Harding_RevisedPlan

SUMMARY OF REVISED PLAN FOR RENOVATING HARDING PARK

City staff have been working for more than two years to develop an acceptable plan for the renovation of Harding Park and Fleming golf courses. Initially the plan was to select a private entity to bring their expertise and investment to the project through a formal bid process. However, that effort failed when changes in available capital funding, combined with the City’s strict insistence on protecting resident rates and course access, made partnering with a private entity economically infeasible. At the recommendation of the Recreation and Park Commission and Supervisor Tony Hall, City staff have been exploring other means to finance the renovation.   The following is a description of the project’s guiding principles and financing plan. The attachment “Responses to Community Concerns” is a chart that explains how City staff have been able to address the public’s overriding concerns.

I. GUIDING PRINCIPLES

In order to assess the revised plan, it is important to understand the basic assumptions and principles, which based on years of due diligence and public hearings on the subject, have guided staff’s efforts.
1. San Francisco residents are entitled to the best possible recreational experience. Harding Park was once a great golf course and Fleming was a model for what a nine-hole course could be for seniors, juniors, beginners and others seeking a nine-hole experience. Unfortunately, as a result of decades of deferred maintenance and insufficient capital investment, conditions at the courses have deteriorated badly. Fortunately, Harding Park’s and Fleming’s essential characteristics (its land features, location, and design) offer the potential for Harding Park and Fleming to once again provide an exceptional urban recreational experience.
2. Increases in resident fees should be minimized and golf must remain affordable and accessible. Harding Park is and always will be first and foremost a municipal course. Thus, any plan for renovating Harding must assure that golf remains affordable and accessible to San Francisco residents.   Similarly, financing plans that rely on taking away historic levels of resident play in favor of higher paying non-residents were rejected.
3. The courses should not be privatized. The City should retain control over Harding Park. Course polices should continue to be set by the Recreation and Park Commission and fees should continue to be set by the Commission and the Board of Supervisors.   Also, City employees, effectively trained and supervised, should continue to maintain the courses and employment opportunities for City employees should be enhanced.
4. A special “Golf Fund” should be established to capture golf course revenues. Once restored, Harding and Fleming will require an effective maintenance program together with a dedicated source of funding for supplies, maintenance equipment and capital repairs to preserve the benefits of the restoration and avoid “throwing good money after bad”.
5. Harding Park needs to be completely renovated. Simply improving current maintenance practices will not reverse the effects of decades of deferred maintenance. Instead, a major up-front investment is needed to rebuild Harding Park’s entire infrastructure, including irrigation systems, greens, tees, fairways and support facilities, from the ground up.   Phasing the improvements incrementally is impractical, would compromise the effectiveness of the renovation and would add substantially to the length of the construction period and the overall cost of the project.
6. The City should develop a comprehensive youth golf program. The game of golf can provide valuable benefits to San Francisco’s youth and entire families. Every effort should be made to maximize recreational opportunities for new communities of players. The First Tee program can provide an exceptional resource in meeting this goal.
7. The renovations should make Harding Park more environmentally sensitive. The recreational programs available around LakeMerced, as well as the study and rehabilitation of the Lake’s habitat itself, will be enhanced by improving Harding Park.
8. The PGA TOUR Championship is a means not an end. Although bringing the PGA TOUR championship to Harding Park once every three years will provide the City with significant, wide-ranging, benefits, securing the Championship was not the goal of the project. Rather, the Championship offers a critical means towards achieving the ultimate goal of providing the best possible recreational experiences for San Franciscans at affordable fees.

II. THE MUNICIPAL FINANCING PLAN

The following is a summary of the key financing elements of the City’s revised plan to restore Harding Park. Construction is estimated to take 12 months. The project would be built in accordance with all applicable regulatory approvals (such as building permits and Planning Commission approvals).
The Park, Recreation and Open Space Fund
To best achieve the ambitious and diverse goals described above, the City can issue bonds backed by the City’s voter approved Park, Recreation and Open Space Fund (the "Open Space Fund"). Voters approved an Open Space Charter Amendment in March 2000, to pay for the “acquisition, construction, reconstruction, rehabilitation and/or improvement of park properties and recreational facilities and for the initial purchase of related equipment. ”The Open Space Fund receives a set portion of property tax annually for thirty years beginning with fiscal year 2000-2001. Open Space Funds do not increase property taxes, rather they are set aside from current assessments.
Financing the restoration of the golf course complex by leveraging Open Space Fund dollars is the least expensive and fastest financing option available. It also allows the City to retain maximum control over the courses. Tax-free bonds are generally less expensive than private capital because they are secured by tax revenue. Lower debt service costs mean lower resident fees.
Revenues from the golf courses would repay 100% of the debt. The fee structure for the courses is specifically
designed to fully repay the Open Space Fund each year. The project is self-sustaining and is not contingent on other revenues sources or the diversion of revenues from other General Fund programs.
No Long Term Lease
Moreover, because the City is not required to enter into a long-term lease with a private sector developer to pay for the restoration, the City retains greater control over the courses and course policies. In fact, IRS rules applicable to tax-exempt financings of this type strictly limit the participation of private parties. For example, under those IRS rules the City cannot enter into a long-term lease of the property, management agreements are limited to relatively short-terms (usually five years) and private parties cannot acquire “equity” in the project.
The First Tee Program
Through the participation of The First Tee Program, the City expects to secure significant charitable contributions for the Project. The First Tee program would separately pay for all of its facilities, plus a percentage of the overall capital costs of the project. Project sponsors estimate that 400 new youth participants could be enrolled annually. Since The First Tee program is funded through charitable contributions and major funding from the USGA and the PGA TOUR, the City can realize the benefits of a proven youth golf and life skills program without incurring costs.
The Role of the PGA TOUR
Finally, there has been an awful lot of confusion and misinformation about the proposed role and financial impact of the PGA TOUR’s participation in this project. The PGA TOUR Championship will pay the City significantly more money than it will cost. A non-profit agency, the PGA TOUR has agreed to donate the first million dollars of net revenues and 50% of any remaining net revenues from each Championship held at Harding Park to
(i) The First Tee Program at the Harding-Fleming golf complex,
(ii) course related improvements and
(iii) improvements to the surrounding LakeMerced recreational area.
Hosting one of golf’s premier events, i. e. the PGA Tour Championship, for one to two weeks every three years makes restoring Harding Park more affordable for residents, not less, and preserves General Fund dollars for other important City programs.
RESPONSES TO COMMUNITY CONCERNS

Although the failure of the plan to utilize private investment set the project back, ultimately the final result is a better project for the City. Under this revised plan, by leveraging both the City’s municipal financing capacity and the PGA TOUR, the City can fully restore Harding and Fleming golf courses. In this way we can create the best possible recreational experience at the lowest cost to residents, without privatizing jobs or giving up public control. The following shows how City staff have addressed concerns that have been raised in connection with this project:

CONCERN RESPONSE

Privatization:

1. A 35-year lease to a private developer is too long. Addressed. The revised plan prohibits long-term leases and limits the permissible terms of management agreements to five years

2. The profit motives of a private developer will   place undue pressure on greens fees. Addressed. Since the City is financing the work itself, it retains control of the courses and does not have to attempt to balance the interest of a private, for-profit, firm.

3. Loss of civic control Addressed. Course policies and fees will continue to be set by the Recreation and Park Commission and the Board of Supervisors.

4. The project will limit resident play. Untrue. The City will implement controls that assure residents continue to enjoy historic levels of play at the courses.

Reserving golf funds:

1. The only way to protect throwing good money after bad and ensuring that the renovated courses stay in a good condition is if a Special Golf Fund is created. Addressed. The revised plan contemplates the   creation of a special “Golf Fund” separate from the City’s General Fund. The Golf Fund will provide a dedicated source of funding for supplies, maintenance equipment and long-term capital repairs and improvements.

Environmental issues:

1. The project finances assume a night lit driving   range, which could pose a danger to migratory birds and a nuisance for neighbors. Addressed. Because the profit motive has been reduced by not relying on private investment, the project no longer assumes or requires a night lit range.

2. The project sponsors planned a broadcast   application of Round-Up without giving other   alternatives a chance. Addressed. To address environmental concerns about a preemptive broadcast application of the herbicide “Round Up”, the Department hasagreed to pursue a more graduated program instead that involves spot spraying only in areas of heavy infestation, followed by alternative methods of weed eradication, including removing top soil, followed by additional spot spraying, but only to the extent necessary. The renovation will create more energy efficient systems, including the installation of new infrastructure that allows the irrigation system to use recycled water as it becomes available. Moreover, with the adoption of new, cutting-edge environmentally sensitive land management practices, the project will significantly reduce the total amount of pesticides used on the courses. These improvements will compliment other environmental measures the Department is taking in the natural areas of LakeMerced.

Role of the PGA TOUR:

1. The PGA TOUR is trying to take over control of Harding Park. Untrue. The PGA TOUR has never suggested or offered to take over control of the Harding-Fleming golf complex. The PGA TOUR has simply stated that it is willing to make Harding Park the West Coast home of the PGA TOUR Championship once every three years (an honor almost any course, public or private, would covet) and bring The First Tee program to San Francisco, if the course’s inherent qualities are restored in a timely fashion and well maintained. Hosting the Championship offers a critical means towards achieving the City’s ultimate goal of providing the best possible recreational experience for San Franciscans at affordable fees. The PGA TOUR is willing to assist the City in achieving those goals, but has not insisted on doing so.

2. The scope of the proposed renovation has been driven by the requirements of the PGA TOUR. Untrue. The requirements of properly restoring Harding and Fleming – new irrigation systems, fairways, greens, maintenance facilities, club house, cart paths etc. - are the same, with or without the PGA TOUR Championship. The course facilities are being designed for municipal use not less than 35 ½ out of every 36 months, not for the approximately one-two weeks of the Championship every three years.

3. The PGA TOUR makes the project too expensive. Untrue. The direct economic benefits of including the PGA TOUR far outweigh the costs. So much so that hosting the Championship once every three years is an integral component of keeping Harding Park affordable for residents and preserving General Fund dollars for other City programs.

Impact on play:

1. Phased construction should be considered. Considered but rejected. Simply improving current maintenance practices will not reverse the effects of decades of deferred maintenance. Instead, a major up-front investment is needed to rebuild Harding Park’s entire infrastructure and facilities from the ground up. Moreover, constructing the improvements incrementally- in two or more phases- is impractical, would compromise the effectiveness and viability of the renovation project and would add substantially to time and overall costs of the project.

2. Fleming’s layout should be preserved. Addressed. Initial plans that included substantial modifications to Fleming were altered to preserve its essential characteristics. Fleming is a unique course in that it allows golfers of all levels the chance to play a mix of hole types, and in the process, use every club in their bags, while still being relatively short and easier than Harding is. Thus, an integral part of the project has been to upgrade the condition of the Fleming course, without changing its layout, and to realize the full potential of that course for a quality experience by senior, junior, beginning, and in fact, all golfers.

CONCERN	RESPONSE
Privatization:
1. A 35-year lease to a private developer is too long.	Addressed. The revised plan prohibits long-term leases and limits the permissible terms of management agreements to five years
2. The profit motives of a private developer will place undue pressure on greens fees.	Addressed. Since the City is financing the work itself, it retains control of the courses and does not have to attempt to balance the interest of a private, for-profit, firm.
3. Loss of civic control	Addressed. Course policies and fees will continue to be set by the Recreation and Park Commission and the Board of Supervisors.
4. The project will limit resident play.	Untrue. The City will implement controls that assure residents continue to enjoy historic levels of play at the courses.
Reserving golf funds:
1. The only way to protect throwing good money after bad and ensuring that the renovated courses stay in a good condition is if a Special Golf Fund is created.	Addressed. The revised plan contemplates the creation of a special “Golf Fund” separate from the City’s General Fund. The Golf Fund will provide a dedicated source of funding for supplies, maintenance equipment and long-term capital repairs and improvements.
Environmental issues:
1. The project finances assume a night lit driving range, which could pose a danger to migratory birds and a nuisance for neighbors.	Addressed. Because the profit motive has been reduced by not relying on private investment, the project no longer assumes or requires a night lit range.
2. The project sponsors planned a broadcast application of Round-Up without giving other alternatives a chance.	Addressed. To address environmental concerns about a preemptive broadcast application of the herbicide “Round Up”, the Department hasagreed to pursue a more graduated program instead that involves spot spraying only in areas of heavy infestation, followed by alternative methods of weed eradication, including removing top soil, followed by additional spot spraying, but only to the extent necessary. The renovation will create more energy efficient systems, including the installation of new infrastructure that allows the irrigation system to use recycled water as it becomes available. Moreover, with the adoption of new, cutting-edge environmentally sensitive land management practices, the project will significantly reduce the total amount of pesticides used on the courses. These improvements will compliment other environmental measures the Department is taking in the natural areas of LakeMerced.
Role of the PGA TOUR:
1. The PGA TOUR is trying to take over control of Harding Park.	Untrue. The PGA TOUR has never suggested or offered to take over control of the Harding-Fleming golf complex. The PGA TOUR has simply stated that it is willing to make Harding Park the West Coast home of the PGA TOUR Championship once every three years (an honor almost any course, public or private, would covet) and bring The First Tee program to San Francisco, if the course’s inherent qualities are restored in a timely fashion and well maintained. Hosting the Championship offers a critical means towards achieving the City’s ultimate goal of providing the best possible recreational experience for San Franciscans at affordable fees. The PGA TOUR is willing to assist the City in achieving those goals, but has not insisted on doing so.
2. The scope of the proposed renovation has been driven by the requirements of the PGA TOUR.	Untrue. The requirements of properly restoring Harding and Fleming – new irrigation systems, fairways, greens, maintenance facilities, club house, cart paths etc. - are the same, with or without the PGA TOUR Championship. The course facilities are being designed for municipal use not less than 35 ½ out of every 36 months, not for the approximately one-two weeks of the Championship every three years.
3. The PGA TOUR makes the project too expensive.	Untrue. The direct economic benefits of including the PGA TOUR far outweigh the costs. So much so that hosting the Championship once every three years is an integral component of keeping Harding Park affordable for residents and preserving General Fund dollars for other City programs.
Impact on play:
1. Phased construction should be considered.	Considered but rejected. Simply improving current maintenance practices will not reverse the effects of decades of deferred maintenance. Instead, a major up-front investment is needed to rebuild Harding Park’s entire infrastructure and facilities from the ground up. Moreover, constructing the improvements incrementally- in two or more phases- is impractical, would compromise the effectiveness and viability of the renovation project and would add substantially to time and overall costs of the project.
2. Fleming’s layout should be preserved.	Addressed. Initial plans that included substantial modifications to Fleming were altered to preserve its essential characteristics. Fleming is a unique course in that it allows golfers of all levels the chance to play a mix of hole types, and in the process, use every club in their bags, while still being relatively short and easier than Harding is. Thus, an integral part of the project has been to upgrade the condition of the Fleming course, without changing its layout, and to realize the full potential of that course for a quality experience by senior, junior, beginning, and in fact, all golfers.