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Upgraded Skylinks Golf Course Opening Delayed For About A Month, Now Scheduled For End of October
(Sept. 21, 2004) -- LBReport.com has learned that the opening of the newly renovated and upgraded Skylinks Golf Course has been delayed.
Instead of an October 1 opening (indicated on LB's Parks, Recreation and Marine web site), a charity tournament is now scheduled for October 29 (at which a higher charity price per player applies)...and regular operations are scheduled to begin on October 30.
Signs on Spring St. at Clark Ave. and Lakewood Blvd. note the Oct. 29 date and city staff provided confirmation to LBReport.com. Members of LB's Golf Commission are expected to be briefed on Skylinks' delayed opening at their Sept. 22 meeting.
Much of the new Skylinks course, which abuts LB Airport between Lakewood Blvd. and Clark Ave., stretching from Spring St. to nearly Conant St. appears to be in place. We saw work progressing on the clubhouse structure on Sept. 21.
The Parks, Recreation and Marine web site indicates Skylinks was closed on October 1, 2003 for improvements of approximately $5 million for the course and roughly $1 million on the club house.
The improvements were funded using revenue from the proceeds of Bonds, floated with the voted approval of the City Council (details below). LB taxpayers are ultimately responsible via the General Fund but city management says it expects increased green fee revenue (from higher fees for the upgraded Skylinks course) to cover the bond payments. If the green fee revenue falls short, LB's General Fund, or some other source, would presumably have to make up the difference.
The newly upgraded Skylinks course will be lengthened by 475 yards to host professional championship tournaments, says the Dept. of Parks, Recreation and Marine web site. The course will remain Par 72 with the new increased length of 6,828 yards and improvements will include:
Clubhouse renovation improvements include:
In December 2002, LB City Hall management -- with voted City Council approval -- entered into the financial arrangement to pay for the Skylinks improvements by using bonded debt. AGC is paid for its work by proceeds from the sale of city bonds, while LB City Hall (i.e. taxpayers) is committed for roughly 27 years to pay back bondholders based on what City Hall assumes will be additional activity and increased rent from the Skylinks improvements.
"[A]dditional activity at Skylinks Golf Course attributable to improved facilities should increase AGC’s annual rental payments to the City after completion of the project," said a memo to Councilmembers from LB Parks, Recreation and Marine Director Phil Hester and LB's (now former) Dir. of Financial Management Robert Torrez, signed as approved by City Manager Jerry Miller.
Exactly how activity can be assumed to increase even with higher fees -- and quantified and forecast over roughly 27 years without knowing the amount of coming fee increases or future market rates competing golf courses -- is unclear.
Similar bond funding was used at part of the "Pike at Rainbow Harbor" when the Council OK'd using public money to back repayment of bonds on a parking structure...and if visitors and parking revenue fails to reach the levels predicted by City Hall, LB public money could be tapped to pay the difference. Likewise, the LB Aquarium of the Pacific, initially portrayed basically as a In a Dec. 10, 2002 public memorandum to Councilmembers explaining the arrangement, city staff stated in pertinent part:
The improvements to Skylinks Golf Course are estimated to cost approximately $7
million and will entail the reconstruction of the entire course. Funding is proposed to be
made available through bonds to be issued by the City; however, the debt will be paid
from monies generated and deposited by AGC. Debt payments will be made from
revenue AGC is currently required, through their lease, to reserve for the explicit
purpose of making improvements to the City’s golf courses. Staff proposes to amend
the lease with AGC to enable substantial course renovation improvements, to enhance
maintenance standards for all five courses, and to make certain operational changes
that will respond to concerns raised by the golfing community, the Municipal Golf
Commission, the City Auditor‘s Office, and AGC.
Financing Plan
In order to finance the improvements contemplated for the Skylinks Golf Course, the
City is proposing to issue approximately $8 million of fixed-rate taxable lease revenue
bonds with a term of 27 years. A total bond size, not to exceed $9 million, is being
requested to allow for possible changes in market conditions at the time the bonds are
sold. The bond issue will generate approximately $7 million of construction proceeds and approximately $1 million for bond reserves, underwriter fees, bond insurance fees,
and costs of issuance. Although the City’s General Fund will be the legal security for
the bonds and primary source of payment for the bonds, the underlying source of
repayment for the debt will be revenues pledged by AGC to the City. In the event that
AGC defaults on their lease and fails to meet its obligations to fully fund the annual
bond payments, the operation of the golf courses would revert to the City and debt
would be retired through golf course revenue.
AGC has agreed to pledge, and deposit with the bond trustee, capital improvement
funds generated through its amended lease with the City. This pledge will remain in
place through the term of the bonds and the amended lease with AGC. Currently these
funds are used by AGC, with City approval, to make certain capital improvements
across all City golf courses under AGC management. These funds are not used for
normal maintenance costs. Normal maintenance costs will continue to be the
responsibility of AGC through the amended lease. Amounts deposited with the bond
trustee, and not required for the payment of debt service on the bonds, will be made
available to AGC to fund, with the consent of the City, capital improvements for all City
golf courses.
The capital improvement funds pledged for debt service are derived from 10 percent of
green fee revenues. The capital improvement funds will be deposited monthly by AGC
with the City’s bond trustee bank to ensure funds are available to pay debt service.
Based on current green fee revenues, it is anticipated that AGC will collect
approximately $800,000 per year in capital improvement revenues. Based on current
market conditions, the estimated annual debt service for the lease revenue bonds will
be $600,000.
The lease revenue structure of the bonds requires that the City pledge non-golf course
assets. The City will structure the financing to allow for the flexibility to substitute or
reduce the pledged City assets over the term of the bonds.
It is contemplated that fixed-rate bonds will be issued. However, all or a portion of the
fixed rate bonds could be converted to a lower variable rate through the use of a short-
term swap transaction at or after bond issuance. A swap transaction is a commonly
used tool to manage cash flow related to bond payments. A fixed to variable rate swap
agreement can be used at a time when conditions in the swap market are
advantageous to the City...
FISCAL IMPACT
...Annual debt service will total approximately $600,000, and will be paid by AGC from
monies generated and deposited by AGC. In the event that AGC defaults on their lease
and fails to meet its obligations to fully fund the annual bond payments, the operation of
the golf courses would revert to the City and debt would be retired through golf course
revenue. Contact us: mail@LBReport.com |