Letter: Contrary to claims, Sharp Park is economically viable

Letter

Posted by
Thu, April 30, 2009


CORRECTION: In an earlier version of this article, the net revenue for 2008 was shown as positive, rather than negative, due to an editing error.

The opponents of Sharp Park’s golf course constructed a pair of arguments that lead inevitably to their desired conclusion, that this is the right time to restore the original wetlands habitat in order to save the nearby endangered species. The first premise is economic:

"Sharp Park’s deficit is substantial. Sharp Park has lost between $30,000 and $300,000 a year for the past four fiscal years from the golf fund alone. San Francisco’s other golf courses suffer for it, because they must subsidize Sharp Park’s losses, robbing other courses of needed maintenance. But that isn’t all it costs San Francisco to operate Sharp Park: Sharp Park also draws down the capital fund, the open space fund, and the natural areas program fund."

But what if the claim about all the money being lost is false? Does that make a difference to the validity of Plater and SF Supervisor Mirkarimi’s argument against the golf course?

According to the San Francisco Controller’s 2009 report for the last 4 years showing the net result after subtracting Sharp Park’s expenses and overhead from revenue:

Year Net revenue
2005 $373,021
2006 $334,784
2007 $43,770
2008 -$76,844
Total $674,731


The Controller also states that revenues from earned interest, citywide membership fees and non-specific concessions are not allocated to individual courses but to the overall golf fund. For the years shown above the cumulative revenue to that fund was $1,467,755

If we were to allocate just 11% of that number (based on percentage of total golf revenue) to Sharp Park’s results we would increase its cumulative by $161,453 to a new total of $836,731

San Francisco’s Sharp Park golf course operation does not have a financial viability problem. Rather, it has a financial management problem that a small fee increase would help.

Plater’s other premise, that the golf course is bad for the environment and the endangered species may or may not be true, but we can see that he does not want to find out. Supervisor Mirkarimi’s legislative end-run around the Environmental Impact Review process so he can place the golf course in the care of GGNRA doesn’t portend a fair hearing for the existence of the golf course once out of San Francisco and Pacifica’s control.

Why not? In answer let us note that Brent Plater is a prominent volunteer at GGNRA and retains substantial connections there. No need to wonder why he sees Mirkarimi’s legislation as the golden opportunity it is.

Ken King
Half Moon Bay


At the public hearing on June 29th, the Planning Director from the SF Rec and Park Dept. clarified the much debated finances for the golf course. She said the course loses an average of $42,000 every year from the SF General Fund. This does not include money spent from the Open Space Fund, such as the recent $245,000 berm repair.

This pales next to the 8 million dollars required to be spent in the next few years on a water reclamation system. (6.9 million by the SF PUC and 1.9 million by the NCCWD) If the course is converted into habitat, that expense would be averted.

It’s no surprise that Ken King mistakenly concludes that Sharp Park delivers a profit. The financial data provided by the San Francisco’s Recreation and Parks Department is confusing, confused, and substantially unreleased.

Indeed, the most recent assessment of the golf program—produced by SF controller Ben Rosenfield on 17 December 2008 (not 2009 as asserted by King) in response to a request from Supervisor Sean Elsbernd—is a case in point. This report includes as “revenue” the major subsidies to the SF Golf Fund from the SF General Fund. These transfers are in fact *expenditures* of taxpayer money; they are not new monies brought into the City’s coffers from the operation of the golf courses. When these subsidies are removed, all the courses show significant deficits—which is precisely why these General Fund transfusions have been made. I’ve personally confirmed this point with Supervisor Elsbernd, who admits that this interpretation is correct—though he does so reluctantly, as he is the main golf advocate on the Board of Supervisors.

Furthermore, analysis of the golf course’s finances by other entities—including the National Golf Foundation and PROS Consulting (the firm that San Francisco hired for the recent Golf Task Force report)—have similarly concluded that Sharp Park is losing money. These analyses happen to think that the golf course can be made profitable; others disagree. But no analyst but King thinks that the course makes money now.

The losses attributable to the Sharp Park golf course grow much larger when other expenses—currently being paid by San Francisco taxpayers outside of the golf program—are included. The emergency work just done on the sea wall cost some $280K out of the San Francisco Open Space Fund, which was created for acquisition of open space within SF’s city limits but has been used for years as a piggy bank by the golf program. The environmental review of Sharp Park as part of the Natural Areas Program Management Plan process has cost some $450K just for the Laguna Salada portion—necessitated to evaluate the impact of the golf course on its resident endangered snake and frog populations. These costs are of course being paid for by San Francisco taxpayers.

Which leads to the most important point: Ken King and all the others who are not San Francisco property tax payers are spending someone else’s money when they demand that the Sharp Park golf course continue to be run as it is. Of course they want San Francisco taxpayers to keep paying for this course—where 75% of all rounds played are by non-San Francisco residents. It’s not *their* money that’s making the course go. It’s not Pacifica that is at jeopardy for huge civil and criminal penalties for “illegal take” of endangered species at the golf course. It’s San Francisco.

So if San Mateo county residents like Ken King were really serious about wanting to continue this golf course, they would be lobbying their county—and the city of Pacifica—to come to the table with some *money*—to underwrite operations at the course, to pay for emergencies like the sea wall repairs, to indemnify San Francisco for legal costs related to the snake and frog, or most definitively, to purchase the park outright.

But most tellingly, no such offers come. At the April 30 Sharp Park hearing before the Board of Supervisors Government Audit and Oversight Committee, the mayor of Pacifica kept promising to “help” keep the golf course but refused to provide any specifics when pushed by the supervisors. Maybe Pacifica has no ability to pass a bond levy or raise taxes to pay for this amenity the way every other municipality in the country does—but then it shouldn’t be surprised if that amenity goes away.

The reality is that the Sharp Park golf course has become a toxic asset on *anyone’s* books. The course lies at or below sea level at the end of a big watershed and is irremediably subject to flooding, sedimentation, and erosion that will only increase with rising sea levels. It is home to endangered species that *must* be protected—or else suffer major penalties from both the Feds and the state of California. That’s just the law. And the demand for golf has been falling throughout the peninsula—30-40% over the past decade, according to the recent Harvey Rose audit of the golf program—because of demographic changes in what people want to do for fun. That’s just the reality.

What’s left is that there are a few golfers who still like their golf course and want to enjoy cheap, subsidized golf (courtesy of San Francisco taxpayers) the way they have for as long as they can remember. But unfortunately for them, the world has changed. San Francisco cannot afford to play nanny to Sharp Park’s golf course any longer. We have bigger financial problems. San Francisco’s $576 million budget deficit (to be much larger next year) is closing recreation centers and laying off staff right within our city limits. We don’t have the luxury of keeping afloat any longer an increasingly unpopular, money-losing, geographically-challenged, endangered species-threatening golf course down in San Mateo county.

Ian is correct about Sharp Park golf course’s losses to the golf fund for this fiscal year, which ends June 30: they are expected to be $42,000. 

Ian is also correct that the losses to the golf fund only tell part of the story: Sharp Park golf course also loses money from other funds San Francisco maintains, including the capital fund, the general fund, the open space fund, and funds to create recycled water projects consistent with state law.

However, the $42,000 loss anticipated for this fiscal year is on the low-end of the annual average.  Between 2004 and 2008, Sharp Park lost between $30,000 and $300,000 each fiscal year from the golf fund alone.  This year’s anticipated loss to the golf fund is on the low-end because of the drought: the more it rains, the more the golf course floods, and the fewer rounds are sold at the golf course.  In wetter years, the golf course loses closer to $300,000 per year.

Moreover, during this fiscal year, San Francisco spent $240K fixing Sharp Park’s frog-killing pump house from the capital fund.  This expenditure was not included in the assessment of losses to the golf fund, because the golf fund didn’t pay for the repair even though the repair solely benefits the golf course.  If that were included in this years net losses, the number would again approach the $300,000 mark for FY08-09.

Mr. Kaufman is right that not many of us around here are overly concerned about expenditures by San Francisco taxpayers on whatever they choose to support. Kaufman’s populist concern about Sharp Park’s alleged drain on said taxpayers is touching to the extent his concerns are genuine, which is a caveat I am sure he will understand. “Toxic asset”, now that is clever and topical! Amazing, then, how the species endure there, isn’t it?

Kaufman: “But no analyst but King thinks that the course makes money now.” The negative 2008 result reported above contradicts this assertion, which is why I said fee increases would help here - it’s just not that big a gap.

Mr. Kaufman says the golf course makes most of its revenue by draining divergent SF city funds, but given the reported revenues for the last half dozen years average around $1.2 million per year, and the golf rounds average 50,000/year with an average cost of $25/round, there isn’t a lot of room for all the subsidies Kaufman and his friend Plater claim. It’s curious, btw, that Plater is insistent about his figures based on no evidence and in opposition to the published Controller’s report. What are we to make of this?

There is not much more point in wringing our hands about golf course economics 101 now that the SF Supervisors are set to vote this week on implementing the planning commission’s staff report regarding Sharp Park. If I understand this right, there will be more than the originally-intended passing nod to science Ross Mirkarimi and Brent Plater hoped to get by with.

Ken King should not doubt the sincerity of San Francisco taxpayers’ determination to stop buying cheap golf for freeloaders in San Mateo county.

If he and his pals want the golf course to remain as it is, he should be organizing in Pacifica to buy and run the place instead of demanding that San Francisco continue to throw good money after bad. He conspicuously reveals no inclination to do anything of the kind.

It’s easy to imagine the howls of outrage that would echo through San Mateo county if San Franciscans were packing Pacifica city council meetings to demand that Pacifica continue to pay for a major amenity up here in San Francisco.

This issue is really just that simple. The endangered species aspect merely magnifies the costs. It’s all about dollars, not snakes and frogs. More precisely, ***whose*** dollars and ***where*** they’re spent.

Apologies to Robert Frost, but San Francisco taxpayers have many more dollars to spend before they rest. An EIR that takes into account the diverse biomes in the 400-acre Sharp Park property, one that satisfies the needs of the permitting authorities will be expensive, and necessarily so to be done right. Once completed, good decisions regarding the status of Plater and Kaufman’s “toxic asset” can be fairly decided.

Ken King has posted many false statements on this website, and at least now he is starting to admit it.

He now admits that an EIR will be conducted, even though he denied it previously.  There has been no change to the legislative language in the meantime.

He now admits that information about scientific and financial studies about Sharp Park need to be conducted before political deals are cut about the future of the land, even though he pushed to have it the other way around previously.  There has been no change to the legislative language in the meantime.

What he fails to admit, though, is most telling: that the controller’s report did not say Sharp Park makes money.  The report was created at the request of Sean Elsbernd, who agrees with Stan Kaufman’s analysis above: Sharp Park loses money every year because of subsidies from the general, open space, and capital fund.

What the controllers report did say is that the overhead costs at Sharp Park were not falsely inflated, but were in fact accurate and reasonable.  Status quo advocates had tried to suggest, up until this report was released, that the overhead costs were somehow biased against golf and should be reduced.  The controller’s report contradicted this argument in depth. 

But don’t believe me, read it for yourself: you’ll find about 2 pages justifying the overhead costs, and 10 pages of the same costs data we’ve always had for Sharp Park and the rest of the golf courses vis a vis the golf fund.  This is data we’ve had since July 1 2008.  No where does the controller claim that Sharp Park earns revenue, and everyone who’s looked at this data has concluded that Sharp Park loses money every year.

This is going to require a lot more study by an impartial source. 

It’s not obvious to me that the associated environmental costs are greater than the income potential of a properly-run golf course. The numbers Ken cites suggest that the course could make enough money to cover the costs of its maintenance in a sustainable manner.

I don’t play golf and don’t have any particular interest in keeping a course in San Mateo County. And I see no reason why SF should own a course in Pacifica. 

But I’m skeptical of any numbers developed by the golf course privatizers for obvious reasons. And I’m not in love with the idea of turning public amenities into science fair projects, either.

There’s more analysis of the politics/policy aspects of this at Bruce Balshone’s blog on Examiner.com.  I have no idea whether he knows what he’s talking about:

The GGNRA has not been known to develop property, but act as caretakers. If it were to be converted to a habitat, San Francisco could escape paying property taxes and upkeep but the GGNRA, as a federal agency, has higher authority, and Pacifica would lose land-use jurisdiction over the area if it were turned over to the GGNRA.

If GGNRA would accept the land, the golf course in its current form would need considerable work to turn it into a biological preserve, and the City of San Francisco would likely be required to do the work in advance of any transfer as the GGNRA would not want to accept the property until the work is completed, otherwise it would also accept the liability.

 

If San Francisco is required by the GGNRA to convert the land to a habitat before it takes custody of the land, Pacifica must first give its land-use and zoning approval to San Francisco to make the required changes. Hence the conflict and the potential leverage Pacifica may yet have.

 

Bruce is incorrect in suggesting the GGNRA would not want Sharp Park until after it has been restored. 

The GGNRA has a long history of accepting properties within its legislative boundary and then investing in these properties to enhance their remarkable values.  To name just a few: Crissy Field, Lands End, & Muir Beach have all had substantial restoration project occur within the last 10 years using a mix of private, public, and foundation monies to fund the work.

And let’s not forget Mori Point.  The GGNRA, in partnership with the Golden Gate Parks Conservancy, has restored Mori Point to its present condition. 

There is every reason to believe that the GGNRA and the Parks Conservancy would do the same at Sharp Park, which sits directly adjacent to Mori Point’s restored areas.

The proposal to raise prices at Sharp Park in order to reduce the losses there has been studied by the National Golf Foundation, Leon Younger and PROS consulting, and the San Francisco Budget Analyst.

Without fail, these entities all concluded that, absent massive investments in infrastructure and course maintenance (10-14 million dollars worth), Sharp Park cannot simply raise prices and expect to increase revenue.

There is a basic economic reason for this:  whenever you raise prices for anything, demand drops.  At Sharp Park, because of the poor playing conditions golfers have very little loyalty to the course.  Even a small increase in price will drive golfers to play other courses, as it were. 

For a modest price increase, golfers can get a far superior experience at other municipal golf courses in San Mateo County.  If Sharp Park raises prices and fails to fix the chronic flooding, environmental, maintenance, and capital problems at the course, golfers will golf somewhere else, reducing revenue to the city overall.

To fix these problems and thereby justify the price increase, San Francisco needs tens-of-millions of dollars of capital it just doesn’t have, and particularly since the economic collapse private capital for a marginal business enterprise such as Sharp Park just isn’t in the cards.

But for most of the status quo components, the price increase is a ruse.  They like Sharp Park the way it is: cheap, subsidized, and affordable.  However, I will say that maintaining golf in San Mateo County subsidized by San Francisco taxpayers and causing so much environmental damage simply can’t be sustained in even the medium run.

The most likely scenario is that Sharp Park will be restored into a community centered model of natural flood control, outdoor recreation, and endangered species recovery. 

However, if the restoration effort is somehow halted the only viable scenario that will remain is create another Harding Park-type golf course at Sharp Park, charging $120 a round and up.  This outcome would make everyone poorer.

If Ken King and other San Mateo golfers are eager to pay increased green fees to cover the true costs of the Sharp Park golf course, let’s estimate what those would be. For the coming year:

  - $300K supplement from the SF General Fund
  - $280K emergency repairs to sea wall/pump
  - $450K EIR costs for Laguna Salada impacts
  - $18K property taxes to San Mateo county
  - $1.6M for irrigation project (the $8M socked to SFPUC ratepayers, amortized over 5 years)

Total: $2,648,000—***all of this currently paid for by San Francisco taxpayers***.

So if we transfer these costs to San Mateo golfers, who play 75% of the average 50K rounds played each year at Sharp Park, this means that their green fees will increase by $71 ($2.648M / 37.5K rounds)—so the typical per-round cost to anyone without a San Francisco address should be $85-95.

That of course doesn’t cover any course improvements, so it represents the lowest possible cost that would cover expenses. Add in the tens of millions that golfers think *should* be invested, and you can see that the green fees for King and his buddies must skyrocket well over $100/round. This doesn’t of course include the costs of legal judgments for illegal take of endangered species nor catastrophic repairs when sea level rise wipes out the sea wall. Ultimately King and pals will be paying $200-300/round—assuming that they decide to keep playing, which they are unlikely to do.

Obviously these are at best crude estimates that people like King will attempt to shout down. But the unassailable reality is this: San Francisco has been providing huge subsidies for the benefit of non-San Francisco golfers at Sharp Park, and these subsidies are no longer tolerable or possible.

San Mateo county is going to have to pay ***much*** more either in green fees or in taxes if it chooses to buy the course and run it itself. Or else San Mateo county is going to have to acknowledge that this golf course is a loser no matter who is paying for it, and it should be put to better purposes.

I was present in Supervisor Mirkarimi’s office three weeks ago today when he denied that a full EIR was necessary or that any city agency could afford to pay for one. He confidently claimed the “study” featured in his legislation that was to be completed by September 30 this year would be adequate for the purpose of deciding on Sharp Park’s disposition to GGNRA. The group I was with insisted this would not stand scrutiny from the many permitting authorities. Ross, to his credit, finally gets it.

Here’s what Mr. Plater wrote last Tuesday, two days before Mirkarimi changed his stance in accepting the full EIR proposed by staff and dropping the restrictive September 30, 2009 completion date: “The Mirkarimi bill expressly requires, based on the best scientific evidence available, that a restoration study be conducted along with alternatives that retain or redesign the golf course.” All of that by September 30, of course. Plater hoped (hyped?) the September date would hold, in which case there could not possibly be a completed EIR befor the transfer to GGNRA.

You could say Plater’s dream is a casualty of reality because the legal requirements necessary to complete such a transfer were bound to become known to the San Francisco Supervisor sooner or later. It’s an interesting twist that Plater claims he’s always been for a full EIR - if he had been, he would have opposed Mirkarimi’s legislation from the getgo. But it seems that Mr. Plater is more interested in engineering the transfer to GGNRA so it can decommission the golf course at his behest.

Regarding the numbers provided in the controller’s report, I said it straight the first time: “the net result after subtracting Sharp Park’s expenses and overhead from revenue” show the golf course in recent reported history either made, or can easily make, a profit. Kaufman and Plater’s claims are an intentional fraud repeated with the urgency of a Zen mantra, but not less meaningless for the repetition.

To Stan Kaufman: I don’t play golf, have never played golf, and don’t intend to ever play a game of golf. Sorry about that.

Good grief, I hope there aren’t any “people like King”! “King and his pals”, “King and his buddies” sounds like legions of golfers led onto the course by me - imagine that, those of you who know me.

Mr. Kaufman’s tone is rather barky, and he has quite an imagination, making up numbers whenever it suits him. Like this: “75% of all rounds played are by non-San Francisco residents”. Oh yeah? Mark Duane, Sharp Park’s manager conducted a survey of users last year, and guess what the percentage of San Francisco resident users was? Mr. Kaufman’s 25%? Not hardly, try 71%. The results are available at the golf shop if you ask for them.

Buy the SP property? Surely you’re joking Mr. Kaufman.

The Younger Report referred to by Mr. Plater was paid for, then set aside by the Parks and Rec Dept. for the inept “work” it was. Nobody accepted the validity of the report, which is why it was junked.

Mr. Plater is intent on making a silly argument that if you raise the price of a round of golf a couple of dollars, you will have a massive flight away from the sport. The reason so many golfers now drive down from SF to play golf is that Harding raised prices sky high, as much as $150/round on weekends.

Nobody, certainly not I, said anything about prices like that and Plater knows it. Lawyers typically like to create straw men, than set then on fire.

Ken King correctly notes that the supervisorial proposal is changing. It is morphing from a narrowly confined “study” with an arguably predetermined outcome to a formal alternatives analysis within a California Environmental Quality Act (CEQA) Environmental Impact Report (EIR) process.

This is a much better path as it will create some definition for the much promoted but loosely defined “restoration”.  This will allow federal, state, and local oversight agencies to formally comment on the science, law and financial feasibility of the “restoration” as well as the other alternatives.

I don’t think the golfers or the people of Pacifica should fear the EIR process itself. They should participate in it. They would be well advised, however, to observe from this discussion the lengths that some people will go to in order to have their way, so their participation should be vigilant as to whether balanced information is being processed.

The San Francisco Board of Supervisors passed the Sharp Park legislation ***unanimously*** this afternoon. Change is coming to Sharp Park.

I was in the Sharp Park clubhouse today and noticed a sign inviting club users to come to a meeting to fight impending closure.  I asked the bartender in the lounge what this was all about and he replied that the enviromentalists were trying to close the club because they (the club) were supposedly running over frogs or some such thing. I said that I thought the issue had something to do with finances and he said this was not true the club was making money.  There seems to be a lot of confusion about the financial viability of the club and what the real issues are.