City cites payoff prediction for Black Gold
In a fast-changing economy, forecasts of financial trends, including predictions of future revenues and expenses for municipal-owned operations, can be chancy, but city officials who keep an eye on the Black Gold Golf Club have made an interesting calculation.
The city predicts Black Gold will reach a major milestone in the 2036-37 fiscal year, when “all the years of net losses will be fully offset by net income,” after loans from the city treasury are repaid and construction bonds retired.
The forecast came at the tail-end of a six-page review of Black Gold finances for the 2010-11 fiscal year presented at the final City Council meeting for 2011. And as my Nov. 17 column noted, the facility’s recent bottom-line “has improved markedly.”
Projections for the next 25 years “from our current low point” employ “a conservative increase in revenues of 3 percent per year and 2 percent for expenses,” the report from Parks and Recreation Director Bill Calkins stated.
The “overall costs to operate the facility,” which opened in 2001, “have resulted in a net loss and will continue to do so” until 2022-23, after which all net income will be used to pay off loans from the city made since 2000, according to the report.
“Shortly after the city loans are repaid, the bonds will be paid off and the majority of depreciation will end…[and] operations will see a significant increase in net income” leading to 2036-37, when the years of net losses will be offset.
Total loan repayments will be about $6.6 million, including principal and interest. The bond sales totaled some $21 million in 1999 and 2000, with a refinance in 2003, which removed restrictive bondholder reporting requirements and reduced the interest rate.
“It is also anticipated that with the additional catering revenue from the Community Center projected over the same time period, we will be able to repay the city loans a year earlier, as well as achieving a…break even of net losses and net income a year earlier,” the report concluded.
Last year, council approved Black Gold catering and banquet services as primary caterer at the Community Center, and authorized $400,000 for renovations to the center kitchen, which is expected to boost the center’s rental revenue, listed as $203,000 in 2009-10.
Private-business caterers still can rent the center for clients separately or use Black Gold staff and supplies as part of a package, deemed “cost effective” by golf and city officials.
Black Gold’s food and beverage income is a bright spot in the facility’s financial picture. While green fees dipped again in 2010-11, food and beverage revenue met estimates and catering department income flourished at 12 percent above the previous year.
Overall, revenues were 92 percent of what was expected at the beginning of the 2010-11 fiscal year, including green fees at 84 percent, driving range at 110 percent, merchandise at 99 percent, “other pro shop” at 86 percent and food and beverage at 100 percent.
Of course, a past unmet forecast was that Black Gold would return $1 million annually to the city treasury within five years of opening, well before the scheduled bond payoff date.
The city predicts Black Gold will reach a major milestone in the 2036-37 fiscal year, when “all the years of net losses will be fully offset by net income,” after loans from the city treasury are repaid and construction bonds retired.
The forecast came at the tail-end of a six-page review of Black Gold finances for the 2010-11 fiscal year presented at the final City Council meeting for 2011. And as my Nov. 17 column noted, the facility’s recent bottom-line “has improved markedly.”
Projections for the next 25 years “from our current low point” employ “a conservative increase in revenues of 3 percent per year and 2 percent for expenses,” the report from Parks and Recreation Director Bill Calkins stated.
The “overall costs to operate the facility,” which opened in 2001, “have resulted in a net loss and will continue to do so” until 2022-23, after which all net income will be used to pay off loans from the city made since 2000, according to the report.
“Shortly after the city loans are repaid, the bonds will be paid off and the majority of depreciation will end…[and] operations will see a significant increase in net income” leading to 2036-37, when the years of net losses will be offset.
Total loan repayments will be about $6.6 million, including principal and interest. The bond sales totaled some $21 million in 1999 and 2000, with a refinance in 2003, which removed restrictive bondholder reporting requirements and reduced the interest rate.
“It is also anticipated that with the additional catering revenue from the Community Center projected over the same time period, we will be able to repay the city loans a year earlier, as well as achieving a…break even of net losses and net income a year earlier,” the report concluded.
Last year, council approved Black Gold catering and banquet services as primary caterer at the Community Center, and authorized $400,000 for renovations to the center kitchen, which is expected to boost the center’s rental revenue, listed as $203,000 in 2009-10.
Private-business caterers still can rent the center for clients separately or use Black Gold staff and supplies as part of a package, deemed “cost effective” by golf and city officials.
Black Gold’s food and beverage income is a bright spot in the facility’s financial picture. While green fees dipped again in 2010-11, food and beverage revenue met estimates and catering department income flourished at 12 percent above the previous year.
Overall, revenues were 92 percent of what was expected at the beginning of the 2010-11 fiscal year, including green fees at 84 percent, driving range at 110 percent, merchandise at 99 percent, “other pro shop” at 86 percent and food and beverage at 100 percent.
Of course, a past unmet forecast was that Black Gold would return $1 million annually to the city treasury within five years of opening, well before the scheduled bond payoff date.
posted by Jim Drummond at 12:00 PM
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