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4/27/2005 - STAFF REPORTS (2)
Presentation to City of Palm Springs by Richard Singer, Director of Consulting Services, National Golf Foundation Consulting, Inc. 1. Introduction a. Introduction to the NGF and Consultant Team b. Palm Springs Project History c. Brief Summary of Findings 2. General Golf Industry Overview a. National Golf Market b. Local Golf Market c. Implications for Palm Springs and Tahquitz Creek 3. Review of NGF Activities and Findings a. NGF Activities Conducted in Completion of Project b. Specific Findings in Market c. Specific Findings at Tahquitz Creek 4. Summary of Recommendations a. Physical Recommendations b. Operational Recommendations c. Brand/Position Recommendations 5. Financial Implications of Recommendations a. Revenue and Expense Summary b. Impact of Changes 6. Summary Conclusions a. Where You Go From Here b. Follow-up 7. Questions zoos-- �en., Operational Review and Recommendations For Tahquitz Creek if Resort In Palm Springs, California 7 7 ................... .............. Prepared For: 14343 Civic Drive Palm Springs, California 92392 (760) 955-5029 Prepared By: CONSULTING 1150 South U.S. Highway One, Suite 401 Jupiter, Florida 33477 (561) 744-6006 March 2005 Item No. Table of Contents INTRODUCTION............................................................................................................. 1 EXECUTIVE SUMMARY ................................................................................................2 MARKET ENVIRONMENT .............................................................................................5 MarketArea Overview....................................................................................................... 5 DemographicsSummary.................. ................... . ................... . .............. . . ............... . ..........5 EconomicOverview......... ..................... ................ .... ................ .... ............... . .................. ..6 Economic Overview Summary ................. .................... ................. . ........................................11 GolfMarket Overview......................................................................................................12 NationalTrends... ...................... ................. ................... ..................... ..................... ...........12 Estimated Palm Springs Area Golf Demand 2004-2009 ....................................... .. ....................13 Palm Springs Area Golf Supply Inventory............... . ................... ....................... ........................14 GolfMarket Summary............................................... ................... .................... ................. .. .17 CompetitiveGolf Market..................................................................................................18 Public/Semi-Private Golf Market............. .................... . ................... ............... ... .................... 18 Municipal Golf Facilities............................ ...................... . ................. ............... .................... ..22 Daily Fee and Resort Golf Facilities.................................. .................. ...................... .................25 Proposed New Golf Courses ..... ................. ................... ................. . ................ . ................. 30 Competitive Facilities Summary............. ..................... ............................................................... 30 CITY OF PALM SPRINGS MUNICIPAL GOLF OPERATIONS REVIEW ....................31 Inventoryof Facilities......................................................................................................31 LegendCourse............................................................ ..................................... .................... ....32 ResortCourse. ............................................................... ................... ................... .....................33 Entryand Clubhouse....................................................... . ............. ..................... .................... .34 Maintenance Facility and Practice Amenities.................. . ............. ... ................ ......................37 Summary............................................................................. ................. ................ ... ..................38 Administrative Overview.................................................................................................39 Golf Operations Contracts................................. .................................... ... . .............. ..................39 City of Palm Springs Net Financial Performance................................... .................... .. ...........41 ContractAssignability....... .......................................... ..................................... . .................... ...42 Systemwide Support By City of Palm Springs.............. ............... ................. ..................... ......42 Tahquitz Creek Golf Facility Performance and Data Analysis......................................44 CurrentPricing .... ................. .................. ........................................ ..........................................44 CapacityIssues.................................................................... ................... ................ ..................45 Resort Course Data Analysis.................. ...................................... ................. .................... .......45 Legend Course Data Analysis........................ ...................................... .................. ...... .............49 Tahquitz Creek—Combined Facility and Ancillary Analysis..........................................................53 Tahquitz Creek Golf Resort- Customer Satisfaction ....................................................58 Overview. ......................... ... ........................ ... ..58 ... .................... ... ......................... . .. CustomerSatisfaction.......... ..... ........................... .. ............................. ............................. ... ..58 Tahquitz Creek Physical Plant Summary and Improvement Recommendations ........58 Introduction and Objectives .................... ... . . .................. ... .. . ....................... . .. ..................59 TheResort Course... ................................ ...................... . ................................. .....................59 TheLegend Course ....... .... . ... ..................... .... ... ....................... . ... ........................ . ... . .63 Tahquitz Creek—Overall Physical Recommendations....... .................................... ....................67 REVENUE ENHANCEMENT RECOMMENDATIONS —TAHQUITZ CREEK GOLF RESORT.......................................................................................................................71 Name Change and Amenity Update................................................................................71 Review Of Current Advertising .......................................................................................72 Recommended Course Of Action ...................................................................................73 Theme And Message Development. . ... ..................... ... ...... ............................. ... .. .............73 Advertising And Marketing Content...................... .. .......................... .............................. ... ....74 BudgetaryConsiderations............................... ........................ .......................................... ........74 FocusOf Advertising.................................. ........................ .................................. ....................74 Finding Your Customers .................................................................................................75 Communications Solutions Overview............................................................................76 CostConsiderations............ ............................... ... ............................ . .....................................77 CONSIDERATION OF SELF-OPERATION BY CITY OF PALM SPRINGS ................78 OperationalNorms...........................................................................................................79 Tahquitz Creek Golf Resort—Self Operation Scennario...............................................81 FinancialAssumptions.............................. ........................... .......................................................81 Projected Income Statement (2005-2008).................... .................................... ......................... 82 Results.......... . ......................... ................................. ...................................... ...........................83 Utilization of Financial Projections.................................................................................84 SUMMARYSTATEMENT.............................................................................................85 APPENDICES...............................................................................................................86 Appendix A—Demographic Overview Data...................................................................86 AdditionalDemographics................................... ....................................................................... ...86 Appendix B—Additional Market Area Economic Information ......................................89 Appendix C—Golf Demand Overview Data....................................................................93 NGFGolf Demand Indices......................... ........................ .........................................................93 Appendix D—Competitive Golf Facility Data.................................................................94 ProposedNew Golf Courses ................................. .............................. ......................................95 Appendix E—CLASP" Surveys...................................................................................101 Appendix F—Golf Course Architect's Renderings and Aerial Photographs.............121 Executive Summary The following is a summary of the significant findings and recommendations made by National Golf Foundation Consulting, Inc. (NGF Consulting) The supporting text and tables are found in the body of the attached report and appendices. NGF Consulting has conducted a detailed review of the management and operation of the City of Palm Springs' Tahquitz Creek Golf Resort. This evaluation was conducted over several months and included consultant's visits to Tahquitz Creek, interviews with officials of the City's Parks and Recreation Department and Palmer Golf Management, analysis of historical financial and activity data, review of operational documents and contracts, collection of market information, and implementation of a golfer survey. The following NGF Consulting report includes details of specific recommendations for improving the City of Palm Springs municipal golf operation. NGF Consulting's analysis has revealed a high-quality municipal golf operation that is one of, if not the most, active facilities in the valley in terms of rounds played, at about 45,000 annual rounds per eighteen holes. However, the facility is presently not meeting its fiscal objectives due to the current golf market dynamic in the Coachella Valley and the presence of a significant debt service incurred with the construction of the Resort Course at Tahquitz Creek. Therefore, profits from the Resort Course and lease payments from Palmer Golf for the Legends Course are insufficient to meet the debt service, necessitating a subsidy from the City's general fund. Though total rounds and revenues for the 36-hole facility have recovered somewhat from the depths reached after the September 11, 2001 tragedy, two factors -the oversupply of golf courses in the market and the local golf industry's reliance on the volatile tourism industry- may preclude the facility from attaining the activity levels realized in the late 1990s. (Interviews with area golf operators indicate that average per facility rounds played have fallen by 20% to 30% since that time.) And though the demographic profile of Palm Springs is consistent with high golf activity, the number of households available to support each golf course is extremely low compared to national benchmarks. This is true even when an adjustment is made for the significant number of seasonal households and for the roughly three million annual visitors that come to the Coachella Valley. Palm Springs and the Coachella Valley feature an abundance of golf courses. The NGF database indicates 87 total golf facilities in the Coachella Valley, comprising 109 eighteen-hole equivalent courses and 1,962 holes. Much of the high-end public access golf course supply has been added over last decade. Since 1994, 29 new golf facilities— 14 public and 15 private— have opened for play, including such top quality public facilities as Desert Willow, Landmark, the PGA West Norman Course, Cimarron, Shadow Ridge, and the newly opened City of La Quinta facility, SilverRock Resort. Additionally, the redeveloped Canyons South re-opened as Indian Canyons just 3.5 miles southwest of Tahquitz Creek in late 2004, and the SCPGA courses at Oak Valley in Beaumont added 36 holes to the regional market in 2000. The oversupply situation will get worse before it gets better. NGF Consulting has identified twelve new golf course projects that are either in planning or under construction in the valley, including seven daily fee facilities and the second course at SilverRock. In the City of Palm Springs itself, one daily fee resort (Escena) is under construction and another is planning (Indian Oasis). This additional inventory will put further stress on the market, as the rate of new construction continues to outpace population growth which, though vigorous, is concentrated primarily in the East Valley. The result of the competitive oversupply and the downturn in the National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—2 tourism industry has been a general decline in per facility golf activity, a dynamic that is playing out in many markets across the nation. As a result of the supply/demand balance in this market, facilities must have a "draw" in order to maintain or build market share. NGF Consulting feels that the construction of a new clubhouse, preferably in conjunction with a new hotel, is integral to the future success of Tahquitz Creek. The addition of a high-end on-site hotel will allow Tahquitz Creek to increase rounds played, and at a higher average daily rate, as well as compete more effectively in the very important golf package segment of the Palm Springs market. A new clubhouse will improve the image of the facility, facilitate large tournaments and outings, and enhance earning potential for the pro shop, food & beverage, and banquet revenue centers. As the City's agreements with Palmer Golf are currently structured, these improvements would benefit both parties. Increased rounds played would improve the bottom line at the Resort Course, while the tiered lease schedule at the Legends would result in higher payments to the City as revenues passed certain levels. The current clubhouse places constraints on this earnings potential, and may also negatively affect perception of the club in the consumer's mind, as many of Tahquitz' competitors feature superior support amenities. The possibility that the clubhouse, if wrapped in as part of the hotel deal, may be built at minimal or no cost to the City makes an even stronger case for the new facility. However, NGF Consulting believes that a new, or significantly upgraded, clubhouse is critical even if the City must pay for it. Additionally, a 're-branding' or 're-positioning' of Tahquitz Creek is recommended, whether or not a hotel is ultimately built. NGF Consulting believes that 'Palm Springs' is the most valuable brand that can be attached to the club, more so than either Palmer Golf or Holiday Inn, as the city's name is synonymous with golf. As such, we recommend that the City consider changing the name of the club from Tahquitz Creek Palm Springs to Palm Springs National Golf Resort. Any equity built up in the current name can be retained by re-naming the 'Resort Course' the 'Tahquitz Creek Course'. As part of the re-branding of the club, the City and Palmer Golf Management should implement a much more aggressive marketing campaign aimed at creating stronger relationships with valley hotels, and at drawing the critical Los Angeles and San Diego metro area golfers. This marketing push will gain much more traction after facility improvements have been made, and a hotel added. As part of this study, the City asked NGF Consulting to address the idea of improving the Legends Course and bringing it up to the same price points as the Resort Course. We feel that this would be a mistake, as there is ample and growing supply of public golf at$100+ peak season green fees, while the Legends Course provides one of the few affordable golfing alternatives for many valley residents. The fact that rounds have been climbing at the Legends while stagnating at the Resort Course may be evidence of the need for more affordable golf in the valley, not less; NGF Consulting believes that price segmentation among its two courses is unique in this golf market and works well for the Tahquitz Creek facility. Rather than improving the Legends to the level of yet another high-end daily fee, we recommend restoring the layout to its classic 1950s feel, as detailed in the body of this report. 'Classic' layouts are enjoying resurgence nationwide, and should have particular appeal in a market with such a large senior golfing population. The restoration of the Legends Course would be part of$4.0 million schedule of improvements that NGF Consulting recommends for the two golf courses. We feel it is appropriate for Palmer Golf to share in this investment, especially if the clubhouse is improved or replaced at no cost to the management company. Finally, it is also recommended that the City invest in a capital lease agreement for new maintenance equipment for both courses. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—3 The City of Palm Springs also wanted to address the question of how the municipal golf operation would fare financially if the City were self-operating Tahquitz Creek. In creating the pro formas under this scenario, NGF Consulting has found that current operating structure at Tahquitz Creek, with the Legends Course under lease agreement and the Resort Course under a management contract, has made it difficult to project financial results under the self-operation scenario. For instance, it would be easier to project the self-operation scenario if both courses were currently operated under management contract, using some basic assumptions regarding the City's ability to operate the course efficiently relative to Palmer Golf. For the year 2004, in the absence of any lease or management agreements and assuming the same operating results, the two courses would have netted about $1.4 million in operating profit, enough to cover the $1.09 million in annual debt service for the resort course. Under the current operating scenario, the two courses netted about $617,000 to the City in 2004, after management fee and before debt service. Therefore, assuming the same operational efficiency as the club experienced under Palmer, self-operating would have produced higher net proceeds to the City in 2004. However, NGF Consulting feels that the City could not operate the facility at the same expense structure (especially labor), or with comparable management expertise of an experienced operator such as Palmer Golf, and that the added expense incurred in self- operating Tahquitz Creek would be such that the current management contract/lease agreement structure is preferable. In summary, NGF Consulting's analysis of the City of Palm Springs' Tahquitz Creek Golf Resort has revealed a high quality, successful golf facility that has experienced a decline in rounds and revenues since the late 1990s, due primarily to the market dynamics detailed in this report. NGF research, along with customer surveys, has revealed that the facility is generally highly regarded among golfers and that Palmer Golf Management is doing a good job in operating the facility. Though net operating profits to both Palmer Golf and the City of Palm Springs are substantial, the added burden of debt service for the Resort Course that falls to the City has necessitated a subsidy from the general fund. Tahquitz Creek does have issues that need to be addressed if it is to maximize rounds and revenues in this oversupplied golf market, which will become even more competitive in the near future. Foremost among these issues are the inadequacy of the existing clubhouse structure, and the lack of a lodging component. NGF Consulting has made a series of recommendations that, if implemented, should position Tahquitz Creek to withstand the imminent increase in golf course supply, and begin generating revenues sufficient to meet the debt service, without general fund subsidy. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—4 Operational Review and Recommendations For 7ahquitz Creek Golf Resort In Palm Springs, California Prepared For: Cf pALM SA, U N 'C'g41FORN�P 14343 Civic Drive Palm Springs, California 92392 (760) 955-5029 Prepared By: CONSULTING 1150 South U.S. Highway One, Suite 401 Jupiter, Florida 33477 (561) 744-6006 March 2005 yla�l�5 Table of Contents INTRODUCTION............................................................................................................. 1 EXECUTIVE SUMMARY ................................................................................................2 MARKETENVIRONMENT ..............................................................................I..............5 Market Area Overview....................................................................................................... 5 DemographicsSummary..................................................................................................................5 EconomicOverview.............................................. ................. ................................. ............. .......6 Economic Overview Summary............... ........................................................... ...........................11 GolfMarket Overview ......................................................................................................12 NationalTrends................................... ................................... ... .................................. ...............12 Estimated Palm Springs Area Golf Demand 2004-2009...............................................................13 Palm Springs Area Golf Supply Inventory........................... ................ ................................... .....14 GolfMarket Summary....................................................................................................................17 Competitive Golf Market..................................................................................................18 Public/Semi-Private Golf Market............ .......................................................................................18 MunicipalGolf Facilities.......................................... .................... ................................................ 22 Daily Fee and Resort Golf Facilities...............................................................................................25 ProposedNew Golf Courses................................... .................. ................ ............................... .30 Competitive Facilities Summary.....................................................................................................30 CITY OF PALM SPRINGS MUNICIPAL GOLF OPERATIONS REVIEW....................31 Inventory of Facilities.......................................................................................................31 LegendCourse....................................................................... ................................................. .....32 ResortCourse.................................................................................... ...........................................33 Entryand Clubhouse............................................................. ........................................................34 Maintenance Facility and Practice Amenities........................... ....................................................37 Summary........................................................................... ................................................. ..........38 Administrative Overview.................................................................................................39 Golf Operations Contracts..............................................................................................................39 City of Palm Springs Net Financial Performance........ .... ................................ ............................41 ContractAssignability.....................................................................................................................42 Systemwide Support By City of Palm Springs....... ............... .. ...................................................42 Tahquitz Creek Golf Facility Performance and Data Analysis......................................44 CurrentPricing...............................................................................................................................44 CapacityIssues................... ..........................................................................................................45 Resort Course Data Analysis.........................................................................................................45 Legend Course Data Analysis.......................................................................................................49 Tahquitz Creek—Combined Facility and Ancillary Analysis..........................................................53 Tahquitz Creek Golf Resort- Customer Satisfaction ....................................................58 Overview........................................................................................................................................58 CustomerSatisfaction....................................................................................................................58 Tahquitz Creek Physical Plant Summary and Improvement Recommendations ........68 Introductionand Objectives ...........................................................................................................59 TheResort Course.........................................................................................................................59 TheLegend Course.......................................................................................................................63 Tahquitz Creek—Overall Physical Recommendations..................................................................67 REVENUE ENHANCEMENT RECOMMENDATIONS —TAHQUITZ CREEK GOLF RESORT.......................................................................................................................71 Name Change and Amenity Update................................................................................71 Review Of Current Advertising .......................................................................................72 Recommended Course Of Action...................................................................................73 Theme And Message Development........................................................ ......................................73 Advertising And Marketing Content...............................................................................................74 BudgetaryConsiderations..............................................................................................................74 FocusOf Advertising......................................................................................................................74 FindingYour Customers .................................................................................................76 Communications Solutions Overview............................................................................76 CostConsiderations............................................................. .. ......................................................77 CONSIDERATION OF SELF-OPERATION BY CITY OF PALM SPRINGS ................78 OperationalNorms...........................................................................................................79 Tahquitz Creek Golf Resort—Self Operation Scennario...............................................81 FinancialAssumptions...................................................... ............................................................81 Projected Income Statement(2005-2008).....................................................................................82 Results............................................................................ ..............................................................83 Utilization of Financial Projections.................................................................................84 SUMMARYSTATEMENT.............................................................................................85 APPENDICES...............................................................................................................86 Appendix A— Demographic Overview Data...................................................................86 AdditionalDemographics................................. ....... ........................................-...........................86 Appendix B—Additional Market Area Economic Information ......................................89 Appendix C—Golf Demand Overview Data....................................................................93 NGFGolf Demand Indices.............................................................................................................93 Appendix D—Competitive Golf Facility Data.................................................................94 ProposedNew Golf Courses .........................................................................................................95 Appendix E—CLASPT"' Surveys...................................................................................101 Appendix F—Golf Course Architect's Renderings and Aerial Photographs.............121 Introduction NGF Consulting, a subsidiary of the National Golf Foundation, was retained by the City of Palm Springs to assist in evaluating the operations, management, and physical plant of the City's 36- hole golf facility known as "Tahquitz Creek Golf Resort" or "Tahquitz Creek Palm Springs," which comprises the Resort Course and the Legend Course. This municipal golf facility is owned by the City of Palm Springs and operated by Arnold Palmer Golf Management via lease (Legend Course) and management agreement (Resort Course). The City is contemplating ways to improve the overall financial condition of the golf facilities and possibly invest in some physical upgrades to the property. Palm Springs has been considering the possibility of re-developing the Tahquitz Creek Golf Club site to include a new 250-room hotel, new golf clubhouse, pro shop, cart barn and a new maintenance building to be constructed on the site of the current clubhouse, parking lot and a portion of the driving range. This project would be funded by private investment, possibly a national hotel chain, and is slated to commence upon the completion and findings of this study. The City is also considering the long-term implications of its operations agreement with Arnold Palmer Golf Management. The results of this operations and management review will be used to assist City officials in determining the appropriate course for the future of this facility with regards to management, operations and capital improvements. Under consideration for this report are the present physical structures, operating condition, and market placement of the Tahquitz Creek Golf Resort, the potential to reduce expenses at the facility; the potential to grow activity and revenues at the facility; and, the potential to enhance the physical condition of the City's golf property. The key components of NGF Consulting's analysis include: • Tahquitz Creek physical evaluation • Review of present and future market environment • Tahquitz Creek operations review • Tahquitz Creek customer analysis • Review of existing management structure • Economic impact of changes Activities conducted in completion of this consultants' report included field research, statistical analysis, a series of meetings with key City of Palm Springs officials, several meetings with golf operations personnel and Arnold Palmer management personnel, a series of tours of the subject Tahquitz Creek property, organization of on-line and paper survey/research instruments, and interviews with frequent Tahquitz Creek golfers. Further, NGF staff consultants collected data to gain an understanding of the dynamics of the Palm Springs/Coachella Valley area golf market from sources including personal staff visits and publications such as Palm Springs Life, Wheelers Desert Letter, and Palm Springs Desert Resorts Convention & Visitors Bureau "Visitor Study' 1998. The key consultants contributing to this study effort include Richard B. Singer, Director of Consulting Services and Ed Getherall, Senior Project Director at National Golf Foundation (NGF). Forrest Richardson, ASGCA, and Patrick Burton of Forrest Richardson Associates conducted the physical site analysis. NGF Consulting would like to thank the staffs of the City of Palm Springs, Tahquitz Creek Golf Course and Arnold Palmer Golf Management for their cooperation in providing timely and comprehensive data and other information. Following is the consultants' report on the City of Palm Springs municipal golf operation and our recommendations for its future operation. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—1 Executive Summary The following is a summary of the significant findings and recommendations made by National Golf Foundation Consulting,Inc. (NGF Consulting). The supporting text and tables are found in the body of the attached report and appendices. NGF Consulting has conducted a detailed review of the management and operation of the City of Palm Springs' Tahquitz Creek Golf Resort. This evaluation was conducted over several months and included consultant's visits to Tahquitz Creek, interviews with officials of the City's Parks and Recreation Department and Palmer Golf Management, analysis of historical financial and activity data, review of operational documents and contracts, collection of market information, and implementation of a golfer survey. The following NGF Consulting report includes details of specific recommendations for improving the City of Palm Springs municipal golf operation. NGF Consulting's analysis has revealed a high-quality municipal golf operation that is one of, if not the most, active facilities in the valley in terms of rounds played, at about 45,000 annual rounds per eighteen holes. However, the facility is presently not meeting its fiscal objectives due to the current golf market dynamic in the Coachella Valley and the presence of a significant debt service incurred with the construction of the Resort Course at Tahquitz Creek. Therefore, profits from the Resort Course and lease payments from Palmer Golf for the Legends Course are insufficient to meet the debt service, necessitating a subsidy from the City's general fund. Though total rounds and revenues for the 36-hole facility have recovered somewhat from the depths reached after the September 11, 2001 tragedy, two factors-the oversupply of golf courses in the market and the local golf industry's reliance on the volatile tourism industry- may preclude the facility from attaining the activity levels realized in the late 1990s. (Interviews with area golf operators indicate that average per facility rounds played have fallen by 20% to 30% since that time.) And though the demographic profile of Palm Springs is consistent with high golf activity, the number of households available to support each golf course is extremely low compared to national benchmarks. This is true even when an adjustment is made for the significant number of seasonal households and for the roughly three million annual visitors that come to the Coachella Valley. Palm Springs and the Coachella Valley feature an abundance of golf courses. The NGF database indicates 87 total golf facilities in the Coachella Valley, comprising 109 eighteen-hole equivalent courses and 1,962 holes. Much of the high-end public access golf course supply has been added over last decade. Since 1994, 29 new golf facilities— 14 public and 15 private— have opened for play, including such top quality public facilities as Desert Willow, Landmark, the PGA West Norman Course, Cimarron, Shadow Ridge, and the newly opened City of La Quinta facility, SilverRock Resort. Additionally, the redeveloped Canyons South re-opened as Indian Canyons just 3.5 miles southwest of Tahquitz Creek in late 2004, and the SCPGA courses at Oak Valley in Beaumont added 36 holes to the regional market in 2000. The oversupply situation will get worse before it gets better. NGF Consulting has identified twelve new golf course projects that are either in planning or under construction in the valley, including seven daily fee facilities and the second course at SilverRock. In the City of Palm Springs itself, one daily fee resort(Escena) is under construction and another is planning (Indian Oasis). This additional inventory will put further stress on the market, as the rate of new construction continues to outpace population growth which, though vigorous, is concentrated primarily in the East Valley. The result of the competitive oversupply and the downturn in the National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—2 tourism industry has been a general decline in per facility golf activity, a dynamic that is playing out in many markets across the nation. As a result of the supply/demand balance in this market, facilities must have a "draw" in order to maintain or build market share. NGF Consulting feels that the construction of a new clubhouse, preferably in conjunction with a new hotel, is integral to the future success of Tahquitz Creek. The addition of a high-end on-site hotel will allow Tahquitz Creek to increase rounds played, and at a higher average daily rate, as well as compete more effectively in the very important golf package segment of the Palm Springs market. A new clubhouse will improve the image of the facility, facilitate large tournaments and outings, and enhance earning potential for the pro shop, food & beverage, and banquet revenue centers. As the City's agreements with Palmer Golf are currently structured, these improvements would benefit both parties. Increased rounds played would improve the bottom line at the Resort Course, while the tiered lease schedule at the Legends would result in higher payments to the City as revenues passed certain levels. The current clubhouse places constraints on this earnings potential, and may also negatively affect perception of the club in the consumer's mind, as many of Tahquitz' competitors feature superior support amenities. The possibility that the clubhouse, if wrapped in as part of the hotel deal, may be built at minimal or no cost to the City makes an even stronger case for the new facility. However, NGF Consulting believes that a new, or significantly upgraded, clubhouse is critical even if the City must pay for it. Additionally, a 're-branding' or're-positioning' of Tahquitz Creek is recommended, whether or not a hotel is ultimately built. NGF Consulting believes that 'Palm Springs' is the most valuable brand that can be attached to the club, more so than either Palmer Golf or Holiday Inn, as the city's name is synonymous with golf. As such, we recommend that the City consider changing the name of the club from Tahquitz Creek Palm Springs to Palm Springs National Golf Resort. Any equity built up in the current name can be retained by re-naming the 'Resort Course' the 'Tahquitz Creek Course'. As part of the re-branding of the club, the City and Palmer Golf Management should implement a much more aggressive marketing campaign aimed at creating stronger relationships with valley hotels, and at drawing the critical Los Angeles and San Diego metro area golfers. This marketing push will gain much more traction after facility improvements have been made, and a hotel added. As part of this study, the City asked NGF Consulting to address the idea of improving the Legends Course and bringing it up to the same price points as the Resort Course. We feel that this would be a mistake, as there is ample and growing supply of public golf at$100+ peak season green fees, while the Legends Course provides one of the few affordable golfing alternatives for many valley residents. The fact that rounds have been climbing at the Legends while stagnating at the Resort Course may be evidence of the need for more affordable golf in the valley, not less; NGF Consulting believes that price segmentation among its two courses is unique in this golf market and works well for the Tahquitz Creek facility. Rather than improving the Legends to the level of yet another high-end daily fee, we recommend restoring the layout to its classic 1950s feel, as detailed in the body of this report. 'Classic' layouts are enjoying resurgence nationwide, and should have particular appeal in a market with such a large senior golfing population. The restoration of the Legends Course would be part of$4.0 million schedule of improvements that NGF Consulting recommends for the two golf courses. We feel it is appropriate for Palmer Golf to share in this investment, especially if the clubhouse is improved or replaced at no cost to the management company. Finally, it is also recommended that the City invest in a capital lease agreement for new maintenance equipment for both courses. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—3 The City of Palm Springs also wanted to address the question of how the municipal golf operation would fare financially if the City were self-operating Tahquitz Creek. In creating the pro formas under this scenario, NGF Consulting has found that current operating structure at Tahquitz Creek, with the Legends Course under lease agreement and the Resort Course under a management contract, has made it difficult to project financial results under the self-operation scenario. For instance, it would be easier to project the self-operation scenario if both courses were currently operated under management contract, using some basic assumptions regarding the City's ability to operate the course efficiently relative to Palmer Golf. For the year 2004, in the absence of any lease or management agreements and assuming the same operating results, the two courses would have netted about$1.4 million in operating profit, enough to cover the $1.09 million in annual debt service for the resort course. Under the current operating scenario, the two courses netted about$617,000 to the City in 2004, after management fee and before debt service. Therefore, assuming the same operational efficiency as the club experienced under Palmer, self-operating would have produced higher net proceeds to the City in 2004. However, NGF Consulting feels that the City could not operate the facility at the same expense structure (especially labor), or with comparable management expertise of an experienced operator such as Palmer Golf, and that the added expense incurred in self- operating Tahquitz Creek would be such that the current management contracttlease agreement structure is preferable. In summary, NGF Consulting's analysis of the City of Palm Springs' Tahquitz Creek Golf Resort has revealed a high quality, successful golf facility that has experienced a decline in rounds and revenues since the late 1990s, due primarily to the market dynamics detailed in this report. NGF research, along with customer surveys, has revealed that the facility is generally highly regarded among golfers and that Palmer Golf Management is doing a good job in operating the facility. Though net operating profits to both Palmer Golf and the City of Palm Springs are substantial, the added burden of debt service for the Resort Course that falls to the City has necessitated a subsidy from the general fund. Tahquitz Creek does have issues that need to be addressed if it is to maximize rounds and revenues in this oversupplied golf market, which will become even more competitive in the near future. Foremost among these issues are the inadequacy of the existing clubhouse structure, and the lark of a lodging component. NGF Consulting has made a series of recommendations that, if implemented, should position Tahquitz Creek to withstand the imminent increase in golf course supply, and begin generating revenues sufficient to meet the debt service, without general fund subsidy. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—4 Market Environment In this section of the report, NGF Consulting will provide a summary of important factors that characterize the trade area in which the City of Palm Springs golf course operates. This overview will include an investigation of basic demographic and economic variables, an overview of the golf market, and a review of the golf facilities in this market that are directly competitive with the subject Tahquitz Creek golf facility. We will then provide a summary of these factors and how they relate to the continued operation of the City's golf facility. MARKET AREA OVERVIEW Utilizing research materials provided by Applied Geographic Solutions, Inc. (a supplier of demographic research based on U.S. Census results), NGF Consulting has examined relevant characteristics of the local population. In the following table, NGF Consulting indicates the population, median age, and median household income trends for the 10-mile and 25-mile (which approximates the Coachella Valley) market rings from Tahquitz Creek, Riverside County, the Riverside-San Bernardino-Ontario CBSA, the State of California, and the United States. More detailed demographics are provided in the tables of Appendix A. Demographics Summary From the data presented above, NGF Consulting has made the following observations regarding the demographics of Palm Springs and surrounding areas: • There are approximately 185,000 permanent residents living within ten miles of Tahquitz Creek, and about 440,000 living within 25 miles. Rapidly growing Riverside County is home to more than 1.85 million people, and the Riverside- San Bernardino-Ontario CBSA has nearly 3.8 million residents. Population growth rates both locally and regionally was more than twice the corresponding rates for California and the U.S. during the 1990s. While the state and national rates are expected to remain about the same over the next five years, growth in the valley and Inland Empire is expected to pick up further to nearly four times the projected national compound annual growth rate of 1.0%. • The local and regional markets have significant Hispanic populations, representing an estimated 34% and 44% of total residents in the 10-mile and 25- mile market areas, respectively, in 2004. This compares to the national figure of 14.3%. In 2003, the National Golf Foundation conducted a research study as part of Golf 20/20s Diversity Task Force, which is developing strategies for player development programs and other initiatives focused on women and minorities. The study found that the golf participation rate is 5.1% among African Americans aged 18 and older and 4.3% for Hispanic Americans aged 18 and older, compared to the overall U.S. golf participation rate of 12.9%. The implication for local golf operators is that initiating player development programs aimed at stimulating latent golf demand among minorities may help to maximize play at area golf facilities. • The median age for residents living within ten miles of Tahquitz Creek is 43 years, compared to the national median of 36; the median age of the valley overall is closer to the national median. In general, the propensity to play golf with greater frequency increases with age, making relatively older markets more attractive to golf facility operators, all other factors being equal. However, this dynamic is mitigated somewhat in this market as there is a relatively large National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—5 percentage of seniors that is more than 80 years old, an age when golf activity would be expected to be on the decline. • Median household income in the ten-mile market area was about 4.6% lower than the national median of$45,660 in 2004. However, this measure is not necessarily indicative of the discretionary income or affluence of golfers in this market, due to the large percentage of retirees and the huge influence of relatively affluent seasonal tourists and part-time residents. In general, higher income residents are more likely to participate in golf, and they play more frequently than lower income golfers. Economic Overview The economy of Palm Springs and the Coachella Valley is driven by tourism and seasonal residents, and the health of the local golf industry is closely tied to the number of visitors that come to the area each year. Though the population of Palm Springs itself has grown relatively slowly, the Coachella Valley, particularly the east end, is growing at a rapid pace and the economy is also fueled by the steady migration of new residents into the area. City of Palm Springs Palm Springs is the oldest and probably the best-known city in the Coachella Valley, made famous by Hollywood in the 30s, 40s and 50s as the vacation getaway of the stars. About 50% of Palm Spring's population is full-time, and the other 50% is made up of weekenders, vacationers, and seasonal residents. The city has an abundance of older neighborhoods, such as Old Las Palmas, the Movie Colony, Vista Las Palmas, the Tennis Club, Canyon Country Club, Deepwell, Ruth Hardy Park and Los Compadres, as well as new developments such as the Colony at El Mirador, 28 @ Arenas, Mountain Gate, and the Four Seasons. The city's main street, Palm Canyon Drive, is a classic desert boulevard with tall palm trees on both sides shading approximately one mile of interesting shops and restaurants. Palm Springs is in the midst of transforming itself from a winter resort town into a year-round destination attracting both visitors and new full-time residents. An estimated three million people visit the Palm Springs area each year, generating a billion dollars annually. While Palm Springs' permanent population grew 35 percent between 1980 and 2002, hotel room sales for the same period jumped 102 percent, with airport passenger traffic increasing 185 percent. Hotels, restaurants, and shops rarely close for more than a week or two during the slower summer season. Wyndham Palm Springs notes that July 2004 was the best in its history, with 75% occupancy compared to 45% in 2003. New residential and commercial development is happening at a record pace; as of March 2004, there were more than 7,800 new residential and vacation units in various stages of development in Palm Springs. The City's director of community and economic development estimates build- out for these residential projects to be in five to seven years with commercial and industrial projects close behind. With the large number of new rooftops being developed, the City is seeing significant new interest in retail, commercial, and industrial development—something Palm Springs has struggled with for 10 years. The city is also starting to see increases in sectors outside the resort services industry, such as the new 32,000-square-foot FedEx ground facility currently under construction. One of the reasons for this new construction is that the cost of living in Palm Springs and the Coachella Valley is approximately 32% below the overall cost of living in the Los Angeles region. The cost of housing is particularly low in relation to the surrounding counties of Orange, Los Angeles, and San Diego, a factor that is driving new residents to the area. The median National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—6 home price in the Palm Springs area stood at$268,000 during 2003, compared to $382,150 in Los Angeles, $456,710 in San Diego, and $526,770 in Orange County. In 2004, Palm Springs hosted events that included the Miss Teen USA and Mrs. America pageants, the Palm Springs International Film Festival, and the Palm Springs International Festival of Short Films. The Palm Springs Convention Center, currently undergoing a major renovation and expansion, draws thousands of people to meetings, such as the International Council of Shopping Centers and the Aircraft Owners & Pilots Association. The city also has an evolving arts, entertainment, and cultural scene. The evolution of Palm Springs has been a collaborative effort between the City of Palm Springs Community and Economic Development Department, Palm Springs Economic Development Corporation (PSEDC), Agua Caliente Band of Cahuilla Indians (the Tribe), and the private Palm Springs Economic Development Corp. Founded in 1996, the group has worked closely with the City to develop new ways to attract and retain business and industry in the City. The Agua Caliente Band of Cahuilla Indians is the "original partner" and plays a pivotal role in the economic development of Palm Springs. The tribe's new$95 million Spa Resort Casino adjacent to the original downtown Spa Resort Hotel has helped revitalize the area. The 119,000-square-foot casino, designed by one of the country's top architectural firms, helps link legendary Palm Canyon Drive to the convention center. Continued development and revitalization of downtown and other areas of the City is on the horizon, including the potential redevelopment of Desert Fashion Plaza. Downtown redevelopment projects include the Brussels Building and Oasis Hotel at the corner of Tahquitz Canyon Way and Palm Canyon Drive. Mixed-use projects, including residential lofts, restaurants, and retail are slated for both ends of downtown. Palm Springs is located in the center of the Riverside County-the fastest growing county in California-and its population grew by 37% between 1980 and 2003. The growth of some key economic drivers for Palm Springs during that time period is summarized below: City of Palm Springs Growth from 1980 through 2003 Actual 2003 Growth Permanent population 44,260 37% Seasonal population 28,000-31,000 n/a Annual hotel guests 1,000,000 n/a Total taxable sales $667,000,000 122% Retail sales ' $527,000,000 119% Restaurant sales' $125,000,000 218% Hotel room sales $102,000,000 100% Assessed valuation $5,995,000,000 230% Airport passenger traffic 1,247,000 202% Valuation of real estate built from 1980-2003 $1,533,000 'Annual sales were estimated based on first half 2003 sales Source:City of Palm Springs California Economic Overview Year 2004 Edition National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-7 City Population and Demographics • Population in Palm Springs has grown to 44,260 permanent residents in 2003, though the growth rate over the last 15 years has lagged considerably behind that of the rest of the Coachella Valley and the Inland Empire. • In addition to the permanent population, another 28,000 to 31,000 people live in the city in the winter bringing the total population to about 75,000 residents during the winter season. Average household income for seasonal residents is estimated at approximately$80,000 per year, and the average annual length of stay is six months. • Between 2.5 and 3 million tourists visit the Coachella Valley annually, one-third of which stay in Palm Springs hotels. • By the year 2020, the city's population is projected to grow to more than 52,000 with an additional 35,000 to 40,000 winter residents. • The populace of Palm Springs is relatively old; the median age was 46.9 years according to the 2000 Census, with more than a quarter of all residents age 65 years or older. • Median household income for permanent residents of Palm Springs was estimated to be $41,591 in 2003-somewhat lower than corresponding figures for the Coachella Valley and the national overall; however, this is often observed in communities with high retiree populations and is not necessarily a measure of relative affluence. Tourism/Convention Center Tourism is by far the number one industry in Palm Springs and the rest of the valley, contributing about $1 billion to the economy annually and directly or indirectly employing about 100,000 workers in the valley, according to local tourism estimates. The resort communities of the Coachella Valley attract up to 3,500,000 international and domestic visitors per year, with 55% of them coming from Los Angeles and Orange County. Approximately 1.6 million visitors, or 45% of the total number, stay in Palm Springs hotels, condominiums, time-share units and other seasonal residences (hotels account for approximately 60%). On average, visitors to Palm Springs total 2.0 visits per year, 5.7 nights per visit and 2.4 persons per party. The Average (Arithmetic Mean) Household Income of these visitor households is currently estimated at $95,800 per year. For this market population sector, this results in an effective annual income within Palm Springs of approximately$1.9 billion. • After a difficult year in 2002 following the 9/11 tragedies, and with a very competitive business and consumer travel market nationwide, the tourism sector in Palm Springs has not yet recovered to prior levels. • For the year 2003, hotel room sales were down 4.9% in Palm Springs while passenger air traffic increased by 12.3% to 1.25 million passengers, an increase that can be largely attributed to the growth in the permanent population in the desert region (and was up another 8.9% during the first half of 2004, probably on the way to an all-time record.) National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—8 • Airline passenger growth slowed from 14.5% annual growth in the third quarter of 2004 to 10.6% in the fourth quarter, according to the report. Bryant L. Francis, marketing director for Palm Springs Airport. The airport had 143,367 passengers pass through security in January, 2.4 percent more than the previous year, despite four consecutive days of storms that resulted in canceled flights. The $34.7 million expansion project for the Palm Springs Convention Center is on schedule for a September 2005 grand opening. The project will expand the building from 149,500 square feet to 261,000, allowing Palm Springs to accommodate 73 percent of meetings that come to California, up from the current 42 percent. Hotel leaders were strong advocates of an increase in the transient occupancy tax- or bed tax-to fund the project. TOT tax collected from that increase will pay down a $40 million revenue bond, which was sold to finance construction. The expanded convention center is expected to boost the city's hotel tax revenues from $13 million to $17 million annually before 2010, and should help Palm Springs and the Coachella Valley in the increasingly competitive convention-hosting industry. (Please refer to Appendix B for information on increased competition from Phoenix/Scottsdale and Las Vegas markets.) Ed Svitak, president-elect of Palm Springs Hospitality Association Board of Directors, noted "I have seen the groups we have lost," in recent years, before adding that some are coming back purely because of the expansion. The Association of Labor Automation, which left for San Jose,just signed a two-year contract to return to Palm Springs in 2006 and 2007. That booking, alone, could bring in 3,000 room nights. Palm Springs International Airport Palm Springs International Airport is a vital contributor to the economy of the Coachella Valley, creating jobs and income while serving the transportation needs of the region. By 2005, the total economic impact of Palm Springs International Airport is projected to reach $1.3 billion of value added (in 2001 dollars), and more than $1.6 billion by 2010, an increase of 23 percent in constant dollars over 2001. (Refer to Appendix B for some highlights for PSIA for the most recent year available from the airport's website.) Residential and Commercial Activity Construction activity has been vigorous in Palm Springs in recent years, though this activity has not been fully reflected by population growth. • During the last 20 years, a total of$1.31 billion in building permits were issued in the City of Palm Springs, an average of$66 million per year. During the year 2003, construction skyrocketed to over $191 million based on building permit valuations. • Single-family residential construction accounted for$125 million during 2003, representing 549 single-family homes. This compares with $28 million representing 112 single-family homes during 2002. • Commercial construction totaled more than $13 million during 2003, compared to $10 million in 2002. Coachella Valley Palm Springs and the Coachella Valley are located in the Sonora Desert. The valley floor is about 400 feet above sea level, and is surrounded by Mount San Gorgonio (around 10,000 feet high) to the northwest, the San Jacinto Mountains (also about 10,000 feet high) to the west, the Santa Rosa Mountains to the south, and on the northeast by Joshua Tree National Park and the Chocolate Mountains. The population of the Coachella Valley continues to grow at a record National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—9 pace. As of January 1, 2004, the California Department of Finance estimates the valley's permanent population at 367,000 — up from 336,400 on Jan. 1, 2003. Much of the growth is concentrated in the East Valley. • Palm Springs was the only valley city not to increase its permanent population in 2003, despite soaring residential construction there. The Department of Finance may resolve this apparent incongruity when it releases its next set of figures. The next city going east, Rancho Mirage, is characterized by nice residential properties and gated country club communities, many on golf courses and most quite expensive. • At the eastern end of the valley is Indio, the valley's most populous and fastest growing city. Called the "City of Festivals," Indio hosts the annual Date and Tamale Festivals. With 59,100 permanent residents, Indio is the valley's biggest city; Indio's 7.7% growth rate in 2003 made it the state's 12th fastest-growing municipality. • La Quinta also continues to grow rapidly, at about 6.0% in 2003; it has nearly doubled in population in the last decade. La Quinta is the newest and one of the fastest growing cities in the valley. In addition to residential housing, there are many gated and country club communities in La Quinta. • East of Palm Springs is Cathedral City, originally known as Palm Springs Annex. Since it's incorporation in 1983, Cathedral City has moved out from under Palm Springs' shadow and has some excellent housing options, many of which are less expensive than Palm Springs. Cathedral City, with 48,600 residents, is second largest to Indio. • Palm Desert (44,800) has risen to third place, and Palm Springs (44,230) is now fourth. Palm Desert added about 5,000 residents on July 1 by officially annexing two former county enclaves. So Palm Desert's actual population now stands at something greater than 49,000. Palm Desert is the center of the valley; the city is known as a retail center, with major department stores and national name retailers. Palm Desert is growing rapidly, and the area is marked by many large gated communities, golf courses and major resorts. • Indian Wells is considered the most expensive community in the valley. It's private, exclusive, and characterized by gated and walled ultra high-end communities offering world-class golf, tennis and other amenities. • The U.S. Census Bureau does not track second-home owners; the number of part-time residents in the valley is estimated at between 125,000 and 130,000 people; during peak periods like February, Palm Springs and Palm Desert increase by about half, Indian Wells nearly doubles in size, Rancho Mirage swells by about two-thirds, and La Quinta by about one-third. Housing Market • The growth in home resale prices is unlikely to end any time soon, but is expected to moderate from its current 18% to 20% to about 10%to 12%. • After years of relative inactivity for new construction, Palm Springs is actively building. New construction continues at a brisk pace throughout the valley, and National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—10 was particularly vigorous in 2003 in La Quinta, Indio, Rancho Mirage, Coachella, and Desert Hot Springs, now that its municipal bankruptcy has been settled. For 2004, Indio was projected to exceed $300 million in building permits and break all valley construction records, with La Quinta not far behind. Tourism/Hotel Room Sales • After September, the valley-wide Palm Springs Desert Resorts Convention and Visitors Authority redirected its promotional efforts from corporate meeting planners to the millions of Southern Californians who live within two hours' driving time. The CVA's quick reaction saved the valley from a tourism disaster, but could not completely prevent a significant downfall. Local hotel room sales— the best statistical measure of valley tourism—fell significantly in 2001 and dropped again in 2002. • In 2003, overall hotel room sales were modestly ahead for the first time in three years in the valley, but Palm Springs was down for the third straight year. Still, due to increased bed taxes, Palm Springs hotels generated 3 percent more bed- tax revenue for the city in 2003 than in 2000, on 11 percent fewer sales. Early returns for 2004 were positive, as the corporate travel market is beginning to rebound. Economic Overview Summary NGF Consulting has observed that the economies of Palm Springs and the Coachella Valley are strong, though highly reliant on the tourism industry. The key NGF Consulting findings of the area economy and demographics are listed below: • There are approximately 185,000 permanent residents living within ten miles of Tahquitz Creek, and about 440,000 living within 25 miles; population growth rates both locally and regionally were more than twice the corresponding rates for California and the U.S. during the 1990s. While the state and national rates are expected to remain about the same over the next five years, growth in the valley and Inland Empire is expected to pick up further to nearly four times the projected national compound annual growth rate over this period. Within the market area both median age and median household income measures tend to be favorable for high participation in golf. Local growth in minority populations may impact golf participation if steps are not taken to actively pursue and grow this golf market segment. • The Palm Springs and Coachella Valley economies are driven by the tourism and construction industries, which in turn are fueled by the beautiful weather and relatively low cost of living, especially compared to neighboring Los Angeles and Orange Counties. Because of the reliance on tourism and seasonal residents, the Palm Springs economy has traditionally been extremely seasonal in nature. However, the city seems to be in the midst of transforming itself from a winter resort town into a year-round destination attracting both visitors and new full-time residents. • An estimated three million people visit the Coachella Valley each year, and about half of these people stay in Palm Springs hotels, condos, time-shares, and other seasonal residences. These visitors generate about a billion dollars annually to the economy. While Palm Springs' permanent population grew 35 percent between 1980 and 2002, hotel room sales for the same period �� National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—11 jumped 102 percent, with airport passenger traffic increasing 185 percent. The tourism industry in Palm Springs finally seems to be recovering to pre- September 11 levels. The current$34.7 million expansion project for the convention center will help put Palm Springs on a more level playing field in the hyper-competitive convention marketplace, thus drawing more visitors to the area. • Though population growth in the City of Palm Springs has lagged behind the rest of the valley and the Inland Empire, new residential and commercial development is now happening at a record pace. As of March 2004, there were more than 7,800 new residential and vacation units in various stages of development in Palm Springs, with estimated build-out for these residential projects in five to seven years. GOLF MARKET OVERVIEW Having identified key demographic and economic factors that may affect the performance of the subject Palm Springs golf courses, we now turn our attention to the status of the local golf market in terms of supply and demand. NGF Consulting uses actual data from competing golf facilities to provide documentation of the local golf economy. NGF Consulting also utilizes predictive models as benchmarks for estimating potential market strength. The methodology for determining the relative strength of the subject market is described in the following section and associated appendices. National Trends Golf participation in the U.S. has grown from 3.5% of the population in the early 1960s to about 12.6% of the population today. NGF estimates that 36 million golfers reside in the U.S., with growth slowed to about 1.0% per year. Other surveys completed outside the golf industry show the number of people who "identify themselves as golfers" is as high as 45 million, indicating a large potential "latent' demand from very inactive golfers. As rapidly as the demand for golf has grown, the supply has grown even faster, with an average increase of about 2.1% per year. With the increase in supply, we are seeing a marked increase in competition, and the supply is greater than the demand in some markets. In addition to increased competition, four other factors have contributed to a decline in the number of rounds per course during the 2002 to 2005 period. These include: 1) a worsening economy; 2) the aftereffects of 9-11, which greatly reduced the traveling golfer market; 3) the increasing time pressure on individuals and families; and 4) abnormally poor weather conditions over the past few years in much of the U.S. The combination of these factors has caused many golf facilities to become distressed, particularly those that have a high debt load because of higher construction costs and the perceived need to build high-end courses. A very large share of these distressed golf courses include golf facilities built as part of new master-planned residential communities at over-inflated prices during the 1994-2004 period. The level of golf course closings has doubled from an annual average of 24 courses per year in 1993—2001 to 48 courses in both 2002 and 2003 and 63 courses in 2004. In terms of the total number of rounds produced, NGF estimates that rounds fell about 1.5% in 2003, after a 3%drop in 2002. End-year NGF research indicates a rebound of about 0.7 percent in 2004. The Pacific U.S. Region, which includes California, saw rounds drop by about 0.6 percent in 2004, after a 2.3 percent decline from 2002-2003. The Pacific region has been hit particularly hard in early 2005 with much of the peak January— February winter season lost due to significantly fewer play days - an average of 15 fewer days open in the region in the first two months of 2005. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—12 On the positive side, the growth in golf course development has also slowed nationally, a trend that, combined with a slight growth in rounds in 2004, should help ease some of the competitive pressure. Another positive trend is the aging of America. Baby boomers are rapidly approaching retirement age when golf activity flourishes. Although participation rates typically decline with age, due primarily to physical limitations and economic limitations imposed by fixed incomes, the number of rounds produced per golfer increases dramatically. The baby boomers represent not only the largest single demographic in the US, but they also approach retirement age with more disposable income than any previous generation. Thus, a general increase in golf rounds can be anticipated over the next ten years as a direct result of the retiring of baby boomers. Estimated Palm Springs Area Golf Demand 2004-2009 A detailed demand analysis appears in Appendix C to this report. In this section, NGF Consulting will summarize the golf demand potential in this market area and how this demand will impact the City of Palm Springs municipal golf operations. The Tahquitz Creek market area is part of the Palm Springs Designated Market Area (DMA). The tables below illustrates how the three key Southern California DMAs rank in relation to the other 210 DMAs nationwide on some key golf demand and supply measures. Palm Springs San Diego Los Angeles DMA DMA DMA Characteristic Rank(of 210 DMAs) Predicted Household Participation Rate 63 86 132 Predicted Golfing Households 136 27 2 Predicted Golf Rounds Demanded 95 32 2 Total Number of Facilities 61 64 6 Public Facilities 103 75 6 Private Facilities 17 40 7 Resort Facilities 6 9 20 Premium Facilities 19 21 5 Standard Facilities 85 43 7 Value Facilities 160 136 10 Palm Springs San Diego Los Angeles DMA DMA DMA DMA Golf Demand Rankings Predicted Household Participation Rate 20% 19% 16% Rank(of 210 DMAs) 63 86 132 Predicted Number of Golfing Households 29,357 197,628 898,924 Rank(of 210 DMAs) 136 27 2 Predicted Number of Rounds Demanded-2004 1,491,766 4,037,993 18,693,287 Rank(of 210 DMAs) 95 32 2 The above shows the importance of the resort golf market in Palm Springs as the area has the 6th most resort golf courses of any DMA in the nation. On the flip side, the market is among the least supplied with `value' (lowest priced) golf courses, ranking 160rh out of 210 DMAs . In all, the approximately 29,300 permanent resident golfing households are expected to produce National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-13 roughly 1.5 million rounds of golf annually, support for roughly 35 to 40 golf courses at an average of about 40,000 rounds per course. All of this shows clearly the importance of the broader Southern California golf market on the resort golf facilities in the Palm Springs market. The nearby Los Angeles DMA is the second largest golf market in the U.S. with an estimated demand for as many as 18.6 million rounds of golf per year. Much of this golf demand is serviced in Palm Springs and continued attraction of other Southern California golfers to Palm Springs, as well as golfers traveling from other markets, is key to the success of golf courses in the Coachella Valley. Rounds per Golfer The golfers in the Coachella Valley tend to be highly motivated and active golfers. The indices presented below show that not only are households in the Palm Springs market 10 percent more likely to contain golfers (index=110), what golfers there are in the Palm Springs area tend to demand as many as 2.3 times the number of rounds per golfer per year compared to the total U.S. average. Predicted Golf Demand 2004 Palm Springs San Diego Los Angeles CA CA CA California Entire US Golfing Household Index 110 101 87 93 100 Rounds Played Index 236 87 76 85 100 Source:NGF Consulting 2005. Palm Springs Area Golf Supply Inventory Palm Springs and the Coachella Valley feature an abundance of golf courses. The NGF database indicates 87 total golf facilities in the Palm Springs DMA (essentially the Coachella Valley), comprising 109 eighteen-hole equivalent courses and 1,962 holes. Out of these, there are 30 regulation length facilities that allow public access (municipal, daily fee/resort, or semi- private), totaling 41.5 eighteen-hole equivalent golf courses and 747 holes. There are also 34 regulation length private clubs comprising 49 eighteen-hole equivalents and 882 holes. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—14 Coachella Valley Golf Facility Supply 2005 2007 Total Total 18-Hole Total Total 18-Hole Regulation-Length Facilities Holes Equiv. Facilities Holes Equiv. Municipal 4 126 7.0 4 144 8.0 Other Public Access 26 621 34.5 32 738 41.0 Private 34 882 49.0 37 972 54.0 Total Reg. Length 64 1629 90.5 73 1854 103 Executive/Par-3 Municipal 2 27 1.5 2 27 1.5 Other Public Access 8 90 5.0 8 90 5.0 Private 13 216 '12.0 13 216 12.0 Total Exec./Par-3 23 333 18.5 23 333 18.5 MARKET TOTAL 87 1962 109 96 2187 121.6 Source:NGF Consulting 3/05.2007 estimate assumes all current projects in the development pipeline are completed. Household/Supply Ratios Utilizing this data in conjunction with the demographics presented earlier, we note the following comparison of golf facility supply to the number of households available in the market to support each facility. This "Household/Supply Ratio" estimates the relative supply of a market for comparison to other U.S. locations. The Household/Supply Ratio is derived by dividing the total number of households by the number of 18-hole equivalent golf courses. Household/Supply indices are derived from these ratios, and then compared with the base national figure of 100. As the tables below indicate, the local Palm Springs market area appears to be well over- supplied with golf relative to the U.S. benchmark of 7,477 homes to support each 18 holes of golf. For instance, in the Palm Springs market around Tahquitz Creek, there are 80 percent FEWER households available to support each 18 holes of golf than we observe nationally. It is the opposite situation in the Los Angeles Market as there are 2.6 times as many households to support each 18-holes as the U.S. average, and over 4 times as many households to support each 18-holes of resort golf. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—15 Household /Supply Ratios 2004 10 Miles: 25 Miles: Tahquitz Tahquitz Palm Springs San Diego Los Angeles Creek Creek DMA DMA DMA California U.S. Households Per 18 Holes Total 1,207 1,516 1,333 11,456 19,840 13,518 7,477 Public 3,147 3,609 3,199 17,662 28,641 20,707 10,533 Private 1,957 2,614 2,285 32,606 64,567 38,941 25,765 Resort 4,337 5,108 4,498 39,988 413,705 94,420 85,323 By Price Point: Premium 4,863 5,628 4,879 52,985 131,412 74,557 29,897 Standard 17,831 19,531 '16,934 42,388 65,706 51,375 16,308 Value 17,831 20,752 20,563 70,646 82,741 64,867 25,654 By Public Facility Type: Daily Fee 3,821 4,312 3,838 21,626 45,592 29,287 13,322 Municipal 17,831 22,136 19,192 96,336 77,035 70,678 50,314 *Resort facilities can be public OR private and are therefore already included in the total Household/Supply Indices 2004 10 Miles: 25 Miles: Tahquitz Tahquitz Palm Springs San Diego Los Angeles Creek Creek DMA DMA DMA California U.S. Households Per 18 Holes Total 16 20 18 151 262 178 100 Public 29 34 30 166 269 194 100 Private 7 10 9 124 246 148 100 Resort 5 6 5 47 484 111 100 By Price Point: Premium 5 6 5 60 148 84 '100 Standard 55 61 53 132 204 159 100 Value 92 107 106 364 426 334 100 By Public Facility Type: Daily Fee 19 21 19 152 228 166 100 _Municipal 40 44 41 131 199 151 100 *Resort facilities can be public OR private and are therefore already included in the total Seasonal Adjustment The actual Household/Supply Ratio for the Palm Springs area may not be a true representation of the local golf market as golf courses in the Valley generate a large volume of golf business from a transient population that is not counted in the basic permanent resident households used as the numerator in the calculated ratio. The table below displays a new Household/Supply Ratio and Index for the Palm Springs market with an adjustment to account for tourists and seasonal residents in the area each winter season. As shown, this estimate still shows an over- supply of golf. Even when all tourists and seasonal residents in the market during peak winter season are counted, the area still has weaker support for each 18-holes of golf in the market as of January 2005. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-16 Household/Supply Ratio and Index Seasonally Adjusted - 2004-05 Seasonally Adjusted Palm Palm San Diego Los Angeles Springs DMA* Springs DMA DMA DMA California U.S. Households Per 18 Holes Total HH/Supply Ratio 2,419 1,333 11,456 19,840 13,518 7,477 Total HH/Supply Index 32 18 151 262 178 100 *Source:NGF Consulting 3/05.Seasonally adjusted households estimate=263,700(144,000 permanent households in Coachella Valley+ 34,200 seasonal households+85,500 transient households(10,260,000 adult tourist person nights/120 nights)). Recent Construction Activity The rate of construction of new golf courses has been very vigorous in the Coachella Valley over last decade. Since 1994, 29 new golf facilities— 14 public and 15 private— have opened for play. Additionally, the redeveloped Canyons South re-opened as Indian Canyons just 3.5 miles southwest of Tahquitz Creek in late 2004. In just the last eight years, the valley has seen a spate of development at the high end of the public access golf market, including: the two Desert Willow courses in Palm Desert (1997/1998); the 36-hole Landmark Golf Club in Indio (1999); PGA West Norman Course in La Quinta (1999); Cimarron in Palm Springs (2000); the Marriott Shadow Ridge Resort in Palm Desert (2000); Del Webb's Sun City- San Gorgonio (2001); Trilogy in La Quinta (2003); and, the newly opened municipal SilverRock Resort in La Quinta (2005). Additionally, the SCPGA courses at Oak Valley in Beaumont added 36 holes to the regional market in 2000. Unlike many golf markets across the country, the Palm Springs/Coachella Valley area has not slowed in terms of new golf course construction. There are many more projects currently either in planning or under construction (please refer to "Proposed New Golf Courses" in Appendix D for details on these projects), and this imminent increase in inventory will put further stress on an already ultra-competitive market. Golf Market Summary In the previous analysis NGF consulting has made basic estimates of the demand for golf and the supply of facilities to service that demand. Plotting the results of the analysis on the NGF Opportunity Chart, we see that the market area falls into the "Active" golf market classification. This means that in the local market area surrounding the City of Palm Springs' Tahquitz Creek Golf Resort there are far fewer households available to support each 18-hole golf course in the community, but these households tend to demand a lot more golf. In addition, there are other large markets nearby that tend to be in the opposite situation with few golf courses and a large number of relatively inactive golfers. This helps to create a strong and golf-active seasonal/ tourist market that adds support to Palm Springs golf courses. The implication for the City of Palm Springs and its continued operation of the Tahquitz Creek Golf Resort is that growth in rounds at the individual facility level must come from increased participation among existing golfers, both visitor and resident, as the natural growth in activity has not kept up with the pace of new golf facility construction. This means that in order to remain competitive Tahquitz Creek must be able to separate itself from the growing competition and offer a total package of amenities that best distinguishes it as a unique and desirable golf/vacation experience. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—17 Opportunity Chart 280 ❑ Palm Springs CA 0 260 - 240 - San Diego CA 5 220 - 200 - © Los Angeles CA U i 180 - "Inactive" 60 "Opportunity" a 120 N 9 �00 0 20 40 60 80 80100 120 140 160 180 200 220 240 260 280 N c "Saturated" 60 "Active" 2 40 20 - 0 Rounds Demanded Index COMPETITIVE GOLF MARKET One of the objectives of this study is to identify what, if any, opportunities exist for Tahquitz Creek to increase market share and revenues in the hyper-competitive Palm Springs/Coachella Valley golf market. To accomplish this objective, we will analyze how other comparable public- access golf facilities are performing in this market. NGF Consulting has collected rounds activity and fee information from a subset of Tahquitz Creek's most important municipal, daily fee, resort, and semi-private competitors. While NGF Consulting recognizes that there may be other public access golf courses outside the Coachella Valley (such as the Banning/ Beaumont area) that will draw the occasional golfer away from Palm Springs, NGF Consulting believes that most golf demand for residents and visitors is self-contained in Palm Springs and the rest of the valley. Public/Semi-Private Golf Market. NGF Consulting has collected basic operating data from Tahquitz Creek's primary municipal and daily fee competitors. The data tables on the pages following the golf course maps display key information about these competitors, such as annual rounds played, daily green fees and annual pass/membership fees. Additionally, we have included a table that lists the peak season and low season prime time rack green fees for all other daily fee, resort, and/or semi-private clubs in the market. The last table lists the Valley's private member-only clubs, which present local permanent and seasonal golfers with yet more options. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—18 Facility Maps Golf Courses within City of Palm Springs E San Rc oa�I_W '�IIIPaII Ill�Ij"UT I C'[LjPa'Im Sprjn�Country Club -�rILJ Verona Rd T ulio_R _F t -, _E 1.11 ale a x sta CNI Peln V, C IA 3i 71fzi _� 5 vens Rd] =�j 2 TR�� Ob., 'z LL 74 I _U Te III k�R L A L ot Ir Ave vg I( Olin F 7_ R,- 3bth A Jcz 7 flg lralem p;.,n It 'in At R lash sJl Rill R.Irion .Rd -Rd A I- n Rd_ R... -Rd m n 1, I Rd Ro 011 Tornn�a'CU�Bel At Greens I—L 1 J,L s 311 A J_ IF L Agua r In esquite IF Cl _I 1. i T� r fv Ja PI'l rri _�3 T.hqutz Creek Golf Resort I Seven Lakes Country Club J, L �F T Elm _ati I L -1 14 'IF UN -7 411 I 1C. on Estates Country Club t'0' 111 qr�_,I ), 111 7 - 1� 1 Indian Canyons Golf Resort) Kf. 1 Canyon Country Club i�,' -,C 020i1 jCathI IM MmsA C., A H1W reserve d.) I Map Key: Daily Fee Municipal Private National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—19' Key Competitors Desert Dunes Golf Course � -_ Joshua Tree National Park { Joshua Tree Wilderness 0 Visas ChlnClmar�rron Golf Resort _ b ,pa i� R V C R S I D P a air,Sp{ings • Jar, Thousand .A Pslms .,Ram n R r' Ramon RI The Westin Mission Hills Resort-Gary Player I ') RC Golf Club r • The Westin Mission Hills Resort-Pete Dye • fal�(yp* mh h cn�,.o M _'r, P I- t L M M it 6 M '. Tahpuitz Creek Golf Resort -11 1 t • - :Cathedral Canyon Golf&Tennis Club�eMm —.-. s he Shadow Ridge Golf Club i •� ��, r� Indian Canyons Golf Resort 1_•_,• _ �' _6 (Desert Nhllow Golf Reossort a �••�• Palm Desert Resort Avert Country C 6 r JW Mardo[t Desert Springs Resort • •0 • f •Landmark GC - Fred Waring D- • �t m a ggty_ (ttt� In Wells Golf Resort l o 'a • Aver Im D Indra n Wells: Inil_iq i Bus !_ II • � rn '' • • 50th Aver_ T; Coachellar SilverRockar 'I os Z 62n1ntl Ave _ V_e_nee 52 02001 Mcrosett Cory.A ogres reserved. Map Key: Daily Fee Municipal Private O Range O In Planning/Under Construction National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—20 Location of All Golf Facilities within Coachella Valley (Color Coded by Type) Joshua rune How Alvin - m 'l Desert Hod _ Wilderness , Joshua Tree r Springs o National Park f82) cf , j In;pirehnn N Vuhde V�ater NodhPm -141dy� SpnngsIIll � - t'', c 1. I F_c r, n �- S _ I yP Thousand - Mount San Palm Spry 989 Palms v?o. I� __ B�.atag9_.�v+, Jacinto al - - State Park �� 4 - San Jacinto - y �.�� hl!tlral i' i.V r_ R+S I D E I Wilderness' O p _AA �R Tall Pmk Rancho. ,✓r Ba I 7' �� - - - - Mirage ll' �" Mh�Y of ill Fred! ar g Date—_Ly I c ,.� J j 6m� Palm Deserto"iaA an V7elIs` � '. _ � venue 52 La Quintal r✓' irgort_Blvd_._._�i �" yp �Thermall Sari Bernardino National Forest tPqomh ne" . ' i, 62nd Ave,_l l a soot Moroson coip ql �reF€�Q a?. , � /+; - ,_ - 66 Map Key: © Daily Fee Municipal Private NGF Consulting has collected basic operating data from market golf facilities. The data tables on the following pages display key information such as annual rounds played, daily green fees and annual pass/membership fees. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—21 Municipal Golf Facilities Coachella Valley Municipal Facilities (18-hole or greater regulation length courses) ' Peak Season Off Season Prime Peak Season Off Season Prime Prime Resident #of Rounds Played Green Fee Prime Green Fee Resident Green Green Fee Facility Name City Holes Year Open 04 Trend WD/WE WDIWE Fee WDNVE WDIWE Desert Willow Golf Resort Palm Desert 36 1997/98 80,200 Up $55/$55 $165/$165 $45/,' $45/$45' Golf Resort at Indian Wells Indian Wells 36 1986 88,200 Down $45/$55 $120/$130 $35/$352 $35/$352 SilverRock Resort La Quints 18 2005 DNA DNA $65/$75 $145/$160 $30/$303 $55/$553 Tahquitz Creek-Resort Palm Springs 18 1995 40,000* Down $55/$55 $100/$110 $20/$28" $45/$50" Tahquitz Creek-Legends Palm Springs 18 1959 51,000 Up $35/$35 $70/$80 $10/$18 $30/$35 *NGF Consulting estimate;December 2004 rounds not available 1 Resident card costs$10; Palm Desert residents can purchase a$79"VIP Card"that entitles them to$30 green fees from June 1 to October 1 2 Resident card costs$5,good for three years;also good for 20%discount in restaurant and in pro shop(soft goods only) 3 Resident card costs$15 4 Resident card costs$27 National Golf Foundation Consulting,Inc.—City of Palm Springs Municipal Golf Operation—22 Significant Findings— Municipal Golf Facilities NGF Consulting research indicates the following significant findings regarding other municipal golf facilities in the Palm Springs/Coachella Valley market: • Including the newly opened Arnold Palmer Course at SilverRock Resort in La Quinta, there are four municipal facilities, totaling seven 18-hole golf courses, in the Coachella Valley—SilverRock, Tahquitz Creek Golf Resort, Golf Resort at Indian Wells, and Desert Willow Golf Resort. Unlike in most golf markets, municipal golf courses in the valley are on a par with, or even superior to, a high percentage of the market daily fee clubs. Tahquitz' Legends Course, built in 1959, is by far the oldest municipal course in the market. • Though these facilities are at higher price points than Tahquitz Creek(especially the Legends), all are formidable competitors, particularly Desert Willow due to its quality, reputation, amenities, customer service, and proximity to Palm Springs. Indian Wells, where rounds and revenues have fallen considerably since the late 1990s, should be an even stronger competitor after its $21 million major renovation, planned to commence this summer, is completed. And SilverRock, which has already heightened the competition for Tahquitz Creek and others, will ultimately add a luxury hotel in advance of a second 18-hole golf course; the master plan also calls for boutique hotels, a world- class spa and a convention center. • Indian Wells averaged about 44,000 rounds on its two courses in 2004, down considerably from its heyday of about 52,000 rounds per course. Desert Willow has held its own, and saw a 5.7% increase in 2004 in activity, to 80,200 rounds on its Firecliff and Mountain View courses. SilverRock has reported strong early play, averaging about 110 players per day since opening. In comparison, Tahquitz Creek fared favorably, at about 88,000 rounds on its two courses. • Play at Indian Wells is supplemented by the on-site four resorts nearby, including the Hyatt Grand Champions Resort and Spa, Indian Wells Resort Hotel, Miramonte Resort and Spa and Renaissance Esmeralda Resort& Spa, while Desert Willow benefits from its proximity to the JW Marriott Desert Springs Resort. • As mentioned, the city of La Quinta is currently in negotiations to enter into a development partnership for a top hotel at SilverRock, as city officials recognize how critical a 'draw"— in this case a high-end hotel component— is in this competitive atmosphere. When the hotel component and second course are complete at SilverRock, Tahquitz Creek will be at a competitive disadvantage due to the comparative quality of the golf courses and support amenities at these other municipal golf courses, as well as the presence of a lodging component. When the PGA TOUR's Bob Hope Chrysler Classic comes to SilverRock in 2006, it will also present the new facility with invaluable publicity in the Palm Springs market. • Low season (generally June through September) prime time rack rate pricing at the Tahquitz Resort Course and the three other municipal facilities are nearly identical at about$55, though summer rates are projected to be moderately higher at SilverRock, and summer weekday morning rates at Indian Wells are listed as $10 cheaper than at the Resort Course. Desert Willow and SilverRock, at $165 and $160, respectively, are a tier above the Resort Course and nearly twice the green fee of the Legends Course during the January through mid-April high season. Fees at Indian Wells fall in between these two tiers during the winter high season. All green fee pricing has become relatively National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—23 fluid in this market due to discounting, wholesaling, and other factors (at this writing, Tahquitz Creek and Cimarron were discounting due to damage from the January 2005 rains), but rack rates are generally good relative barometers when comparing pricing at different facilities. • The Cities of Palm Springs, Palm Desert, Indian Wells, and La Quinta all offer resident discount cards (prices are $27, $10, $5, and $15, respectively) that allow residents to play at deeply discounted rates at the municipal golf courses. Peak season morning rates for residents range between $30 at the Legends and $55 at SilverRock; these extremely low in-season rates make it very difficult to draw permanent resident golfers away from their"home" courses during the winter. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—24 Daily Fee and Resort Golf Facilities Key Market Public Access Competitors (18-hole or greater daily fee, resort, and semi-private regulation length courses) Off Season Peak Season #of Year Rounds Prime Green Prime Green Hotel On Single Annual #of Facility Name city Holes Type Open Played 04 Trend Fee WDIWE Fee WDIWE Site(YIN) Member Dues Members Cathedral Canyon Golf&Tennis Club Cathedral City 27 SP 1974 47,000 Up $35/$35 $851$85 No $3,300 225 Cimarron Golf Resort Cathedral City 36' DF 2000 35,000 Up $40/$50 $85/$952 No $3,2003 15 Desert Dunes Golf Course (Desert Hot Springs 18 DF 1989 N/A N/A $45/$55 $89/$99 No DNA DNA Indian Canyons Golf Resort (Palm Springs 18 DF 2004 DNA DNA $35/$50 $89/$99 No DNA DNA JW Marriott Desert Springs Resort Palm Desert 36 DF 1986 75,000 Down $50/$60 $145/$155 Yes DNA DNA Landmark Golf Club iIndio 36 DF 1999 51,296 Down $55/$75 $135/$145 No DNA DNA Mesquite Golf Club Palm Springs 18 DF 1985 33,000 Down $50/$60 $89/$99 No DNA" 55 Palm Desert Resort Country Club (Palm Desert 18 DF 1980 55,000 Up $30/$30 $75/$85 No $4,080 110 Shadow Ridge Golf Club jPalm Desert 18 DF 2000 40,000* Level $65/$65 $145/$145 Yes DNA DNA The Westin Mission Hills Resort iRancho Mirage 36 DF I1987/19911 76,000 Up $70/$705 $145/$1455 Yes DNA DNA *NGF Consulting Estimate KEY: DF—Daily Fee SP—Semi-private WD—Weekday WE—Weekend N/A—Not available DNA—Does not apply 1 Includes 18-hole executive course; rounds activity reported is for regulation course only 2 Currently(Winter/Spring 2005)charging$69/$79 due to January flood damage 3 Includes cart, range balls 4 Not currently marketing new memberships 5 Rancho Mirage residents can purchase resident card for$75 that entitles them to green fees up to 50% less than posted rates National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—25 Green Fees of Other Market Public Access Golf Courses (18-hole or greater daily fee, resort, and semi-private regulation length courses) Off Season Peak Season Prime Green Prime Green Fee Facility Name City #of Holes Type Year Open Fee WD/WE WD/WE Desert Falls Country Club Palm Desert 18 SP 1985 , $35/$35 $150/$165 Desert Princess Country Club Cathedral City 27 SP 1985 $35/$45 $85/$100 Heritage Palms Golf Club Indio 18 SP 1 1996 $30/$30 $95/$95 Indian Palms Country Club & Resort Indio 27 SP 1946 $45/$45 $69/$69 Indian Springs Golf&Country Club Indio 18 DF 1962 $39/$49 $79/$89 La Quinta Resort Golf Course- Dunes La Quinta 18 DF 1985 $50/$50 $125/$135 La Quinta Resort Golf Course-Mountain La Quinta 18 I DF 1985 $60/$60 $170/$190 Mission Lakes Country Club Desert Hot Springs 18 DF 1971 $35/$35 i $55/$65 Mt. Vista G.C.At Sun City PD- San Gorgonio Palm Desert 18 DF 2000 $34/$34 $98/$98 Mt.Vista G.C. At Sun City PD-Santa Rosa Palm Desert 18 DF 1992 $34/$34 $98/$98 Palm Desert Country Club (Closed for renovation) Palm Desert 27' 1 DF 1960 N/A N/A Palm Springs Country Club (Palm Springs 18 DF 1950 N/A $35/$35 PGA West Resort Courses- Nicklaus Tourn. La Quinta 18 DF 1986 $60/$75 $170/$190 PGA West Resort Courses- Stadium La Quinta 18 DF 1986 $60/$75 $170/$190 PGA West Resort Courses-Greg Norman La Quinta 18 DF 1999 $60/$75 $170/$190 Rancho Mirage Country Club Rancho Mirage 18 SP 1985 $28/$28 $69/$69 Sun City Shadow Hills Indio 92 DF 2004 $40/$40 $55/$55 Trilogy Golf Club At La Quinta La Quinta 18 DF 2003 $49/$59 $119/$139 Woodhaven Country Club Palm Desert 18 SP 1984 $35/$35 $79/$89 KEY DF-Daily Fee SP-Semi-private WD-Weekday WE-Weekend N/A-Not available 1 Includes 9-hole executive course 2 Currently building nine addition to open in fall 2005 National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-26 Significant Findings — Daiiy Fee/Resort/Semi-Private Market NGF Consulting research indicates the following significant findings for the Palm Springs/ Coachella Valley public access golf market: General • The abundance and variety of golf facilities in this market was detailed previously in this report. Of the 30 regulation length 18-hole or greater facilities (comprising 41.5 eighteen-hole equivalent courses) in the valley, four are municipal, nineteen are daily fee and/or resort, and seven consider themselves to be semi-private (several of these are formerly fully private clubs that have found it necessary to open up for public play). • In addition to the considerable number of golfing options residents and visitors to the Palm Springs area have, there are also two highly regarded and affordable facilities in nearby Beaumont that will draw some play from the valley- Oak Valley Golf Club and the PGA of Southern California Golf Club at Oak Valley. Peak season prime rates are $66 weekdays and $92 weekends at the SCPGA courses, and a very reasonable $60/$85 at Oak Valley. • Due to the fluid nature of fees in this market caused by frequent discounting, couponing, and use of wholesalers such as 'Stand-by-Golf' and 'Golf Passbook', identifying the top competitors for the Tahquitz Creek courses is not an exact science. However, based on factors such as price/value proposition and relative proximity we have identified the following facilities as the chief competitors to the Legends Course: Cathedral Canyon, Cimarron, Indian Canyons, Palm Desert Resort, Mesquite, Indian Springs, Desert Dunes, and Rancho Mirage Country Club. Of these, the newly re-opened Indian Canyons may post the biggest threat to activity levels at the Legends. This $15 million course, which opened in the fall of 2004, is aesthetically beautiful and features a full service 12,000 square foot clubhouse. • Of these facilities, Cathedral Canyon, Cimarron, Mesquite, Indian Canyons, and Desert Dunes are also competitive to the Resort Course. Other top competitors include the previously detailed municipal facilities, as well as the Marriott Desert Springs Resort, Landmark, Marriott Shadow Ridge, and the Westin Mission Hills Player and Dye courses. Several of these facilities feature courses that are comparable, or even superior to, the Resort Course, and most have better support amenities (i.e., clubhouse, food service, tournament capability). • During off peak periods (shoulder season, twilight, and especially the summer months) nearly all clubs that allow public access become competitors to each other, as the pricing differential between facilities of different qualities becomes much smaller. For instance, the La Quinta Mountain Course is $60 during summer mornings, compared to $55 at Tahquitz Resort Course; the corresponding winter/spring fees are $190 and $110, respectively for weekday morning play. • Because of the highly competitive nature of this market, the presence of an on- site hotel, proximity to major hotels/resorts, and/or strong affiliations with premier lodging properties is an increasingly important factor in maximizing play levels. If none of these factors are present, the club must present a strong price/value National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—27 proposition by offering (in addition to great course, of which there are many in this market) high quality amenities and strong customer service to draw golfers. It is much more difficult to build customer loyalty when discounting becomes prevalent in a golf market. Fees • NGF research and interviews with area golf operators indicate that average daily green fees have stagnated or even declined in this local and regional market in the last several years, due to oversupply that has led to the use of promotional rates, wholesale companies, and more aggressive yield management on the part of operators. Though published rack rates may not necessarily have declined noticeably, even some high-end clubs such as the PGA West courses, the La Quinta Resort, and the Marriott Desert Springs have dropped rate recently. Due to this market dynamic, those clubs that will not compromise rate integrity run the risk of losing rounds to competitors. • Though fee categories in this market differ by facility, they generally are broken down by time of year (peak season of roughly January through mid-April, off season of June through September, and spring and fall shoulder seasons) and time of day(typically prime morning until noon, early afternoon twilight, and later afternoon super twilight). Twilight rates, especially during peak season, are generally 30% to 40% lower than prime morning rates. Seasonality results in advertised summer rack rates that are roughly 50% to 70% lower than during the peak season. • As mentioned previously, discounting of fees has become prevalent in the Coachella Valley golf market, even among most high-end daily fee clubs, in response to increased competition and an uneven economy. This takes the form of promotional rates, couponing on the Internet and in local trade magazines ('Palm Springs Desert Golf Digest', 'GolfNews'), use of wholesale companies, and website-based yield management of unsold tee time inventory. As a result of this discounting, published rack rates are not necessarily reflective of actual fees that golfers are paying. • The use of wholesale internet-based companies is now ubiquitous in the Palm Springs/Coachella Valley golf market. Chief among these is 'Stand-By-Golf, which recently merged with 'Next Day Golf' and markets last-minute unsold tee times of more than 40 courses in the valley. They number among their clients Tahquitz Creek, as well as such other top facilities as Landmark, Marriott Desert Springs, Westin Mission Hills, Shadow Ridge, Indian Wells, and La Quinta. • The use of such services can add to the bottom line of golf facilities (as long as the fees charged cover the variable cost of producing the round). However, once prevalent in a golf market, these wholesalers also predispose golfers to expect discounted rates, thus compromising rate integrity. A better alternative may be for clubs to undertake their own yield management, actively managing the tee sheets and releasing discounted rates only via their own websites and e-mail clubs. (Landmark's website system seems among the best in the market, lessening their reliance on 'Stand-By-Golf'). • Discounting blurs the pricing structure of golf markets, as some middle and upper-tier facilities become affordable to golfers that typically would play at lower National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—28 priced courses. These golfers may also travel further than they typically would to play these top courses. As a result, the "home" course of these players may receive a smaller share of their frequent customer's wallets, especially during off peak periods. This phenomenon is obviously good for golfers, but not so good for operators who must be much more creative in holding and building market share, and must constantly monitor the pricing at other clubs. Rounds • Most market operators that we spoke to report a decline in rounds played of anywhere between 10% and 30% since the late 1990s, with the nadir occurring after the September 11, 2001 tragedies. While overall rounds played in the market have likely increased due to the growth in golf courses and population, these rounds are divided among an ever-growing number of facilities, leading to declining average rounds per facility. • This is consistent with a nationwide trend caused primarily by 9/11, a poor economy and an increasing number of daily fee golf courses fighting for shares of stagnant markets. In Palm Springs, this trend was especially acute due to the reliance on the tourism industry and the vigorous growth in new course construction. About half of the operators we interviewed report that rounds activity has been on the rebound in the latter half of 2003 and the first half of 2004, • Activity levels in this market are reflective of the strong seasonality factor prevalent in the desert, due to the swelling population in the winter months. Depending on the club and whether or not it has a lodging or seasonal residential component, winter visitors can account for 60% to 80% of total play in season. Winter and early spring are periods of heavy activity, while play during the summer months drops considerably. It is not uncommon for clubs in this market to realize 60% or more of total annual play in from January through April. • The daily fee/semi-private clubs that we interviewed averaged approximately 34,000 per 18 holes in 2004, Most of the public golf facilities in this market are operating well below their desired and actual capacities, considering the year- round nature of this market. Most golf courses have little trouble filling tee times during peak season weekend mornings, but the off peak periods, such as summer weekdays, are more difficult to fill. For instance, the municipal courses are averaging in the low 40,OOOs per eighteen holes, while theoretical capacity is upwards of 70,000 and desired capacity for a top end course is 50,000 or more. • In a golf market with excess capacity, the price/quality spectrum tends to collapse as higher quality facilities drop prices to increase rounds of play at their venues. The facilities that get caught in the middle of these situations tend to be facilities with non-distinguishing characteristics, those remotely located within the market, and/or facilities without well-established loyal player bases. • Tournamentlouting play is a strong supplement to daily fee and member play at some courses in this golf market. Examples of high volume tournament clubs include Landmark and Desert Willow, which reported about 12,000 tourney rounds in 2004, or about 15% of total activity. Tahquitz Creek likely needs to improve its clubhouse and food services before it can seriously contend for large outings. ® National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—29 Proposed New Golf Courses NGF Consulting has identified twelve new golf course projects that are either in planning or under construction in the valley. These projects include seven daily fee and one municipal course (second course at SilverRock), as well as several private clubs. If all were completed, these projects would add up to 13 new courses in the valley, comprising 225 holes, an estimated 135 of which will be open to the public. In the City of Palm Springs itself, one daily fee resort (Escena) is under construction and another is planning (Indian Oasis). Details of these projects appear in Appendix D to this report. Competitive Facilities Summary During the last decade, a spate of new high-end public access golf courses in the Coachella Valley has added to an already crowded market. The abundance of high quality golf courses in the Palm Springs area, combined with a slowdown in travel due to 9/11 and an uneven economy, has resulted in a very competitive golf market, which has manifested itself in a decline in average per facility rounds played of about 20%to 30% since the late 1990s, despite that fact that overall rounds played in the market have likely increased. This drop in average annual rounds played is especially troublesome to operators given that there are indications that average daily (blended) rates have stagnated or even declined in this local and regional market in the last several years, due to the now ubiquitous use of promotional rates, wholesale companies such as `Stand-By-Golf', and more aggressive yield management on the part of operators. The use of such services can add to the bottom line of golf facilities; however, these wholesalers also predispose golfers to expect discounted rates, thus compromising rate integrity. Tahquitz Creek, due to the lack of a strong affiliation with major hotels, is at a disadvantage compared to much of its competitive set when it comes to the ability to effectively promote golf package rounds. Additionally, the majority of Tahquitz'top competitors enjoy superior clubhouse facilities, thus putting the club at a disadvantage in terms of luring large tourneys and outings, as well as non-golf related banquets. Still, NGF Consulting research indicates that Tahquitz Creek is among, if not the most, active golf facilities in the valley. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—30 City of balm Springs Municipal Golf Operations Review In this section we will discuss those factors that influence operations at the City's Tahquitz Creek golf facility, including the overall management structure and oversight of the City golf operation. Emphasis is placed on those issues that NGF feels are adversely affecting profitability, with recommendations on how to improve performance— as opposed to commenting on the many things that are being done right. The City of Palm Springs operates a municipal golf facility that was constructed in 1954 and designed by the late William F. Bell, ASGCA, known as "Billy" Bell, Jr. This facility included the original 18-hole golf course now known as the Legend Course, and the clubhouse structure that still stands today. By the early 1990s this 18-hole municipal golf course was being operated successfully by Arnold Palmer Golf Management (Palmer Golf) under a lease agreement with the City. In 1995 a second 18-hole golf course was added (Resort Course) and the 36-hole facility was renamed Tahquitz Creek Golf Resort. Since the financing arrangement for the new golf course precluded a lease of the facility, a management contract for the Resort Course operations was entered into with Palmer Golf, thereby setting up the separate structures for the two courses that are essentially one facility. NGF Consulting recognizes that this review of operations for Tahquitz Creek was conducted during a time period in early 2005 that has been particularly difficult for the golf operation due to excessive rainfall that has limited play and seriously hampered revenues. Further, the City of Palm Springs has had to spend thousands of dollars to repair physical damage caused by the severe wet weather. Although some of the direct impact of this early 2005 weather event has been considered by NGF Consulting in this analysis, the full impact of this event has probably not been accounted for, as NGF Consulting has focused on the basic operating structure of the facility and considered the winter 2005 weather event as a on-time event that does not materially effect the basic operational setup present at the City's Tahquitz Creek Golf Resort. At present the Tahquitz Creek facility enjoys a sound reputation for golf in the golf-active Palm Springs market. Through the years Palmer Golf has worked hard to promote the facility to the golfing public at large and also protect a valuable City asset. As of March 2005, the City's Tahquitz Creek golf facility includes the elements as outlined below. INVENTORY OF FACILITIES Tahquitz Creek consists of two 18-hole golf courses, both offering gorgeous views of Palm Springs. Golf Digest recently rated Tahquitz Creek as "One of the Best Places to Play" in the U.S. The Legend course is a traditional layout that has been popular in Palm Springs for as long as it has been open. The Resort course features a desert links style course with rolling terrain, well-placed bunkers, full waterscapes and mountain views. Overall, the facilities at Tahquitz Creek are less than adequate for a premier 18-hole resort golf course. While the golf courses offer an outstanding golf value, the ancillary facilities seem to be less than adequate for the high-quality golf operation that is possible at Tahquitz Creek. Some detail of the facilities at Tahquitz Creek is as follows: National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—31 Legend Course The Legend Course extends generally southward from the clubhouse area. It is a returning 18- hole design of significant length, especially for a par-71 design. The course was built as part of a housing development to afford lot frontage to the golf course. The golf course architect was William F. Bell (Billy Bell, Jr.). Corridor widths were typical for the mid-1950s, well too narrow compared to what might be allocated to golf corridor width in today's world. The layout is pleasant, but compromised by flanked housing which does not always present a great view. Half of the holes are bordered on both sides by housing. Many holes have been planted by trees that tend to guide golfers away from playing along preferred lines to the target. These tree-lined fairways have been recently renovated, along with the addition of more than 40 new bunkers. With over 60 total bunkers and deceptively undulated greens, the legend course tends to play harder than it initially appears. The scorecard for the Legend Course is shown below: 1 e r 71 H LE Cr O -IO���{{{OA yIIk�OI©'+I,OODTI OIOI�V®O O' ®0IN�TOTTHCP NEf Aq 110 399 492 400 336 56J27076'1L91g30 3953GI IB250q IBI 219i1d39 q30 g5131BSI6DI5 WHITE H 3W 309 ABI 3B5 312 522 19B 131 152 33L3 ]]q 39B 165 qB0 392 208`9W 427 990 3HI 6509 % MEWS NCESil. -� YELLOW H — S 1 I3 3 I1 3 15 10 B 19 16 6 13 E 9 1 IF I�IF111p� 3II 299 130 33L JOB"90 W M IN 2@I 362 339 IA3 440 336 IGI 365 415 lBl 2990 SDI T_ WOMEN'E HCE 1S T I 1 15 13 917 J I II I i I! 16 12)IB 1 e c III [�lYW4wllMill.!►'1�11;:>.A,►1►Y1 - The Legend Course presently operates as a lower price alternative to the highest fee resort golf courses in the area. This course is particularly popular with local year-round residents and hosts a lot of summer rounds. The Legend tends to be a difficult and challenging golf course as the narrow width of the holes and the extensive tree cover adds to the difficulty. From the forward tees (Red/Ladies) the golf course can play very long and difficult (5,811 yards), and the layout features several long forced carries. Over the years the trees have grown and matured and this has created some over-growth that has served to further narrow the golf layout and prevented effective use of curved (hook/slice) shots that some golfers use by design. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—32 II These photos show the basic character of the Legend Course. Resort Course The Resort Course extends westward and is a self-contained course with occasional bordering to roadways or adjacent parcels with non-golf uses. Only a few of the holes border residential housing providing a core-routed golf course feel. The scorecard depicts a golf course playing to 6,800-yards and a par of 71. The course was designed by Ted Robinson, ASGCA, and constructed]in 1995. The scorecard for the *Resort Course is shownbelow: 1'AnM1��iS__.,,.� u�.ar- Ili 6 TA" UITZ CREEL( l0 1 ��qq� H L6 OOTi0�0 IN TOT HCP NH ADJ IlOf ib Rtl l.ln � - tlm.l ll ILA ,nlci- 3193=1152519367 531 S0336119fi 1163 ..-10136331]I]9562.100 111 130 5]]JLldID� -.__� .•�I •nulvneltlpL,.PI"i-l-pvxnL,6i jinn 1111,1,n 6 WHIT6 669111y 33036 152 519 34]5R336116J M11 37113111015953]375 391 110 5363109 6bb 1'.a rl'I� li l� .�. IJI an.l IJ 4' �, O FI T.A•.lu XENSHc 17 19 415� 1 3 II 1 5 / Z 12 I8 1. 6 6 4 14 10 M Pc IIII I' .1LAN1)LA 1 � 1 I I I 1.•II( ...n4 ul I I I,ail iJl rcl, .FI f J cuu II k III, „ nv onrvl r 1 _ "1 irlJ 1. �291 316 I 111ID 31 31 107 123 101 2619 31212]II 236 109 411 311 331 01 155 25X]5)llG�1 1 �I W MENS NCf IS l :1 II J 13 1 S Y 2 14 16 4 1 12 10 iy 'n }I SCORER -TEES ..._.__ATTEST .___....__.OPTE- __ ' 9 ]nO.:ZA lunsvuv,mV,In„nil.rom Y l#f3"Cii3�lrfiiYr.�Lau'.rltluu�PltiraAA�3 •6,. :. . - - ..,_ . 1 y,-.3,_:4u �« .p_±,F YPir�«.p This golf course is a links style desert layout that is a challenge to players of all abilities. Its unique design brings together a natural desert beauty as well as a modern architectural design. The mountain views along with the rolling terrain, well placed bunkers, and water features leave a lasting impression. The Resort Course is a very pleasant layout consisting of well-paced holes that afford many shot varieties and good challenge. The pace seems good, as does the variety of hole lengths, directions and views. The routing generally follows the drainage pattern of Tahquitz Creek. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—33 pp �vyI� p y,yy�y yyy�� z w wren�ry��yry�yvw�a r 11� V'MV IYIi[YXNY N1�wA +uMWNn�x.G"MU�+ti.[ � }� -� .aC!.ow.Xw+4wIXrWra� f,. .l'v+WYnrrn�'wrrww Xf w. rw x�X tlpvC"W'a OVA I'MX un ' ! ndM+bvM+X.+uYru .a+'aau .. w. urw.w' Syr Alit IA P: it These photos show examples of high quality views present on the Resort Course. Entry and Clubhouse The entry to the Tahquitz Creek facility is off of Golf Club Drive. Access to the facility is very easy as Golf Club Dr. connects with Ramon Road, a main thoroughfare in the area and the southern boundary to the Palm Springs Airport (1.5 miles from Tahquitz Creek). There are directional signs near the intersection of Ramon Rd. and Golf Club Dr. to help direct golfers to the property. The entry to Tahquitz Creek is stately with the neatly lined palm trees. The entry alignment and bag drop procedure follows good logistics and there appears to be ample parking. A �11 c Entry road and sign for Tahquitz Creek Golf Resort. The clubhouse is old, and although the "Arizona Memorial"-like structure is functional for a high- volume 18-hole municipal golf course, the facility seems inadequate to accommodate increased activity at Tahquitz Creek in the future. The clubhouse is modular in structure with a small breezeway connecting the two main pieces. On one side are the pro shop (approximately 2,000 s.f.), administrative offices and restrooms. The other section includes the dining area and snack bar. There is an outside veranda with tables for extra seating. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-34 L - - �M,I A a Photos showing the clubhouse exterior at Tahquitz Creek Golf Course. The facilities are generally small in size and appear to limit the operation. The staging area between the cart barn and clubhouse does not provide adequate circulation to allow multiple groups to maneuver out to the course, and there is insufficient space to stage carts for large events or to allow for a cross-over if a shotgun start is used. The dining area is large enough to accommodate about 80 inside with an additional 30+ on the outside veranda. These space issues limit the size of tournaments that can be accommodated at the facility even though there are 36 holes. The clubhouse is continuing to deteriorate: the flooring is old and the basic layout has become awkward. There is not a consistent theme or pattern to the furnishings, the restaurant and patio areas are undersized, the food and beverage operation cannot host a full event of golfers, due to the lack of space and lack of an adequate kitchen facility. Still, despite the limitations Palmer Golf has had great success with food, beverage and merchandise revenues. The Pro Shop offers a large (but cramped) selection of merchandise including brand apparel such as Lily of Beverly Hills, Ashworth, Cutter& Buck, Greg Norman and Izod, as well as top quality golf equipment such as Titleist, Callaway and Cobra. Most items proudly display the Tahquitz Creek Golf Resort logo, including shirts as well as golf tees, balls, towels and windshirts. Palmer Golf recently began using the "Tahquitz Creek Palm Springs" name on the logo to capitalize on the Palm Springs brand. Since the clubhouse is the focal point of most golf course operations, it is important to keep it as pleasing as possible. Newer patrons will form their first impression of the club here, and this is key in creating memory of the entire facility. At present the pro shop and food/beverage areas appear to be in need of major renovation/improvement. It is expected that any renovation or enhancement of the Tahquitz Creek Golf facility would have to include a new golf clubhouse. National Golf Foundation Consulting, Inc -City of Palm Springs Municipal Golf Operation-35 - I Selected clubhouse/pro shop views at Tahquitz Creek Golf Course. The cart barn is also in deteriorating condition. It is visible to the patrons and serves as an eyesore. The staging area between the cart barn and clubhouse does not provide adequate circulation to allow multiple groups to maneuver out to the course, and there is not an adequate area to stage carts for a large event. n Photos showing the cart barn area at Tahquitz Creek. Food and Beverage Services The food and beverage operation at Tahquitz Creek consists of a full restaurant, operated by Palmer Golf, called Traditions Cafe. On the course or off Tahquitz Creek offers a complete selection of food and drink, from fresh brewed coffee and pastries in the morning, to a post- game meal with grilled selections and microbrewed beer. Among the food and beverage offerings at the club include: • Traditions Cafe • Western-Style Barbeque • Complete Box Lunches • Beverage Cart Services • Tavern Off The Green National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—36 �►—'` __ II � Y Photos showing the limited size of the food and beverage operation and kitchen at Tahquitz Creek. The main area of food and beverage operation at Tahquitz Creek consists of approximately 3,000 square feet of space that includes a snack bar, bar area, and a small kitchen. It is NGF Consulting's understanding that the City has supplied some of the basic equipment for the operation, but the Palmer Golf has added equipment as well. Maintenance Facility and Practice Amenities The maintenance facility appears adequate in terms of space, and it is somewhat well located for both courses, at least to the degree possible. The facility is old and declining, but is still has adequate space to store all maintenance equipment, fertilizers, herbicides and pesticides. There is insufficient office space and furnishings for management to run a premier 36-hole facility. The mechanic's shop has insufficient space and has limited tools and equipment with which to repair machinery. Staff notes that equipment is old and much of it needs replacing. No specific assessment was made as part of this study other than a general inspection of some of the equipment. Staff is correct, at least in general terms: a lot of equipment should be scheduled for replacement or upgrade. l j � 1 Photos of the maintenance shed and maintenance equipment at Tahquitz Creek. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—37 The practice green and chipping/bunker area is very convenient to the clubhouse, driving range, first and tenth tees. These practice amenities appeared to be well utilized during the consultants visits to the facility. They also offer a nice panoramic view of the San Jacinto Mountains to add to the enjoyment. Practice amenities at Tahquitz Creek GC include: • Grass Tee Driving Range—A full swing practice range features 50 grass tee stations. Tahquitz Creek golf professionals are regularly found helping guests improve their game by offering complimentary swing tips and 1-hour golf clinics. • Practice Putting —Allowed on one of the two professionally manicured practice greens. • Short Game Area—An area to practice the short game from 50 yards and under is available with chipping, pitching and hitting out of practice bunkers. r Yu�"WSW°YvinWlrrirY�."wMwr+�rW�rwMYW � "ulr'4wN�'nnwnr,+IMM UIMIkW�Wa + WWII�Y�YMi�NiMVN,I.I�IM ., � � �M'�hMwwpi..,��WpYq•AY<'I, nwww.�W+�.��w x«aM rw..�.. WpppaxMM+WwnYoy Mk'M M7k+MWnb'M4M1M4.11WiW+�lwtlWy�#�N+�iiwXWW' .•� `. .. f !0.Y►WJ4,V I A/PareR'R. �. These photos show practice facilities at Tahquitz Creek Golf Resort. Summary In summary we note that while the City of Palm Springs is operating two outstanding 18-hole golf courses at Tahquitz Creek, the over-crowded golf market makes the quality of ancillary and support amenities more important than would normally be the case at a municipal golf course. Despite the great golf experience offered at Tahquitz Creek, the limitations in space and decor with the facility's clubhouse building is placing limitations on the facility's overall revenue potential. More importantly, NGF Consulting observes the lack of any adjacent lodging units (resort/timeshare/hotel) to help attract an increased number of golfers. It is clear from our competitive review that the success of golf operations in the Palm Springs market is closely tied to the presence of on-site lodging and/or strong affiliations with major hotels. Still, with all its limitations the City's Tahquitz Creek Golf Resort is performing relatively well in its market niche. It is expected that improvement and expansion of the clubhouse facility will add to the appeal of the facility, especially to larger groups and outings, and help to stimulate in rounds played activity. Both golf courses and the ancillary facilities would benefit greatly from improvements and modification to make them (1) more competitive amongst other courses in the area; (2) more National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—38 appealing to the available customer base; and (3) a stronger asset for the City's Parks offerings to the public. The key to long term and successful improvement will only be realized by adopting a clear and concise master plan for improvements. Commensurate with adoption of a master plan, the City must also adopt a financial and operational plan that will incorporate the proposed physical improvements of the sites with what is feasible and desirable from a market perspective. In the following paragraphs, NGF Consulting will note our observations concerning the current operation of the City of Palm Springs Municipal Golf Program, and conclude with a set of recommendations we expect will improve the City's golf facility operation. ADMINISTRATIVE OVERVIEW Oversight of the municipal golf courses comes under the purview of the Park & Recreation Department and Director Scott Mikesell. Mr. Mikesell directs key staff within the many divisions of the Department. All management and staff at the Tahquitz Creek golf facility are hired by the private operator. The City is generally responsible for oversight and management of the contracts in place for the golf facility operations. There are two primary methods by which this oversight is accomplished: (1) periodic inspections of each golf course by the City; and, (2) periodic audits to be performed by the City of Palm Springs on the golf operations. Aside from this oversight (and, of course, the required lease payment/management fee), the private operator essentially runs the golf facility as if they were the owners. The General Manager at Tahquitz Creek has a lot of flexibility with regards to operations and does not adhere to Citywide fee schedules, with the exception of the City discount card program. Golf Operations Contracts As noted, the City of Palm Springs has entered into two separate contracts for the operation and maintenance of the two golf courses (Legend and Resort), even though the two courses together comprise one golf facility. The reasons for this arrangement were discussed earlier in this section and are not the subject of this NGF Consulting report. The basics of the contractual agreements to manage the City's golf facility is as shown in the following paragraphs: Palm Springs Golf Course LEASE Agreement Between City of Palm Springs and Arnold Palmer Golf Course Management Company Initial term from January 2, 1995 through January 1, 1997 Option to extend for one 18-year period if Lessee has expended no less than $200,000 toward construction of pledged improvements. At end of 18-year period, option to extend an additional 10-year period Lease year is calendar year National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—39 Base Rent Year $50,000 Year 2 $60,000 Year 3 $170,000 Year $180,000 Year 5 $190,000 Year 6 through end of term: $200,000 Payable 116 of annual rent at end of each month November through April Percentage Rent in addition to Base Rent is payable in any lease year in which operating revenue exceeds $2,000,000. In any month in which cumulative operating revenues for the applicable lease year reach and exceed $2,000,000, lessee is to pay 25% of the amount over $2,000,000; and, in following months within the same year, 25% of the operating revenues each month; and, 50% of funds received by sales made by any concessionaire of lessee during the subject month. Lease agreement amended April 25, 2002, to clarify procedures for the improvement of the leased premises and the use of the capital improvement fund. Lessee is to set aside from annual Percentage Rent no less than 3% of annual operating revenues for deposit into the capital improvement fund. Pledged improvements include: install complete cart paths from tee to green on each hole; install a water feature on hole#12 of the Legends Course. Tahquitz Championship Golf Course MANAGEMENT Agreement Between City of Palm Springs and Arnold Palmer Golf Course Management Company Initial term from January 2, 1995 through January 1, 2000 Base Compensation to Manager: $12,500 per month, increased annually at the close of each fiscal year by the lesser of 4% or the increase in the CPI for the MSA. Performance Compensation in addition to base compensation based on operating revenue, as follows: Operating Revenue (=x) Incentive Management Fee x< $2,000,000 0% of x $2,000,000 < x<$3,000,000 2%ofx $3,000,000< x< $4,000,000 5% of x x>$4,000,000 10% of x Total performance compensation shall not exceed base management fee paid in any fiscal year. Manager maintains Operating Fund. City may advance to Manager funds for Working Capital Fund. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-40 Manager pays to City no less than 3% of annual operating revenues each fiscal year for deposit into the Capital Improvement Fund; a balance of at least$500,000 is maintained and used exclusively for capital expenditures. Manager prepares proposed capital improvement program. City approval required in writing. Paid out of Capital Improvement Fund. +++++++++++++++++++++++ First Amendment to agreement dated March 2002, to clarify procedures for improvement of the land and use of the Capital Improvement Fund for such purposes; and revise certain reporting requirements. Term extended for five years, from July 1, 2001 through July 1, 2006. Base Compensation to Manager raised to $15,000 per month beginning July 1, 2001. Performance Compensation in addition to the Base: $75,000 payable at the end of the 41h year-July 30,2005 - if the following conditions are met: operating revenues increase by 7% annually (aggregate); operating expenses do not increase by more than 2% annually; and operating revenue at the end of the 3rtl year is at least $3,229,668. Additional performance compensation: $100,000, payable at the end of the 51h year if the following conditions are met: operating revenues increase by 7% annually, including the 41h year of the term; operating expenses do not increase by more than 2% annually; and operating revenue at the end of the fourth year is at least$3,530,645. City of Palm Springs Net Financial Performance Based on the above noted contract terms for the operation and management of the Tahquitz Creek Golf Resort, the following table shows the City's net economic performance. This exercise shows that the City of Palm Springs has lost about$600,000 to $700,000 on the operation of Tahquitz Creek (including debt service)while Arnold Palmer has earned about $900,000 each year during that period. Tahquitz Creek Golf Resort Summary of Financial Impact City of Palms Springs and Arnold Palmer Golf Management City of Palm Springs Arnold Palmer Golf Management Summary of Financial Impact(2003-04) Summary of Financial Impact 2( 103.04) 2003 2004 - 2003 2004 Revenues Revenues Resort Course Revenue $2,084,861 $1,882,991 Legend Course Revenue $3,138,227 $3,211,971 Legend Lease from Palmer $484,557 $501,700 Resort Management Fee $150,000 $150,000 Total Revenue $2,569,418 $2,384,691 Total Revenue $3,288,227 $3,361,971 Expenses Expenses Resort Course Expenses $2,046,124 $1,767,540 Legend Course Expenses $1,891,885 $1,940,120 Resort Management Fee $150,000 $150,000 Legend Lease $484,557 $501,700 Debt Service $1,090,000 $1,090,000 Debt Service Total Expenses $3,286,124 $3,007,540Total Expenses $2,376,442 $2,441,820 Net Effect ($716,706) ($622,849)Net Effect $911,785 $920,151 National Golf Foundation Consulting, Inc -City of Palm Springs Municipal Golf Operation-41 Contract:Assignability One issue that often accompanies a lease and/or management agreement for a private entity to operate a municipal golf course is the private operator's possible assignment of the contract(s) to another private entity. NGF Consulting understands that this may become an issue for Tahquitz Creek in 2005, as Palmer Golf is considering a possible sale of their Concessionaire's interest to Ironwood Golf Group, Article 23 of the lease stipulates that the City can withhold its consent unless all the following criteria are met: (a) the proposed assignee's or sub-lessee's general financial condition, including liquidity and net worth, verified by audited financial statements prepared by a Certified Public Accountant in conformity with GAAP is equal or greater than that of Lessee; (b) the proposed assignee or sub-lessee has a demonstrated operating capability equal to or greater than that of Lessee as to the sue for which the Leased Premises are leased; (c) the proposed assignee or sub-lessee is financially responsible; and (d) such assignment or subletting will not materially adversely impact the Percentage Rent paid to lessor pursuant to Section 8.2. NGF Consulting will address this subject under a separate letter report. This letter will include a comprehensive review of Ironwood Golf Group for the purpose of evaluating their experience, knowledge, capability and reputation to assume the Tahquitz Creek golf operations contracts. This NGF Consulting analysis was completed under the assumption that Palmer Golf(or its equivalent)will remain in place at Tahquitz Creek. Systemwide Support By City of Palm Springs As part of its responsibility to the City golf operation, the City of Palm Springs is contributing to the overall success of the golf facility in a number of ways. The most important of these is the continued service on the debt for the construction of the Resort Course in 1995. The table below summarizes the City's golf facility debt service responsibility. Resort Course Debt Service Paying AgentfTrustee Fees 3,000 Principal 315,000 Interest 772,392 Total Resort Course Debt Service 1,090,392 Other direct expenses incurred by the City include costs associated with maintenance and operations of both the Resort and Legend courses as well as benefits, insurance and administrative services. These expenses typically are determined by fractions of various Parks and Recreation staff that work with the golf courses. In summary the City's direct expenses on the golf courses are totaled below: National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—42 City of Palm Springs Golf Course Expenses 2004 Budget Legends Maintenance& Operations 46,321 Resort Course Maintenance&Operations Regular Employees 26,536 PIERS Contributions 7,220 Medicare Tax 416 Fringe Benefits 3,394 Workers Compensation 1,274 Employee Benefits 12,304 Total Personnel Costs 61,144 Special Dept Supplies 1,550 Contingency 1,000 Contractual Legal Service 10,300 Insurance 3,969 Administrative Services 11,543 Total Special Charges 28,362 Unscheduled Capital Proj. 35,000 Resort Course Debt Service 1,090,392 Total Resort Course Expenses 1,204,898 TOTAL CITY EXPENSES 1,251,219 Source:City of Palm Springs Marketing There is little marketing support from the City of Palm Springs for the golf course operation. The City has basic information regarding the golf course on its web site, as well as a link to the individual course site. For the most part Palmer Golf is essentially on its own when it comes to marketing, promotion, and pubic relations. Inspections In an effort to control the relative quality of the City's golf course, the City has implemented a system of facility inspections to be carried out by the Park and Recreation Department on a regular basis. A review of the inspection system indicates that the inspectors tend to look for evidence of"gross mismanagement" and are not identifying minor areas of concern. Also, there are no established Citywide standard that can be applied to this effort, and as a result these inspections tend to take a narrow view of the golf facility condition. Water Issues One of the key issues facing the City of Palm Springs in operating golf courses in the Coachella Valley area is the issue of water for turf irrigation, in light of water shortages generally affecting the greater San Bernardino area. In March 2005 area voters approved the sale of a reclaimed water system to the to a resort agency to for distribution. As per agreement with the City of Palm Springs the cost per acre foot of reclaimed water will be split between the City and Palmer National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation—43 Golf 60%to 40%with the City paying 60% for the Resort Course water and Palmer paying 40% for the Legend Course. TAHQUITZ CREEK GOLF FACILITY PERFORMANCE AND DATA ANALYSIS The City of Palm Springs and Palmer Golf have supplied the consultants with a variety of documents and reports on the activity and economic performance of the Tahquitz Creek golf facility. As noted previously, the two golf courses at the facility(Resort and Legend courses) each are operated under a different structure and as such the performance reports are different. The performance data for each of the two golf courses has been analyzed separately in the following paragraphs. Current Pricing 2004- 2005 Golf Rates* Resort Course Season Prime Twilight Super Twilight Replay 2004 Oct 1 -Dec 23 $84.95 $49.95 $29.95 $34.95 Dec 24-April 10 $109.95 $59.95 $39.95 $44.95 2005 Apr 11 -May 31 $74.95 $44.95 $29.95 $34.95 June 1 -Sept 30 $54.95 $34.95 $24 95 $24.95 Prime time,Twilight and Super Twilight tee times vary throughout the year. *Prime time in-season rates shown are for weekend;weekday rates are$10 less 2004-2005 Golf Fees For Resident Discount Cardholders* Resort Course Friday through Sunday Weekdays and Holidays Oct 1 -Dec 23 $42.00 $48.00 Dec 24-May 31 $45.00 $50.00 June 1 -Sept 30 $20.00 $28.00 *With purchase of$27 Resident Card,for City of Palm Springs Residents Only 2004-2005 Golf Rates* Legend Course Season Prime Twilight Super Twilight Replay 2004 Oct 1 -Dec 23 $59.95 $34.95 $19.95 $24.95 Dec 24-April 10 $79.95 $39.95 $24.95 $29.95 2005 Apr 11 -May 31 $54.95 $29.95 $19.95 $24.95 June 1 -Sept 30 $34.95 $24.95 $19.95 $15.95 Prime time,Twilight and Super Twilight tee times vary throughout the year. *Prime time in-season rates shown are for weekend;weekday rates are$10 less National Golf Foundation Consulting, Inc -City of Palm Springs Municipal Golf Operation-44 2004—2005 Golf Fees For Resident Discount Cardholders* Legend Course Friday through Sunday Weekdays and Holidays Oct 1 —Dec 23 $25.00 $30.00 Dec 24—May 31 $30,00 $35.00 June 1 —Sept 30 $10.00 $18.00 *With purchase of$27 Resident Card,for City of Palm Springs Residents Only Capacity Issues A golf course's theoretical capacity can be determined mathematically by multiplying the number of available tee times (utilizing only the first tee as the starting hole) in an hour by the number of hours of daylight, minus two hours, multiplied by the maximum number of players in a group, usually a foursome. A more realistic measure, a golf course's actual capacity takes into account the loss of tee times for weather, unplayable conditions, cancellations, no-shows, groups of less than four players, and other reasons a golf course would never actually play the theoretical capacity. Determining the actual capacity for a given course is difficult if not impossible to calculate because most courses differ in physical characteristics and management procedures. For example, a course that has paved cart paths and good drainage can quickly resume play after a heavy rain, whereas a course that does not have paved cart paths and/or has poor drainage may have to suspend play for several hours or the entire day. In Palm Springs, California an 18-hole public golf course such as either the Legend or Resort course should allow for a theoretical maximum of about 75,000 rounds annually or about 10,000 rounds in the peak February—March -April months. Given the price points and desired quality it is reasonable to expect a lower actual capacity on the Resort Course than the Legend Course. Resort Course Data Analysis The Resort Course is the newer of the two Tahquitz Creek facilities and the one operated by Palmer Golf under a management agreement with the City. Given this arrangement, the Resort Course financial records do not include any ancillary revenues such as food and beverage, merchandise, or range. The Resort Course data analyzed by NGF Consulting was provided by Palmer Golf and the City of Palm Springs. Activity Levels The Resort Course has rounds activity characteristics more closely associated with the higher- end resort golf clubs in the area. High-end conditions are a priority and extensive use is discouraged to protect the maintenance quality. The Resort Course has been consistently playing around 40,000 rounds per year for the last four years. The low seems to be 37,000 rounds in 2001, with an immediate comeback to a high of 42,000 in 2002. NGF Consulting recognizes that these rounds totals may not match exactly with the City's data due to NGF's utilization of the golf-industry accepted definition of a round: one round = "one person teeing off in an authorized start," regardless of the number of holes played. The table below shows the monthly rounds totals for the Resort Course dating back to July 2000. The data shows the importance of the January—April peak season as the Resort Course consistently hosts roughly 47-48 percent of total rounds activity in the 4-month season. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—45 Tahquitz Creek Resort Course Monthly Rounds Played 2000-2004 Rounds 2004 2003 2002 2001 2000 Jan 4,020 3,432 3,211 3,612 Feb 5,028 4,552 4,680 4,482 Mar 7,038 6,484 6,309 5,666 Apr 5,038 4,401 4,568 4,058 May 3,526 3,462 3,829 3,440 Jun 3,828 3,720 3,443 3,182 Jul 1,716 1,897 2,367 1,838 1,400 Aug 1,703 1,354 2,148 1,377 991 Sep 2,946 3,551 3,853 2,866 3,366 Oct 1,174 2,534 160 1,212 2,395 Nov 2,410 1,195 4,016 2,286 1,434 Dec 3 707 3 563 3 236 3059 Total 38,427 40,289 42,147 37,255 12,646 The distribution of rounds in 2004 shows about 10 percent of play on the Resort Course is derived from organized events or tournaments. While this volume exceeds the tournament play on the Legend Course (numbers to follow), it still reflects limitations in the overall tournament offering at Tahquitz Creek and the inability of the club to accommodate larger gatherings. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf operation-46 Tahquitz Creek Resort Course Rounds Played by Type 2004* ® 2004 Total Rounds 38,427 Tournament Rounds 4,435 Non-Tournament Rounds 33,992 Tournament Rounds% 11.5% *Through November 2004. Revenue Analysis NGF Consulting has reviewed the financial statements in detail and has made comparisons to the rounds activity reports. The following tables summarize the performance of revenues for the past four years for the Resort Course. Overall, the data shows a relatively consistent level of revenue performance for the facility in terms of both total revenues and average revenue per golf round. Volume of play is the strongest predictor of revenues, as opposed to fluctuating per round earnings often observed at municipal golf courses. Tahquitz Creek Palm Springs Resort Course Revenue (2001-2004) 2004* 2003 2002 2001 Non-tournament Rounds 33,992 Tournament Rounds 4,435 Total Rounds 38,427 40,289 42,147 37,255 Revenues Green Fees $1,264,767 $1,475,328 $1,395,732 $1,431,620 Cart Fees 382,296 391,565 386.016 370,661 Tournament Green Fees 216,468 205,910 221,865 229,614 Golf Shop 19,461 12,057 5,279 9,356 Total Revenues $1,882,991 $2,084,861 $2,008,892 $2,041,261 *Through November 2004 National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-47 Revenue Ratios Resort Course revenues are derived from green fees, cart fees and tournament fees. Average revenue per round estimates are displayed below: Tahquitz Creek Palm Springs Resort Course per Round Revenue (2001-2004) 2004 2003 2002 2001 Revenue per Round Green Fees per Round $37.21 $36.62 $33.12 $38.43 Cart Fees per Round $11.25 $9.72 $9.16 $9.95 Tournament GF per Tourn. Round $48.81 N/A N/A N/A NT=Non Tournament Round Expense Analysis The City of Palm Springs has provided the consultants with a complete budget for the operation of the Resort Course portion of the Tahquitz Creek Golf Resort, as well as a breakout of direct personnel expenses for the operation. The Resort Course expense performance appears in the table below. Tahquitz Creek Palm Springs Resort Course Expenses (2001-2004) 2004* 2003 2002 2001 Payroll Expenses General and Administrative $146,261 $126,712 $139,008 $121,764 Golf Shop 86,416 94,979 74,674 74,595 Food and Beverage 0 0 Golf Course Maintenance 443,996 517,544 541,828 558,530 Driving Range 0 0 Cart Department 70,912 80,545 67,116 85,398 Guest Service 0 0 Sales 24,345 41,489 54,903 62,750 Total Payroll Expenses $771,930 $861,270 $877,529 $903,036 Operating Expenses General and Administrative 291,285 356,792 341,060 331,265 Golf Shop 12,181 14,129 4,466 25,662 Food and Beverage 0 0 0 0 Golf Course Maintenance 533,647 633,423 525,795 570,329 Cart Department 92,420 86,981 76,751 85,553 Sales 66,077 93,529 99,058 118,387 Total Operating Expenses $996,610 $1,184,854 $1,047,130 $1,131,195 Total Expenses $1,767,540 $2,046,124 $1,924,659 $2,034,231 *Through November National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-48 Cost of Production Golf facilities are like any other business enterprise in that the facilities operate under the restrictions of"production costs"—costs associated with "producing" a round of golf. In the golf facility industry, most of the production costs are fixed and will be required regardless of how many rounds are played. NGF Consulting has derived from the Resort Course financial statements that the total cost of production at the facility is budgeted to be $1,767,540 in 2004. Given this amount and the 2004 actual rounds played, the facility cost of production ratios are as follows: Cost per 2004 Expenses Round @ 45,000 Cost of Production 2004 Expenses per 2004 Round Rounds Personnel $771,930 $20.09 $17.15 All Non-Labor $995,610 $25.91 $22.12 TOTALS $1,371,818 $46.00 $39.27 It costs Palmer Golf between $39 and $46 to produce each round of golf on the Resort Course. This also does not take into consideration the crossover responsibilities inherent in these expenses as some of these costs cover ancillary facilities and grounds shared with the Legend Course (to be discussed in more detail below) under a separate contract. Legend Course Data Analysis The Legend Course is the older of the two Tahquitz Creek facilities and the one operated by Palmer Golf under a lease agreement with the City. The Legend Course lease includes all ancillary revenues such as food and beverage as well as merchandise and range revenues. Most of the data analyzed by NGF Consulting with regards to the Legend Course was provided by Palmer Golf. Activity Levels The Legend Course is the more active of the two City golf courses with close to 50,000 rounds played in 2003 and 2004. The Legend Course peaked in 1999 with over 58,300 rounds played, declining 14,000 rounds (24% decline) to a low of 44,300 in 2001. The Legend Course has shown a recovery in 2003 and 2004 with rounds played totals close to 50,000 rounds. This rebound coincides with Palmer Golfs addition of Dan Farrar as general manager(departed in early 2005 during the NGF review). NGF Consulting recognizes that these rounds totals may not match exactly with the City's data due to differing definitions and the use of a calendar year vs. fiscal year. The table below shows the monthly rounds totals for the Legend Course dating back to January 1999, The data shows the January—April peak season is just as important for the Legend Course with roughly 45 percent of total rounds activity in the 4-month season. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—49 Tahquitz Creek Legend Course Monthly Rounds Played 1999-2004 Rounds 2004 2003 2002 2001 2000 1999 Jan 4,536 3,996 3,250 3,979 4,655 5,252 Feb 6,178 5,571 4,743 5,087 5,699 6,960 Mar 8,063 8,025 7,032 6,522 8,485 10,057 Apr 5,712 5,401 4,314 4,803 4,929 5,302 May 3,807 3,968 3,256 3,251 3,856 4,364 Jun 3,738 4,048 3,299 3,557 4,103 4,498 Jul 2,303 2,359 2,468 2,386 2,224 2,567 Aug 2,193 2,463 2,219 1,730 1,721 2,496 Sep 3,450 3,552 3,956 1,440 2,726 3,234 Oct 3,932 2,416 5,493 3,215 2,425 2,936 Nov 3,985 4,847 622 4,804 5,500 5,957 Dec 4_650 3 896 3 575 4 266 4736 Total 47,897 51,296 44,548 44,349 50,589 58,369 The average distribution of rounds for the last several years shows a very small percentage of play on the Legend Course coming from tournament play. This small volume is due in part to the Legend Course's limited appeal and also reflects the noted limitations in space at Tahquitz Creek. f Tahquitz Creek Legend Course Rounds Played by Type 2000-2004 2004 2003 2002 2001 2000 Total Rounds 43,912 51,792 44,548 44,563 50,589 Tournament Rounds 2,699 3,781 3,943 4,032 0 Non-Tournament Rounds 41,213 48,011 40,605 40,531 50,589 Tournament Rounds % 6.1% 7.3% 8.9% 9.0% 0.0% Revenue Analysis NGF Consulting has reviewed the financial statements in detail and has made comparisons to the rounds activity reports. The following tables summarize the performance of revenues for the past three years for the Legend Course. Overall, the data shows a relatively consistent level of revenue performance for the facility in terms of both total revenues and average revenue per golf round. Volume of play is the strongest predictor of revenues, as opposed to fluctuating per round earnings often observed at municipal golf courses. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-50 Tahquitz Creek Palm Springs Legend Course Revenue (2001-2004)* m 2004 2003 2002 2001 Non-tournament Rounds 48,602 48,011 40,605 40,531 Tournament Rounds _ 3,518 3,781 3,943 4,032 Total Rounds 62,120 61,792 44,548 44,563 Revenues Green Fees $1,083,710 $1,197,586 $998,178 $1,191,201 Cart Fees 464,914 467,127 404,850 415,951 Tournament Green Fees 111,751 116,106 132,113 149,045 Golf Shop(All) 670,270 595,083 556,956 613,049 Food&Beverage (All) 754,287 621,789 494,171 475,645 Driving Range (All) 127,039 140,535 147,768 151,099 Total Revenues $3,211,971 $3,138,227 $2,734,036 _$2,995,990 *Includes all Tahquitz Creek ancillary revenues(in italics) Revenue Ratios Legend Course revenue is derived from three primary sources: green fees, cart fees and tournament fees. These categories combined to produce approximately$1.5 to $1.7 million in revenues between 2001 and 2004. Revenues from the golf shop, food/beverage, and driving range are derived from rounds at BOTH golf courses and therefore will be analyzed separately later in this section. As can be seen in the table that follows, average revenue per round has been in steady decline over the four-year period shown. It appears that fees have been reduced in order to maintain and/or recover higher rounds played levels. Tahquitz Creek Palm Springs Legend Course per Round Revenue (2001-2004) 2004 2003 2002 2001 Non-tournament Rounds 48,602 48,011 40,605 40,531 Tournament Rounds 3,518 3,781 3,943 4,032 Total Rounds 52,120 51,792 44,548 44,563 Revenue per Round Green Fees per NT Round $22.30 $24.94 $24.58 $29.39 Cart Fees per NT Round $9.57 $9.73 $9.97 $10.26 Tournament GF per Tourn. Round $31.77 $30.71 $33.51 $36.97 NT=Non Tournament Round Expense Analysis Palmer Golf has provided the consultants with a complete budget for the operation of the Legend Course portion of the Tahquitz Creek Golf Resort. Palmer Golf has also provided a National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-51 breakout of direct personnel expenses for the operation. The Legend Course expense performance appears in the table below. Tahquitz Creek Palm Springs Legend Course Expenses (2001-2004) 2004� 2003 2002 2001 Payroll Expenses General and Administrative $102,213 $91,889 $92,904 $79,189 Golf Shop 110,251 87,056 83,006 107,859 Food and Beverage 178,598 157,581 133,255 151,860 Golf Course Maintenance 225,954 276,701 324,594 282,131 Driving Range 7,458 Cart Department 47,614 46,207 40,496 49,161 Sales 15,923 18,459 23,219 27,225 Total Payroll Expenses $680,553 $677,893 $697,473 $704,884 Operating Expenses General and Administrative $163,738 $162,218 $137,184 $206,749 Golf Shop 10,046 18,059 10,855 49,879 Food and Beverage 45,069 52,765 43,552 42,588 Golf Course Maintenance 358,417 357,046 371,367 396,426 Driving Range 14,093 13,056 15,093 14,333 Cart Department 68,168 57,951 57,809 59,286 Sales 31,733 41,881 42,285 51,224 Total Operating Expenses $691,266 $702,977 $678,146 $820,485 Total Expenses $1,371,818 $1,380,870 $1,376,619 $1,625,369 I Cost of Production NGF Consulting has derived from the Legend Course financial statements that the total cost of production at the facility is budgeted to be$1,371,818 in 2004. Given this amount and the 2004 actual rounds played, the facility cost of production ratios are as follows: Cost per 2004 Expenses Round @ 60,000 Cost of Production 2004 Expenses per 2004 Round Rounds Personnel $680,553 $13.06 $11.34 All Non-Labor $691,265 $13.26 $11.52 TOTALS $1,371,818 $26.32 $22.86 It costs Palmer Golf between $22 and $26 to produce each round of golf on the Legend Course and at the standard presently beinq met. This does not assume that the total $1.371 million (mostly fixed costs) being spent to operate and maintain this golf course is sufficient to produce the desired standard. This also does not take into consideration the crossover responsibilities National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-52 inherent in these expenses as some of these costs cover ancillary facilities and grounds shared with the Resort Course (separate contract). TahguiL— Creek— Combined Facility and Ancillary Analysis At present the City of Palm Springs is bringing its City golf resort to the public through agreements with Palmer Golf. As noted these agreements are distinct and separate for the two golf courses, even though together the Resort Course and Legend Course comprise one golf facility. While this may lead to some confusion about the financial distribution between the two courses, the reason for the separation is clear and no other option is realistic given the circumstances and how the agreements were entered into. It is clear from our inspections of the golf courses (detail in the individual course reviews)that the City of Palm Springs is getting good value from its golf facility management entity. Palmer Golf has overseen the growth in revenues at the facility to over$5.0 million per year, while still managing to contribute to the City coffers and keep operating expenses low. Analysis of the data shows that the revenues generated from the City's municipal golf facility operation are sufficient to cover the expenses associated with the operation. While overall financial performance at Tahquitz Creek Golf Resort has declined in recent years, the decline has not led to drastic cuts in maintenance or a serious decline in the overall quality of the City's golf resort. Further, all payments by Palmer Golf to the City have continued without interruption during the recent downturn. The table below shows the combined revenues and expenses for the two-course City golf resort: National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—53 Tahquitz Creek Palm Springs - Combined Resort and Legend Courses Rounds 2004' 2003 2002 2001 Legend NT Rounds 48,602 48,011 40,605 40,531 Legend Tournament Rounds 3,518 3,781 3,943 4,032 Total Legend 52,120 51,792 44,548 44,563 Resort NT Rounds 33,992 Resort Tournament Rounds 4,435 Total Resort 38,427 40,289 42,147 37,255 Total Rounds 90,547 92,081 86,695 $1,818 Total GF Rounds 82,594 88,300 82,752 77,786 Total Tourn. Rounds 7,953 3,781 3,943 4,032 Revenues Green Fees $2,348,477 $2,672,914 $2,393,910 $2,622,821 Cart Fees 847,210 858,692 790,866 786,612 Tournament Green Fees 328,219 322,016 353,978 378,659 Golf Shop 689,731 607,140 562,235 622.405 Food &Beverage (All) 754,287 621,789 494,171 475,645 Driving Range 127,039 140,535 147,768 151,099 Total Gross Revenues e $5,094,963 $5,223,086 $4,742,928 $5,037,241 Cost of Goods Sold Merchandise $334,699 $305,425 $310,873 $314,485 Food & Beverage 233,604 205,591 155,456 149,498 Total Cost of Goods Sold $568,303 $511,016 $466,329 $463,983 Total Net Revenue $4,526,660 $4,712,070 $4,276,599 $4,573,268 Payroll Expenses General and Administrative $248,474 $218,601 $231,912 $200,953 Golf Shop 196,667 182,035 157,680 182,454 Food and Beverage 178,598 157,581 133,255 151,860 Golf Course Maintenance 669,950 794,245 866,422 840,661 Driving Range 0 0 0 7,458 Cart Department 118,526 126,752 107,612 134,559 Sales 40,268 59,948 78,122 89,975 Total Payroll Expenses $1,462,483 $1,639,163 $1,575,003 $1,607,919 Operating Expenses General and Administrative $455,023 $519,010 $478,244 $538,014 Golf Shop 22,227 32,188 15,321 75,541 Food and Beverage 45,069 52,765 43,552 42,588 Golf Course Maintenance 892,064 990,469 897,162 966,755 Driving Range 14,093 13,056 15,093 14,333 Cart Department 160,588 144,932 134,560 144,839 Sales 97,810 135,410 141,343 169,611 Total Operating Expenses $1,686,874 $1,887,830 $1,725,276 $1,951,680 Total Expenses $3,139,357 $3,426,993 $3,300,278 $3,659,599 Net Income/Loss $1,285,077 $976,321 $1,013,659 '(through November) �! National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-54 Revenue Analysis The revenues displayed above show the combined 36-hole Tahquitz Creek Golf Resort earning in excess of$5.0 million in total gross revenues in three of the last four years. Only 2001 revenues at$4.7 million were below the $5.0 million mark. Approximately 65 percent of the total facility revenue is generated from the Legend Course (includes all ancillary revenue) with the remaining 35 percent from the Resort Course. We note that this relationship between revenues at the two courses is not consistent with the expense distribution (discussed below). Revenue Ratios Total Tahquitz Creek revenue is derived from the combination of all green fees, cart fees and tournament fees, plus all the ancillary revenue from the golf shop, food/beverage, and driving range. As can be seen in the table that follows, average golf revenue per round has been in steady decline over the four-year period shown, while ancillary revenues, especially food and beverage, have increased in the last few years. Tahquitz Creek Palm Springs—Revenue Per Round Combined Resort and Legend Courses Rounds 2004* 2003 2002 2001 Legend NT Rounds 48,602 48,011 40,605 40,531 Legend Tournament Rounds 3,518 3,781 3,943 4,032 Total Legend 52,120 51,792 44,548 44,563 Resort NT Rounds 33,992 Resort Tournament Rounds 4,435 Total Resort 38,427 40,289 42,147 37,255 Total Rounds 90,647 92,081 86,695 81,818 Total GF Rounds 82,594 88,300 82,752 77,786 Total Tourn. Rounds 7,953 3,781 3,943 4,032 Revenue per Round Green Fees $28.43 $30.27 $28.93 $33.72 Cart Fees $9.36 $9 33 $9.12 $9.61 Tournament Green Fees** $41.27 $30.71 $33.51 $36.97 Golf Shop $7.62 $6.59 $6.49 $7.61 Food & Beverage (All) $8.33 $6.75 $5.70 $5.81 Driving Range $1.40 $1.53 $1.70 $1.85 Total Gross Revenues $56.27 $66.72 $54.71 $61.57 `(through November)**Tournament green fee average is Legend Course only for 2001-03 Expense Analysis NGF Consulting has obtained the expense budgets for both the Legend and Resort golf courses. It is clear that there is some inequity in the distribution of expenses between the two courses. This has been an issue of some contention between the City and Palmer Golf, as the City contends that too much expense is tied to the Resort Course. The analysis for golf course maintenance is as follows: National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—55 Tahquitz Creek Golf Resort Total Golf Course Maintenance Expenses Legend and Resort Course Distribution ® 2004 2003 2002 2001 Total TC Golf Maintenance $1,562,015 $1,784,715 $1,763,585 $1,807,417 Legend Course Maintenance Payroll $225,954 $276,701 $324,594 $282,131 % of total 33.7% 34.8% 37.5% 33.6% Maintenance Operations $358,417 $357,046 $371,367 $396,426 %of total 40.2% 36.0% 41.4% 41.0% Total Legend Maintenance $584,371 $633,747 $695,961 $678,557 % Legend 37.41% 36.51% 39.46% 37.54% Resort Course Maintenance Payroll $443,996 $517,544 $541,828 $558,530 % of total 66.3% 65.2% 62.6% 66.4% Maintenance Operations $533,647 $633,423 $525,795 $570,329 % of total 59.8% 64.0% 58.6% 59.0% Total Resort Maintenance $977,644 $1,150,968 $1,067,624 $1,128,860 % Resort 62.6% 64.5% 60.5% 62.6% As shown, the Resort Course is commanding a little more than 60 percent of the total golf course maintenance spending based on the aggregate numbers provided. This amount is consistent with the 60% (Resort) /40% (Legend) split that was reportedly agreed to by Palmer Golf and the City some years ago. Some information provided by the City of Palm Springs indicated that certain individual line items, particularly in advertising and some golf course maintenance expenses, are distributed much more towards the Resort Course, even as high as 70 percent (see table below). While NGF Consulting agrees that the Resort Course is newer and has features that generally require more detail maintenance (bunkers/hazards/bigger greens), the distribution between two courses in a 36-hole resort like Tahquitz Creek should never be more than 60/40. This would indicate that there may be room for Palmer Golf to adjust its distribution budgets to allocate more needed money over to the Legend Course maintenance. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-56 Allocation of Expenses Legend Resort General&Admin. Expenses Advertising & Promotions 30% 70% Dues &Subscriptions 50% 50% Education Expense 50% 50% Electricity 60% 40% Janitorial & Pest Control 50% 50% License& Permits 50% 50% Miscellaneous 50% 50% Office Equipment Lease/Repair 50% 50% Office Supplies 50% 50% Postage& Photocopy 50% 50% Real Estate Taxes 100% 0% Repair&Maintenance Bldg 50% 50% Security 50% 50% Telephone 50% 50% Trash Removal 50% 50% Travel 50% 50% Utilities 50% 50% Water&Sewer 50% 50% Yellow Page Advertising 50% 50% Golf Shop Expenses Dues&Subscriptions 50% 50% Education 50% 50% Golf Shop Supplies 50% 50% Miscellaneous 50% 50% Travel, Ent. &Promotions 50% 50% Uniforms 50% 50% Golf Course Maintenance Expenses Auto Expense 40% 60% Dues&Subscriptions 50% 50% Education 50% 50% Electricity 40% 60% Office Supplies 50% 50% R &M Building 50% 50% Shop Hand Tools/Small Equip. 40% 60% Telephone 50% 50% Travel, Ent. & Promotions 50% 50% Uniforms 35% 65% Waste Removal 50% 50% Water&Sewer 50% 50% Cart Department Golf Cart Repairs 40% 60% Golf Cart Supplies 40% 60% Uniforms 40% 60% Lease of Golf Carts 40% 60% Source:City of Palm Springs National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—57 TAHQUITz CREEK GOLF RESORT - CUSTOMER SATISFACTION Overview In an effort to communicate with the customers of the Tahquitz Creek golf facility, NGF Consulting has implemented our Customer Loyalty and Satisfaction Program (CLASP) at the subject facility for the period of November 2004 through early March of 2005. NGF Consulting recognizes that this survey was conducted with current golfers at these two facilities and is limited in that former and infrequent players at the two City golf courses have not been surveyed. The general findings from the surveys are summarized in the following paragraphs. Customer Satisfaction During the survey period a total of 140 surveys were recorded by NGF Consulting. While there were some areas that warrant minor concern (particularly with the clubhouse), the vast majority of the respondents surveyed enjoy the Tahquitz Creek golf facility and are very loyal to it. In fact NGF Consulting notes that the Tahquitz Creek facility won the award given by NGF for the single golf facility using the CLASP system earning the highest measures on customer service and customer loyalty in the entire U.S. The features at Tahquitz Creek that surveyed golfers rated as most important include the overall golf course condition (especially the greens), the value proposition, tee-time availability, friendliness of staff, and pace of play. Our surveys indicate that this group of survey respondents were generally satisfied with the condition, quality and value of the City's municipal golf offering. Both courses are held in high regard on virtually all measures in our survey and both courses are perceived as good or better than the relevant competition. Among the key findings from our survey was a considerable out-of-town clientele at the facility with upwards of 51 percent of the golfers coming from beyond 30 miles and/or 30 minutes of drive time. The survey group demographics indicate a predominantly male (80%), older (69% over 50) and wealthier (55% over$100,000 income) clientele that plays only a handful of rounds in the Palm Springs area each year. These golfers indicated that ESPN and The Golf Channel were the two most viewed cable television stations and 82 percent regularly look at the sports page of their local paper. Other key findings show the importance at this facility of affordability and special discounts to attract players to the facility. Also, all facilities rated very high on the 1 to 5 scale with only clubhouse (and related) amenities ranking low. When asked what would most influence a return trip to Tahquitz Creek, price discounts and improved facility conditions were the first and second responses. When whether the golfer would want to host or participate in a tournament at this facility, the need for greater staging and banquet space was noted. TAHQUITz CREEK PHYSICAL PLANT SUMMARY AND IMPROVEMENT RECOMMENDATIONS The physical evaluation of the Tahquitz Creek Golf Club, Legend and Resort Courses, consisted of on-site visits by the golf course architect, interviews with staff and a review of the physical golf courses. In order to facilitate our work, aerial imagery was secured and configured to match the existing scorecard lengths as shown on scorecards. This enables us to see, with a degree of detail, the locations of trees, property lines and current improved features. It is noted that no detailed survey or plans were provided, and therefore the review of the aerial photos is approximate in nature and enables only general and schematic findings. The evaluation by the golf course architect is for the purpose of identifying proposed modifications to the physical course that may be recommended in the context of overall i� National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—58 operational or physical alterations. While the evaluation covered many areas, it is not a substitute for an in-depth study or analysis in specific disciplines such as civil engineering, agronomic evaluation, construction cost analysis, etc. Introduction and Objectives The two courses, the Resort Course and the Legend Course, are routed out of a single clubhouse location. The courses share a common practice range, practice greens and maintenance facility. The objectives of the study—for both courses and the overall facility—was to identify areas of potential improvement, and to outline specific recommendations that might be further studied, considered and weighed. Recommendations for the golf course are made in three separate sections: (i) The Resort Course, (ii) The Legend Course, and (iii) Overall Facility Recommendations (golf course specific). The Resort Course Overview The Resort Course extends westward and is a self-contained course with occasional bordering to roadways or adjacent parcels with non-golf uses. Only a few of the holes border residential housing. The feel is of a core-routed course. It is a non-returning 18-hole design of average length for a regulation course. At this elevation (500-ft. above sea level) the length is appropriate, especially for daily fee golfers. The scorecard depicts a golf course playing to 6,800-yards and a par of 71. The course was designed by Ted Robinson, ASGCA, and constructed in 1995. The Resort Course is a very pleasant layout consisting of well-paced holes that afford many shot varieties and good challenge. The pace seems good, as does the variety of hole lengths, directions and views. The routing generally follows the drainage pattern of Tahquitz Creek. This normally dry drainageway converges with the larger Palm Canyon Channel. Both drainageways offer attributes to the golf experience, providing interest in terrain and open space along many fairways. The routing of the course, because it follows these drainage patterns, is mostly linear and, as noted, does not return at the ninth hole. This linear, non-returning routing is not at all a negative as the variety of hole directions and areas with two or more holes break up the otherwise constraining nature of a layout of this type. During January 2005, while we were on site, heavy flows were noted in both drainageways. Significant damage to cart paths and fringes of the golf course were being repaired as possible while still enduring flows. It is obvious that additional armoring of embankment along the major, Palm Canyon Channel, is needed. Grading, irrigation, turf and drainage pipe were lost due to the erosion caused by the heavy flows. While armoring may never eliminate damage completely, it would reduce damage if property designed and installed along with replacement. The City should consider this. While no construction plans were reviewed, it did not appear that rip-rap or other erosion mitigation armoring had been placed/installed along the majority of the Palm Canyon Channel edge of the Resort Course. The absence of such armoring is the likely cause of the significant damage that the City is now repairing. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—59 t - V"r i. These photos show areas where grading, irrigation, turf and drainage pipe were lost due to the erosion caused by the heavy flows. - C"T'nRtYj These photos show areas where January 2005 flooding disrupted cart paths on the Resort Course. The landscaping of the course is above average. The impression one gets is that the non-turf areas may have been designed and, perhaps, originally planted with much greater detail and care than they now appear. Desert plantings are in need of pruning, replacement, augmentation and removal. Ideally the non-turf areas might be enhanced. This concept has been further outlined within our report. Visually, the course is very good. Views— both proximal and territorial—are excellent to areas of the golf course as well as distant mountains. Among the few unfortunate views are utility lines along Hole Nos. 1 and 2 and the backdrop of Hole No. 17, which is the back-of-house area for the adjacent water park. Additionally, the proposed relocation of the maintenance area (covered subsequently in this report) will undermine the existing natural open space along Hole No. 18. This undertaking should be carefully planned so the positive ambiance of the finishing hole is preserved as well as possible. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation—60 Agronomic conditions of the course appear well above average. Maintenance staff reports no major problems associated with turf quality. Indeed, our review confirms a well-conditioned golf course with good playing surfaces, especially the greens. Irrigation coverage appears good. Staff reports that the system is very functional with only normal problems and issues. Enhancements are periodically made to the system by the operator. Surface drainage is adequate. Standing water is minimal except during heavy precipitation when basins fill up and do not drain quickly to the nearby drainageways. This is very likely an unavoidable condition as basins are probably set just above the floor of the drainage way and reverse flows (water backing up to the basin pipes) occur when heavier flows are running in the Tahquitz Creek low flow. Staff reported that bunker drainage is not as good, with some bunkers needing additional or replaced drainage. Staff also noted that bunker sand probably needs replacing. Our conclusion is that bunkers should be overhauled over time, perhaps attacking them in two years, one nine per year. Overhauling would involve assessing existing drainage, installing new drainage if needed, reshaping edges and floors as required, and installing new sand. If possible, bunkers should be reshaped so sand does not have to be stabilized with artificial methods. There appear to be no impending safety issues relative to golf holes. Staff reported no serious injuries as a result of errant balls. Staff notes that some cart path turns are severe. An example is the path transition from Hole 3 to 4, which is sharp in their opinion. During our visit we noted that boulders were being used to denote 150-yard points to the green. These may prove hazardous to guests as balls played from behind such boulders can ricochet back or at angles, striking the player of a bystander. These boulders might be better utilized in the native desert areas as augmentation to the landscape. Being away from play and in rugged ground places more responsibility on the golfer to avoid such ricocheting. The Resort Course: Objectives and Recommendations The objective at the Resort Course should not be to change the nature of the design, nor to try and overcome obstacles that would prove futile. For example, while it may be desirable to block the view of the water park's service entrance (Hole No, 17), this is impractical, as massive amounts of earthwork or very expensive trees would need to be arranged; still, the views would not be totally blocked. The following recommendations are aimed at(1) enhancement, (2) improvement and (3) creating a more marketable golf course in context to competitive courses. Emphasis was placed on being able to tell a stronger story in the marketing of the facility, and to create even better photo opportunities than those currently available on the course. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—61 The Resort Course does not seem to warrant any major-improvements. However, there are improvements that should be considered and integrated into a master plan. A master plan will have the effect of establishing a roadmap for the City and operator, and it will focus energy and resources to the maximum benefit of the City's asset. Alternatively, when any golf course attempts to implement changes and improvements in the absence of a master plan, it is often the case that the right hand does not know what the left hand is doing, so to speak. The result is many times a fragmented effort. Funds are spent on one area, when they may have been better used elsewhere, or in combination with a larger, more global effort that might have been more cost-efficient. The following comprises the recommendations that should be undertaken to improve the Resort Course in the areas of(1) enhancement, (2) improvement and (3) creating a more marketable golf course in context to competitive courses: • Develop a Master plan: Bring all physical improvements into a single document that can be formally agreed to by the City and operator • Create Additional Non-Turf"Native"Areas: Water is an issue in terms of cost. Public perception also dictates that less water use is a better management practice. By establishing additional non-turf areas at the Resort Course, water use will be reduced. It is our conclusion that new non-turf areas can be integrated so they do not adversely affect play or pace. In fact, additional areas may make the course more exciting by way of creating additional options and strategy, especially for the better player. • Enhance Non-Turf"Native'Areas: Existing areas of non-turf should be improved and cleaned-up. A landscape plan should be created which addresses the protocol for these areas. The City and operator should work to adhere to this protocol in order that the investment is well cared for. • Overhaul Bunkers: Based on further evaluation and detailed plans, implement a program to re-shape, drain and replace sand to bunkers throughout the course. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf operation—62 • Add Length: While the stated length of the course (6,256-yards at the white markers; and 6,705 at the back markers) is ample for the casual, daily-fee golfer, there is a perception that a course of less than 6,800-yards—perhaps even 7,000-yards from the back tee markers—is not challenging enough. One must also consider that the par is 71 and not 72, but the public does not take this into account as a rule. They simply look at the yardage. Certainly, a stated length of 6,256-yards from the white markers will drive players to the back markers, which is counterproductive as it will place golfers who are not as skillful to the back tees. While the perception that 6,800-yards is not long enough may be wrong, it none-the-less is an obstacle to marketing. Ideally, if the scorecards might be changed and nothing else done, it would suffice. However, accuracy is probably a good policy. Therefore, we recommend that a few tees, primarily for the purpose of adding length to the scorecard, be considered. Hole Nos. 7, 14 and 18 may be good candidates for such tee evaluation. Also, we recommend that the scorecard be adjusted so the white tee markers are stated closer to 6,500- yards, and not the 6,200-yard range as is currently shown. This will drive more players to the white (regular) markers where their game is more compatible. While it would increase the SLOPE, this is rarely a factor in the public's perception. Not many people, except operators, golf executives and handicap chairs, know what SLOPE means. Careful evaluation of the length issue is called for. This recommendation is a summary of considerations to be investigated. • Further Studv Aesthetics Impacts: Study the logistics and cost of undergrounding utility lines. Study • Relocate 150-yard Boulders to Native Areas • Ensure Relocation of the Maintenance Facilitv is Well Planned and Inteqrated The Legend Course Overview The Legend Course extends generally southward from the clubhouse area. It is a returning 18- hole design of significant length, especially for a par-71 design. The course was constructed in 1954 and designed by the late William F. Bell, ASGCA, known as "Billy" Bell, Jr. The course was called "Palm Springs Muni". It was built as part of a housing development to afford lot frontage to the golf course. Corridor widths were typical for the mid-1950s, well too narrow compared to what might be allocated to golf corridor width in today's world. The layout is pleasant, but compromised by flanked housing which does not always present a great view. Half of the holes are bordered on both sides by housing, which is a shame. Many holes have been planted by trees which are now overgrown and, while they might help with aesthetics as a buffer to housing, they tend to guide the golfer and take away choices for playing along a preferred line to the target. Several of the trees are in poor health. Conditions overall are somewhat poor due to an old irrigation system which does not provide uniform coverage. This system has a lack of control in addition to poor spacing and old technology. Additionally, drainage in areas is less than desirable and seems to be mostly surface drainage to drainageways. Specific drainage problems noted by staff included areas at Hole Nos. 4 and 5, but this was only cited as being a chronic problem area. Several other areas cause problems occasionally. Staff notes that the greens behave differently than the Resort National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—63 Course, as the greensmix is inherently different between the two courses. Nonetheless, the greens are in very good condition and appear to sustain a healthy turf. The routing is solid. Mr. Bell was said to enlist the assistance of his mother, who in 1954 would have been recently widowed after the passing of William P. Bell ("Billy" Bell, Sr.), to help with routing plans. It is, of course, unlikely that we would be able to prove that the Legend Course had been routed by Mrs. Bell, but there is a good likelihood of this being the case. According to information gathered from personnel at Southern California courses designed by Bell, "Billy" Jr. acknowledged that his mother would always assist his father in routings. The holes at the Legend Course play in a varying degree of direction, and the pace and orientation is diverse. Holes that interact with the Palm Canyon Channel are among the most interesting. There are five such holes, roughly 1/3 of the layout. During January 2005, while we were on site, heavy flows were noted in the drainageways channel. Low flow crossings were damaged and only one route across the channel was able to be opened after heavy flows. The City was rebuilding the crossings at the time of this report's rpreparation. L These photos show the Legend Course and the drainage way channel in January 2005. The course has a very average ambiance. More attention could be directed to the golf features. This would have the effect of taking attention away from the housing. Views to distant mountains are great when fairways happen to align to these views. When fairways align to housing walls and fences, the ambiance suffers. Features are not very exciting. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—64 k4v�p ts . � ......_,.. .. -_..d..__._.».,,;ram A Y _ These photos show the basic character of the Legend Course. Greens and bunkers were remodeled about ten years ago by the operator of the course. At the time there were no bunkers left on the course. The course was described as "100% boring". Staff was uncertain whether a golf course architect was involved in the remodel effort. It appears that a minimal amount of work was undertaken, as features are still not very exciting and the overall look and feel is rather pedestrian. Certainly the course does not stack up very well to newer courses—the Resort Course being a prime example. Staff noted that recently some small areas of the course, now planted wall-to-wall with turf, had been left dormant. This test proved unpopular with neighbors to the course. It is likely that the most offended were immediate property owners to the specific areas. The City's intentions were well aimed. Perhaps with a different approach —one expressed within a master plan of improvements—such reduction in overseeded turf areas may be embraced by the public. Certainly it would be beneficial to try and reduce turf areas at this course, while still retaining the charm of a parkland setting and design. Agronomic conditions of the course appear decent considering the poor irrigation and drainage situation. Overseeding is done without de-thatching. Staff follows this procedure as a result of the irrigation system constraints. There appear to be no impending safety issues relative to golf holes that have caused any specific or chronic problem. Staff reported no serious injuries as a result of errant balls. During our visit we noted that boulders were being used to denote 150-yard points to the green. These may pose hazardous to guests as balls played from behind such boulders can ricochet back or at angles, striking the player of a bystander. These boulders might be better utilized in the Resort Course's native desert areas as augmentation to the landscape. Staff indicated that the operator is required to complete cart path work in the coming summer to complete a full-path system on the front nine holes. This work should be master planned and integrated to any proposed changes that may be considered at the Legend Course. Not making sure this integration takes place will have the effect of potentially dictating changes to the course so not to un-do any recent investment in new paths. This would be a shame. Unquestionably, cart paths are the last component of a course that should be dictating improvements or enhancements. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-65 The Legend Course: Objectives and Recommendations Among the negatives at the Legend Course are: • Average conditions • A boring test of golf • Length without strategy at many holes • Overbearing housing bordering the course • Poor arbor management • A lack of differentiation —no decent answer', except cost and availability, to the question: "Why would someone play this course? The objective at the Legend Course should be to find creative ways to address the negative aspects listed above. The end result should, at all cost, answer the question of what would attract someone to the course, and how could revenues be increased by (a) attracting more interest/play, and (b) charging higher rates. The Legend Course needs a story. What is now a lame and boring golf course—admittedly, perhaps, comfortable to regular players— is in need of an overhaul to increase and grow the asset of both the City and its operator. As is further described within the "mission statement," a direction for transformation is to create a classic-oriented golf course. This approach is consistent with the neighborhood, returning the course to a grandeur and style indicative of the 1950s in Palm Springs. Tees would be formal. Bunkers would be banked and more classic in appearance. Greens would become more interesting and larger. Water hazards may return to some holes. The result would be a course of classic quality; the story to be told would be one of tradition. Instead of the "typical' Palm Springs golf look, the opportunity at the Legend Course is to go with what was there, improving it in the spirit and style of an older, mature facility. A master plan covering this transformation is essential. It will form the basis for determining accurate costs and phasing, thus enabling the City to ascertain appropriate funding and pro forma scenarios. The following comprises the recommendations that should be undertaken to transform the Legend Course: • Develop a Master plan: Bring all physical improvements into one single plan. The master plan should address the following areas: o Tee improvements and alignments o Fairway delineations o New and relocated fairway bunkers o Green expansions using existing materials (some greens can be expanded by mowing, without shaping and much cost) o New and enhanced greenside bunkering; all bunkers should be given a style and spirit National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—66 o Complete arbor care plan, protocols and new tree planting; many trees need to be removed and replaced; the trees were once an asset— not they are a liability due to their condition o Find ways to focus views and take away the poorer views toward adjacent housing and development o Add interest and differentiation to holes; par-3s should have diverse strategy; par-5s and 4s should be adjusted for length so they play with different club selection o Turf areas may be reduced by looking at creating larger bunkers along fairways (pseudo-waste areas, but not a desert look), and/or by developing larger areas of low water and colorful plantings o Irrigation o Drainage o Ascertain water feature additions; improvements to existing o Signage and course furnishings • Re-desiqn and Build Hole No. 18: return the hole to a par-5, creating a risk- reward hole that will showcase the design improvements at the course. • Integrate the Cart Path Improvements Into the Master Plan • Integrate Chanqes to Work with Anv proposed Resort Plan (see below) Tahqui4z Creek o Overall Physical Recommendations In terms of golf course specific recommendations, the following are necessary undertakings by the City as changes are considered. One cannot divorce the following considerations from recommendations at either course independently as all changes will have a domino effect— what might change at the Resort Course needs to consider what change might need to be made at the practice area, and so-forth. • Potential Resort Development: The City acknowledges that there is a concept to develop a resort hotel on the property. A conceptual plan shows this situated in the area of the existing maintenance facility, clubhouse, customer parking and southern end of the practice range. A new clubhouse and parking would be integrated to the resort grounds and area; the maintenance facility would relocate to the area north of Resort Course Hole No. 1. The City is advised to carefully ensure that all golf features, practice areas and access is preserved and/or modified to yield a viable and exciting golf facility. While this appears to be a workable concept, its merits or drawbacks are not the focus of this study. Therefore, further evaluation is called for with the specific emphasis of this proposed resort hotel concept plan. A golf course architect should be a part of the planning to ensure that golf components are well-thought-out. _ National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—67 • Maintenance Equipment: Staff notes that equipment is old and much of it needs replacing. No specific assessment was made as part of this study other than a general inspection of some of the equipment. Staff is correct, at least in general terms: A lot of equipment should be scheduled for replacement or upgrade. A detailed analysis should be made and considered. • Maintenance Buildinq and Facilitv: The existing facility appears adequate in terms of space, and it is somewhat well located for both courses, at least to the degree possible. The facilities are old. The potential resort development will have the effect of relocating the maintenance facility to the area north of the No. 18 Hole of the Resort Course, obviously rebuilding the entire maintenance building and grounds. Should this occur, the new facility would likely need to be build and in place before razing the existing facility. • Drivinq Ranqe Orientation: The existing driving range is too close to Crossley Road for comfort. While the range tee seems oriented (aimed) slightly left of the roadway parallel line, additional mitigation should be considered and implemented. This may be accommodated along with a reconfiguration of the practice range tee area if and when a resort hotel is developed. However, even in advance of this timeframe, the range should be studied to find ways to reduce errant shots or shots to toward the public roadway. One method which is successful is to create bands of non-turf along the range edges. This has the effect of directing practice shots toward the center, as it is unnatural for golfers, even during practice, to purposefully aim toward areas not in turf. This would also benefit water usage by eliminating turf coverage. Plantings along the roadway should be increased. A barrier, such as a low split rail fence, should be installed along this public roadway to signify that the area is off limits. Signage should be installed along the roadway indicating that the area is an active practice area for golfers. • Clubhouse Improvements: The existing clubhouse facility at Tahquitz Creek is less than adequate for a premier 36-hole municipal golf course. Specifically, we note: o The clubhouse and entry is poorly configured, providing a lackluster arrival experience. o The clubhouse is poorly constructed and disjointed; much of the construction appears to be an afterthought. o The pro shop is not ideal for a large volume of merchandise sales. o The cart staging area is insufficient for setting up multiple carts that can easily exit the staging area and make way to the course. o The restaurant appears insufficient for supporting large groups, as the dining room and patio area is small, and the kitchen is inadequately equipped to service customers in a timely manner. The Tahquitz Creek Resort Course presents potential for the City of Palm Springs if an investment is made to address the above stated issues. It represents a tremendous asset as a result of its mature, parkland setting, great views, close proximity to the airport, and surrounding National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—68 population. The combination of mature vegetation, bold terrain and central location provide a wonderful, natural setting in the heart of the city—which provides an oasis for nearby residents and visitors. The current configuration of the clubhouse facility and lack of adequate space for large banquets and parties is a most important missing attribute for the facility, especially from a programming perspective. Specific clubhouse and entry reconfiguration options are presented as part of the overall re- development plan as presented to the consultants by the City of Palm Springs. In general, all NGF Consulting and FRA recommendations regarding the Tahquitz Creek clubhouse center around the inclusion of a pro shop, restaurant, banquet facility, patio area, golf cart storage, and golf cart staging area. A detailed clubhouse program and synopsis that applies regardless of the re-development option chosen follows: Clubhouse Program The square footage (s.f.) of the conceptual clubhouse is based on the program list below. There is opportunity to increase or decrease the square footages depending on the development of more specific programmatic plans and needs. For the basis of this study, FRA determined that the following were baseline requirements for a new clubhouse at Tahquitz Creek: • Bag drop • Golf pro shop • Golf cart storage (below main level) • Men's &women's restrooms with lockers • Kitchen facility • Restaurant with bar and dining area • Exterior patio with bbq facility • Snack bar • Mechanical /electrical room • Board room (above main level) • Offices • General storage Main Golf Clubhouse: Approximately 9-12,000 s.f. Cart Storage (below): Approximately 3,000 s.f. Total 12-15,000 s.f. Probable Cost Ranges Although the development of probable cost estimates require plans, master plans, specific surveys and acreages, a cost range can be deducted based on the above recommendations for each specific golf course. • Resort Course Enhancements/Improvements: A range of$400,000 to $600,000 is estimated to implement improvements to the golf course, not including maintenance area work, undergrounding of utilities, recent cart path and course damage (due to floods) or other off-course work. • Legend Course Enhancements/Improvements: A range of$2,400,000 to $2,800,000 is estimated to accomplish improvements to the golf course, not including recent low flow crossing losses (due to flooding), water features or National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—69 other work associated with the potential resort development (range reconfiguration, new practice greens, etc.) Note: No estimate is provided for maintenance area rebuilding, relocation; range reconfiguration or new facilities; new clubhouse areas; undergrounding of utilities, path and low flow crossing replacement due to flooding; or other unknown conditions which may need to be replaced and/or altered. Summary Mission Statements It is helpful to provide a concise mission statement that encompasses the ideals being sought when considering enhancements and improvements to an existing golf course. The Tahquitz Creek Course (Resort Course): "Continue to enhance the Tahquitz Creek Course through detailed landscaping;increase strategy by removing some areas from turf and at the same time reduce water costs; and maintain a reputation of excellent conditions amidst an urban setting that feels natural." The Legend Course: "Transform the Legend Course into the quintessential classic course of the Desert, with formal tees, steep banked bunkers and greens of interest and diversity—all within a setting of majestic trees and the essence of pure golf." National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—70 Revenue Enhancement Recommendations Tahquitz Creek Golf Resort The marketing and advertising for Tahquitz Creek Golf Resort is typical of many golf courses. There is a budget of roughly$80,000. The advertising is a general mix of newspaper/ print, radio, occasional television, and an email/Internet component. The messages are typical of golf courses in the Tahquitz Creek sector if not overused. They focus on the natural beauty and challenges of the golf courses. Ten years ago, there would have been nothing wrong at all with the current advertising and marketing of Tahquitz Creek. The golfing world has changed, however, and typical is no longer sufficient in a golf-saturated marketplace. With more courses available to golfers, fewer rounds being played and intense competition for business, dramatic change cannot be realized by tinkering around the edges of the current marketing and advertising program. NAME CHANGE AND AMENITY UPDATE From a marketing perspective, it is clear that the "brand" name with the greatest potential to positively impact the revenues at the City's golf resort facility is the "Palm Springs" brand itself. Given this, NGF Consulting is suggesting a change in the name of the to complete a re- branding of the City's resort for local, regional and national golfers. We see no indication that dropping the Tahquitz Creek name would amount to abandoning a significant asset. The Tahquitz Creek name is hard to pronounce and limiting. Although it is a common name within the community, it is foreign and non-descript to those who visit. And, because it is a common name within the community, it is also not distinctive for tourists and visitors. We recommend that the City consider naming the overall facility PALM SPRINGS NATIONAL GOLF CLUB. This sets the stage for the courses to become known for the City of Palm Springs —and it is also authoritative. The name evokes a stately and prime golf destination—and one- of-a-kind, i.e., it is golf in Palm Springs. The name simply says so. There is no question where the facility is located, nor that it is, in effect, the official Palm Springs golf facility. Further, the Resort Course would become the TAHQUITZ CREEK COURSE (this is because the creek runs through this course). The LEGEND COURSE would remain as it is currently known. The future resort concept would become known as "PALM SPRINGS NATIONAL GOLF RESORT— Home of the Tahquitz Creek and Legend Courses." Even though we do not have research on this issue, our experience leads us to believe that the Palm Springs National Resort name change would be received enthusiastically. Updating the amenities at the course would also result in advantages for marketing, advertising and rebranding. The current facilities, while adequate, need to be updated and modernized. The addition of lodging at the course would also yield benefits to the communications surrounding the resort. We have been told that there is some discussion of working with Holiday Inn to build lodging and other amenities for the resort. We believe the addition of these amenities would be a significant enhancement to the ability to drive rounds to the golf courses. However, we would suggest that consideration be given to the InterContinental or Crown Plaza brands for the lodging instead of the Holiday Inn brand. Both of these upscale brands are part of the National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—71 InterContinental Hotels Group Lodging Brands and would be more appropriate for a Palm Springs project than the more middle-of-the-road Holiday Inn brand. REVIEW OF CURRENT ADVERTISING We have reviewed current advertising examples from Tahquitz Creek including emails, print advertising, television promotions and one television script, and radio commercials. These are the key messages, headlines and information delivered in these various pieces: Print Advertising: • Desert Golf • "One of the Places to Play% Golf Digest • Two championship courses • Scenic Golf Television Promotions and advertising script: • Golf in the desert • "Tradition's Restaurant" • Beautiful panoramic settings that Tahquitz Creek is famous for Email Appeals: • Great weather • Great deals • "Fine" golfing • Charming hotel and resort Radio Commercials: • Golf in the desert • (Did not communicate any other message well) Generally speaking, there is a lack of consistency and differentiation in the messages contained within the advertising, marketing and promotion of Tahquitz Creek. It appears that golf at Tahquitz Creek is being marketed as a commodity rather than as a special or unique experience. This has led to an emphasis on price-driven deals at the resort, which has an adverse impact on revenue per round. Given the limited budget available for advertising, Tahquitz Creek has focused primarily on local media and the Internet. Radio advertising is normally placed on KXPS, the local ESPN radio affiliate. Newspaper advertising is placed primarily in the local newspapers, The Desert Sun and Golf Extra. There has been limited television advertising on local cable television network, PAX TV. The advertising for Tahquitz Creek is not focused on branding the facility in the minds of golfers. Rather, there is a focus on the value proposition that golf at Tahquitz Creek is a "value" based on deals for multiple rounds, rounds that include breakfast or lunch and special programs that allow golfers to purchase discounted rounds. References to Tahquitz Creek as being an "oasis' in the desert are the kinds of statements that could be made about any Palm Springs golf course. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—72 RECOMMENDED COURSE OF ACTION To increase rounds and strengthen the customer base there is an urgent need for: • A clear, distinguishing theme and message • Redesign of all collateral materials and advertising • A name change from Tahquitz Creek to Palm Springs National Resort • A larger marketing and advertising budget • A different focus for spending marketing and advertising resources Thesne And Message Development "Palm Springs National" would need a theme and message that distinguishes it from other golf destinations in Palm Springs. This message should reflect the value proposition offered by Palm Springs National and should be relentlessly communicated through all forms of marketing and adverting. Value is the nexus of price and quality. The golf course itself is beautiful, so beautiful in fact that it has become a place where national golf manufacturers come to shoot their television commercials (a credit to the local managers willingness to work with producers and a source of occasional revenue for the course.) To assist in the development of this message, it is recommended that some basic research be conducted. An effort to collect the thoughts and opinions of present golfers at the facility (through NGF-CLASP) would provide valuable feedback from customers about what they like about Palm Springs National and should yield actionable data for message development. After analyzing the results, the core messaqes should be discussed and aqreed upon by all stakeholders at the facility. These themes and messages would then become part of all advertising and marketing. The NGF Consulting team's review of the CLASP results indicate the following are the key themes to effectively communicate (in order of importance): • The Palm Springs Experience • Value—the nexus of quality and price • Desert Golf • Name Change— "Palm Springs National" • Amenity improvements(should they be undertaken) • The Palmer Connection A global theme and effective messaging should communicate to current and prospective customers that Palm Springs National offers high quality golf in Palm Springs at a very attractive price. Another appeal to golfers in the area is that the facilities are above par; in fact, they are achieving excellence in the renovations and updates to the clubhouse and the inclusion of a conference center. Even the thought of an on-site hotel should be employed in the advertising and marketing scheme. We should make one cautionary point with regard to marketing the Palmer connection. While it is well established that golfers react favorably to certain golf architects (Palmer, Nicklaus, etc.), it is far less clear whether a management company makes a difference to golfers when deciding where they will play and how much they will pay. The Palmer brand is certainly a premier name in the world of golf when it comes to architecture, endorsements of products and tournament golf. It is less clear that having the Palmer organization manage a golf course would be a National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—73 significant, marketable asset. If research is undertaken this specific issue should be tested with current and potential customers to see if it is, in fact, a motivating factor. Advertising And Marketing Content Palm Springs National is in need of new images and a distinctive look and feel to its advertising and marketing. A central design ethic and images should be allowed to permeate all advertising for the facility. The current advertising is dated and has probably lost the ability to capture the attention of prospective customers. We would recommend new still photography as well as hiqh definition video or film footage for use in television commercials and/or on a redesiqned website. A new logo would also need to be designed and used on all new collateral material. We would recommend the use of a Sweepstakes or giveawaV for the next two years with a requirement that email addresses be given as part of the entry process. This will allow the marketing and advertising expenditures to result in a larger and more robust email marketing system. Budgetary Considerations The current budget is inadequate to make a significant push that would result in more customers for Palm Springs National. In the current competitive environment, it is critical that more resources be dedicated to marketing and advertisinq. Golfers are creatures of habit. They are also highly motivated by a value proposition that makes them believe they are receiving high quality at an attractive price. By increasing the reach and frequency of Palm Sprinqs National advertising for a two or three year period, the staff will have an opportunity to teach golfers the 'Palm Springs National Habit." Advertising and marketing delivering messages about a solid value proposition can get golfers to the golf course the first time. If they have a good golfing experience, appropriate food and beverage service and solid customer service the golfers will return again and again. If golfers can be convinced to try Palm Springs National then these golfers will return. This will be especially true if an effort is made to capture email and mailing addresses so that the facility can continue to communicate with the customers on a regular basis. The 2004 marketing and advertising budget was approximately$80,000. In a market the size of the Palm Springs/Los Angeles/San Diego market this is a very, very small budget. We recommend doubling the spending on marketing and advertising for a three-year period while, at the same time, adopting a more focused and disciplined communications approach. Focus Of Advertising We strongly recommend that the focus of advertising for Palm Springs National be refocused first on television and direct mail and then, overtime, shifted more to email and the Internet. Newspaper advertising, while convenient, is expensive when evaluated from a 'cost per impression" basis. The limited budget also results in newspaper advertising that is small and lacking in impact. This is exacerbated by the relatively small percentage of newspaper readers who actually play golf. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—74 Radio advertising is also a relatively poor way to reach golfers. It is difficult to drive them to web pages or to deliver phone numbers through radio and the small percentage of listeners who play golf. The only reliable places where golfers aggregate are golf tournaments and The Golf Channel. These television opportunities are a target rich environment for the placement of advertising to promote golf. That's where the golfers are. If you want to talk to them, that's where you need to advertise. By using television, Internet-based marketing and direct mail to drive golfers to the redesigned website Palm Springs National will have an opportunity to entice golfers to become customers, capture their email addresses and open a dialogue with them that will result in a long-term relationship. FINDING YOUR CUSTOMERS Using a proprietary methodology, we have identified potential targets for Palm Springs National in the marketplace. We have determined that there are 485,000 golf customers and consumers in the target Los Angeles, San Dieg,o and Palm Springs marketplace. Obviously, attempting to mail all of these potential customers, multiple times, is far beyond the budget of Palm Springs National. However, by sorting this list using sex (men), a high level of disposable income ($100,000+), subscriptions to golf magazines and other specific criteria, we are able to create a list that yields potential prime customers. Various counts are presented below: Count 1 Age 35+ Income $1001K+ Gender: Male Interest: Golf Homeowner Goo select is Greater Los Angeles Area ,2nd Goo select is Greater San Diego Area ,3rd Goo select is Palm Springs area Los Angeles 39,067, San Diego 7,191, Palm Springs 2,059 Count 1 Total = 48,317 National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—75 Count 2 Age 35+ Income $150K+ Gender: Male Interest: Golf Homeowner Geo: Same as Count 1 Los Angeles 21,250, San Diego 2,136, Palm Springs 239 Count 2 Total = $231,625 Count 4 Age 50+ Income $100K+ Gender: Male Interest: Golf Homeowner Geo: Same as Count 1 Los Angeles 25,940, San Diego 3,956, Palm Springs 1,715 Count 4 Total = 31,611 Count 5 Age 50+ Income $150K+ Gender: Male Interest: Golf Homeowner Geo: Same as Count 1 Los Angeles 13,387, San Diego 1,064, Palm Springs 181 Count 5 Total = 14,632 As part of the overall marketing and advertising plan going forward, Tahquitz Creek should consider the use of highly targeted direct mail to reach these prime customers. Ideally, each of these targets should be hit at least three times in a relatively compressed time frame for maximum impact. COMMUNICATIONS SOLUTIONS OVERVIEW • Redesign website with new logo and Palm Springs National name • Shoot new photos and 35 mm film or high definition video National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—76 • Redesign all collateral materials and produce new print, direct mail and television advertising • Develop and place television advertising in weekend golf coverage and on The Golf Channel where local insertions are possible • Use highly targeted direct mail • Use a sweepstakes to generate interest and capture email addresses • Dramatically cut back or eliminate newspaper advertising • Dramatically cut back or eliminate radio advertising Cost Considerations Once decisions are made about the direction for the resort definitive cost estimates can be established. It is our recommendation that the logo development, printing of new collateral materials, new photography and film or video be made part of a capital improvements budget since those materials can and will be used for several years. We would estimate this cost to be approximately$50,000. It is further our recommendation that the advertising and media budget be doubled and that the budget be reviewed on a quarterly basis based on economic conditions, the financial status of the resort and other decisions. Over a three-year period, a budget of$160,000 per year should allow most of the recommendations within this study to be implemented with the possible exception of significant television advertising. If the new amenities are added, the resort is renamed and the budget will accommodate it we believe it would be in the best interest of the resort to consider a branding campaign that is over and above the recommended increase in the marketing and advertising budget. This will inform golfers about the renamed and improved resort and position Palm Springs National for future success. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—77 Consideration of Self-Operation by City of Pairs Springs As is the case with any municipality, the City of Palm Springs has several management options it can consider for the operation of its golf resort. At present the City has contractual agreements in place for the operation and management of the Tahquitz Creek Golf Resort. In this section, NGF Consulting will present a discussion of implications for the City of Palm Springs if it were to assume full control of the golf facility's operation. Although this course of action is not likely given the existing contracts in place, NGF Consulting has completed these estimates for comparison and decision-making purposes. There are more than 2,400 municipal golf facilities in the United States. The majority of these facilities are self-operated by governmental jurisdictions, be it a city, town, county, state, or park district. Since the first municipal course in the United States (Van Cortlandt Park) opened in New York City in 1895, municipal governments have developed and operated public access golf courses. Self-operation gives the municipality the greatest control over the golf operation, as it retains control over all employees, establishes policies and procedures, hours of operation, fee schedules, and operating and capital budgets. All revenues would be available to pay for operating and maintaining the facility and upgrading areas that need improvements. Any losses sustained by the golf operation would also be the responsibility of the municipality. Self-operation also has its downside, as some municipalities have painfully learned. In an attempt to capture the favor of their residents, some municipal golf operations have been managed from a political, rather than business, standpoint, and decisions made accordingly. Invariably, these operations begin to suffer from a lack of resources due to low revenues and high expenses. When revenues are inadequate to meet operating expenses, budgets are cut and the quality of the facility begins to deteriorate. This often results in a loss of customers and a further loss of revenues. The golf operation usually goes into a downward spiral, until it hits bottom. At that point, the municipality either tries to lease the facility to a private operator or faces a costly restoration to bring the facility back to a condition that is competitive with other area courses. Advantages and Disadvantages of Self-Operation The advantages of self-operation are: • The municipality has complete control over the operation and maintenance of the golf facility. • All revenues would flow to the municipality. • Management fees would not be included in the operating expenses paid by the municipality. • Capital improvements can be accomplished more quickly provided that funds are available. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—78 • Municipalities have various options to acquire capital funding that are not available to the private sector and their cost of borrowing money is frequently far less. The disadvantages of self-operation are: • The policies and procedures that govern the golf operation may be influenced more by political decisions than business decisions. • The facility can be encumbered by bureaucratic procedures that prevent the golf operation from being reactive to market conditions or unique circumstances. • Personnel costs, which account for the majority of a golf facility's budget, can be higher than the private sector's due to mandated wages and fringe benefits. • Hiring and firing personnel can take weeks and months whereas the private sector can do it in a few days. • Capital improvements can be delayed or postponed indefinitely when funds are not available. OPERATIONAL NORMS A basic comparison with municipal golf courses nationally as derived from 2003 actual results contained in the National Golf Foundation's publication, Operating& Financial Performance Profiles of 18-hole Golf Facilities in the U.S. shows the following. I Rounds Played 2003 Season Total Revenue U.S. 10-12 mos. <10 mos. Below$1.0 mm Above$1.0 mm Bottom 25 Percent 27,500 26,860 27,500 24,020 34,510 Median 35,390 39,830 33,720 29,220 40,930 Top 25 Percent 44,730 58,170 40,680 36,400 53,240 Legend Course 5-1,792 Resort Course 40,289 Source.Operating&Financial Performance Profiles of 18-Hole Facilities in the U.S.—2003 Edition, National Golf Foundation; subject facility rounds played supplied by City of Palm Springs and Palmer Golf ��� National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—79 Total Revenue 2003 Season Total Revenue U.S. 10-12 mos. <10 mos. Below$1.0 mm Above$1.0 mm Bottom 25 Percent 625,690 671,360 616,870 500,000 1,170,000 Median 983,580 1,030,470 980,000 643,030 1,457,820 Top 25 Percent 1,433,280 1,683,530 1,349,520 857,510 1,889,750 Legend Course* $3,138,227 Resort Course $2,084,861 *Legend Course includes all ancillary revenues,while the Resort Course does not. Source.Operating&Financial Performance Profiles of 18-Hole Facilities in the U.S.-2003 Edition, National Golf Foundation, revenues from City of Palm Springs and Palmer Golf. Total Expenses 2003 Season Total Revenue Below Above U.S. 10-12 mos. <10 mos. $1.0 mm $1.0 mm Bottom 25 Percent 578,780 657,540 577,530 461,250 960,520 Median 851,350 1,051,620 778,090 586,950 1,224,090 Top 25 Percent 1,233,930 1,385,310 1,113,400 718,370 1,670,060 Source:Operating&Financial Performance Profiles of 18-Hole Facilities in the U.S -2003 Edition, National Golf Foundation Number and Distribution of Staffing -Full-Time (Year-Round) Season Total Revenue Below$1.0 Above$1.0 U.S. 10-12 mos. <10 mos. mm mm Course Maintenance 6.0 8.0 4 7 7.1 5.9 Golf Operations 2.5 4.5 1.2 2.9 2 4 General&Administrative 1.0 1.2 0.9 1.1 0.9 Food&Beverage 1.0 1 6 0.6 1.7 1.0 Other 0.0 0.0 0.0 0.0 0.0 Total 10.4 15.3 7.4 12.8 10.2 Source: Operating&Financial Performance Profiles of 18-Hole Facilities in the U S.-2004 Edition, National Golf Foundation National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-80 Total Capital Expenditures Past Three Years (2001-2003) Season Total Revenue U.S. 10-12 mos. <10 mos. Below$1.0 mm Above$1.0 mm Bottom 25 Percent 90,000 89,500 120,000 49,830 185,740 Median 350,000 257,500 356,000 175,000 420,000 Top 25 Percent 756,740 846,500 717,500 785,000 750,000 Source: Operating&Financial Performance Profiles of 18-Hole Facilities in the U S.—2003 Edition, National Golf Foundation TAHQUITZ CREEK GOLF RESORT— SELF OPERATION SCENNARIO NGF Consulting has detailed the revenue and expense performance of the two-course Tahquitz Creek Golf Resort under the assumption of self-operation by the City of Palm Springs. Again, NGF Consulting recognizes the contractual arrangements in place for the operation of the facility but has provided this estimate to be used as a benchmark for comparative purposes and future decision-making. The paragraphs and tables below summarize the overall impact of this scenario for the City of Palm Springs. Financial Assumptions Based on NGF Consulting's knowledge of the area golf market, trends at local golf facilities, and our analysis of Tahquitz Creek Golf Resort, we have created projections for the future operation of the City's golf resort. The following general assumptions have been used: • The basic structure of operation that exists under Palmer Golf would remain in place. This means that staffing and budget line-items would be similar to the present operation. • Direct expenses for personnel are estimated to increase approximately 20 percent under a self-operation scenario. This is a reflection of the higher labor cost present in municipal golf due to the wage and benefit structure. • NGF Consulting has assumed that the hotel/clubhouse re-development plan will be implemented. This means that revenues and expenses will be adjusted based on the re-development process as follows: o The rounds played estimate reflects the severe winter rain in 2005, as well as the beginnings of re-developing the site. o In 2006, rounds, revenues and expenses are adjusted to account for the closing of the clubhouse for re-development. It is assumed that Tahquitz Creek would operate out of a temporary clubhouse for 2006. o The City's golf resort would have a grand re-opening in January of 2007 as the "Palm Springs National Golf Resort." The 2007-08 projections reflect a return to normal operations with increased activity, particularly in the organized tournament/event activities. • NGF Consulting has also assumed a doubling of the marketing and advertising budget for the re-developed "Palm Springs National Resort." National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—81 Projected Income Statement (2005-2008) NGF Consulting has utilized the previously mentioned assumptions to create the cash flow statements that appear in the following exhibits. Each category of revenue has been listed separately. Tahquitz Creek Palm Springs -Combined Resort and Legend Courses Projected Activity Levels (2006-2008) 2006 2006 2007 2008 Legend NT Rounds 40,000 36,000 44,000 48,000 Legend Tournament Rounds 3,200 3,500 5,000 6,000 Total Legend 43,200 39,500 49,000 54,000 ResortNT Rounds 26,500 24,000 30,000 34,000 Resort Tournament Rounds 4,000 4,400 5,000 6,000 Total Resort 30,500 28,400 35,000 40,000 Total Rounds 73,700 67,900 84,000 94,000 Total GF Rounds 66,500 60,000 79,000 88,000 Total Tourn. Rounds 7,200 7,900 10,000 12,000 Tahquitz Creek Palm Springs - Combined Resort and Legend Courses Projected Revenues (2006-2008) 2005 2006 2007 2008 Green Fees $1,890,860 $1,816,250 $2,285,369 $2,967,221 Cart Fees 689,580 633,195 766,281 903,732 Tournament Green Fees 297,143 326,032 412,698 495,238 Golf Shop 552,750 203,700 630,000 705,000 Food & Beverage(All) 608,025 220,675 840,000 940,000 Driving Range 103,180 0 117,600 131,600 Total Gross Revenues $4,141,538 $3,199,851 $6,051,949 $6,142,791 Cost of Goods Sold Merchandise $268,228 $102,472 $348,342 $356,218 Food &Beverage 188,306 72,965 264,247 295,447 Total Cost of Goods Sold $456,534 $175,437 $612,589 $651,666 Total Net Revenue $3,686,004 $3,024,414 $4,439,360 $6,491,1261 National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-82 Tahquitz Creek Palm Springs -Combined Resort and Legend Courses Projected Expenses and Net Income(2005-2008) Payroll Expenses 2006 2006 2007 2008 General and Administrative $275,000 $200,000 $290,000 $298,700 Golf Shop 210,000 216,300 225,000 231,750 Food and Beverage 190,000 60,000 200,000 206,000 Golf Course Maintenance 800,000 824,000 850,000 875,500 Driving Range 15,000 0 16,000 16,480 Cart Department 125,000 100,000 135,000 139,050 Sales 55,000 56,650 60,000 61,800 Total Payroll Expenses $1,670,000 $1,456,951 $1,776,000 $1,829,279 Operating Expenses General and Administrative $450,000 $375,000 $475,000 $489,250 Golf Shop 35,000 36,050 37,000 38,110 Food and Beverage 65,000 66,950 69,000 71,070 Golf Course Maintenance 1,000,000 1,030,000 1,060,000 1,091,800 Driving Range 25,000 25,750 26,500 27,295 Cart Department 175,000 150,000 186,000 191,580 Sales 110,000 100,000 117,000 120,510 Total Operating Expenses $1,860,000 $1,783,760 $1,970,500 $2,029,614 Total Expenses $3,630,000 $3,240,701 $3,746,600 $3,868,893 Net Operating Income $155,004 ($216,287) $692,860 $1,632,232 Debt Service $1,090,000 $1,090,000 $1,090,000 $1,090,000 Net Income/Loss ($934,996 ($1,306,287) ($397,140) $642,232 Results The results of NGF Consulting's preliminary cash flow projections show that the City of Palm Springs golf operation should increase total revenue with the renovations proposed, and when all renovations are complete the overall golf operation is expected to net roughly $540,000 after all expenses and debt service. However, during the re-development period the facility may lose as much as $220,000+ on operations BEFORE any debt service is paid. Therefore it is expected that outside assistance will be required to support the full expense of the golf facility operation during renovation. This situation is not at all uncommon at municipal and daily fee golf facilities throughout the United States in 2004. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-83 UTILIZATION OF FINANCIAL PROJECTIONS The financial projections presented by NGF Consulting have been prepared based on existing and projected market conditions, the quality of the Palm Springs golf resort and the intended segment of the golf market toward which it is /will be oriented. Proper uses of these projections include but are not limited to: • Establishing reasonable performance expectations for the proposed facility. • Determining an appropriate level of support that may be required. • Establishing a benchmark for contract negotiations. • Establishing the basis for financing determinations. NGF Consulting is confident that the stated financial projections can be achieved at the Palm Springs golf facility. However, they should not be viewed as the ultimate target once the facility has been re-opened and operating for a few years. From a practical standpoint, those managing the facility will need to respond to variable market conditions, as well as unforeseen maintenance needs. Overall, these projections suggest that operational break-even would be difficult under a self- operation scenario, unless a renovation/enhancement is completed that includes the addition of a lodging component and expanded clubhouse operation. ® National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—84 Summary Statement In summary, NGF Consulting's analysis of the City of Palm Springs' Tahquitz Creek Golf Resort has revealed a high quality, successful golf facility that has experienced a decline in rounds and revenues since the late 1990s, due primarily to the market dynamics detailed in this report. NGF research, along with customer surveys, has revealed that the facility is generally highly regarded among golfers and that Palmer Golf Management is doing a good job in operating the facility. Though net operating profits to both Palmer Golf and the City of Palm Springs are substantial, the added burden of debt service for the Resort Course that falls to the City has necessitated a subsidy from the general fund. Tahquitz Creek does have issues that need to be addressed if it is to maximize rounds and revenues in this oversupplied golf market, which will become even more competitive in the near future. Foremost among these issues are the inadequacy of the existing clubhouse structure, and the lack of a lodging component. NGF Consulting has made a series of recommendations that, if implemented, should position Tahquitz Creek to withstand the imminent increase in golf course supply, and begin generating revenues sufficient to meet the debt service, without general fund subsidy. NGF's primary recommendations for Tahquitz Creek are: • Enter into an agreement for construction of an on-site hotel, preferably of the upscale variety, that will also incorporate a new clubhouse. • Replace, or extensively renovate, the current clubhouse structure to increase revenue potential and allow Tahquitz Creek to compete more effectively with other highly amenitized facilities in this market. This should be undertaken even if an agreement cannot be reached with a hotel operator. • Retain Palmer Golf Management, or a management company/lessee of similar stature and expertise. • Implement a schedule of capital improvements of approximately $500,000 for the Resort Course and $3.5 million for the Legends Course, to include a restoration of the older track to its classic 1950s feel. • Re-name the club "Palm Springs National Resort'; Tahquitz Creek would become the new name of the current Resort Course. • Retain current price segmentation of the two golf courses. • Implement an aggressive marketing campaign aimed at building stronger relationships with major hotels in the area and at drawing more golfers from the very strong Los Angeles and San Diego markets. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—85 APPENDICTS APPENDIX A- DEMOGRAPHIC OVERVIEW DATA Additional Demographics Riverside- 10 Miles: 25 Miles: San Tahquitz Tahquitz Bernardino- Palm Creek Golf Creek Golf Riverside Ontario,CA Springs CA Resort Resort County Metro CBSA DMA California Entire US Population 1990 120,407 277,828 1,170,413 2,588,796 232,358 29,759,163 248,710,012 2000 154,205 364,024 1,545,387 3,254,821 320,128 33,871,648 281,421,906 CAGR 1990-2000 2.5% 2 7% 2 8% 2 3% 3.3% 1 3% 1 2% 2004 185,274 440,606 1,856,913 3,763,495 391,652 35,979,311 293,686,994 2009 222,817 533,473 2,228,111 4,369,109 478,779 38,453,601 308,074,238 CAGR 2004-2009 3.8% 3 9% 3 7% 3 0% 4 1% '1 3% 1 0% Households 1990 52,977 107,015 402,070 866,812 87,715 10,381,043 91,947,641 2000 66,619 137,107 506,218 1,034,813 117,402 11,502,870 105,480,101 CAGR 1990-2000 2 3% 2 5% 2 3% 1 8% 3.0% 1 0% 1 1/% 2004 80,238 166,017 612,948 1,190,887 143,941 12,227,339 112,708,665 2009 96,386 20Q599 738,513 1,374,504 175,813 13,079,667 121,218,050 CAGR 2004-20093.7% 3.9% 38% 2-9% 4.1% '14% 15% Median Age 1990 42 35 32 30 34 32 33 2000 44 38 33 32 37 33 35 CAGR 1990-2000 0 4% 0 7% 0.5% 0.5% 0 7% 0 6% 0 7% 2004 43 37 33 32 36 34 36 2009 44 38 34 33 37 35 37 CAGR 2004-2009 0.6% 0 5% 0 5% 0.6% 0 5% 0.8% 0.6% Median Household Income 1990 $31,132 $28,331 $33,107 $33,284 $29,753 $35,843 $30,102 2004 $43,568 $40,928 $46,790 $46,226 $41,728 $51,212 $45,660 CAGR 1990-2004 2.8% 3 1% 2 9% 2.8% 2.9% 3.0% 3 5% 2009 $48,977 $46,355 $52,595 $51,861 $47,114 $56,749 $51,215 CAGR 2004-2009 2 4% 2 5% 2 4% 2 3% 2.5% 2 '1% 2 3% Median Disposable Income 2004 $37,797 $35,687 $40,164 $39,748 $36,332 $43,337 $39,321 2009 $41,996 $39,635 $44,423 $43,941 $40,371 $47,299 $43,503 CAGR 2004-2009 2.1% 21% 2.0% 20% 21% 18% 20% - National Golf Foundation Consunn -City of Palm springs Municipal Golf Operation-86 Riverside- San 10 Miles: 25 Miles: Bernardino- Tahquitz Tahquitz Ontario,CA Palm Creek Golf Creek Golf Riverside Metro Springs Resort Resort - County CBSA CA DMA California Entire US Population by Age-2004 Age 0 to 4 5.5% 6.7% 7.3% 7.6% 7.0% 7 2% 6.8% Age 5 to 14 11.6% 14 3% 16.3% 16.8% 14.4% 14.9% 13.9% Age 15 to 19 5 6% 7.0% 8.0% 8.3% 7.1% 7.3% 7.1% Age 20 to 24 5.8% 6.7% 7.5% 7.8% 7.1% 7.1% 7 0% Age 25 to 34 11 6% 12.7% 13.9% 14.2% 13.2% 14.8% 13.6% Age 35 to 44 12.6% 13.0% 14 7% 14 7% 12 9% 15.5% 15.1% Age 45 t0 54 12.7% 12.1% 12.3% 12.5% 11.7% 13 5% 14.2% Age 55 to 64 11.8% 10.0% 7.9% 7.9% 9.8% 8.9% 9.9% Age 65 to 74 10.8% 8.6% 5.9% 5.3% 8.4% 5.5% 6.4% Age 75 to 79 4.9% 3.7% 2.5% 2.1% 3.5% 2.1% 2 5% Age 80 to 84 3.9% 2.8% 1.9% 1.6% 2.6% 1.6% 1.9% Age 85 Plus 3.4% 2.4% 1 7% 1 4% 2.2% 1.5% 1.8% Median Age 43 37 33 32 36 34 36 Income-2004 Median HH Income $43,568 $40,928 $46,790 $46,226 $41,728 $51,212 $45,660 Per Capita Income $29,605 $23,154 $20,060 $18,750 $23.396 $24,152 $23,504 Average HHIncome $68,359 $61,450 $60,772 $59.254 $63,659 $71,067 $61,246 Household Income-2004 Less than$10,000 8.7% 9.3% 8.2% 8.5% 8.9% 8.2°% 9.2% $10,000-$14,999 6.4% 7.0% 5.8% 5.8% 6.6% 5.1% 5.7% $15,000-$24.999 13.1% 14.1% 12.1% 12.1% 13.9% 10.6% 117% $25,000-$34,999 12.3% 12.8% 11.5% 11.6% 12.8% 10.5% 11.8% $35,000-$49,999 15.3% 15.9% 15.5% 15.7% 15.8% 14.5% 15.8% $50,000-$74,999 17.1% 17.2% 19.5% 19.8% 17.2% 18.6% 19.4% $75,000-$99,999 9.6% 9.1% 12.5% 12.3% 9.2% 12.5% 11 5% $100,000-$124,999 6.0% 5.5% 7.1% 6.9% 5.7% 7.9% 6.4% $125,000-$149,999 3.4% 29% 3.2% 32% 31% 4.3% 3.1% $150,000 Plus 8.1% 6.2% 4.6% 4.2% 6.8% 7 8% 5.3% Race-2004 White 78.1% 70.3% 65.5% 62.1% 673% 59.6% 75.1% Black 2.4% 2.5% 6.3% 7 7% 2.2% 6.7% 12.3% American Indian/Eskimo 0.8% 1.3% 1.2% 1.2% 0.9% 1 0% 0.9% Asian/Pacific Islander 3.1% 2.3% 4.0% 4.6% 2.3% 11.3% 3.8% Other Race 15.6% 23.6% 23 0% 24.4% 27.4% 21.5% 8.0% Ethnicity-2004 Hispanic 33.7% 44.3% 402% 42.3% 501% 35.7% 14.3% Non Hispanic 66.4% 55.7% 59.8% 57.7% 49.9% 64.3% 85.7% National Golf Foundation Consulting, Inc.-City of P21m Springs Municipal Golf Operation-87 Riverside- 10 Miles:25 Miles: San Tahquitz Tahquitz Bernardino- Creek Creek Ontario,CA Palm Golf Golf Riverside Metro Springs Resort Resort County CBSA CA DMA California Entire US Housing-2004 Total Housing Units 121,232 229,430 707,248 1,364,106 201,14512,983,845123,896,928 Owner Occupied Housing Units 45.9% 49.3% 601% 58.7% 47.8% 54.1% 61.0% Renter Occupied Housing Units 20.3% 23.0% 26.5% 28.6% 23.7% 40.1% 30.0% Vacant Units 33.8% 27.6% 13.3°% 12.7°% 28.4% 5.8% 9.0% Households-2004 Total Households 80,238 166,017 612,948 1,190,887 143,94112,227,339112,708,665 Average Household Size 2.3 2.6 3.0 3.1 2.7 29 2.5 Married Households w/Children 15 5% 21.8% 30.5% 31.9% 22 9% 27.7% 24.5% Married Households w/No Children 29.9% 28.5% 25.8% 24.3% 28.0% 23.5% 26.5% Nonfamily Households w/Children 8.2% 11.1% 126% 14.1% 11.0% 12A% 110% Households-1 Person 1.6% 1.6% 1.7% 1.8% 1.7% 2.1% 1.7% Households-2 People 39.9% 36 2% 30.4% 28.7% 35.6% 29.6% 33 6% Households-3People 9.8% 11,9% 151% 16.0% 11.6% 16.0% 17.0% Households-4 People 8.0% 10.9% 15.5% 16.3% 10.9% 14.9% 14 6% Households-5 People 4.7% 6.9% 9.5% 10.0% 7.3% 8 1% 6.8% Households-6+People 4.6% 7 1% 8.9% 9.4% 8.1% 7.9% 4.4% Employment-2004-Census Based Employed Pop.Age 16 Plus 151,346 341,5151,387,219 2,780,568 301,80527,489,676228,863,934 •Civilian Employed 93.9% 92.4% 92.2% 91.1% 92 5% 92.1% 93.5% %Civilian Unemployed 61% 7.4% 7.4% 7.8% 7.5% 6.9% 5.7% %in Armed Forces 0.1% 0.2% 0.4% 1.2% 0.1% 0.9% 0.8% %in Labor Force 50.7% 53.1% 58.4% 59.6% 54.1% 62.5% 64 0% %Not in Labor Force 49.3% 46.9% 41.7% 40 4% 45.9% 37.5% 36.0% Educational Attainment-2004 Population-Age 25 Plus 132,406 287,6531,129,852 2,241,222 252,24422,830,499191,837,342 Less than 9th Grade 7 7% 11.6% 10.6% 10.5% 14.1% 11.5% 7.6% 9th-12th Grade 12.4% 14.3% 14.4% 14.8% 14.2% 11.7% 12.1% High School Graduate 22.7% 23 6% 24.6% 24.8% 22.1% 20.1% 28 6% Some College, No Degree 27.1% 25.6% 26.8% 26.2% 24.5% 22.9% 21.1% Associate Degree 6.0% 5.8% 6.9% 7.2% 5 5% 7.1% 6.3% Bachelor's Degree 14 8% 11.9% 10.8% %7% 12.2% 17.1% 15.6% Graduate or Prof. Degree 9.4% 7.2% 6.0% 5.8% 7 4% 9.5% 8.9% National Golf Foundation Consulting, Inc -City of Palm Springs Municipal Golf Operation-88 APPENDIX B —ADDITIONAL MARKET AREA ECONOMIC INFORMATION Increased Competititon from Phoenix/Scottsdale In a February 20, 2005 article, "Deserts Battle for Tourists,"the Desert Sun details the aggressive advertising campaign, "The Desert is a Myth," currently being carried out by the Greater Phoenix Convention and Visitors Bureau. Many view the campaign as an aggressive effort to attract potential winter visitors away from Palm Springs and the Coachella Valley to the greater Phoenix area - something that could have a far-ranging impact on valley golf courses, resort hotels, casinos and restaurants. The $2.4 million marketing campaign featured bigger-than-life billboards over the Lincoln Tunnel and print media advertisements in the Los Angeles Times, New York Times and National Geographic Adventure Magazine. Gary C. Sherwin, vice president of market development for Palm Springs Desert Resorts Convention and Visitors Authority, and other tourism authorities suggest that the campaign could affect Palm Springs' efforts to tap the New York market. Discount air carrier, JetBlue Airways, now offers direct flights from New York to Sky Harbor International Airport in Phoenix. Three resort properties have opened in the greater Phoenix/Scottsdale area since 2003 -JW Marriott's Desert Ridge, Sheraton Wild Horse Pass Resort and Westin Kierland Resort & Spa. The new James Hotel opened in January, and a 1,000-room Sheraton is expected to be built next to an expanded, $600-million Phoenix Convention Center. Competition is expected to steam up even more when the ultra high-end $2.5 billion, 2,700-room Wynn Las Vegas resort opens in April. Phoenix and other cities seem to be outspending the Palm Springs area when it comes to promoting tourism. Greater Phoenix's Convention and Visitors Authority, with an operating budget of$19.8 million, spends on marketing half of the entire Palm Springs Convention and Visitors Authority budget. A marketing analysis last year indicated that local tourism officials were operating with a $5 million budget in 2004, and that the Palm Springs Bureau of Tourism's overall budget was reported to be $1.5 million. Conversely, the combined budget for Phoenix/Scottsdale is $19.8 million, and Las Vegas' tourism and convention budget now stands at $190.4 million. Tourism bureau budgets in Los Angeles and San Diego were $22.3 million and $16.2 million in 2004, respectively. Scottsdale's tourism budget stood at $6.6 million, or$1.6 million more than what was spent by the Palm Springs CVA. The severe reduction in the California state tourism budget, and the elimination several years ago of the federal tourism marketing program, has placed the sole responsibility of marketing the region on the CVA. Local tourism officials are responding to the need for a more aggressive approach. The Palm Springs Bureau of Tourism is set to release a new marketing campaign - "Palm Springs, America's Desert Star"—that will be the city's new tagline on marketing materials. Another print media campaign - called "Palm Springs Style!"- is budgeted to cost$327,000 from February through June 30, and has been designed to target the national travel market. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—89 Palm Springs International Airport Activity— IFY2001 • 98,000 Aircraft Arrivals and Departures • 640,000 Passenger Enplanements • 481,925 Airline and General Aviation Visitors • 5,822,680 Visitor Days • $491 Million Spent by Visitors • 14,966 Jobs Supported by Airport Activity • $925 Million Gross Revenues Created by Airport Activity On-Airport Economic Impact • $131 Million Gross Revenues • $48 Million Payroll • 1,146 Jobs on the Airport • 41 private employers and two government agencies located on airport property Total Economic Impacts • $925 Million Gross Revenues to Coachella Valley Businesses • $795 Million Value Added to the Regional Economy • $309 Million Payroll to Local Workers • 14,966 Jobs Supported by the Airport Economic Activity Created by Air Visitors • $465 Million in Visitor Spending • 9,274 Jobs in the Region • $157 Million in Payrolls for Workers in the Hospitality Industry Airline Visitors • Stayed 12.3 Days • Spent $84 per Day • Spent$1,055 per Trip Tax Revenues from Economic Activity • Local Tax Revenues- $69.5 Million • State Tax Revenues- $15 Million • Total Tax Revenues - $84.5 Million National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—90 ®uvook/Forecast for Coachella Valley Some local observers feel that the economic prospects of the Coachella Valley are as positive as they have been since the Sept. 11, 2001 tragedy. Indian Wells-based business consultant and Wheeler's Desert Letter Publisher Bob Marra notes: "The Coachella Valley economy as a whole is very robust," Marra says. "I attribute much of this to the increasing number of people, especially moneyed people, who are setting up permanent— not just part-time— residency here. They're affecting every aspect of the valley economy, most notably real estate and retail, and they are altering our demographics in major ways. In purely economic terms, this is really good news." The Coachella Valley economy compares favorably to the rest of the nation and the Inland Empire, but analysts say the growth is slowing. The valley has steadily added jobs for the past 30 months, but economists at Chapman University forecast that growth will dip in the first quarter of 2005 for the first time since 2002. Last year"was extremely strong and 2005 is still strong, but it's not going to be as strong as the '04 fourth quarter," said Esmael Adibi, the lead researcher and director of the Anderson Center for Economic Research at Chapman University. The Center believes that tourism and construction still drive the local economy, and that as long as these two areas remain strong,job creation will remain at the level it has been. However Adibi worries about construction spending and considers it the heaviest weight in determining the Valley's job growth. "Construction spending and home prices are not sustainable," he said. Adibi also considers median home prices, occupancy rates and the average number of airline passengers when forecasting economic growth rates. All but median home price are expected to slow in the first quarter of 2005. Airline passenger growth, which is of particular importance to the fortunes of the City's golf courses, also slowed from 14.5 percent annual growth in the third quarter to 10.6 percent annual growth in the fourth quarter according to the report. Bryant L. Francis, marketing director for Palm Springs Airport, said tourism and the "sheer increase in local population" should keep the airport from slowing any time soon. The airport had '143,367 passengers pass through security in January, 2.4 percent more than the previous year, despite four consecutive days of storms that resulted in canceled flights. The tables below indicate that the more vigorous population growth is occurring primarily in the East Valley, and that median household income in Palm Springs lags behind much of the rest of the valley cities. Source:The Press-Enterprise National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—91 Coachella Valley—Additional Demographics Population by City - Coachella Valley Cities City Population Growth 2002 2000-2002 Indio 52,187 3,071 Cathedral City 45,417 2,770 Palm Springs 43,715 908 Palm Desert 42,863 1,708 La Quinta 28,715 5,021 Coachella 24,282 1,558 Desert Hot Springs 16,886 304 Rancho Mirage 14,345 1,096 Indian Wells 4,348 532 Source:CA Dept of Finance;U.S.Census Bureau Median Income by City Coachella Valley Cities, 2002 Median City Income Indian Wells $103,362 Rancho Mirage $67,516 La Quinta $61,227 Palm Desert $53,189 Cathedral City $43,603 Palm Springs $39,941 Indian Wells $38,079 Coachella $31,335 Desert Hot Springs $28,634 Source Economics&Politics, Inc. �� National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—92 APPENDIX C — GOLF DEMAND OVERVIEW DATA NGF predictive demand models are based on historical golfer participation characteristics, and they incorporate existing and emerging demographic trends in the subject market area. In January of each year, Market Facts mails golf participation surveys to 50,000 households nationwide to determine the previous years' golf participation characteristics. In order to be representative of the U.S. population, the observations are weighted to match total U.S. demographics. The NGF Golf Demand Model includes the critical combination of age and income, regional seasonality, and available golf course supply, as well as existing and emerging demographic trends in a particular market area. The model can be used as a benchmark for estimating potential market strength in a particular area. Because the sample is so large, NGF is extremely confident of its accuracy. In statistical terms, the national participation rate is estimated to be 12.6 percent plus or minus 0.2 percent at the 90 percent confidence level. NGF Golf Demand Indices The Golfing Household Index is based on Predicted Number of Golfing Households, which compares golfing household participation in a particular geography to the national base index of 100. The Rounds Index is based on Predicted Number of Rounds, which compares the propensity of rounds played per household in a particular geography to the national average rounds index of 100, The predictive indices for golfing households and rounds demanded were developed in order to determine the relative strength of a particular golf market area in comparison to other golf markets and the nation as a whole. These predictive demand indices help identify where golfing households and rounds activity are concentrated by comparing various geographies with one another and the national average, which is 100. For example, if a market has a Golfing Household Index of 120, that area is estimated to have 20 percent higher golf participation rate as compared to the U.S. average. And, if a market has a Rounds Index of 120, that area is estimated to have 20 percent higher average rounds per household as compared to the U.S. average. Although both the golfing household index and the rounds index help to predict golf demand in a particular market, each index is derived independently and does not necessarily relate to the other. It is possible for an area with a low golfing household demand index to have a high rounds demand index and vice versa. In other words, some markets may have fewer golfing households, but those households play more rounds of golf; other markets may contain a large number of golfing households but the households play less frequently. A market area with a higher than average golfing household index in conjunction with a higher than average rounds index would be considered a prime area in terms of overall predicted golf demand. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—93 APPENDIX D— COMPETITIVE GOLF FACILITY DATA Coachella Valley Private Clubs Facility Name City #of Holes] Year OpenAvondale Golf Club Palm Desert 1 1969 Bermuda Dunes Country Club Indio 27 1969 Bighorn Golf Club Palm Desert 36 1991 Canyon Country Club Palm Springs 18 1961 Club at Morningside Rancho Mirage 18 1983 Desert Horizons Country Club Indian Wells 18 1979 Desert Island Golf&Country Club Rancho Mirage 18 1971 Eldorado Country Club Indian Wells 18 1959 Indian Ridge Country Club Palm Desert 36 1999 Indian Wells Country Club Indian Wells 36 1955 Ironwood Country Club Palm Desert 36 1974 La Quinta Country Club La Quinta 18 1959 La Quinta Golf Course-Citrus La Quinta 18 1981 Marriott's Rancho Las Palmas Country Club Rancho Mirage 27 1977 Mission Hills Country Club Rancho Mirage 54 1970 Monterey Country Club Palm Desert 27 1980 Mountain View Country Club La Quinta 18 2003 Palm Valley Country Club- Palm Valley Palm Desert 36 1985 PGA West Private Golf Courses La Quinta 54 1987 Rancho La Quinta Golf Course La Quinta 36 1993 Santa Rosa Country Club Palm Desert 18 1978 Shadow Mountain Golf Club Palm Desert 18 1959 Tamarisk Country Club Rancho Mirage 18 1952 The Hideaway Golf Club La Quinta 36 2001 The Lakes Country Club Palm Desert 27 1983 The Palms Golf Club La Quinta 18 1999 The Plantation Golf Course Indio 18 1996 The Quarry at La Quinta La Quinta 18 1994 The Reserve Club Indian Wells 18 1998 The Springs Country Club Rancho Mirage 18 1975 The Vintage Club Indian Wells 36 1981 Thunderbird Country Club Rancho Mirage 18 1952 Tradition Golf Club La Quinta 27 1997 Tri Palm Golf Club rThousand Palms 27 1971 National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-94 Coachella Valley 9-Hole or Alternative Length* Facilities Facility Location #Holes/Type Classification Canyon Estates Country Club Palm Springs 9H- Par 3 Private Chaparral Country Club Palm Desert 18H-Executive Private Marrakesh Country Club Palm Desert 18H- Executive Private O'Donnell Golf Club Palm Springs 9H- Regulation Private Outdoor Resorts/Palm Springs Cathedral City 27H - Par 3 Private Outdoor Resorts/Indio Indio 18H- Par 3 Private Palm Desert Greens Country Club Palm Desert 18H-Executive Private Palm Royale Country Club La Quinta 18H- Par 3 Private Portola Country Club Palm Desert 18H- Par 3 Private Rancho Casa Blanca Indio 18H - Par 3 Private Seven Lakes Country Club Palm Springs 18H- Executive Private Sunrise Country Club Rancho Mirage 18H- Executive Private The Vineyards Coachella 9H- Regulation Private Proposed New Golf Bourses Though new golf course construction has slowed considerably in most markets nationwide, it continues unabated in the Coachella Valley. According to our investigation of the golf market, there are presently twelve new golf course projects that are either in planning or under construction in the Valley. These projects include seven daily fee (six resort, one residential), one municipal (proposed second course at SilverRock Resort), and four private facilities, including the second course at Toscana. If all were completed, these projects would add up to 13 new courses in the Valley, comprising 225 holes, an estimated 135 of which will be open to the public. In the City of Palm Springs itself, one daily fee resort (Escena) is under construction and another is planning (Indian Oasis). Additionally, we have profiled four other potential projects that appear to be more speculative at this time, but which could further add to the golf supply should one or more come to fruition. A synopsis of these potential projects follows: National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-95 Project Name Location Type Status Synopsis Andalusia at Coral La Quinta 36-Hole Under The 18-hole Rees Jones golf course Mountain Private Construction in this private resort community is Resort expected to open for play by Summer 2005.A second 18-hole course is to follow. In addition to the two 18-hole golf courses and 20,000 square-foot clubhouse, the completed project is planned to include 600 single-family homes, and various recreational amenities. Classic Course at Indian Wells 18-Hole Under The Palmer Course Design golf Northstar Private Construction course within this master planned Resort w/ community is expected to open by Real Estate Fall 2005. Plans for the 500-acre project include the 18-hole golf course, 102"golf view villas," 139 timeshare units,465 condominiums, a retail village, a research and development park, offices, commercial buildings, and a 350- room hotel. The golf facility will be used for the Bob Hope Chrysler Classic and other charitable events. Desert Cove Cathedral 18-Hole In Planning Drawings and course plans for this City Daily Fee new golf facility development have Resort been approved by the city with further advancement pending the city's securing a 4-star hotel and resort. Entitlement process is ongoing and construction is anticipated by October 2005 Ultimately, a 4-star hotel and convention center are also sought to accompany this project Escena Palm Palm 18-Hole Under The golf course, by Nicklaus Design, Springs Springs Daily Fee/ Construction is scheduled to open by Spring 2005. Resort w/ The project will also include a 15,000 Real Estate square-foot clubhouse, a 450-room resort, timeshares, and 550 homes surrounding the course. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—96 Project Name Location Type Status Synopsis Fantasy Springs Indio 18-Hole In Planning Planning continues for the golf Resort Daily Fee/ course in this proposed expansion Resort w/ project on the Cabazon Indian Real Estate Reservation; no construction schedule at this time. Project, to be developed in phases,will include an 18-hole golf course, a 324-room hotel with 7-story towers, spa,4,200-seat convention center and entertainment arena, 1,200-seat conference center, and swimming pool. Highland Falls Desert Hot 18-Hole In Planning The project has been approved and Springs Daily Fee/ grading is scheduled to begin in Resort w/ March 2005 In addition to the 18- Real Estate hole golf course,this resort project is to include single-family and multi- family homes and a hotel. Indian Oasis Palm 18-Hole In Planning This proposed golf resort project has Resort Springs Daily Fee/ been approved by the City but no Resort w/ construction schedules have been Real Estate determined The project is to include an 18-hole golf course,200 luxury vacation units,400-room luxury hotel, convention and meeting facilities, a health spa, restaurants, and 500,000 square feet of office space Shadow View Coachella 18-Hole In Planning Plans for this golf community are in Country Club Daily Fee progress with advancement pending w/Real local approvals. No schedules for Estate construction have been determined at this time. Plans for the project include an 18-hole golf facility, 1,600 homes and 500,000 square feet of retail space National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—97 Project Name Location Type Status Synopsis SilverRock Resort 2 La Quinta 18-Hole In Planning The first Palmer Design course in this Municipal municipal golf resort opened for play Resort February 14, 2005.Timing for the second phase of this project is as yet undetermined. Eventually, the project will include two tournament-quality 18-hole golf courses, clubhouses and practice range,4-or 5-star hotel, boutique hotel and spa, rental or timeshare casitas, community center, recreational facilities, 18 acres of lakes, hiking trails, and 25 acres of native area landscape. Stone Eagle Golf Palm 18-Hole Under The golf course in this private golf Club Springs Private w/ Construction community is expected to open by Real Estate November 2005. The project is planned to include an 18-hole golf course and 20,000 square-foot clubhouse, driving range, and 44 single-family homes. Sun City Shadow Indio 9-Hole Under The back 9 of this new golf Hills Daily Fee construction community development is under w/Real construction and is expected to be Estate complete by late Summer 2005. The 806-acre project will include the 18- hole golf course, 15,000 square-foot clubhouse, driving range, and 3,275 homes for age 55 and over with various other recreational amenities Toscana Country Indian Wells 18-Hole Under The first of two Nicklaus Design 18- Club Private w/ Construction hole golf courses in this residential Real Estate development opened January 27, 2005, and the second course is scheduled to open November 2005. In addition to the two 18-hole courses and clubhouse, 620 homes will be built within the gated community.A sports club, including a tennis center and spa, along with a banquet facility are planned for subsequent construction phases. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—98 Potential Projects Project Name Location Type Status Synopsis Joshua Hills Thousand 18-Hole Pre This large golf resort community Palms Daily Fee/ Planning development is in the review and Resort w/ permit process, and if approved is Real Estate expected to be built over 10 years or so The project has drawn opposition from growth activists and environmental groups. Phase I of the 7,200-acre landfill project is to feature a technology center surrounded by a golf course, a fitness center and various types of residential units.The remainder of the project, with up to 7,000 housing units, may also include up to 12 golf courses, 3 resort hotels,various recreational amenities, public schools, emergency services and a commercial center. Morongo Band of Cabazon 18-Hole Pre- Long-range planning is in progress Indians Golf Daily Fee/ Planning for this new golf resort development, Course Resort w/ with no timeline determined at this Real Estate time Possible features of this 1,700- acre project include an 18-hole golf course, commercial and retail development, and perhaps a resort- type hotel and a residential units Shenandoah Thousand 18-Hole Pre- Early planning is in progress for this Springs Village Palms Daily Fee/ Planning new village development with the golf and Golf Club Resort w/ course part of the"future"plans Real Estate Infrastructure work is underway on the residential development and no construction schedule is determined for the golf course phase of the project Included in this mixed-use project will be 362 single-family homes, a wellness center, 165-room hotel and 2,000-seat special events center, a retail center with restaurants TBD Coachella 36-Hole Pre- This new golf community Daily Fee/ Planning development has been proposed for Resort w/ construction and further Real Estate advancement is pending various approvals No schedules are determined as yet. Plans for the 1,877-acre project include two 18- hole golf courses,a resort hotel and as many as 8,000 homes �� National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—99 In PEann7i u j/Undae Construction Map Joshua Tree 'o' �! Desert Hot W bland Falls National Park e-4 ____Sprm9s O�_ 5 J - Joshua tree N Dille o n __L, _'n Wilderness ni0 North Pa -llpry� !nsloirLpa d Springs Qf 0 111} �Coi Escena Palm Springs) C it L! I p p R- a1 4,4t Palm Sprit'i I A_. ,Thousand Palms _ - �— Indian Oasis Golf Course ....`.ILO PlnahShore�Dr I I *J C jClassk Course At North5tar Agua CalioNe o¢O Desert Cove O'- p VIE P. S I D F. lot - 1 J b;_Ir Sun City Shadow Hills p - r�tl Mirage I Toscana Country Cub I - b du5 f Fre uai y_i� treT IrMto s1 Stone Club Golf Eagle Indian VVells I4._.h; p)', O r 9 I =+, Shadow View Country Club _ O, Fantasy Springs Resort r, I� 5��ve ` �oachella _ I La Qmnta6� j0 SiHerRod:Rasort k °e _ (74J o - 'ri' Thermi,` Andalusia At Coral Mourdaln li O San Bernardino National Forest ili - �2nd A ©2001 Wvoas tt Cary.All npMs reserved. IC National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—100 APPENDIX E — CLASPTM SURVEYS Executive Summary Course: Tahquitz Creek Golf Resort Time Period: From 10/30/2004 to 2/28/2006 Player Type: Overall Last Played This Course: Overall (within the past 12 months) The following are key findings with regard to your customer satisfaction study. This report is based on 140 total responses. 5 Factors Most Important to Your Golfers: 1. Overall Course Conditions (tees, fairways) 2. Overall Value of Course 3. Tee-time Availability 4. Pace of Play 5. Condition of Greens NGF Loyalty Index: 36% The Competition Listed below are those facilities that your golfers indicated they play most often in the area. You may consider these facilities your closest competition: • Monterey Country Club • Cimarron Golf Resort • Desert Dunes Golf Course • Oasis Country Club • Tri Palm Golf Club Satisfaction Ratings vs.the Competition When compared to the local competition,your facility has a higher satisfaction rating for the following factors: • Overall Value of Course • On-course Services (restrooms, drinking water) When compared to the local competition,your facility has a lower satisfaction rating for the following factors: • None Share of Wallet You have an average of 39%of your customers'overall business. Frequent Customers Characteristics of frequent customers at Tahquitz Creek Golf Resort: • Age 50+ • Male • Income greater than$100,000 • Average Number of Rounds Played Annually- 8 to 24 • Average Score: 80 to 99 Satisfaction at your Facility Tahquitz Creek Golf Resort was well above the benchmark for the following factors(index of 110 or more): • None National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—101 Tahquitz Creek Golf Resort was well below the benchmark for the following factors (index of 90 or less): • None NGF Customer Fulfillment Grid This report is based on 140 total responses. Satisfaction Importance 1. Overall Value of Course 84% 63% 2. Convenience of Course Location 79% 20% 3. Tee-time Availability 74% 41% 4. Overall Course Conditions(tees, fairways) 83% 69% 5. Condition of Greens 79% 21% 6. Scenery and Aesthetics of Course 77% 9% 7. Pace of Play 71% 32% 8. Condition of Golf Cars 81% 9. Amenities (clubhouse, pro shop, locker room) 62% 1% 10. Friendliness/Service of Staff 85% 12% 11. Food and Beverage Service 70% 1% 12. On-course Services(restrooms, drinking water) 68% 1% 13. Overall experience 87% 19% NGF Loyalty Index Shown below is the loyalty breakdown at your facility, based on 129 qualifying responses. 36% of your golfers are loyal to your course. Tahquitz Creek Golf Resort Benchmark' Loyal golfers at your facility: 36% 29% Somewhat vulnerable golfers at your facility: 51% 53% Highly vulnerable golfers at your facility: 13% 18% Golfers not loyal to your facility: 0% 0% ' Percentage of golfer loyalty at national courses,price level(7 courses,718 responses)for the same date range and player type. If the benchmark is displayed as"n/a,"there were not enough responses to create a benchmark for your chosen comparative set.Try to increase the scope of your benchmark selection. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—102 Competitive Analysis Your share of your customers'business vs.the competition, for only those that live within 30 miles of your facility. This report is based on 67 total responses. Course Market Share(1) Tahquitz Creek Golf Resort 39% Monterey Country Club 5% Cimarron Golf Resort 4% Desert Dunes Golf Course 3% Oasis Country Club 3% Tri Palm Golf Club 3% Cathedral Canyon Golf&Tennis Club 3% Desert Princess Country Club 3% Mesquite Golf Club 3% Indian Wells Country Club 2% Mountain Vista Golf Course At Sun City Palm Desert 2% Desert Willow Golf Resort 2% Palm Springs Country Club 2% Landmark Golf Club 1% Trilogy Golf Club At La Quinta 1% Based on total volume of rounds played. National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—103 Share of Wallet Percentage of your customers'overall rounds played at your facility. This report is based on 140 total responses. Customer Segments Average Rounds Played at Average Annual % Rounds Played at Tahquitz Creek Golf Resort Rounds Your Facility Overall 10 30 33% Age Under30 4 15 27% 30-49 9 21 43% 50+ 10 33 30% Gender Male 10 28 36% Female 11 35 31% Income Less Than$50,000 15 25 60% $50,000-99,999 12 35 34% $100,000 or more 6 26 23% Rounds Played Less than 8 1 3 33% 8-24 4 14 29% 25+ 20 60 33% Average Score Under80 14 33 42% 80-99 10 32 31% 100 or more 9 23 39% National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—104 Importance Ratings This report is based on 140 total responses. Age Gender Household Income Rounds Played Customers Loyalty Benchmark Under 30 - Under $50K Under 8 - Not Business Drivers Overall (1) 30 49 50+ Male Female $50K $100K+ 8 24 25+ New Existing Loyal Loyal $99K Overall Course Conditions (tees, 69% 46% 67% 69% 71% 69% 75% 62% 74% 65% 71% 65% 73% 62% 72% 72% 70% fairways) Overall Value of 63% 50% 67% 72% 60% 63% 68% 77% 65% 62% 61% 60% 67% 56% 65% 65% 64% Course Tee-time Availability 41% 32% 0% 46% 41% 40% 43% 62% 40% 43% 36% 54% 29% 41% 42% 39% 43% Pace of Play 32% 21% 33% 26% 36% 36% 21% 23% 37% 29% 25% 28% 40% 29% 33% 26% 36% Condition of Greens 21% 22% 67% 18% 21% 25% 7% 31% 14% 25% 25% 23% 16% 32% 17% 17% 24% Convenience of20% 23% 0% 10% 25% 19% 25% 31% 21% 22% 11% 21% 24% 18% 21% 22% 22% Course Location Overall experience 19% 9% 33% 26% 16% 20% 14% 8% 23% 18% 29% 18% 16% 26% 17% 22% 18% Friendliness/Service 12% 11% 0% 15% 12% 13% 11% 0% 12% 16% 14% 9% 15% 6% 15% 20% 10% of Staff Scenery and Aesthetics of Course 9% 10% 33% 10% 8% 7% 18% 0% 9% 13% 21% 2% 11% 12% 9% 13% 7% On-course Services (restrooms, drinking 1% 1% 0% 3% 1% 1% 4% 0% 2% 0% 4% 2% 0% 3% 1% 2% 0% water) Food and Beverage 1% 2% 0% 3% 1% 2% 0% 0% 0% 3% 0% 4% 0% 3% 1% 0% 2% Service Amenities (clubhouse, pro 1% 2% 0% 3% 0% 0% 4% 0% 0% 0% 4% 0% 0% 3% 0% 0% 0% shop, locker room) I Benchmark compares your importance ratings to averages for national courses,price level(7 courses,718 responses)for the same date range and player type. z"New"golfers are those who played your course for the first time within the past 2 years,while"Existing"golfers are those who played your course for the first time more than 2 years ago. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—10 Media Habits This report is based on 140 total responses. Age Gender Household Income Rounds Played Customers(1) Loyalty Business Drivers Overall Under 30 30-49 50+ Male Female Under$50K $50K-$99K $100K+ Under 8 8-24 25+ New Existing Loyal Not Loyal Most Popular Radio Stations None(0 AM) 51% 100% 64% 46% 52% 50% 62% 56% 54% 68% 42% 53% 62% 49% 54% 52% None(0.0 FM) 37% 33% 41% 37% 38% 36% 38% 37% 44% 50% 39% 29% 50% 33% 33% 41% KWXY-FM(98.5 FM) 5% 0% 0% 7% 6% 4% 15% 9% 1% 4% 2% 9% 3% 6% 9% 2% KCMJ(1010 AM) 4% 0% 8% 3% 6% 0% 0% 7% 4% 4% 0% 9% 6% 4% 0% 7% KDES-FM(104.7 FM) 4% 0% 0% 5% 4% 4% 0% 5% 4% 0% 2% 7% 0% 5% 0% 6% KPSI(920 AM) 4% 0% 3% 4% 4% 4% 15% 0% 4% 4% 2% 5% 0% 5% 7% 2% KEZN(103.1 FM) 4% 0% 8% 2% 3% 7% 0% 2% 4% 0% 2% 7% 0% 5% 7% 2% KPLM(106.1 FM) 4% 0% 3% 4% 5% 0% 8% 7% 1% 4% 2% 5% 0% 5% 9% 1% KMRJ(99.6 FM) 3% 33% 5% 1% 4% 0% 8% 0% 4% 4% 0% 5% 9% 1% 0% 5% KWXY(1340 AM) 3% 0% 0% 4% 3% 4% 8% 2% 1% 0% 2% 5% 0% 4% 2% 2% KVCR(91.9 FM) 2% 0% 0% 3% 3% 0% 0% 5% 0% 0% 5% 0% 0% 3% 0% 4% KCRI(89.3 FM) 2% 0% 5% 1% 3% 0% 0% 2% 3% 0% 0% 5% 0% 3% 7% 0% KNWQ(1140 AM) 2% 0% 0% 3% 3% 0% 0% 2% 3% 4% 2% 2% 3% 2% 2% 2% KNWZ(970 AM) 2% 0% 0% 3% 3% 0% 0% 2% 3% 0% 2% 4% 0% 3% 0% 4% KCLB-FM(93.7 FM) 2% 0% 5% 1% 3% 0% 0% 2% 3% 4% 2% 2% 3% 2% 2% 2% National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—106 Age Gender Household Income Rounds Played Customers(1) Loyalty Business Drivers Overall Under 30 30-49 50+ Male Female Under$50K $50K-$99K $100K+ Under a 8-24 25+ New Existing Loyal Not Loyal Most Popular Television Stations ESPN 36% 33% 41% 36% 42% 18% 38% 44% 34% 50% 32% 35% 41% 34% 48% 35% The Golf Channel 31% 67% 33% 29% 34% 21% 23% 26% 34% 21% 26% 42% 29% 31% 46% 24% CNN 21% n/a 13% 25% 24% 7% 8% 16% 29% 21% 23% 20% 18% 22% 20% 23% Discovery Channel 20% n/a 26% 18% 17% 25% 31% 21% 15% 29% 14% 22% 24% 19% 9% 24% ABC 20% 33% 15% 21% 17% 29% 23% 28% 15% 11% 28% 16% 12% 22% 17% 23% Fox News 19% n!a 8% 24% 24% n/a 15% 16% 22% 18% 18% 20% 12% 21% 20% 19% Fox Sports 17% 33% 15% 18% 17% 18% 15% 21% 18% 21% 16% 16% 21% 16% 17% 19% CBS 14% n/a 13% 14% 13% 14% 31% 19% 9% 7% 19% 11% 15% 13% 11% 16% History Channel 13% n/a 13% 14% 13% 11% 23% 12% 12% 7% 16% 13% 9% 15% 11% 16% NBC 11% 33% 8% 13% 12% 11% 15% 16% 10% 7% 14% 11% 12% 12% 7% 16% A&E 11% n/a 8% 14% 9% 21% 15% 7% 12% 7% 9% 16% 9% 13% 11% 11% CNBC 9% n/a 3% 11% 6% 14% 15% 5% 9% 7% 7% 11% n/a 12% 11% 5% TNT 7% n/a 13% 5% 6% 11% n/a 5% 10% 7% 7% 7% 15% 4% 4% 10% MSNBC 7% n/a n/a 11% 7% 7% 8% 9% 7% 4% 11% 5% 3% 9% 9% 7% Food Network 6% 33% 8% 5% 6% 7% 8% 7% 7% 4% 11% 4% 9% 6% 4% 8% USA 6% 33% 3% 7% 6% 7% 8% 7% 6% 14% 4% 5% 12% 5% 2% 10% None 4% n/a 8% 3% 5% 4% n!a 7% 4% 7% 2% 5% 3% 5% 4% 2% Fox 4% 33% 5% 3% 6% n/a n/a 2% 7% 4% 4% 5% 9% 3% 7% 4% TBS 3% n/a 3% 3% 4% n/a 8% 2% 3% 4% n/a 5% 3% 3% 7% 1% Lifetime 2% n/a n/a 3% 1% 7% n/a 2% 3% n/a 4% 2% 3% 2% 2% 2% TLC(The Learning Channel) 2% n/a 8% n/a 2% 4% 8% 5% n/a 7% 2% n/a 9% n/a 2% 2% WS 1% n/a 5% n/a 1% 4% 8% 2% n/a 4% n/a 2% 3% 1% 2% 1% Travel Network 1% nla 3% 1% n/a 7% n/a 5% n/a 4% 2% n/a n/a 2% 2% 1% UPN 1% n/a 3% n/a 1% n/a n/a 2% n/a n/a n/a 2% n/a 1% 2% 0% PAX 1% n/a n/a 1% n/a 4% n/a n/a n/a n/a 2% n/a n/a 1% 2% 0% El 1% n/a 3% n/a 1% n/a n/a n/a 1% n/a n/a 2% n/a 1% 0% 1% Weather Channel 1% n/a n/a 1% 1% n/a n/a n/a n/a n/a 2% n/a n/a 1% 2% 0% National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—107 Age Gender Household Income Rounds Played Customers(1) Loyalty Business Drivers Overall Under 30 30-49 50+ Male Female Under$50K $50K-$99K $100K+ Under 8 8.24 25+ New Existing Loyal Not Loyal Most Popular Newspaper Topics Sports 82% 100% 77% 84% 84% 75% 92% 84% 76% 82% 86% 78% 82% 83% 80% 83% National News 71% 33% 69% 74% 72% 68% 85% 60% 75% 64% 74% 71% 62% 74% 72% 73% Local News 68% 100% 74% 65% 64% 86% 85% 74% 59% 68% 63% 73% 62% 71% 76% 61% Business 64% 67% 69% 63% 70% 43% 46% 51% 75% 68% 65% 60% 65% 64% 61% 69% Entertainment 44% 33% 51% 41% 37% 68% 69% 40% 41% 50% 47% 36% 32% 48% 54% 36% Weather 36% 67% 26% 40% 33% 46% 46% 35% 29% 43% 37% 31% 29% 38% 39% 34% Travel 29% n/a 36% 27% 23% 50% 38% 26% 26% 32% 28% 27% 26% 29% 30% 28% Coupons 24% n/a 21% 27% 17% 50% 38% 35% 13% 29% 28% 18% 21% 25% 30% 20% Weekend 24% n/a 31% 22% 17% 50% 38% 19% 22% 25% 26% 22% 15% 28% 30% 19% Comics 14% n/a 13% 16% 14% 14% 23% 9% 16% 14% 14% 15% 15% 15% 17% 13% Classifieds 10% 33% 5% 12% 7% 21% 23% 9% 7% 7% 7% 15% 9% 11% 13% 10% Obituaries 7% n/a 5% 8% 6% 11% 23% 2% 4% 7% 4% 11% n/a 9% 9% 7% Advice 4% n/a 5% 3% 2% 11% 8% 2% 3% 4% 2% 5% 3% 4% 4% 4% None 3% n/a 8% 1% 4% n/a n/a 5% 3% n/a 2% 5% 3% 3% 7% 1% "New"golfers are those who played your course for the first time within the past 2 years,while"Existing"golfers are those who played your course for the first time more than 2 years ago. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—108 Customer Origin Note: Percentages are cumulative. Distance In Miles (based on 136 responses) 5 Miles 35% 10 Miles 41% 15 Miles 46% 30 Miles 49% Distance In Minutes(based on 136 responses) 10 Minutes 28% 20 Minutes 42% 30 Minutes 49% Customer Profile Characteristics of surveyed golfers. This report is based on 140 total responses. Customer Segments Survey Respondents Age Under 30 2% 30-49 28% 50+ 69% Gender Male 80% Female 20% Income Less Than $50,000 10% $50,000- 99,999 35% $100,000 or more 55% Rounds Played at This Course Less than 8 66% 8-24 21% 25+ 14% Total Number of Rounds Played Less than 8 20% 8-24 41% 25+ 39% Average Score Under 80 5% 80-99 72% 100 or more 23% National Golf Foundation Consulting, Inc —City of Palm Springs Municipal Golf Operation—109 Selection Criteria This report is based on 140 total responses. Age Gender Household Income Rounds Played Customers Loyalty Under 30- Under $50K- Under 8- Not Reasons Overall 30 49 50+ Male Female $50K $99K $100K+ 8 24 25+ New Existing Loyal Loyal Affordability 66% 67% 69% 67% 70% 61% 54% 72% 71% 57% 65% 73% 50% 73% 70% 67% Special discount 61% 33% 64% 63% 61% 64% 38% 70% 62% 64% 70% 51% 65% 61% 61% 65% Tee-time 56% 33% 54% 59% 57% 54% 54% 56% 56% 54% 61% 51% 41% 62% 65% 54% availability Proximity to 54% 67% 51% 55% 55% 54% 46% 63% 49% 32% 58% 60% 44% 58% 50% 53% residence Quality of 38% 33% 41% 38% 38% 39% 23% 37% 41% 32% 44% 35% 26% 42% 50% 34% service Variety 29% n/a 33% 28% 29% 25% 15% 33% 32% 21% 28% 33% 21% 32% 28% 33% Friends play 28% 33% 26% 29% 28% 29% 31% 33% 19% 21% 16% 42% 26% 29% 35% 27% here Reputation of 24% n/a 23% 25% 23% 29% 31% 16% 29% 32% 19% 24% 26% 23% 35% 19% course Other 10% 67% 18% 5% 9% 11% 15% 7% 12% 21% 5% 9% 15% 8% 15% 7% "New"golfers are those who played your course for the first time within the past 2 years,while"Existing"golfers are those who played your course for the first time more than 2 years ago. National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—110 Satisfaction Ratings by Customer Group This report is based on 137 total responses. Age Gender Household Income Rounds Played Cus(o2)mers Loyalty Index Under 30- Under $50K Under 8- Not Business Drivers Overall (1) 30 49 50+ Male Female $50K - $100K+ 8 24 25+ New Existing Loyal Loyal $99K FriendlinesslService of 4.29 99 3.67 4.54 4.22 4.25 4.44 438 4.12 437 4.46 4.29 4.19 4.12 4.36 4.80 4.01 Staff Convenience of Course Location 4.19 98- 433 4.44 4.08 412 4.44 4.54 4.17 4.10 4.43 4.18 4.08 3.97 428 4.46 4.02 Overall experience 4.14 102- 4.33 4.31 4.06 4.07 4.44 446 3.98 4.15 4.50 4.04 4.04 4.12 4.16 5.00 367 Overall Value of Course 413 100- 4.00 4.31 4.06 4.07 4.41 4.31 4.05 4.13 4.54 4.04 4.02 4.21 4.12 4.76 381 Scenery and Aesthetics 4.04 102- 3.67 415 4.02 3.98 433 4.33 4.02 3.94 4.29 4.00 3.96 3.88 4.09 4.51 3.78 of Course Condition of Golf Cars 4.02 106= 3.67 4.28 392 3.94 4.40 4.33 3.81 4.07 4.32 3.98 3.91 4.00 4.04 4.64 369 Tee-time Availability 4.01 102* 4.00 4.13 3.96 3.95 4.22 4.23 3.95 3.93 4.32 384 4.02 3.79 409 454 3.72 Overall Course Conditions(tees, 4.01 104* 3.67 4.18 396 3.93 4.37 4.50 3.88 399 4.36 4.00 3.85 3.97 4.02 4.62 370 fairways) Condition of Greens 3.96 104* 3.67 4.10 3.90 3.88 4.30 4.33 3.69 400 4.29 3.98 3.77 382 4.00 4.49 3.67 Pace of Play 3.85 106' 3.67 3.92 3.82 3.80 4.00 392 393 3.75 4.14 3.78 3.75 4.00 3.80 4.37 3.54 Food and Beverage 3.84 102' 3.00 3.90 3.86 3.77 4.19 4.46 3.79 3.75 4.11 3.76 3.79 3.94 3.82 4.52 3.48 Service On-course Services (restrooms,drinking 3.75 104* 4.00 3.79 3.75 3.69 4.04 4.00 3.76 3.66 4.18 362 3.67 3.68 3.79 4.44 3.40 water) Amenities(clubhouse, 3.72 102- 3.00 3.79 3.73 3.63 4.08 4.23 3.57 3.69 4.21 3.72 3.45 3.76 3.69 435 3.40 pro shop, locker room) I Index score compares your customer satisfaction to averages for national courses, price level(7 courses,718 responses)for the same date range and player type. 'Red'numbers indicate below average satisfaction while those in"green"indicate above average satisfaction.Average=100 2"New"golfers are those who played your course for the first time within the past 2 years,while"Existing"golfers are those who played your course for the first time more than 2 years ago. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-11 Satisfaction Ratings Distribution This report is based on 137 total responses. Neither Business Drivers Very Somewhat Satisfied Somewhat Very Dissatisfied Dissatisfied nor Satisfied Satisfied Dissatisfied Friendliness/Service of Staff 5 1 14 46 70 Convenience of Course 5 6 16 35 71 Location Overall Value of Course 5 2 15 63 52 Scenery and Aesthetics of 4 2 25 57 47 Course Overall experience 5 2 10 67 47 Overall Course Conditions 6 1 16 74 38 (tees,fairways) Tee-time Availability 4 4 27 52 48 Condition of Golf Cars 8 2 16 61 47 Condition of Greens 6 2 21 68 38 Pace of Play 1 11 27 66 31 Food and Beverage Service 7 6 28 54 40 On-course Services 6 9 28 60 31 (restrooms, drinking water) Amenities (clubhouse, pro 5 10 36 51 33 shop, locker room) National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—112 Custom Survey Questions Report Please note the rate you paid to play our course: (Single select,Active) • $30-less (30 responses) • $31 -$40 (32 responses) • $41 -$50 (43 responses) • $51 -$60 (23 responses) • $61 or more (12 responses) Which of the following would most influence you to play our golf course more often? (Single select,Active) • Improved course conditions (14 responses) • Lower rates (88 responses) • Improved Pace of Play (15 responses) • Free Food (7 responses) • Improved customer service (0 responses) • More Tee Time availability (16 responses) The primary reason I play golf at different courses is: (Single select,Active) • Location (14 responses) • Change of Design (Course Layout) (49 responses) • Price (37 responses) • Tee Time Availability (9 responses) • Play with Friends (27 responses) • Better Course Conditions (6 responses) How many Tournaments or Outings do you play within a Calendar year? (Single select,Active) • Less than 3 (62 responses) • 3 to 5 (39 responses) • More than 5 (40 responses) Would you be interested in more information about Tournaments or Outings at our Club in the near future? Rates starting as low as$39 per player. Based on time of event. (Single select,Active) • Yes (87 responses) • No (54 responses) National Golf Foundation Consulting, Inc.—City of Palm springs Municipal Golf Operation—113 Voice of Your Customer Thursday, December 09, 2004 "We live in Oregon and travel to visit my brother in Palm Springs" Saturday, November 27, 2004 "YOU ALREADY HAVE A LOYAL CUSTOMER." Wednesday, November 24,2004 7 would like some information on the winter rates. l will be there Jan. thru April." Sunday, November 21, 2004 "Make the Legend Course more challenging. Love the other course but only play it on coupon. Overall a good experience at your facility but I do like to play a variety of courses when/spend 1-3 months a year in your area. Usually 2 weeks in early Dec. and parts of Jan. Feb." Saturday, November 20, 2004 "Last year we (wife &()enjoyed playing golf and having lunch at your course although sometimes our tee times did not allow us to finish 18 holes. We plan to spend 2 months in Palm Springs this year. We would appreciate earlier tee times" Saturday, November 20, 2004 "more coupons through email" Wednesday, November 17,2004 "took a golfing trip and I have heard of this course. /just started playing again and I really enjoyed the course and with the people l played with. l plan to go back and play the course again." Sunday, November 14, 2004 "two day specials" "I'm not sure. You guys do a great job overall. My only complaint would be that the last time l played at your place you did not warn me on the phone that you were in the process of re-seeding. Otherwise you're the friendliest place I play. Most of the courses in San Diego (where I work) are not nearly as friendly." Wednesday, November 10,2004 "Keep sending me a-mails regarding yourpromotions, etc." Tuesday, November 09,2004 "special rates for those who stay there and play more rounds on a regular basis." Tuesday, November 09, 2004 "The past few times 1 have played the course conditions really were not very good. Also the pace of play is really too slow. The past two times my round was more than 5 hours and we are pretty fast players. I enjoy the course and play there mostly because friends play there (Stonewall Golfers)and I also play there because of the discount prices especially during the summer months." Tuesday, November 09,2004 'Just keep me up to date on your specials." Tuesday, November 09, 2004 'Absolutely Nothing...../Love Your Courses." Monday, November 08, 2004 "Snowbird membership" Monday, November 08,2004 "nothing for me. it's a matter of time and when i am in the area. Usually don't make up my mind about playing till I'm in the area for business." Monday, November 08, 2004 "nothing" Monday, November 08, 2004 "Price and availabilty" Monday, November 08, 2004 "I have completed this survey based on what I am sure my experience will be at Tahquitz Creek-my husband and/are coming November 26th to Palm Springs area to golf and will be staying very close to your course. l have heard nothing but fantastic things about it and therefore am basing my responses on what I know will be my experience. l have been receiving a-mails over the last few months and just based on being provided with access to this service and the friendliness of responses to my e-mails, I know our experience will be great. l very much look forward to it. National Golf Foundation Consulting, Inc.-City of Palm Springs Municipal Golf Operation-114 Sunday, November 07,2004 "cheaper and faster play" Saturday, November 06, 2004 "Continue with the special offers" Saturday, November 06, 2004 'A discount card for frequent play that would work for someone that spends 4 to 6 weeks per year in the area." Saturday, November 06, 2004 "Lower rates" Saturday, November 06, 2004 "Just provide discounted green fees. Everything else is fine." Friday, November 05,2004 "I LIKE YOUR SUMMER RATES I RECIEVE ON THE INTERNET" Friday, November 06, 2004 "Tee time availability" Friday, November 05, 2004 "Cost is important to me being on a fixed income. The course is great(both)." Friday, November 05,2004 "Seems great the way it is." Friday, November 05, 2004 "lower prices. better tee times" Friday, November 05, 2004 "We're part time residents(condo owner) and being local tax payers, I think it would be reasonable to allow us local resident rates. Upon my recommendation, I believe you're going to host the ACE convention group(Alaska Coldstorage Employers) in Feb, 2005. We think highly of the Tahquitz Resort course and will continue to play it." Friday, November 06, 2004 "The overseeding of the Legends has been a disaster this year and below your standards last year. I will not be playing again until the grass has returned." Friday, November 05, 2004 "1. Pay for my kids college so I can retire 2. Give me the winning numbers for the lottery 3. have reasonable rates and more tee times." Friday, November 05, 2004 "Tahquitz has always been a positive experience. Friendly staff, course conditions are above average, price is moderate. The only thing we could use more frequently is visits by the beverage cart." Friday, November 05, 2004 "incentive rates from time to time." Friday, November 06,2004 "Keep up good work..play all day features during off season." Friday, November 05, 2004 'Price" Friday, November 05,2004 "I love the game but during the winter I cannot play as often due to the higher rates. It would be wonderful if you would have a senior resident rate that would be in the$25/round range or a VIP winter card that would be in the same price range as the one you had during the summer. You asked so I am letting you know. I thoroughly enjoy the course and the personnel are always friendly, courteous and efficient. Thank you." Friday, November 05, 2004 "Give some advance(a month or two)notice of special events or rates during period we most often visit Jan-March) as well as a coupon or special offer presented to those who subscribe to your e-mail announcements." Friday, November 05,2004 "keep it in good shape" Friday, November 05, 2004 "Offer residents that live next to course special discounted rates, I live right off the 13th on the Legend course and drive by the course every day. I would play everyday if I could get a special resident, frequent user rate." National Golf Foundation Consulting, Inc.—City of Palm Springs municipal Golf Operation—115 Friday, November 05,2004 "Free plane tickets to get there from Alaska!Ha!" Friday, November 05, 2004 "I am a member at Monterey CC so based on the membership cost I play most of my golf there." Thursday, November 04,2004 "Keep offering discount deals like you did this summer, especially for full-time residents." Thursday, November 04, 2004 "I'm Canadian and visit Palm Springs each winter during Feb and March. Because of the cost and low exchange rate on the dollar, we play a lot of twilight golf. Would like to see twilight golf start a little earlier. Thank you, see you in Feb. 05." Thursday, November 04, 2004 "You are currently doing a good job keeping me informed." Thursday, November 04, 2004 "I am a member of the ladies club and do enjoy them. I am also a full member of another club so I play there and here. Since I pay out monies at Tahquitz Creek it starts to get too expensive after awhile. You asked so there it is. Thank you for letting me have my input." Thursday, November 04, 2004 "Special Events, Food and Course Conditions.All in all, I truly do enjoy Tahquitz." Thursday, November 04, 2004 "Keep up the good work. I enjoy the course. The resort is a great course but a little expensive by Valley standards. " Thursday, November 04, 2004 "Give me as a seasonal member a better financial deal than any other Joe Blow can get by cutting a coupon out of the newspaper.!" Thursday, November 04, 2004 "Better locker room, showers" Thursday, November 04, 2004 "During overseeding time, keep one course open" Thursday, November 04, 2004 'As a Canadian, I am here for 7 to 9 months a year but cannot get residence card as I do not have a CA. drivers license. Yet I cannot get residence rates although I own property and pay taxes in Palm Springs. I know of the other programs available but....that is for vacationers....not for people in circumstances such as mine. Fix that and I'll stay at Tahquitz Creek. Otherwise, myself and three others look to other courses. Thanks for the survey." Thursday, November 04,2004 "Keep up the good work. You are top notch now, so don't hold on to your laurels. Keep working hard to maintain your resort and the public will come in droves." Thursday, November 04,2004 "I visit area 2-3 times a year. Stay for 10days to a month. Could you offer some partial membership that go t me a percentage discount?Course is fine. Staff have treated me very well. I enjoy playing there." Thursday, November 04, 2004 "give senior discounts and lower afternoon prices" Thursday, November 04, 2004 "STAY THE WAY YOU ARE. NEXT YEAR I PLAN ON TAKING ADVANTAGE OF YOUR SUMMER RATES." Thursday, November 04, 2004 "run your off season special as a with or without price if that can't be done then improve the breakfast/lunch. I got tired of hamburgers and hot dogs. some days there was no other choice." Thursday, November 04, 2004 "Faster play;keeping fee low." Thursday, November 04, 2004 "LEGENDS GREENS ARE TOO SLOW AND SOMEWHAT BUMPY" Thursday, November 04, 2004 "We are planning to spend the winter in Palm Desert this year. We will arrive on Sat. Nov. 5th. We will give you our new a-mail when we arrive. Thanks, Margaret Christiansen" Thursday, November 04,2004 "I have played Tahquitz in the summer for a few years. l have just relocated to this area (last November) National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—116 and will retire at the end of the year l joined your Men's Club this September and plan to start playing on Wednesday's in January. I live at the Tri-Palm estates which is why it is listed. I have a good friend at the Heritage Palms. Tahquitz is my favorite course and I will play it often in 2005, however being a new income next year I shall pay when the rates are the best. Thanks for the survey, Phil LaPierre, pklap@dc.rr.corn" Thursday, November 04, 2004 "Take Canadian$at par Punch cards- 6 rounds for price of 5 early bird discounts" Thursday, November 04,2004 "I live at the Westin Gary Player course, so it is my first choice. I play Tahquitz any chance I get" Thursday, November 04, 2004 "Improve course condition. It has been getting better over the last year for sure!" Thursday, November 04, 2004 "We are very satisfied with your course. We live in Orange County but occasionally vacation in Palm Springs. We enjoy the email discount notices which encourages us to choose your course." Thursday, November 04, 2004 "The Resort course is in far better condition then the Legends course. If the Legends course was in better condition," Thursday, November 04, 2004 "Package deal for vacationers in Palm Springs." Thursday, November 04, 2004 "More choices for stay and play packages" Thursday, November 04, 2004 "Lower costs Course Conditions(greens&fairways etc.) Friendly people " Thursday, November 04, 2004 "More moderate price." Thursday, November 04, 2004 "I have enjoyed the time I have spent at your resort, I wouldn't change anything." Thursday, November 04, 2004 "Provide Internet specials for discounted play, or special savings coupons for local residents." Thursday, November 04, 2004 'More moderate prices would be great. Also would like to see yardage markers on fairways more legible. Occasionally starters can be abrupt...Otherwise everyone is usually great. " Thursday, November 04, 2004 "KEEP ME INFORMED ABOUT SPECIALS AND DISCOUNTS. LIVE IN SAN DIEGO, BUT VISIT THE DESERT AREA MONTHLY DEPENDING ON, WHAT'S GOING ON IN THE DESERT. WE ALSO HAVE A GUYS WEEK-END IN THE SUMMER FOR AN ALL WEEK-END GOLF BLITZ(WEATHER PERMITTING). RESORT COURSE WAS CLOSED, WOULD LOVE TO PLAY THAT COURSE. " Thursday, November 04, 2004 'Available tee times" Thursday, November 04, 2004 "We were just vacationing in Palm Springs and our golf club back home had a reciprocating program with your club. If we are ever going to be in your area again we would most certainly play Tahquitz Creek. Everything was top shelf and the customer service, (especially Jimmy Z.), was fantastic!" Thursday, November 04,2004 "We enjoy playing at Tahquitz. We like the Legend course but our favourite is the Resort course and would play it more often if the price were a bit lower." Thursday, November 04, 2004 "We only come down for a week in February, and have enjoyed playing your course, and hope to play it again in 2005." Thursday, November 04, 2004 "I love Tahquitz, and play it everytime I'm in Palm Springs. However, I live in the San Fernando Valley, so l can't play there very often." Thursday, November 04, 2004 "Keep it the way it is" Thursday, November 04, 2004 "more specials" National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operation—117 Thursday, November 04, 2004 "beautify reastaurant" Thursday, November 04, 2004 "frequency club priced under$175. with winter rates of$50 and$35(resort and legends)per round for members" Thursday, November 04, 2004 "manage pace of play, have good course conditioning, increased value" Thursday, November 04, 2004 "Nothing." Thursday, November 04, 2004 "More special deals. Being from Canada, the US dollar makes golf expensive." Thursday, November 04, 2004 "Give me more notice on your specials or discounts" Thursday, November 04, 2004 "Move closer to my home. Kidding aside, Tahquitz is as good as they come in my mind. Although I've never played$100.00 plus courses." Thursday, November 04, 2004 "Pace of play has been a problem on occasion." Thursday, November 04,2004 "Have a resident monthly membership or yearly membership so that we do not have to pay daily and have better rates on practice balls." Thursday, November 04, 2004 "I have a home in Seattle and one in Palm Springs. We visit Palm Springs 7-8 times a year for from 4 days to 2 weeks, not for months at a time. I would like some sort of seasonal membership or visitor membership that would give me reduced rates and a sense of membership but would be affordable. Something like a 15-20 round membership that I could use from September to May. Thursday, November 04, 2004 "There is nothing more than can be done. We have had tremendously great experiences at Tahquitz and love the staff(especially Jimmie) who treats us very well, every time we're in town. The only negative experience we had was more than a year ago when our vehicle was vandalized while golfing." Thursday, November 04,2004 "Make sure the course is kept up(greens, fairways and tee boxes and that the pace of play is not too slow. The price for a round of golf seems in line with most other desert courses, but it's always nice to get discount coupons and other breaks on the price one pays for a round of golf." Thursday, November 04, 2004 "I am a fan of the two Tahquitz courses." Thursday, November 04, 2004 "Send me some gift certificates to play." Thursday, November 04, 2004 "We live too far away to play there more frequently. Play there when visiting parents who live in Rancho Mirage." Thursday, November 04, 2004 'As a visiting snowbird I only am in your area during the month of March. This year I will also be down for ten days starting Sat. 6 Nov. and am looking forward to being back on your course for a few games." Thursday, November 04, 2004 "Nothing." Thursday, November 04,2004 "Guaranteed low rate for our club during High Season(Oct-May)" Thursday, November 04, 2004 "Nothing. I just like to play Tahquitz" Thursday, November 04, 2004 "I played in June and we did not have a tee time and the girl behind the counter was the best, I know it was hot out and nobody else on the course, but she made us feel like we mattered. There was 8 of us in our group and all 8 thought this was the best of all the courses we played during the weekend. So just keep up the personalized service and great prices." Thursday, November 04,2004 "Send me appealing vacation packages with golf, room and cart" National Golf Foundation Consulting, Inc.—City of Palm Springs Municipal Golf Operatwn— 118 Tahquitz Creek Golf Resort Customer Survey Your opinion is Important to net Our goal is to provide you with an unmatched golf experience providing atop quality product and the best customer service. Please assist us by completing our customer satisfaction survey. In order for us to improve our product and service,it is Important that the survey is answered honestly Please take a moment to complete our brief survey and you'll receive a FREE Round of Golf at Tahquitz Creek Monday-Friday(cart required).Offer Expires 8130/04. 1. a. First,tell us the total number of rounds you played in the past 12 months. rounds b. Then,tell us how many of These rounds you've played at Tahquitz Creek Golf Resort in the past 12 months. rounds c. Finally,list the four other courses you play most often in this area,if any,and tell us how many rounds you've played at each in the past 12 months 1. rounds 2, rounds 3. rounds 4. rounds 2. Which of the following best describes you? ❑Annual member ❑Business/corporate outing golfer ❑ League player ❑ Discount card holder ❑Seasonal member ❑Area resident with no affiliation to course ❑ Vacationer ❑ Other,specify 3. For the first three columns,circle a number from 1 to 5 indicating your level of satisfaction on each factor shown below.Then,in the far right- hand column,check three factors that are mast important to you when playing golf. 1=VERY DISSATISFIED 2=Somewhat Dlssalcfied 3=Neither selis0ed er 01sse05hed 4=Somewhat Sallslled 5=VERYSATISFIED Check three most Tahquitz Creek important FACTORS Golf Resort A.nm In tours.1-.^W^a5.v.l ext.In you...W.",2'.n.v) factors Affordability/value of course 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Convenience of course location 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Tee-time availability 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Overall course conditions(tees,fairways) 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Condition of greens 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Scenery and aesthetics of course 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Pace of play 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Condition of golf cars 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Amenities(clubhouse,pro shop,locker room) 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Friendliness/service of staff 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Food and beverage service 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ On-course services hes[rooms,drinking water) 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ Overall experience 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 ❑ 4. Why do you normally choose to play al Tahquitz Creek Golf Resort? 13. List your two favorite (check all that apply) radio stations in this area: FM AM ❑ Proximity to residence ❑ Tee-time availability ❑Variety ❑ Special discount 14. What sections of the newspaper do you read most often? ❑Affordability ❑ Friends play here (check all that apply) ❑ Reputation of course ❑ Other, Specify ❑Sports ❑ Obituaries ❑ Entertainment ❑Quality of service ❑National News ❑ Travel ❑ Comics ❑ Local News ❑ Weather ❑ Coupons S. Gentler: ❑ Male ❑ Female ❑Classifieds ❑ Weekend ❑ Advice(Dear Abby) ❑Business 6. Age. 15. What 3 cable TV stations do (1) 7. What is your annual household income? you most often watch? ❑ Under$25k ❑ $100k—$149,999 (2) ❑$25k—$49.999 ❑ $150k—$199,999 (3) 0$50k—$74,999 ❑ $200k—$249,999 ❑$75k—$99,999 ❑ $250k+ 16. What is your average score for 18 holes? 8. Will you return to this course in the future? ❑ Yes ❑ No 17. What days do you usually play golf? ❑Weekdays(Monday—Friday) ❑My rounds are split evenly 9. Zip code of primary residence: ❑Weekends(Saturday and Sunday) 10. Distance of course from your residence: _ miles COMPLETE OU.18 ONLY IF YOU ARE A COURSE MEMBER minutes 18. Think about your golf membership at[his course. Select the one box 11. Approximately how many years have you been playing golf that best describes your feelings. at Tahquitz Creek Golf Resort? ❑ There are many good reasons to continue membership at this ❑Less than 2 years ❑ B to 10 years course and no good reasons to change to another course ❑2 to 4 years ❑ More than 10 years ❑5 to 7 years ❑ There are many good reasons to continue membership this course but there are also many good reasons to change.. 12. Would you recommend this course to others? ❑ Yes ❑ No ❑ There are few good reasons to continue membership at this course and there are many good reasons to change. What could we do to enhance your loyalty and increase your play frequency at Tahquitz Creek Golf Resort?waanoe.m.mmanm..rs�e,:amo,vr..:.) Name Email OVER b Address _ Phone enp —RETURN COMPLETED SURVEY TO PRO SHOP FOR VALIDATION— FREE Round of Golf at Tahquitz Creek Monday-Friday(cart required).Offer Expires 8130/04, Name __ Date Redeemed Pro Shop_ Tahquitz Creek Golf Resort(continued) 19. Please note the rate you paid to play our course. 22. Would you pay a flat fee of$10 a year in order to purchase all ❑ $20 or less merchandise in our golf shop at wholesale pnces9 ❑ $21-30 ❑ Yes ❑ $31-40 ❑ No ❑ $41-50 ❑ Maybe ❑ $51 or more 23. Would you be interested in more information about Tournaments or 20. Which of the following would most influence you to play our golf Outmgs9 course more often? ❑ Yes ❑ improved course conditions ❑ No ❑ Lower fees ❑ Improved pace of play ❑ Better food ❑ None of the Above 21. The primary reason I don't play golf more often is because of ❑ Time ❑ Money ❑ Convenience ❑ Family ❑ Work ❑ Most of the above ❑ None of the above 114 two fL 1 t e 4.14 Ito.do -�► `p_�.� ' ,d r r r New Green Shape Provides More Pinnable Areas and and an Undulating,Classic Feel — r ' .`. - a Conceptual Look Existing Green Edge,Hole No. 16 s s ' ' Core Out and Reshape + i - Existing Bunkers 1, I h Enlarged Bunker Reduces Existing Bunker Shape Overall Turf Area,and << Adds Strategic Interest � I ;r CITY OF PALM SPRINGS GREEN COMPLEX_ ENHANCEMENT TAHQUITZ CREEK - LEGEND COURSE 1 FORRFST RICHARDSON F•ASSOC. Ir r v 1 GOLF COURSE ARCHITECTS The Mountain Hws� Losses,Richardson,ASGCA 2337 Ea:e Orangewr,od A=e Shone Wit—be,ASSCA Phoens,AS 85020,USA UORTH �r.. Patnd Burton,ArsoaaLe D-9her 602-906-1818 0 Upper Route to the Green Requires a Moderate Carry from the Tee of 160 Yards,Challenging the Golfer with a Long Approach Shot to the Green. ONew Divided Fairway Provides Greater .. k-- - - Strategic Value.Enlarged Bunker Creates a Visually Intimidating and Aesthetically _ Appealing View from the Tee. ®Center Route to the Green Requires the - Longest Carry from the Tee of 220 Yards, Rewarding the Golfer with a Short,Open Approach Shot to the Green. ®Lower Route to the Green Requires No Carry from the Tee,Challenging the - - - Golfer with a Long,Guarded Approach - -- Shot to the Green. CITY-OF PALM SPRINGS STRATEGIC IMPROVEMEP TAHQUITZ CREEK - LEGEND COURSE - -- "-- EORREST RICHARDSON G-ASSOC. Af I GOLF COURSE ARCHITECTS Th=Mountem Hogs Forres[Richardson.ASGCA 2337 East Or-,-,.Shone W,E—ba,ASGCA Rh--,AZ 8502t CRTN / �fl. Pan�ck Burton,Asmaare OesiRner 602-906-1818 I 'IROIIPnit vervoi RIO il'A ire as lot (�j , - t�. . �'>'1 , A ti '� � _ Z\ � f� _ -- --<� � r - .�-a •--�+ues.���M�.�t�ea'�y�'�;� _ rw ^ ! Al. _ 4k. i - 33 VWA yf: r y 71� t tv i. •I^ ut •�l�;j, -N it .-swirl �r^•a�..y. �- a 7 r CITY OF PALM SPRINGS _ _ _ _EXPANSION OF NON-TURF AREAS TAHQUITZ CREEK - RESORT COURSE FORREST RICHARDSON&ASSOC. ,. GOLF COURSE ARCHITECTS The Mounean H-.e Forrsrt Rmhardsen,ASGCA 2337 Eas.Omngewood A.e 40p' Hpp' 1200' r r r Sha,e ASGCA Phoenr,.Ac BKM,USA PA-lk Burton,Associate Desoner 002-906-1818 NORTH Temporary Pro Shop Clubhouse Cart Storage Clubhouse / � Hotel&Dinning ��, / IL Expanded Putting Green "n>\ T- O I I I ♦ 1l\ � ��� -> Expanded Putting �♦\ ExistingParkin and Facilities Will Need g Green 2' to be Planned an Appropriate Distance •�;(�� from Hole No. 18 Fauway Centerline. ' � O Conceptual Sketch Shows ProposedOriented ! \ ♦♦♦ Clubhouse,Hotel&Parkin as Orented \ with the Golf Course. CITY OF PALM SPRINGS _ CONCEPTUAL RESORT IMPACT PLAN HQUITZ CREEK FORREST RICHARDSON F ASSOC, t Q"\I I GOLF COURSE ARCHITECTS Theu�n��n H°use pl E /'�ai<W nso F.,—E M1'u Richardson.ASGCA 2332 East Orange...d A— St—Witmmb.,ASGCA Phoeru,AS 85020 USA Patrick Burton,Asmcure Designer E02-906-1818 � in