

Exterior Condition & Upgrades - Estimate: $250,000 Aesthetic improvement to facings, color, materials

Replace, upgrade landscaping

Expand Meeting Spaces - Estimate: $1,700,000 Current Space: 75 in one room + 70 on patio

Expand main pavilion room to hold 200

Expand/open patio to hold 100 additional (300 total)

Create outdoor wedding garden

Reconfigure grill as potential restaurant space (60)

Reconfigure bar as pub seating w/ patio for 60 addl.

Expand/improve kitchen

Expand/screen service yard

Expand/open patio to hold 100 additional (300 total)

Golf Shop Upgrades - Estimate: $100,000 Expand office/storage

Free-up 1,000 s.f. retail space

Create Cart Storage Building - Estimate: $440,000 Currently storage for 15 carts; balance kept outdoors andleased temporarily as needed for groups

New building for 70 carts

Arrival & Entry Improvements

New Entry, Signage and Parking - Estimate:$400,000

New entry

New signage

Resurfaced parking w/ Landscaping & Lighting (expandto 300 spaces)

New Entry, Signage and Parking - Estimate:$200,000

New trail connections (to Baylands, etc.)

Bike racks, signage, etc.

Practice Facility Improvements

Range Performance Center - Estimate: $500,000 New building & hitting bays for Instruction

Small meeting spaces and offices

Range Expansion - Estimate: $100,000 (6) Additional hitting bays (adjusted netting to north)

Rebuild Existing Practice Green - Estimate:$180,000

New green complex as short game area

Create Designated Youth Area - Estimate: $200,000 Along Embarcadero (2 Acres)

Range Performance Center - Estimate: $500,000 New building & hitting bays for Instruction

Small meeting spaces and offices


Other “Alternate” Improvements

On-course Restroom Replacement - Estimate: $95,000 New structure and demo existing

Replace Balance of Irrigation System (Varies w/ Plan Option) Complete new system & control

Rebuild All Greens on Course (Varies w/ Plan Option) Rebuild all greens to USGA specs

Resod all Fairways on Course (Varies w/ Plan Option) New and consistent turf variety throughout

New Event Practice Green/Area - Estimate: $80,000 Separate event green and area (Plan D only)

Sand Plate New Fairways (Varies w/ Plan Option) Sand cap to 6 in.

PALO ALTO GOLF COURSEPRO FORMA AND SENSITIVITY ANAYLSYS

6.23.14

ATTACHMENT J

BASE PROJECTIONS

GOLF COURSE FINANCIAL SUMMARY FY 2013 FY 2014 FY 2014 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

ACTUALS APPORVED

YEAR TO DATE

(Jul ‐ April) PROJECTED

Revised

PROPOSED PROPOSED PROPOSED PROPOSED PROPOSED PROPOSED PROPOSED

BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET

REVENUES

Tournament fees 1,670 5,000 3,920 4,000 0 1,760 2,400 2,500 2,500 2,500 2,500

Green fees (Monthly play cards ) 1,781,405 1,094,543 879,515 1,068,843 291,400 1,873,200 2,510,600 2,680,900 2,707,800 2,734,800 2,762,200

Driving range 343,883 340,000 223,316 321,000 78,000 282,720 377,400 401,900 405,900 410,000 414,100

Cart/club rentals 279,795 255,456 159,118 255,456 49,600 248,880 332,300 353,900 357,400 361,000 364,600

Other fees 24,319 24,319 14,179 24,316 0 1,760 12,700 13,700 13,700 13,900 13,900

Proshop lease 27,248 27,248 20,874 27,248 19,000 21,520 28,500 30,700 30,700 31,300 31,300

Restaurant lease 48,880 48,880 37,895 48,880 48,000 56,600 60,400 64,400 65,000 65,700 66,300

Restaurant Utilities 21,600 15,336 13,000 15,336 18,000 26,900 27,000 27,400 27,400 27,900 27,900

Interest Income ‐ Debt Service 25,700 25,900 25,900 25,900 25,900 25,900 25,900

Total Revenue 2,554,500 1,810,782 1,351,817 1,765,079 504,000 2,539,240 3,377,200 3,601,300 3,636,300 3,673,000 3,708,700

EXPENDITURES

Operating Expenses

Salaries & Benefits 134,948 169,452 102,165 153,570 150,173 169,500 165,700 173,200 181,000 189,100 197,600

Advertising & Publishing 11,307 15,003 6,476 15,003 15,000 30,000 30,000 30,000 30,000 30,000 30,000

Supplies and Materials 3,292 28,331 13,460 15,000 8,000 45,100 45,800 46,500 47,200 47,900 48,600

General Expense 1,014 1,438 660 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

Facilities Repairs & Maintenance 7,259 6,835 0 3,000 1,438 22,300 22,600 22,900 23,200 23,500 23,900

Water Expense 381,966 375,849 296,483 367,888 353,019 146,400 188,500 192,300 201,000 210,000 219,500

Other Direct Charges 48,448 46,045 38,298 48,448 13,800 33,200 42,100 42,700 43,300 43,900 44,600

Indirect Charges 93,702 40,443 29,475 48,089 31,200 83,280 105,700 107,300 108,900 110,500 113,900

Subtotal 681,936 683,397 487,017 651,998 573,630 530,780 601,400 615,900 635,600 655,900 679,100

Contract Services

Golf Maintenance 808,801 750,000 572,893 750,000 640,633 829,552 806,932 817,745 817,745 817,745 817,745

Miscellaneous 18,566 3,965 0

Range fees 130,676 129,200 84,860 121,980 66,209 67,444 75,480 80,380 81,180 82,000 82,820

Cart rentals 112,083 102,182 63,647 102,182 21,824 49,776 66,460 70,780 71,480 72,200 72,920

Club rentals 5,951 5,000 2,205 5,000 0 5,700 5,800 5,900 6,000 6,100 6,200

Fixed Management Fees 377,045 345,324 313,495 345,324 82,972 255,972 300,000 300,000 300,000 300,000 300,000

Green Fees to Golf Professional (5%) 0 0 0 0 0 93,660 125,530 134,045 135,390 136,740 138,110

Credit Card Fees 38,000 30,000 22,800 30,000 7,500 39,337 52,723 56,299 56,864 57,431 58,006

Subtotal 1,491,121 1,365,671 1,059,900 1,354,486 819,138 1,341,441 1,432,925 1,465,149 1,468,659 1,472,216 1,475,801

Total Operating Expenses 2,173,057 2,049,068 1,546,917 2,006,484 1,392,768 1,872,221 2,034,325 2,081,049 2,104,259 2,128,116 2,154,901

Net Income From Operations 381,443 (238,286) (195,100) (241,405) (888,768) 667,019 1,342,875 1,520,251 1,532,041 1,544,884 1,553,799

Debt and Other Charges

1998 Debt Service 428,180 429,020 357,552 429,020 428,200 430,800 423,200 432,300 431,200 0 0

New 2014 Debt Service 0 0 0 0 464,856 464,856 464,856 464,856 464,856 464,856

Cost Plan Charges 23,327 25,317 21,097 25,317 26,798 28,138 29,545 31,022 32,573 34,202 35,912

Capital Reserve 0 0 0 0 0 187,320 251,060 268,090 270,780 273,480 276,220

Subtotal ‐ Debt and Other Charges 451,507 454,337 378,649 454,337 454,998 1,111,114 1,168,661 1,196,268 1,199,409 772,538 776,988

Net Income (Loss) (70,064) (692,623) (573,749) (695,742) (1,343,766) (444,095) 174,215 323,983 332,632 772,346 776,811

Golf Rounds 58,000 45,000 54,320 71,800 75,700 75,700 75,700 75,700


6.23.14

ATTACHMENT J

SENSITIVTY ANALYSIS - REDUCED ROUNDS GOLF COURSE FINANCIAL SUMMARY FY 2013 FY 2014 FY 2014 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

ACTUALS APPORVED

YEAR TO DATE

(Jul ‐ April) PROJECTED PROPOSED PROPOSED PROPOSED PROPOSED PROPOSED PROPOSED PROPOSED


REVENUES

Tournament fees 1,670 5,000 3,920 4,000 0 1,520 1,900 2,100 2,200 2,200 2,200


Driving range 343,883 340,000 223,316 321,000 78,000 221,280 305,400 335,000 364,100 367,700 371,400


Other fees 24,319 24,319 14,179 24,316 0 7,520 10,300 11,400 12,300 12,500 12,500

Proshop lease 27,248 27,248 20,874 27,248 19,000 21,100 23,100 25,600 27,500 28,100 28,100




Total Revenue 2,554,500 1,810,782 1,351,817 1,765,079 504,000 1,991,480 2,724,900 2,998,000 3,263,000 3,295,900 3,327,900

EXPENDITURES

Operating Expenses




General Expense 1,014 1,438 660 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000


Water Expense 381,966 375,849 296,483 367,888 353,019 146,400 188,500 192,300 201,000 210,000 219,500



Subtotal 681,936 683,397 487,017 651,998 573,630 517,252 601,400 615,900 635,600 655,900 671,700

Contract Services



Range fees 130,676 129,200 84,860 121,980 66,209 55,156 61,080 67,000 72,820 73,540 74,280

Cart rentals 112,083 102,182 63,647 102,182 21,824 38,976 53,780 59,000 64,120 64,760 65,400

Club rentals 5,951 5,000 2,205 5,000 0 5,700 5,800 5,900 6,000 6,100 6,200



Credit Card Fees 38,000 30,000 22,800 30,000 7,500 30,410 42,286 46,660 50,919 51,427 51,941

Subtotal 1,491,121 1,365,671 1,059,900 1,354,486 819,138 1,288,170 1,370,558 1,407,400 1,432,839 1,436,017 1,439,236


Net Income From Operations 381,443 (238,286) (195,100) (241,405) (888,768) 186,058 752,942 974,700 1,194,561 1,203,983 1,216,964


1998 Debt Service 428,180 429,020 357,552 429,020 428,200 430,800 423,200 432,300 431,200 0 0

New 2014 Debt Service 0 0 0 0 464,856 464,856 464,856 464,856 464,856 464,856


Capital Reserve 0 0 0 0 0 144,808 201,360 222,190 242,470 244,890 247,340


Net Income (Loss) (70,064) (692,623) (573,749) (695,742) (1,343,766) (882,544) (366,018) (175,668) 23,462 460,035 468,856

Golf Rounds 58,000 45,000 53,150 58,100 63,100 67,900 67,900 67,900


6.23.14

ATTACHMENT J

SENSITIVTY ANALYSIS - REDUCED FEES GOLF COURSE FINANCIAL SUMMARY FY 2013 FY 2014 FY 2014 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

ACTUALS APPORVED

YEAR TO DATE



REVENUES

Tournament fees 1,670 5,000 3,920 4,000 0 1,920 2,400 2,500 2,500 2,500 2,500


Driving range 343,883 340,000 223,316 321,000 78,000 282,720 377,400 401,900 405,900 410,000 414,100


Other fees 24,319 24,319 14,179 24,316 0 1,760 12,700 13,700 13,700 13,900 19,000

Proshop lease 27,248 27,248 20,874 27,248 19,000 2,700 28,500 30,700 30,700 31,300 31,300




Total Revenue 2,554,500 1,810,782 1,351,817 1,765,079 504,000 2,385,460 3,196,000 3,407,900 3,440,900 3,475,700 3,514,500

EXPENDITURES

Operating Expenses




General Expense 1,014 1,438 660 1,000 1,000 1,000


Water Expense 381,966 375,849 296,483 367,888 353,019 146,400 188,500 192,300 201,000 210,000 219,500



Subtotal 681,936 683,397 487,017 651,998 573,630 517,300 600,400 614,900 634,600 654,900 676,000

Contract Services



Range fees 130,676 129,200 84,860 121,980 66,209 67,444 75,480 80,380 81,180 82,000 82,820

Cart rentals 112,083 102,182 63,647 102,182 21,824 49,776 66,460 70,780 71,480 72,200 72,920

Club rentals 5,951 5,000 2,205 5,000 0 5,700 5,800 5,900 6,000 6,100 6,200



Credit Card Fees 38,000 30,000 22,800 30,000 7,500 36,500 48,920 52,238 52,760 53,288 53,821

Subtotal 1,491,121 1,365,671 1,059,900 1,354,486 819,138 1,331,848 1,420,067 1,451,418 1,454,785 1,458,208 1,461,651


Net Income From Operations 381,443 (238,286) (195,100) (241,405) (888,768) 536,312 1,175,534 1,341,583 1,351,515 1,362,593 1,376,849


1998 Debt Service 428,180 429,020 357,552 429,020 428,200 430,800 423,200 432,300 431,200 0 0

New 2014 Debt Service 0 0 0 0 464,856 464,856 464,856 464,856 464,856 464,856


Capital Reserve 0 0 0 0 0 173,808 232,950 248,750 251,240 253,750 256,290


Net Income (Loss) (70,064) (692,623) (573,749) (695,742) (1,343,766) (561,290) 24,983 164,654 171,645 609,785 619,791

Golf Rounds 58,000 45,000 54,320 71,800 75,700 75,700 75,700 75,700


6.23.14

ATTACHMENT J

SENSITIVTY ANALYSIS - REDUCED ROUNDS AND FEES GOLF COURSE FINANCIAL SUMMARY FY 2013 FY 2014 FY 2014 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

ACTUALS APPORVED

YEAR TO DATE



REVENUES

Tournament fees 1,670 5,000 3,920 4,000 0 1,360 1,900 2,100 2,200 2,200 2,200


Driving range 343,883 340,000 223,316 321,000 78,000 214,368 305,400 335,000 364,100 367,700 371,400


Other fees 24,319 24,319 14,179 24,316 0 8,272 10,300 11,400 12,300 12,500 12,500

Proshop lease 27,248 27,248 20,874 27,248 19,000 21,100 23,100 25,600 27,500 28,100 28,100




Total Revenue 2,554,500 1,810,782 1,351,817 1,765,079 504,000 1,960,528 2,580,600 2,838,500 3,088,700 3,119,900 3,150,100

EXPENDITURES

Operating Expenses




General Expense 1,014 1,438 660 1,000 1,000 1,000


Water Expense 381,966 375,849 296,483 367,888 353,019 146,400 188,500 192,300 201,000 210,000 219,500



Subtotal 681,936 683,397 487,017 651,998 573,630 517,300 600,400 614,900 634,600 654,900 676,400

Contract Services



Range fees 130,676 129,200 84,860 121,980 66,209 53,774 61,080 67,000 72,820 73,540 74,280

Cart rentals 112,083 102,182 63,647 102,182 21,824 54,754 53,780 59,000 64,120 64,760 65,400

Club rentals 5,951 5,000 2,205 5,000 0 5,700 5,800 5,900 6,000 6,100 6,200



Credit Card Fees 38,000 30,000 22,800 30,000 7,500 28,236 39,255 43,310 47,258 47,731 48,208

Subtotal 1,491,121 1,365,671 1,059,900 1,354,486 819,138 1,295,215 1,360,312 1,396,075 1,420,463 1,423,521 1,426,613


Net Income From Operations 381,443 (238,286) (195,100) (241,405) (888,768) 148,013 619,888 827,525 1,033,637 1,041,479 1,047,087


1998 Debt Service 428,180 429,020 357,552 429,020 428,200 430,800 423,200 432,300 431,200 0 0

New 2014 Debt Service 0 0 0 0 464,856 464,856 464,856 464,856 464,856 464,856


Capital Reserve 0 0 0 0 0 134,456 186,930 206,240 225,040 227,290 229,560


Net Income (Loss) (70,064) (692,623) (573,749) (695,742) (1,343,766) (910,237) (484,643) (306,893) (120,033) 315,131 316,760

Golf Rounds 58,000 45,000 54,320 67,900 67,900 67,900 67,900 67,900

Golf Course Reconfiguration Project Financial Analysis Attachment K

In order to help assess the potential financial performance of the Golf Course during and after construction, staff entered into a contract with the National Golf Foundation (NGF) in 2012 to provide an independent Return on Investment analysis on the design options and long‐range Golf Course plan (Attachment I). Since the NGF report was completed in 2012, staff has continued to revise the Golf Course pro‐forma as new information that impacts the current and future Golf Course financial status has been acquired. Examples of new information include the fact that the project has been delayed a year from the original scheduling estimates, we have begun pre‐construction work on the Golf Course by stockpiling soil on the course and have experienced reduced golf rounds played as a result, we have negotiated contract amendments with Golf Professional Brad Lozares and ValleyCrest Maintenance, and we have received actual bids for the project work and have drafted a construction contract with the lowest bidder. As a result, staff has prepared an updated pro‐forma for the Golf Course illustrating anticipated revenues and costs during pre‐construction, construction and post‐construction stages in light of the latest information available (Attachment J). As mentioned in the discussion above, the lowest bid was 17% higher than the estimate of probable project cost prepared by the Golf Course Architect. Subsequent meetings with the lowest bidder have led to agreement on a contract change order that reduces project costs by $265,399. Council’s last review of estimated project costs occurred on February 3, 2014. For comparison, the following table presents both the February 3, 2014 project cost estimate and the current cost breakdown reflecting the actual lowest bid response and negotiated construction contract being recommended for Council approval. Palo Alto Municipal Golf Course Reconfiguration Project Costs February 3, 2014 Project Construction Stage Cost Estimate:

Base Bid $7,651,595

Change Order Contingency (10%) $765,160

Add Alternate bid items $487,200



Soft Costs $549,052

Total Construction Stage Project Costs $9,501,727

Less Estimated Soil Importation Revenue ($1,300,000)

Less Estimated SFCJPA Mitigation Payment ($3,000,000)

Net Financed Costs without Add Alternate items (Funded

by COPs) $4,665,807

Net Financed Costs with Add Alternate items (Funded by

COPs) $5,201,727

Current Project Construction Stage Cost Breakdown:

Base Bid $8,702,760


Additional Costs ‐ Signage, Public Art and Herbicide

Application $95,061

Add Alternate items $19,650


Soft Costs $758,725

Total Construction Stage Project Costs $10,448,437

Less Estimated Soil Importation Revenue $(1,300,000)

Less SFCJPA Mitigation Payment $(3,000,000)

Net Costs Funded without Add Alternate items (Funded by

COPs) $6,126,822

Net Costs with Add Alternate items (Funded by COPs) $6,148,437


The cost estimate from February 3, 2014 projected the need to debt‐finance $5.2 million to complete the project, through the issuance of certificates of participation (COP) supported by Golf Course revenues. The current cost estimate increases the required debt financing to $6.1 million. Staff continues to use the National Golf Foundation approach to estimate the financial risk of the Golf Course Reconfiguration Project. That approach includes projections and sensitivity analysis on the expected number of golf rounds and the potential for increased market‐driven fees for the reconfigured Golf Course. The “base” projection for the reconfigured Golf Course is the most likely outcome to occur according to the NGF. However, one of the most sensitive variables in the pro‐formas that affect the bottom line is the projected number of rounds played. While rounds played at the Golf Course at one time surpassed 90,000 rounds annually, golf rounds have dropped to 75,000 in FY 2008 and 58,000 in FY 2013. The second most sensitive variable in the analysis is the fees the public are willing to pay to play a round of golf. Taking into account the potential uncertainty of the future, staff continues to include sensitivity analysis that considers the following scenarios: 1) What if the number of golf rounds played is lower than expected when the

City re‐opens the Golf Course? 2) What if the market will not accept the planned fee increases? 3) What if both lower golf rounds played and lower‐than‐anticipated green

fees are the outcome? The baseline projections and the projections for the three scenarios described above can be viewed in Attachment J and are summarized in the tables below. As with project costs, the projections and sensitivity analysis from the February 3rd 2014 Council meeting along with current projections are provided for comparison.


February 3, 2014 Projections: (thousands of dollars)

Scenarios 2014 2015 2016 2017 2018 2019 2020 2021

Base‐

Projection

(741) (1,272) (377) 241 391 400 839 844

Sensitivity Analysis:

1. Lower

Rounds

(741) (1,272) (816) (299) (108) 91 527 536

2. Lower Fees (741) (1,272) (495) 92 232 239 677 687

3. Lower

Fees/Rounds

(741) (1,272) (843) (418) (240) (53) 382 384

June 23, 2014 Projections: (thousands of dollars)

Scenarios 2014 2015 2016 2017 2018 2019 2020 2021

Base‐

Projection (696) (1,344) (444) 174 324 333 772 777

Sensitivity Analysis:

1. Lower

Rounds (696) (1,344) (883) (366) (176) 23 460 468

2. Lower

Fees (696) (1,344) (561) 25 164 172 610 620

3. Lower

Fees/Rounds (696) (1,344) (910) (485) (307) (120) 315 317


The substantive change to the current Golf Course pro‐forma, as compared with the February 3, 2014 pro‐forma, is the increase in annual debt from $400,000 to $464,856, reflecting the actual bid outcome and subsequent construction contract recommended for Council approval. As with all projections, results depend on the assumptions used. The further a projection goes out in time, the less likely it is that results will materialize as anticipated. Varying the assumptions, along with external factors such as weather and economic conditions, can change pro‐forma projections. The FY 2014 – Base Projection is the scenario staff believes to be the most likely at this time and includes several key assumptions: 1) The renovated Golf Course will attract 75,000 rounds of golf annually within

three years. As a point of reference the current Golf Course generated 75,000 rounds in FY 2008.

2) The market will accept a 10% increase in average green fees for the enhanced golfing experience.

3) The construction will be complete within 16 months, beginning Summer 2014.

4) The Golf Course debt will be $6.1 million, paid back over 20 years at an interest rate of 4.5%.

The sensitivity analysis in the table above titled “June 23, 2014: Projections” shows that the scenario of least impact is that of lower fees. This scenario could occur if the golfing public does not accept the planned 10% increase in fees, resulting in the City needing to lower fees to ensure that we attract target golf rounds played. This scenario would increase the City subsidy for the Golf Course by $117,000 compared to the base projection. The next scenario with least impact is that of a lower number of annual golf rounds played than expected. This scenario could result in a considerable increase in net losses of $981,000 compared to the base projection. The scenario with the greatest negative impact, or worst‐case scenario, would be if both lower fees and less annual golf rounds occur. This scenario could result in $1.38 million in net losses compared to the base projection. Should annual golf rounds played fall below those projected, or if rounds and fees fall below expectations, considerable pressure will be brought to bear on the Golf Course operation. In such scenarios, operating costs for the Golf Course would


need to be curtailed and other Community Services Department or City operating and/or capital funds would need to be reallocated to maintain a balanced budget. In addition, the assumption of an annual contribution of at least $200,000 of Golf Course revenues to an operating and capital reserve is built into all of the pro‐formas. Not funding this otherwise prudent reserve could offset some of the negative financial results from lower fees and/or rounds. The detailed FY 2014–21 pro‐forma (Attachment J) also includes current fiscal year projections. For FY 2014 the pro‐forma incudes three columns representing FY 2014 approved budget, Year‐to‐Date actuals (July‐April), and projected year‐end balance. The FY 2014 projections reflect the reduction in golf rounds played due to pre‐construction work, which involved the importation and stockpiling of soil needed for both the levee and Golf Course reconfiguration projects. The current pro‐forma also reflects the executed amendments to professional services and maintenance contracts for the next five years. Each amended contract has a five‐year term, May 1, 2013 to April 30, 2018. The revised pro‐forma shows the expected revenues and expenses for the Golf Course operation during construction in FY 2015 and FY 2016. As seen in the base projection, the Golf Course is expected to have cumulative net losses of $2.48 million during pre‐construction, construction, and short‐term post‐construction before realizing positive cash flows beginning in FY 2017. The costs contributing to the losses during this period include ongoing debt service from 1998 COPs, City internal support costs, salaries and benefits, water expenses, and contractor expenses for ValleyCrest Maintenance and Brad Lozares Golf Professional services. The projected Golf Course performance after the reconfiguration, from FY 2017 forward, is anticipated to have positive cash flow, with significant surpluses after FY2019 when the 1998 debt service expires. The approved FY 2015 budget assumes that the Golf Course will be closed as of July 1, 2014. However, due to the continuing delays in the regulatory permit approval process, staff recommends Council approve a Budget Amendment Ordinance (Attachment G) to operate the Golf Course for the first two months of FY 2015 (July 1, 2014 through August 31, 2014), in the event that the inability to secure regulatory permits continues to delay the project. The proposed budget to operate the Golf Course, July 1, 2014 through August 31, 2014 and closing the Golf Course September 1, 2104 through the end of the fiscal year June 30, 2015 is provided on the last page of this analysis.


Duininck, Inc. has confirmed it can meet the planned construction schedule, provided that it is awarded a construction contract by July 15, 2014. If the contract award is delayed beyond July 15, 2014, additional costs and an extension of the expected completion date is anticipated. If the City operates the Golf Course during July 1, 2014 through August 31, 2014 and closes the Golf Course for construction on September 1, 2014, the projected FY 2015 year‐end net loss is the same as is now assumed in the approved operating budget. As seen in Budget Amendment Ordinance Attachment G, if the Golf Course stays open during July 1, 2014 through August 30, 2014, additional expenses are estimated at $324,800 offset fully with additional revenue.

ATTACHMENT K

FY 2012

Actuals

FY 2013

Actuals

FY 2014

Projected

FY 2015 Scenario A FY 2015 Budget

Recommendation

REVENUES Closed Full Fiscal Year

Open July 1, 2014 through

August 30, 2014, Closed

September 1, 2014 Justification

Tournament fees 1,878 1,670 4,000 ‐ ‐ No activity

Green Fees 1,779,053 1,630,018 1,008,843 ‐ 277,000 2 month activity; reduced 11% from prior per forecast

Monthly play cards 161,672 151,387 60,000 ‐ 14,400 2 month activity; reduced 11% from prior per forecast

Driving range 355,594 343,883 321,000 82,400 78,000 Adjusted per RDG

Cart/club rentals 301,225 279,795 255,456 ‐ 49,600 2 month activity; reduced 11% from prior per forecast

Proshop lease 29,966 27,248 27,248 18,000 19,000 $2,000 per month or 4% gross revenue (open); $1,500 per month or 4% gross (closed);

Restaurant lease 43,827 48,880 48,880 58,800 48,000 Contractual; per lease agreement ($4,000 per month)

Restaurant Utilities 21,600 21,600 15,336 20,000 18,000 Contractual; per lease agreement ($1,500 per month)

Other Fee 25,326 24,319 24,316 ‐ ‐

Interest Income ‐ Debt Service ‐ ‐ ‐ ‐ ‐

Sale of Golf Course equipment ‐ ‐ ‐ ‐ ‐

Total Revenue 2,720,141 2,528,800 1,765,079 179,200 504,000

EXPENDITURES

Operating ExpensesSalaries 90,531 85,469 85,000 97,676 102,676 Fixed

Benefits 39,055 49,479 68,570 47,497 47,497 Fixed

Miscellaneous

Supplies and Materials 12,238 3,292 28,331 8,000 8,000 Fixed

General Expense 754 1,014 1,438 1,438 1,438 Fixed

Rents and Leases ‐ ‐ 1,000 1,000 1,000 Fixed

Facilities and Equipment Purchases ‐ ‐ ‐ ‐ ‐

Allocated Charges 314,651 524,116 467,659 357,713 413,019 Adjusted per RDG

Subtotal 457,229 663,370 651,998 513,324 573,630

Contract ServicesGolf Maintenance 772,539 808,801 750,000 454,104 640,633 Valley Crest contractual amount (open); $18,158 for 5 months (closed); $415,000 grown‐in period (5 months

Miscellaneous 18,318 18,566 ‐ ‐ ‐

Range fees 135,310 130,676 121,980 70,040 66,209 38% of range fees (open); 85% of range fees (closed); ($78,000 in revenue)

Cart Rentals 114,621 112,083 102,182 ‐ 21,824 40% of cart/club rental ($49,600 in revenue)

Club Rentals 6,061 5,950 5,000 ‐ ‐

Fixed management fees 385,018 377,045 345,324 30,500 82,972 $345,333 prorated for 2 months (open); $30,500 for 10 months (closed

Credit card fees ‐ ‐ 30,000 ‐ 7,500 Estimated

Subtotal 1,431,867 1,453,121 1,354,486 554,644 819,138

Total Operating Expenses 1,889,096 2,116,491 2,006,484 1,067,968 1,392,768

Income From Operations 831,045 412,309 (241,405) (888,768) (888,768)

Debt Expenses

Debt Service (refunded) 559,539 428,180 429,020 428,194 428,194 Per Debt Service Schedule

Loan payment to General Fund for CIP

Projects PG‐08001 and PG‐07700 ‐ ‐ ‐ ‐

Subtotal 559,539 428,180 429,020 428,194 428,194

Cost Plan Charges 24,873 24,744 25,317 30,485 30,485 FY 2014 projected increased by 5.85% citywide

Net Income (Loss) 246,633 (40,615) (695,742) (1,347,447) (1,347,447)

Golf Rounds 68,000 68,000 ‐ ‐ ‐

Full Loss 10 Month Loss

324,800 Additional Revenue

324,800 Additional Expenses

(0) Net Impact to General Fund

Minor, Beth CIT';· or rAte At{C, eAt

.. &fTY CLERK'S OfFice: Pat Mamott <[email protected]> From:

S~turday,. June 14, 2014 11:30 AM 14 JUN 16 AM ,: 14 Friend, Gil

Sent: To: Cc: Subject:

Council, City; Keene, James sustainability

Dear Gil, Back in April, I sent the email below to you and the council.

I recently read the following article in the Chronicle about the impact of climate change on bayfront cities: http://www.sfgate.com/opinion/openforum/article/Climate-change-would-drown-parts-of-San-Mateo-5548800.php

See the interactive map at: http://ss2.climatecentral.org/index.html#12/37.5571/-122.3149?show=property&level=3&pois=hide

Since Palo Alto is planning developments to the golf course and parking lot, as well as taking over the airport, I wonder you, as chief sustainability officer, weigh in on these projects.

Thank you, Pat Marriott

From: Pat Marriott [mallto:[email protected]] Sent: Saturday, April 19, 2014 5:01 PM To: City Council ([email protected]); '[email protected]' Subject: where will the water come from?

Council Members and Commissioners: I'm wondering if anyone at City Hall has done research on the dark side of growth, for example:

Where will the water come from for residents and workers?

How will our carbon footprint increase with the growing dense population, whether we're talking about daytime worker population or residents?

When will public transit catch up with the millions of square feet of office space and housing? Who will pay for it?

How much will you have to spend to increase the fire department, police department and other

services as the population grows? Will the additional population and/or offices provide enough revenue to pay for increased cost of services? How about schools?

I'd like to know if you have done any analysis of the above issues.

Thank you,

Pat Marriott

1

jteresi

Typewritten Text

Attachment L

City of Palo Alto (ID # 4716) City Council Staff Report

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Transcript of City of Palo Alto (ID # 4716) City Council Staff Report