Despite financial risks, golf course revamp moves ahead

Palo Alto City Council gives environmental clearance to $9.5 million project

When Palo Alto officials first proposed in 2011 a dramatic reconfiguration of the city's golf course in the Baylands, the main goal was to accommodate flood victims, not golfers looking for a richer experience on the links.

The plan was to rebuild levees around the volatile San Francisquito Creek and widen the channel, thereby reducing the flood threat to the vulnerable downstream area that got soaked in the flood of 1998. Accommodating the new levees would have required the city to reconfigure about six holes on the golf course.

Since then, the golf course project has taken on a life of its own, expanding far beyond the needs of the flood-control project. Over the past year, the City Council has enthusiastically expanded the reconstruction of the Palo Alto Municipal Golf Course to include all 18 holes as well as a new irrigation system, restroom, golf-cart paths, a "youth golf area," space to accommodate up to five playing fields and a reduction of irrigated turf from 135 to 81 acres.

On Monday, as the ambitious golf course overhaul received its final approval from the City Council, members learned that the very flood-control effort that inspired the golf course project may end up delaying it, with potentially huge ramifications for the bottom line. While officials from the city and the San Francisquito Creek Joint Powers Authority (the regional agency spearheading the flood-control project) have maintained that the two projects can be pursued independently of each other, this argument is proving to be a tough sell with one regulatory agency whose approval each project requires.

The San Francisco Bay Regional Water Quality Control Board has been reluctant to issue the creek authority a permit for the flood-control project, claiming that the reconfigured channels could imperil or disturb endangered Baylands species such as the clapper rail and the salt marsh harvest mouse. The creek authority has modified its plans to accommodate some of the water board's concerns, but at the same time, has argued that some of the water board's criticisms fall far outside the scope of the downstream project and should not be applicable.

This debate between the creek authority and the regional water board is now spilling over into the golf course project. In a letter to the city earlier this month, a water-board official voiced concerns about approving the golf course reconfiguration, arguing that doing so would preclude possible design changes for the downstream project.

"This agency has significant concerns with the SFCJPA's current design for the flood control project, and it is possible that the design in the SFCJPA's current application will not be approved by this agency," Dale Bowyer, section leader from the water board's Watershed Division wrote on Jan. 16. "Approving the current design proposal for the Golf Course Project would have the unfortunate effect of foreclosing potential options for improving the SFCJPA's flood control design."

Bower cited the "significant overlap" between the two projects and maintained that applying the the two projects separately "may constitute piecemealing of the two projects' impacts to San Francisquito Creek and adjacent habitat for listed species in the Faber Tract in East Palo Alto," referring to a Baylands site that is home to both the clapper rail and harvest mouse.

City staff, for its part, defended on Monday its determination that the golf project should be reviewed independently from the downstream work. City Manager James Keene said there has been a "difference of opinion" between local officials and the water board about the nexus between the downstream project and golf course renovation. But while these issues are being resolved, he said, the city needs to get all of its other approvals in place so that the golf project can start as soon as possible after the issuance of the water-board's permit.

"We're losing revenues this year just due to the reconfiguration we've already made," Keene said, referring to the city's reconfiguration of several holes to accommodate stockpiling of soil. "I think we need to be as ready as possible for the time when we get the permits to be able to begin the project."

Joe Teresi, senior engineer with the Public Works Department, encouraged the council to approve the Environmental Impact Review for the golf course project, despite the water board's concerns.

"They think there's a chance that the flood-control project may have to be modified to receive its permits and that might cause a domino effect (that will) affect the golf course," Teresi told the council, referring to water-board staff. "That's all theoretical. We feel strongly that the existing boundary between the creek project and the golf course project is the right boundary and that there is no downside to the council taking action on this item this evening."

Len Materman, executive director of the creek authority, made a similar point at the Jan. 21 meeting of the Parks and Recreation Commission, which had been reviewing the golf course EIR (it ultimately recommended approval). The creek authority has modified its project to address concerns about the Faber Tract, he said. His agency, like the city, believes that the two projects should be "decoupled" and considered separately.

"We'd like nothing better than for the golf course configuration to be done irrespective of our work," Materman said.

Since the Jan. 16 letter from the water board, officials from the city, creek authority and water board have met to discuss the board's concerns. Rob de Geus, assistant director of the Community Services Department, said the next two-to-three weeks will be particularly important in getting resolution.

While the council unanimously approved the Environmental Impact Report for the reconfiguration of the golf course on Monday, members expressed some concern about the possibility of delay and directed staff to do more number crunching and make sure the city's investment in the course doesn't end up costing the taxpayers millions of dollars down the road.

Under the current plan, the $9.5 million project would be funded primarily by a $3 million contribution from the creek authority and bonds that would be paid out from golf course revenues. Councilman Larry Klein on Monday voiced some concerns about the prospect of revenues dipping because of construction delays and the city's General Fund getting stuck with the bill.

"This is really a risky investment by the city in my view," Klein said. "If projections don't play out, it's the General Fund that will be paying the COPs (certificates of participation)."

Some changes to the course have already been made. Palo Alto has been importing and stockpiling soil on the west side of the golf course to help accommodate the flood-control project, an effort that is expected to bring the city about $1.3 million in revenues. This also created some disruption for local golfers. Rob De Geus, assistant director of the Community Services Department, said the city has been losing about $100,000 in revenues a month. A construction delay of a year could cost about $1 million, he said.

A delay could also have an even greater impact on residents in nearby flood-prone areas. If the creek authority doesn't get its permit soon, it might lose an entire construction season (work in the channel is restricted during the summer because of the presence of steelhead trout).

"There are a lot of life-safety elements to this decision also," Keene said, adding that he hopes this consideration will factor into the water board's determination.

In approving the EIR, the council also endorsed the proposed strategy for mitigating the loss of 588 trees from the Baylands area. To compensate the community for this loss, the city plans to plant 300 native trees on the course and protect 500 oak saplings at the Arastradero Preserve. Another mitigation includes restoration of at least two acres of native habitat at Byxbee Park, near the course.

Even with the regulatory complications, members were unanimous in approving the golf course project, which Pat Burt referred to last year as a "win-win-win-win." Though for the council the four wins -- flood protection, wetlands restoration, space for new playing fields and a better golf course -- remain applicable, members recognized Monday that these benefits come with some risk. They directed staff provide "financial metrics" showing how much revenue would need to be maintained for the golf course to continue to operate. This provision was proposed by Klein, who said it would "place some limitation on how much financial risk the General Fund would take." Councilman Greg Scharff, who seconded Klein's motion, called the reconfiguration an "exciting project."

"I'm glad we're moving forward," Scharff said. "I think it's a win-win situation."


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Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Feb 4, 2014 at 2:10 pm

With so few Palo Altans using the golf course .. got to wonder why there is such a push to spend all this money for non-residents use?

It's a shame that decisions aren't made with clear financial analysis on the table in this town.

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Posted by Mill Burray
a resident of Community Center
on Feb 4, 2014 at 2:43 pm

This article is funnier than "Caddyshack". Glad I don't pay taxes in Palo Alto.

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Posted by anonymous
a resident of Another Palo Alto neighborhood
on Feb 4, 2014 at 4:25 pm

While I'm the first to be concerned about our Council's priorities, a municipal golf course can actually bring in revenue if it's done right.

But I'm very concerned about this work proceeding now, while we head into this possibly historic drought. The Salt Marsh Harvest Mouse is endangered, and the work on the golf course will remove hundreds of trees. Maybe an interim plan is better, with a longer term plan for after we don't face this kind of water shortage and after we've taken care of more important priorities like the safety building.

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Posted by Ken
a resident of Leland Manor/Garland Drive
on Feb 4, 2014 at 4:56 pm

There was NO need to reconfigure the golf course, just re-done not too many years ago, risking great expense, a shaky future, conflicts with other agencies - the list is long. The golfers didn't want it, the golf staff really didn't want it, the seniors - men and women didn't want it, the women golfers didn't want it. WHO DID? It was the bleeding heart vociferous "soccer moms" who wanted to pare down the golf course for the chillllllldren!! Well, soccer isn't played all year around here - but golf is. More land was needed for mommy parking. The soccer moms pulled this scene a few years ago and persuaded the city to strike a deal with Stanford to snap up that prime real estate at the corner of Page Mill and El Camino polluted by thousands of car exhaust everyday . The soccer moms got the playing fields, and in due time Stanford will get it all back (they own the dirt) while Stanford got a huge amount of building rights in the Stanford Industrial Park area. Ever see who is really playing there? They are from all over - adult leagues. THAT prime area is where Palo Alto should have had a theater, a revenue-making convention center, a place such as Mt. View created. But NO. The soccer moms with youngsters in tow ruled that city council meeting in a an emotional scene led by our then mayor - for the CHILLLLLDREN. The scene last night was disgraceful. All the financial booby traps were pointed out, but our Council did it again. And if the golf course 'doesn't make it', just remember the name of every council member who folded for this idea. And remember this when you, the taxpayer, has to pay for this fiasco. Our own ENRON!!

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Posted by Sheeeeeesh
a resident of Old Palo Alto
on Feb 4, 2014 at 5:37 pm

What a flock of turkey's we have for City Council, ARB, and Planning Commission

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Posted by Midtown
a resident of Midtown
on Feb 4, 2014 at 9:07 pm

Make no mistake, this project is already a lose-lose-lose-lose project.
First, we are losing use of golf course and revenue due to the dirt piled on
the course. Second, we are going to lose the course for years while they push dirt around or wait for permits. Third, we will all lose when the golfers all go away when the greens fees get jacked up in an attempt to pay for this. Fourth, the 500 trees lose which will have to be replaced to the tune of hundreds of thousands of dollars.

Already the numbers don’t add up. “The City Council unanimously agreed Monday, July 23, 2012 to approve a $7.5 million redesign of the Palo Alto
Municipal Golf Course, a project that will move at least 15 of the course's 18 holes, create a new levee to contain flood water from the fickle creek and make 10.5 acres available for three athletic playing fields.” The creek authority would pay $3.2M and Palo Alto $4.3M or $7.5M total. Now the number has magically ballooned to $9.5 M. The project is not even bid yet and the price is skyrocketing.

In 1998-99 the golf course was renovated to the tune of $6M. The city
borrowed money by selling bonds based on the full faith and credit of The City of Palo Alto. The golfers are paying this back at the rate of $550,000 per year. There is about $3.0 million remaining to be paid which will be paid off by the year 2018. Who is going to pay that money with the golf course closed? Is that part of the cost estimate?

Why are we doing this? Those 3 playing fields are the reason. We could have had a rearranged golf course for essentially free with the creek authority paying (Option A), but no, the soccer moms demanded playing fields too (Option G), which the golfers get to maybe pay for. So has anyone run the numbers on this shell game using Poplar Creek as the model? (The PA greens fees can’t be any higher than Popular Creek or we will all go there to golf). Currently the PA golf course makes about $1M profit ($3M revenue and $2M expenses a year not counting bond payments). What will the bond payments be on some number probably far north of the currently estimated $6M. Do you trust numbers from a golf course design firm?

So folks, watch carefully as this thing spirals out of control just like
Mitchell Park. Soccer Moms rule!

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Posted by Deep Throat
a resident of another community
on Feb 5, 2014 at 11:02 am

The city is no longer pledging its full faith and credit for the current golf course loan. In July 2011, the city pledged all its fire department vehicles instead. ”For the 1998 COPs, the Golf Course was pledged. Because the Golf Course has value far in excess of the now remaining debt, staff does not recommend using it as collateral on this relatively small transaction. (COPs are a potential option to address the City’s infrastructure needs and the higher value assets could be used to securer higher borrowing levels.). Instead staff is recommending that the City’s fleet of fire apparatus be used as the leased asset. (A copy of the rolling stock subject to the lease is included in Attachment B). Twenty one (21) vehicles are being leased and their original cost value was $6.56 million. The oldest of these vehicles were purchased in 1991 and the newest was purchased in 2009. By using this asset, the City retains its real property assets for other COPs transactions down the line. The City has included language in the proposed agreement with JP Morgan Chase to substitute other rolling stock assets in the event that one or more of the pledged fire apparatus is eliminated. The City maintains complete control of the fire vehicles during the debt amortization period.”
See the list of fire department vehicles pledged to secure the current golf course loan repayments on the last page at Web Link

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Posted by Jim H.
a resident of Duveneck/St. Francis
on Feb 5, 2014 at 12:25 pm

@ Wondering - Where does it say in the article that few Palo Altans use the course? It also doesn't say how much the course makes/loses when running their "normal operations".

Hard to say that the course is a bad idea without any numbers. If "Midtown" is correct and the course makes $1M a year profit, then right there, it's a better deal than all of the parks in the city.

How much money do the city's other recreational facilities bring in?

With that logic, the city should also get rid of Foothills Park since not many Palo Altans use it. Also should close every park in the city since they don't bring in any revenues.

Bigger issue is that the city is entirely incapable of completing a large scale project. Just add it to the list. Currently we have MItchell Park Library and El Camino Park which are sitting there in limbo. This doesn't include the numerous items that go through the city, only to get held up by infinite studies the city pay for which then quietly go away but never get finalized.

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Posted by Robert
a resident of another community
on Feb 5, 2014 at 1:01 pm

No one cares if the golf course was "renovated" late last century. The existing Palo Alto Golf Course is a wreck - terrible conditions, terrible design, zero character. It's also a huge water waster - the new course design will conserve TONS more water, provide a more playable course, and actually draw in both serious and casual golfers to the course. As an avid golfer that plays 30-40 rounds a year, I might play the existing Palo Alto 1-2 of those times.

There's no point saying "what if" at this stage - the previous design has been trashed because of the creek expansion, and the existing par 67 isn't going to attract anything. They did that in anticipation of a redesign. Calling it off now would be a death knell to the course. This is a perfect example of "too many cooks" (read: agencies) meddling like condo HOA board members.

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Posted by Midtown
a resident of Midtown
on Feb 5, 2014 at 4:07 pm

I recommend anyone interested in the financial details of the golf course read: Web Link This was prepared by one of those high price consultants that our city loves so much. It is very complete and is fascinating reading. It was done in 2008 and projects out to 2015 and things have not changed much since then. The course is compared to the competition and it gives the breakdown of the users and finances. The course actually compares quite favorably to the competing courses (all of which have lost users over the last ten years). What is clear from this is that the City is sucking all sorts of money out of the course in the form of bloated utility costs and overhead charges (what a surprise). The course generates about $4 million from the greens fees, club house and concessions. All of that revenue is going to evaporate and very little of the real expenses will go away once the course closes. A two year closure is going to cost the city close to $8M in revenue before we even begin to build something new. I presume the city will continue to make the current loan payments or our fire trucks will go away. Those 3 soccer fields are going to end up costing us close to $20 million. That dirt that got dumped on the course is a little like HSR, just get the thing started, paid for or not, and there is no stopping. That win-win-win-win has the real potential of costing us the golf course. I propose we let the seniors all play soccer.

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Posted by taxee
a resident of another community
on Feb 5, 2014 at 8:30 pm

Here’s an exercise for someone with time on their hands. Go to the city budget at Web Link and figure out how many staffers – and their total compensation packages – are employed to take care of the golf course, childrens theater, zoo, art center.

Regarding 3 soccer fields, in a letter to Mayor Yeh back in September 2012, John Arrillaga offered to develop 3 new athletic fields for the city. That was right about the time of the 27 University proposal. I don't know if that offer is still on the table.

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Posted by Jeff
a resident of Duveneck/St. Francis
on Feb 6, 2014 at 10:31 am

A high speed rail to nowhere, a state of the art library no one can use, and now a golf course no one can play golf on. Just start the spending ... it will benefit someone.

Like this comment
Posted by Glory Bea
a resident of Old Palo Alto
on Feb 9, 2014 at 7:03 pm

What a consummate waste of time, energy, resources, and MONEY! The City Council should be called on the carpet for this loser!

Like this comment
Posted by Follow the money
a resident of Crescent Park
on Feb 10, 2014 at 12:14 am

Developers can use a fancy golf course and a big fancy library to inflate the value of their properties.
Nothing but the best for the little darlings.

Like this comment
Posted by resident 1
a resident of Adobe-Meadow
on Feb 10, 2014 at 3:01 pm

As a parent my son in high school worked at the PA golf course. He was on the tennis team but played with the high school golf teams that practice there. A lot of our children are exposed to golf in classes and competitive teams so the golf course should be viewed as any other sport we support - like soccer and baseball. I have spent a lot of time at that course as do a lot of other people - just hitting a bucket of balls, playing with friends, and in team company tournaments. My son learned a lot about management of a business as well as having a great time. It builds responsibility and learning both an individual sport and team sport.

Your children should be learning all of the sports that help them socialize and give them more tools as they become adults. Both female and male students learn great skills - and in this one the girls are as competitive as the boys. It is great for them all. If you go to a private club they have a lot of support for children and teenagers so this is what we can do for those that do not belong to a private club. Next best thing.

Sorry, but further commenting on this topic has been closed.

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