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2007-01-17 Joint CC GC PacketCITY OF ALAMEDA • CALIFORNIA SPECIAL JOINT MEETING OF THE CITY COUNCIL AND GOLF COMMISSION WEDNESDAY - - - JANUARY 17, 2007 - - - 6:00 P.M. Location: Golf Course Restaurant, Chuck Corica Golf Complex, 1 Clubhouse Memorial Road Public Participation Anyone wishing to address the Council /Commission on agenda items or business introduced by Councilmembers /Commissioners may speak for a maximum of 3 minutes per agenda item when the subject is before the Council /Commission. ROLL CALL AGENDA ITEM 1. Work Session -No action will be taken A. Brief Opening Comments and Introductions B. Tour Clubhouse Facilities C. Golf Course Overview (Chair Wood) D. Report on Clubhouse Development ADJOURNMENT evert • ©o j Mayor Sign language interpreters will be available on request. Please contact the City Clerk at 747 -4800 or TDD number 522 -7538 at least 72 hours prior to the Meeting to request an interpreter. Equipment for the hearing impaired is available for public use. For assistance, please contact the City Clerk at 747 -4800 or TDD number 522 -7538 either prior to, or at, the Council Meeting. Accessible seating for persons with disabilities, including those using . wheelchairs, is available. Minutes of the meeting available in enlarged print. Audio Tapes of the meeting are available upon request. CITY OF ALAMEDA MEMORANDUM Date: January 17, 2007 To: The Honorable Mayor and Members of the City Council Chair and Members of the Golf Commission From: Debra Kurita City Manager Re: Development Options for Chuck Corica Golf Complex BACKGROUND Since the early 1990's, the City of Alameda has explored various options to develop and finance a new clubhouse at the Chuck Corica Golf Complex. In 1995, a development was proposed to reconstruct the golf driving range, pro shop, cart storage and a new golf clubhouse. The Council rejected the proposal and directed staff to phase the project and pay as monies became available. In 1997, the 1st phase of development was constructed for a cost of $2.4 million. This first phase, the golf driving range reconstruction, was completed and then promptly voted one of the top 100 ranges in the United States. In 2001, the golf enterprise account reached $3.5 million in reserves and staff began phase two clubhouse pre - development planning. After 9/11, overall golf course attendance and revenues began to decline. In 2001/2002, Economic Research Associates (ERA) was commissioned to do a golf clubhouse user study and also, to help identify the required size of a new facility and to determine the level of acceptance of the golfing community to an increase in golf fees. The ERA report had the following conclusions regarding fees: 1. Golfers were generally dissatisfied with the condition of the clubhouse, bathroom, and banquet facilities at the Chuck Corica Golf clubhouse. 2. For residents of the City of Alameda, 88% would support a proposal to build a new clubhouse. Also, for non - residents, 60% would support a proposal to build a new clubhouse. 3. For residents of the City of Alameda, nearly 60% would prefer a higher quality facility than offered at present and slightly higher fees. However, for non - residents, only 28% would prefer a higher quality facility than offered at present and slightly higher fees. 4. Overall, slightly less than half the people surveyed (43 %) would prefer higher quality facility than offered at present and slightly higher fees. Seniors, especially, were The Honorable Mayor and January 17, 2007 Members of the City Council Page 2 of 6 Chair and Members of the Golf Commission against any increase in green fees. ERA's study on the size of a new facility recommended: 1. Overall, a medium -sized golf clubhouse with about 15,000 square feet of public space (not including cart storage), 2. a 250 to 300 -seat capacity banquet room, 3. a 1,200 to 1,400- square -foot pro shop, and 4. a 100 seat/capacity restaurant and bar. In 2003/2004, a request for proposals was issued for design services for a new clubhouse. Negotiations with the preferred consultant, BAR, failed due to BAR's requirement for a $1 million fee. Dahlin Group, the second choice, was selected after negotiations of scope and design services for a fee of $580,000. In September 2004, the Council held a joint meeting with the Golf Commission and discussed the proposed clubhouse. Council voiced concerns about the ability to fund a new clubhouse. Based on the Council concerns, the Dahlin Group contract was not approved. In 2005, the Interim City Manager, directed staff to research the possibility of purchasing the plans for the City of San Mateo's clubhouse, which was built in 1999. Staff negotiated a purchase price of $75,000 for the plans and specifications. The proposed facility is 12,000 square feet and was also designed by Dahlin Group. In 2005/2006, pre - development activities, including soils and hazardous material studies, were completed. It was determined that the San Mateo's clubhouse's foundation would need to be redesigned based on soil conditions at the Chuck Corica complex in addition to structural changes for code compliance. A consultant was hired to do construction cost estimating using the San Mateo plans. The cost estimate for the building was $7.5 million and the San Mateo plans were not purchased. In January 2006, a lease was signed with Tom Geanekos, to manage and operate the existing restaurant and bar at the golf course. During the first year of operations, Mr. Geanekos increased revenue from the operation by approximately 25% over the prior year's revenue. Mr. Geanekos has concluded that, in order to maintain existing business, he will need to upgrade the existing facility to accommodate better kitchen equipment. He also has concluded that any increase in business by the restaurant operation could only be achieved if a larger banquet and restaurant facility were built. In October 2006, Keyser Marston Associates (KMA) was hired to evaluate the potential market for a larger golf course banquet and restaurant facility. KMA's report (Attachment A) indicates an existing demand for a larger facility by not only golf banquets and weddings, but also by the residents and the daytime population located on and around Bay Farm Island and Harbor Bay. The Honorable Mayor and January 17, 2007 Members of the City Council Page 3 of 6 Chair and Members of the Golf Commission In November 2006, Dahlin Group was hired to develop a construction cost estimate for building a new 11,500- square -foot clubhouse with an 8,500- square -foot restaurant, bar and banquet room and a 3,000- square -foot clubhouse that would include pro shop, restroom facilities and office. The estimated cost (Attachment B) for the redesign is $5,550,000. The estimated construction cost includes a 6% escalation factor. Then, BMS Design Group provided cost estimates for a temporary banquet structure and improvements for the existing building, entry road way and entrance gateway. The idea of a temporary structure such as a sprung structure (Attachment C) would facilitate the expanded banquet area for golf tournaments and wedding and social events. The cost for just the sprung structure is $227,000. Additional costs to develop the temporary structure are currently being finalized and will be available the night of the meeting. DISCUSSION The golf course has experienced annual declines for the past three years. The one area of increase in revenue has been the restaurant and bar operations, with the 25% increase from calendar year 2006. The KMA analysis of the potential revenue from a new banquet and restaurant building demonstrated that a favorable market exists to generate new revenue for a restaurant/banquet facility. Based on the KMA report, a conceptual structure of approximately 4,500 square feet of restaurant space and 4,500 square feet of banquet space could generate approximately $2,950,000 in revenue - an increase over 2006 of $1,950,000. Based on the terms of the current lease with the restaurant operator, this would yield $295,000 in new revenue to the golf course per year. The revenue to the golf course in 2006 from the existing restaurant facility is anticipated to be approximately $80,000. KMA also analyzed the potential for increased golf tournaments if a banquet room were built. Per the KMA report, tournament play at golf courses usually accounts for 10% to 15% of rounds. Currently the Chuck Corica course has tournament rounds averaging less than 4% of total play. Based on this, KMA estimates that a banquet facility could generate an increase in tournament play with an associated increase in green fees of approximately $350,000. Therefore, a banquet facility and larger restaurant and kitchen could generate approximately $550,000 in new revenue to the golf course. Below are six potential development options for Council consideration. Option 1: Do nothing until the capital account has sufficient funds to pay for a new facility at a cost of approximately $5.5 million. Currently, the capital account has $2.5 million. No timeline for build out is provided under this scenario. The Honorable Mayor and January 17, 2007 Members of the City Council Page 4 of 6 Chair and Members of the Golf Commission Option 2: Make cosmetic improvements to the existing facade and construct minor kitchen improvements. This option would cost the least. Cost estimates are being developed and will be available the night of the meeting. The current lease agreement with the restaurant operator, Jim's, requires the operator to do any upgrades to the current facility that he determines are needed. Cosmetic improvements to the existing facility will not generate any new revenue or provide for larger space for golf banquets but would provide an aesthetic upgrade for golf players. The restaurant operator has indicated if no expanded space is an option, his revenue will not increase beyond the current income. Option 3: Construct a temporary structure to be used as a banquet facility, upgrade the existing kitchen facilities and make cosmetic improvements to the existing facade. The estimated cost for this option is also being developed and will be available the night of the meeting. The cost to purchase a temporary sprung structure is $227,000. In addition to the purchase of the sprung structure, a concrete foundation would need to be built; electrical, plumbing and gas service would need to be installed to accommodate power, heat and running water. This alternative would require the ongoing rental of temporary restroom facilities for the expanded banquet area. This alternative also would limit the banquet menu to buffet and limited menu options for formal sit down dinning service. The temporary structure's membrane is anticipated to last for approximately five years, at which time a new membrane would need to be purchase and installed at an approximate cost of $30,000. Option 4: Construct a temporary structure, cosmetic improvements to existing facade, upgrade entry road way and entrance gateway. Estimated cost for this option is also being finaled and will be available at the meeting. This option would increase the aesthetics of not only the old building, but also the gateway onto the property and the entrance road. Again, a concrete foundation would need to be built; electrical, plumbing and gas service would need to be installed to the structure to accommodate power, heat and running water. This alternative would require the ongoing rental of temporary restroom facilities for the expanded banquet area. This alternative also would limit the banquet menu to buffet and limited menu for formal sit down service dinning. The temporary structure is anticipated to last for approximately five years, at which time a new structure would need to be purchase and installed at an approximate cost of $30,000. Option 5: Develop and build new clubhouse facility at a cost of approximately $5.5 million using the capital account and a bank loan or other funding source for the remaining funds needed. The cost estimate of $5.5 million is for a facility of 11,500 square feet: a 4,500- square -foot restaurant, 4,500- square -foot banquet room, and a 2,500- square -foot clubhouse /pro shop. Bank of Alameda would be willing to provide the golf course a loan using a portion of the capital account as a reserve loan account based on this cost estimate and usage projections from the Keyser Marston report, but exact terms would be finalized if this option were pursued. The Honorable Mayor and January 17, 2007 Members of the City Council Page 5 of 6 Chair and Members of the Golf Commission Option 6: Develop and build a new clubhouse facility with the restaurant operator as a partner. This option would allow the City to use its capital account to build out the pro shop, restroom facilities and office area. The restaurant operator would enter into a long term lease with the City to build out a new banquet and restaurant facility. A development agreement and long term lease would need to be negotiated and brought back to Council for approval. This option does pose less risk than option #5 above as the restaurant operator would be at risk for the cost to build out the banquet and restaurant space. This option would most likely be negotiated so that the restaurant operator would be given rent credits for the cost of the construction of the new facility. It is not certain whether or not the current operator could get a loan for the construction of the restaurant portion without the golf course guaranteeing the loan with golf course revenues or other security. ENVIRONMENTAL REVIEW Phase I and I I analyses were completed along with the environmental survey for asbestos and lead- containing paints. Asbestos was found in the pipe insulation and in the duct work in the clubhouse. The Phase I and II soils studies revealed no evidence of adverse environmental conditions in connection with this site. Since no Federal funds would be used and there is no federal agency approval required for this project, NEPA findings are not required. There would be an exemption from CEQA since any new structure would be less than 10,000 square feet larger than the existing facilities and there are no historic structures affected. BUDGET CONSIDERATION /FISCAL IMPACT There is approximately $2.5 million in the capital account available to be used for golf course improvements. RECOMMENDATION It is recommended that the Council provide direction on proceeding with the development of the Chuck Corica Golf Clubhouse. Resp- #fully submit ed, Leslie A. Little Development Services Director The Honorable Mayor and January 17, 2007 Members of the City Council Page 6 of 6 Chair Golf Commission Da General Manager, 'Wca Golf Course By: Dorene E. Soto Manager, Business Development Division LAL /DB /DES /ry Attachments: A) Chuck Corica Golf Complex/Food & Beverage Sales Potential, prepared by Keyser Marston Associates, dated January 5, 2007 B) Cost Estimate C) Graphic of Sprung Structure G: \Soto \Golf clubhouse \options jt mgt. 1- 07.doc ADVISORS IN: REAL ESTATE REDEVELOPMENT AFFORDABLE HOUSING ECONOMIC DEVELOPMENT SAN FRANCISCO A. JERRY KEYSER TIMOTHY C. KELLY KATE EARLE FUNK DEBBIE M. KERN ROBERT J. WETMORE Los ANGELES CALVIN E. HOLLIS. 11 KATHLEEN H. HEAD JAMES A. RABE PAUL C. ANDERSON GREGORY D. SOO -1100 SAN DIEGO GERALD M. TRIMBLE PAUL C. MARRA Attachment A KEYSER MARSTON ASSOCIATES ADVISORS IN PUBLIC /PRIVATE REAL ESTATE DEVELOPMENT MEMORANDUM To: Dorene Soto, Business Development Manager City of Alameda From: Robert J. Wetmore, CRE cc: Dana Banke, General Manager, Corica Golf Complex Date: January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential This memorandum and accompanying tables provide the findings of KMA's evaluation of market potential for food and beverage sal es at the clubhouse of the Chuck Cor ica Golf Complex in the City of Alameda. Assignment The findings are provided separately for the restaurant and a potential banquet facility. For the restaurant, the projections assume that the existing facility would either be rebuilt as part of the rebuild of the clubhouse, or s ubstantially upgraded in respect to decor and kitchen facilities. For the banquet facility, the findings include a projection of revenue and commentary on the potential for introducing a tent or similar structure to serve as the focus for that venue. As agreed, this assignment excludes considerations related to the development cost of the facilities, or how those costs could be apportioned to the operator and to the city within the context of the operating ag reement. Nor does it consider any other issues related to the funding or financial feasibility of the project. The assignment also excludes projections of cash flow for the courses that comprise the Corica Complex, but does indicate potential for increase in rounds and rounds revenue from tournament play that could be generated by a banquet facility; those projections could be taken into account by decision - makers in deciding whether to move forward with new or renovated facilities. 55 PACIFIC AVENUE MALL > SAN FRANCISCO, CALIFORNIA 94111 > PHONE: 415 398 3050 > FAX: 415 397 5065 W W W. KEYSERMARSTON.COM 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 2 Reviewers of this memorandum should refer to the cautionary note at the end of our text, which is an integral part of our findings. As indicated, this memorandum does not purport to provide investment advice to anyone. Tasks To provide these findings, we undertook the following: • inspected the present facilities and discussed current operations with the General Manager of the Corica Complex, Dana Banke; • discussed recent operating results and future potentials for eating /drinking facilities with the operator, Tom Geanekos; • reviewed industry data regarding spending for eating and drinking connected with golf; • referenced previous KMA work on eating /drinking facilities in golf clubhouses; • reviewed previous work by Economics Research Associates (ERA) on the golf course and clubhouse; • interviewed operators of other golf courses that have implemented new or expanded clubhouse facili ties and operators of other banquet facilities in the market area. (An appendix to this report indicates the persons contacted; as noted, some market participants apparently chose not to participate in our process). Summary The conclusions of our evaluation are as follows: Restaurant • We perceive good to excellent m arket potential for new or renovated restaurant facilities and for banquet facilities at the Corica Golf Complex, for reasons identified below. • For the restaurant, we concl ude that there is market support for sales of $2.2 million (2007 dollars) and for a facility of 4,500 square feet (inclusive of kitchen that serves both the restaurant and banquet facility ). • Market support would be derived from residents of Bay Farm Island, employees at the Harbor Bay Business Park, and golfers (as separately quantified below). It 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 3 should also be possible to draw patronage from the population residing off Bay Farm Island in Alameda due to the reputation of the operator in the community and the attractive setting at the Com plex; these sales could total several hundred thousand dollars but are not included in these projections. • Another positive factor is the location just off Island Drive, a major arterial on Bay Farm Island linking residential areas on the Island to off - Island destinations. We do not deem absence of direct street frontage as a significant detraction; informal signage can be provided at curb -side and word -of -mouth advertising is critical. • A key aspect of these findings is that the inventory of eating /drinking facilities on the Island is highly constrained and that achievement of only a modest share of the potential generated by residents and by employees at the business park will generate the indicated sales. The increase in sales noted above would be achieved by appealing primarily to the employment base for additional lunch trade and to the residential base for dinner trade (the restaurant is not now open for dinner). These segments are dominant; sales to golfers will account for only about 30% of total volume. • To achieve the indicated results, it will be necessary to cater to the needs of golfers, which are skewed toward fast food at modest price point, and to a somewhat more upscale clientele for dining opportunities for lunch and dinner; there is no reason why requirements of both golfers and non - golfer s cannot be accommodated in a new or refurbished facility, as they are at other golf clubhouses. Banquet Facility • We conclude that there is potential to generate about $750,000 in sales annually in a setting that could accom modate up to 300 guests; the indicated square footage would be app roximately 4,500 square feet at 15 square feet per guest. • It appears that about 170 events could be scheduled annually, with the potential market mix distributed among golf tournaments, weddings, other social events, and corporate events. In the bod y of the report, we quantify the m arket mix and the utilization of the facility by date and tim e. • The basis for market success is the growing popularity of golf courses as venues for banquets (particularly weddings), the potentially strong visual amenity for banquets at the clubhouse location at the Corica Complex, and strong bookings at other venues, notably the 0' Club, which is run by the city. 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 4 • These projections assume a new clubhouse and a new kitchen, although the operator has indicated that the existing kitchen is sufficient for buffet service. In our view, to serve the larger functions effectively (particularly weddings) expanded kitchen facilities, which will allow full sit -down service, are indicated as part of the rebuild or refurbishment of the restaurant. • We assume that banquet facilities would have excellent views of the Earl Fry course. • The venue for the banquet function could be a tent or similar structure (such as an open pavilion that is e nclosed with canvas sides during inclement weather). This solution has been implemented successfully at other golf courses, as discussed below. The advantage is lower development cost than a permanent structure. The disadvantage is the somewhat lower quality level associated with this structure in comparison to a permanent facility, and attendant issues related to weather (heat, ventilation, moisture control, etc.). This kind of structure has been used successfully in hosting the most demanding social events - weddings. • We do not perceive a major difference in revenue generation from a permanent banquet facility versus a well- conceived tent structure of comparable capacity (300 guests) that afforded patrons views of the course. The key driving factor in achieving the projections in this memorandum are revamped kitchen facilities that will accommodate excellent service in both the restaurant and banquet venue. • The absence of banquet facilities at the Corica Complex has been a significant factor in an inability to market the facilities to tournament promoters, as evidenced by the fact that tournament rounds account for only 3.7% of all rounds played at the facility. In our view, with a complement of facilities to cater to this group, the number of tournament rounds could increase from 5,700 to about 12,400 per year. The increase in rounds would yield approximately $350,000 per year in additional greens fees, just about all of which would fa II to the bottom line as operating revenue. There would also be additional food and mer chandise sales from this source. Summary • From all of the above, it appears that eating and drinking facilities associated with the clubhouse at the Corica Complex could achieve annual sales of abo ut $2.95 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 5 million, of which $2.2 million (75 %) would be restaurant sales and $0.75 million (25 %) would be banquet sales, as indicated in the inset table below. City of Alameda Scenario For /Corica Golf Complex Restaurant and Banquet Operations Square Footage Annual Sales 2006 Sales Increase /Sales Restaurant 4,500 $2,200,000 $1,000,000 $1,200,000 Banquet 4,500 $750,000 $0 $750,000 Total 9,000 $2,950,000 $1,000,000 $1,950,000 • With sales indicated above, the payment by the concessionaire (assuming that the city financed the project) would be $295,000 per year, or $210,000 more per year than in 2006. Additional tournament rounds induced by the availability of banquet facilities would yield $350,000 annually i n greens fees (see above) . Therefore, total annual revenue generation w ould be in the range of $645,000, or $560,000 more than in 2006. All of these estimates assume a skilled, highly capable restaurant operator; in the highly localized Alameda market, it is deemed highly beneficial for the operator to have existing ties and strong reputation in the community. Back -Up Detail Restaurant According to the operator, Tom Geanekos, constrained kitchen facilities preclude a higher volume of restaurant business. He reports turning down events due to this limitation and has refrained from marketing the restaurant due to concerns that timely service to patrons will be difficult to deliver with the current facilities; therefore, existing volume is not a reliable indicator of sales potential. Despite kitchen limitations that have remained uncorrected, sales of $1 million were achieved in 2006 (first operating year for this operator) and are reasonably projected at about $1.3 million by Mr. Geanekos for 2007 based o n recent monthly sales volumes. Table 1 provides a summary of our analytical findings in respect to restaurant potential at the Corica Complex. As noted, the existing inventory of facilities on Bay Farm Island, located at Harbor Bay Landing, is highly constrained (in addition, there are a couple delicatessen -type facilities in the Harbor Bay Business Park). Choices are inadequate both for residents and there are few opportunities for businesses to host events for employees or clients on the Island. 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 6 As noted, the population of 13,100 on the Island is estimated to spend about $990 per capita annually on eating and drinking outside the home, resulting in potential sales of $13 million; these results are based on evaluation of sales data published by the State Board of Equalization. Employment on Bay Farm Island is estimated by Claritas (a commercial vendor of demographic data) at 3,040 persons; based on data on employee expenditures published by the International Council of Shopping Centers (ICSC), we estimate that local employees spend about $1,080 per capita annually on eating and dri nking near the place of work, resulting in spending potential of $3.3 million. Current sales at eating and drinking facilities (excluding the facility at the Corica Complex) on Bay Farm Island are $3.5 million based on sales data tabulated for the City of Alameda. Therefore, from the results noted above, total spending potential of $16.3 million from residents and local employees contrasts with sales of $3.5 million, indicating that about 80% of potential eating /d rinking sales are exported from the Island. In our opinion, a reasonable target for an eating /drinking facility at the Corica Complex is about 10 % -15% of the residual sales potential; with this market share, local residents and employees would spend about $1.6 million annually at the facility. In addition, golfers at public courses spend an average of $4 per round on eating and drinking, according to data published by the National Golf Foundation (NGF ). With about 150,000 rounds played annually at the Cor Ica Complex, golfers could spend $600,000 annually on food and dri nk. (Note: There is a minor overlap of sales to residents of Bay Farm Island and residents who also golf at the Cori ca Complex in the estimates noted above). In total, from the identified sources of market support, it appears that there is a volume opportunity for eating and dri nking of about $2.2 million annually at the Corica Complex. With a new or refurbished facility with revamped kitchen, more appealing decor and white tablecloth service for lunch and dinner (in addition to fast food oriented mainly to golfers), sales in the indicated range could likely be achieved. Within the restaurant industry, this would be a moderate volume that could justify approximately 4,500 square feet of building. The evaluation appears quite cautious in that it excludes sales to Alameda residents who do not reside on Bay Farm Island. 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 7 Banquet We have reviewed the inventory of the significant banquet venues in Alameda, which include: • Grand View Pavilion • Harbor Bay Club • Bayside Pavilion • Albert H. Dewitt Officers Club ( "O'Club ") These facilities are described in some detail i n previous reports prepared for the City by ERA. The key competitor would be the Grand View Pavilion, which is located near the Corica Complex and is a recently reconstructed and ded icated banquet facility at high price point. The operator of that facility did not respond to requests for market and operational information relevant to this assignment. It is known that the Pavilion offers flexible seating for about 275 to 300 people indoors and for about 100 people ou tdoors, overlooking the Corica course. Previously, the operator indicated that they expected that weekend weddings with an a verage group size of about 150 would be the pri mary source of business and that charges inclusive of food and beverage and r oom rental would be in the range of $45 to $100 per person. Likely, the facility does not cater much to golf groups, which tend to be price- sensitive. A reported limitation of the facility is difficulty in seating a large group in one contiguous space with clear sightlines. A banquet facility at the Corica Complex should likely be priced below Grand View Pavilion, perhaps through waiving the facility fee. The Albert H. Dewitt Officers Club and Conference Center is the original Officer's Club at the former Alameda Naval Air Station. The facility features World War II memorabilia, solid oak tables, leather chairs, dark paneling, fireplace, and outdoor patio. Facilities include a main dining room with capacity of 250 -300; Trident Room with capacity of 120- 200; Terrace Room with capacity of 90 -110 and Squadron Room with capacity of 30 -50. Data from personnel at the Department of Parks and Recreation, which operates the facility, indicates that in 2006, 170 events were booked at the facility, of which 123 were in the main dining room, 25 in the Trident Room, 3 in the Terrace Room, and 19 in the Squadron Room. It was noted by staff that many of the rentals of the Trident Room were in conjunction with rental of the main dining room. Essentially, then, the bu Ik of demand is concentrated in larger events requiring capacity in excess of 250 persons. Events include auctions, trade shows, w eddings, community fund raisers, retirement parties, graduation ceremonies, birthdays, bar mitzvahs and similar events.. Staff reported to KMA that as of November 2006, the facility was completely booked for Saturdays 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 8 through the end of May 2007, with additional bookings through July and August. The facility does not offer catering (must be provided by off -site caterers, most heavily represented is Grand View catering). A banquet facility at the Corica complex that offered views of the golf course could provide an ambiance that is highly competitive to that offered at the O'Club. The Bayside Pavilion is located at Mariner Square and is a 10,000 square foot facility and is a venue for weddings, corporate events, luncheons, and dinner parties. There is outside patio space and a tent facility on the grounds. Rental r ates for the facility range from $1,500 to $3,000 for five hours. Catering is not provided on -site. No definitive operational information was forthcoming from the operator. A key limitation is that the space is not divisible. The Harbor Bay Club is an athletic club that has two banquet rooms with a seating capacity of 150 each, with expansive views of the Bay. The facility does include a restaurant and bar, but no on -site catering is provided. According to the operator small weddings and large birthday parties are popular. Their average group size is 100 -150 (note limitation on group size based on the facility). Rental fees are based on member /non- member status and start at $500 for three hours for members and $700 for three hours for non - members. The operator reports that 25% of 2007 bookings are already spoken for; an additional 50% wi II book in advance, and 25% are spur -of -the moment renters. Based on market conditions and the pattern of banquet business at other golf clubhouses with which we are familiar, we have identified on Table 2 the over all parameters of banquet business that could be achieved at the Corica Complex. An important aspect of the projections is that they assume that the facility will accommodate up to 300 guests, which is necessary to accommodate the bulk of demand from groups, as evidenced by experience at the O'Club (see above) and at banquet facilities at other golf clubhouses. In regard to the latter, the operator of the Poplar Creek Golf Course in San Mateo, which recently constructed a banquet facility as part of a rebuild of the clubhouse, indicated that their 2,500 square foot facility (accommodates 180 persons) is inadequate to meet the needs of many groups, which are in the range of 250 to 300 persons. According to the operator of the banquet facility at the Haggin Oaks Golf Course in Sacramento, many of their banquet events (frequently, weddings) are in excess of 200 persons. The facility at the nearby Metropolitan Golf Links, which can accommodate 60 persons, is too small to be competitive for many events. As indicated on Table 2, we are showing 166 events booked a nnually out of 650 potential dates (25% utilization), with 27,800 guests annually, and total food and beverage sales of $750,000 (rounded). The market mix would be about 24% golf 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 9 tournaments; 31% weddings; 29% other social events; and 17% corporate events (targeted primarily to Harbor Bay Business Park tenants). In our view, pricing for food and beverage within a range of $25 to $30 per capita wil I be indicated in order for the facility to be price- competitive; we assume that it will be necessary to price below Grand View Pavilion, which may require waiving a room charge. The inset table on Table 2 shows detail regarding tournament play, which has ranged from 3.1% to 3.7% of total rounds played in 2001 -02 and 2004 -05, respectively, accounting for 5,700 rounds in 2004 -05. At municipal courses, tournament play generally accounts for 10% to 15% of rounds, which has been validated by sever al operators contacted as part of this assignment; the inability to host ban quets is a key limiting factor in attracting these groups. If 10% of the rounds played at the two 18 -hole courses at the Corica Complex were tournament rounds, which appears achievable based on results at other municipal courses, 12,400 tournament rounds could be played, for an increase of 6,700 rounds. Tent Structures for Banquets At the request of the client, we contacted several golf courses that have chosen to u se tents or similar structures to accommodate all or a portion of the banquet function, including the following: Haggin Oaks Golf Course (Sacramento) uses a tent structure of 4,500 square feet to host major banquet events, primarily weddings. The facility has windows that have vie ws of the golf course, and there is an outdoor ceremony site adjacent to the tent, which has a poured concrete floor. Approximately 80 events are held per year, ranging in size from 150 to 250 persons. The facility offers full - service (no outside caterers). The facility is marketed as "Sacramento's Newest Wedding Location." Buffets are priced at between $20 and $25 per person and sit -down dinners are priced between $23 and $27 per person (prices exclude bar). Weddings and golf - related events are popular at this venue. Skywest Golf Course (Hayward) now has an 80 -seat restaurant/bar facility and new clubhouse that can host small banquets. They will be constructing an open -air pavilion that will have optional canvas sides (depending on weather) that will seat 220 persons. There will be no food preparation in the open -air facility, but the location is adjacent to the kitchen, thereby allowing full- service. The primary market mix will be larger tournaments and weddings. Chardonnay Golf Club in Napa has a clubhouse that include s banquet facil ities for up to 200 persons. They use a tent for large weddings, special events and golf outings that exceed the capacity in the clubhouse. The tent is about 5,000 squa re feet and can seat 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 10 360 persons comfortably. Most of their events in the tent are golf - related. They use the tent ten months of the year. There is no kitchen in the tent (typical); the food is prepared in the kitchen in the main clubhouse and then transferred to a staging area in the tent where the chef and wait staff expedites it to the tables; buffets work best in this setting. The tent allows them to host large golf events with dinner and also allows for multiple event staging on the same day, where bookings overlap. The tent company they deal with is Occasions Event Productions. The Coyote Creek Golf Course in Morgan Hill uses an 80 foot x 25 foot tent structure to augment banqueting facilities for 250 persons in their clubhouse. The tent can accommodate about 100 persons and is immediately adjacent to the clubhouse. When not in use for food service, it is used for registrations, auctions, and the buffet line for dining in the clubhouse. It is a Sprung structure with heating and lighting, on a poured concrete pad. It is never used as self- standing venue. The structure has been satisfactory and functional but will be replaced by a trellis -like structure that will provide a more glamorous venue for weddings and similar events. We conclude the following from our review of comparable facilities at other golf courses: • Use of tents or tent -like structures is an accepted solution for banqueting needs at some golf venues, including those a t high price point in comparison to the Corica Complex. • These structures can be venues for major social events, notably weddings, and golf - related functions. • Food service can be buffet or full sit -down. • For code and other reasons, food preparation does not occur in these structures; they need to be located adjacent to the clubhouse kitchen. • Requirements of municipal codes need to be taken into account in the p lanning of these facilities; occasionally, the fire marshal does not view these structures favorably. • There are on -going issues of maintenance related to heating, cooling, ventilation, and moisture protection. • To market effectively to weddings it is necessary to provide a full - service event planning and cateri ng package. From the considerations noted above, it appears that a tent or similar structure (open pavilion with canvas sides, as an example) would be a reasonable solution for banquet 001- 001.doc; rjw 10004.015 To: Dorene Soto, Business Developm ent Manager January 5, 2007 Subject: Chuck Corica Golf Complex/Food & Beverage Sales Potential Page 11 needs at the Corica Complex. The location adjacent to the Earl Fry course and the clubhouse indicated by Mr. Banke appears appropriate and desirable for this use. As indicated above, we recommend that the facility be capable of handling 300 guests; likely, the incremental cost of a facility for 300 guests versus 200 guests (the next "break" in size) will be relatively modest in view of fixed costs for F F & E and personal property for both scenarios. To achieve the projections noted in this memorandum for banqueting and provide good service to restaurant patrons, it will be necessary to rebuild or substantially augment kitchen facilities. Concluding /Cautionary Note This memorandum provides findings in respect to generation of food a nd beverage sales at the Chuck Corica Golf Complex. There are many reasons why these results may not be achieved and we do not th erefore warrant that any of the projections will materialize. None of the projections in this memorandum constitute investment advice by Keyser Marston Associates, Inc. to any party whatsoever. Anyone with interests in the food service business or real property are advised to conduct their own analysis and due diligence, which could include hiring competent professionals in construction, the restaurant business, appraisal, legal, tax, or related matters, and reach their own conclusions as to the deployment of assets that they control. 001- 001.doc; rjw 10004.015 Attachment B TABLE 1 City of Alameda Corica Golf Course /Clubhouse Eating and Drinking Facilities Restaurant Potential Existing Inventory, Bay Farm Island La Val's Pizza Harbor View Chinese Restaurant Cafe Enrico El Cabello Why Cook Cafe and Grill Subject Residual Market Potential /Restaurants Local Residents Population 13,100 Eating /Drinking PC $ 990 Total E/D (000's) $ 13,000 Local Employees Daytime Population Expenditures PC For E/D Total E/D (000's) 3,040 $ 1,080 $ 3,300 Residents and Local Employees Total E/D Expenditures (000's) $ 16,300 Total Sales /Existing Facs. (000's) $ 3,500 Residual Potential (000's) $ 12,800 Market Share /Subject @ 10 -15% $ 1,600 Golf Demand # Rounds / Corica Courses Expenditures /Per Round Per NGF Potential Sales from Golfers (000's) Total Potential (Excludes Banquets) (000's) Square Footage Supported @ $500 /SF 150,000 $ 4.00 $ 600 $ 2,200 4,500 Present/Projected Sales Sales, 2005 $ 1,000 Projected Sales, 2006 (Operator) $ 1,300 Increment to Achieve Target Sales $ 900 Dinner $ 600 Additional Lunch $ 300 Note: Square footage includes kitchen that serves restaurant and banquet facility. 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