Hervey Bay Golf Club Proposed 27 holes

Discussion Paper

Future Vision for Hervey Bay Golf and Country Club

I have been associated with our club since around 1982 and have enjoyed the services it provides its members for many years. Unfortunately we don’t appear to have a plan accepted by our member for its progress for the next 25 years. This discussion paper does contain my thoughts and hopefully it will stimulate our members to consider what changes our members may wish to see happen in this period. I have always accepted the decision of our members so would appreciate constructive feed back so we can inform our future committees what are the majority views of our members.

I accept fully that mine and the majority of our present members won’t still be playing golf in 10 years. To me this doesn’t prevent us from thinking about the way we wish our club to develop for the next 25 years. Let us leave a future development plan for our club for its future members that we are all proud to say we were a little part in formulating this plan.

Over the years I have read about other sporting bodies becoming insolvent and being forced to close down and or sell their assets. I have discussed this issue with several of our mature business members over the years and we all agreed we don’t wish to leave our club in this predicament. A few years ago I was approached by our manager to assist the club as it was in financial strife. We had meetings with our bank manager plus I did approach the other banks in the big 4. Basically at that time we were unable to meet all our debts as they became due and none of the banks were willing to increase our overdraft facilities. I then arranged local professionals to assist and we prepared and lodged an application to Council to obtain development approval to be able to develop our two practice areas into residential allotments. We held a special meeting of our members who supported this course of action. We were then able to arrange for valuers to revalue these areas as future residential sites in lieu of private open space. Our committee also issued 10 year membership at a discounted rate provided it was paid in full immediately. With this valuation and the additional cash injection from early payment of membership fees the bank was able to assist us with the required overdraft facilities that our club required urgently to be able to trade satisfactory.

Hervey Future Growth

I have visited Fraser Coast Opportunities and obtain data on present population and predicted growth patterns. I have also obtained similar information on visitor numbers to our city and their expenditure patterns.

In my views the only golf club in our city that any serious golf player would wish to play is our course. We have about 640 members from a population of 47,555 which is 1.3% of our population. Most members would accept that we are still able to play in competition any day we wish but often not at our preferred hit off time slot. I would suggest if we had another 100 members then we would no longer have this luxury of choice. If we then consider the projected population by year 2036 which is 65,943 should give us 887 members. Our golf course won’t be able to handle this number of members without expansion.

Social Golf

It is very difficult now to book a social game of golf at our course as we have member competition 6 days per week. If we had additional golf course faculties for social play we would increase our green fees income. People on holidays are always seeking things to do at each town they visit. I believe it is realistic to assume that if the facilities were available 5% of our permanent population would play at least two games of golf per year and 2.5% of our visitors to our city would enjoy a game of golf at our course. Then if we could accommodate this number of social golfers we could have $350,052 of social green fees now and $518,233 by 2035.

RSL Involvement with our Club

Our committee and members during the last 12 months decided to lease out our club house to the RSL. I understand our income for last year will be about $1.1M and preliminary figures reveal a net profit of $334,816. We employ 5 green keepers and 2 females in our office. Thus this move basically means that our club will never ever face the possibility of our bank foreclosing due to non-payment of debt. Our committee and members should be congratulated for taking this action. However often there are repercussions that aren’t fully understood when these decisions are made. In obtaining these funds from the RSL we must now forgo privileges that I for one took for granted in our club. Our committee don’t have any meeting rooms, We are not allowed to arrange any functions inside the club house, The profits from the additions club house sales over events say the pro-am aren’t able to be used to offset the costs of running those events. These losses will be viewed differently by each member. I have discussed this issue with some of the RSL directors and their manager. They sympathise with me and our members but then point out that we are very willing and happy to accept their monthly cheque. It must be strongly emphasised that I raised these issues with the RSL and that they are contented to follow the existing signed agreement. However if our committee and members wish to discuss other arrangements which will be of benefit to the RSL and our members they will listen and consider our proposals. Their manager and I have discussed one possible solution to this matter. The RSL has invested their money in our club facilities to improve the return to their members. If it was possible that there could be a very large increase in the sporting members of our club then the RSL could consider different options. In star glazing we have discussed this possibility:-

If the club house was situated close by to land on which many sporting bodies were able to use the facilities and all sporting bodies made our club house their club house. Then the ground floor may be set aside for the sporting bodies and the first floor and above would be controlled by the RSL. Thus dining and gaming machines are excluded from the ground floor. The ground floor is controlled by a committee where the voting rights are determined by your club number of members. As each sporting club member spends money at this venue this expenditure is recorded against the sporting group who issued the membership card and proceeds are distributed in proportion to the expenditure of each sporting body members. Note the RSL would still staff and control the complete club house however the sporting bodies would have control of the ground floor. Exact financial details, if our members chose this option should be resolved by others with the appropriate professional expertise.

We have identified that there are two large parcels of land suitable for these sporting fields. One is the odour zone within the freehold land bounded by Hythe, North, Martin and Tooth Streets. There have been no discussions with the land owner at this stage. The second site is State Government

lease land north west of Martin and North Streets. The majority if not all of this land isn’t suitable for residential development.

If our members considered that this option is in our interest then we would need to construct a new club house on the land to the south east of Martin and North Streets.

My vision for our Future Couse Facilities

I believe we need to increase our golf course from a 18 hole course to at least 27 holes and may be 36 holes. If we don’t cater for the future additional golf players as Hervey Bay population grows plus our visitors then we will be inviting one of the other golf courses close by to improve their facilities and become a competitor. The best business model is a monopoly so why give another golf course this opportunity.

How can this be achieved

For the past 16 years there have been discussions about the possibility of another golf course being constructed due west of our course. The land is controlled by Ibis Developments. I am definitely not a shareholder of this private company. For the last 18 months I have spent a lot of time working on this project with possibility of joining both courses together. The outcome from this work is as follows:-

The standard of golf course designed by Pacific Golf Course Designs is a very good course and would encourage golfers to play the course

It is just not financially feasible for this golf course to be constructed and funded from the sale of their other assets plus the present shareholders don’t have any intention to operate a golf course in competition with our club.

Ibis shareholders were always aware that other developers had already sold the residential land adjoining this proposed golf course and the profit from the sale of these lots is not available to fund the development of this golf course. There are still 9 of their shareholders who are present members of our club. They have always wanted to assist in improving our club facilities. Their committee is willing to offer to our club the land required to construct additional golf holes. If our club does wish to expand the number golf holes the logical choice is for our club to accept the kind offer from Ibis shareholders.

Ibis shareholders do increase their own company return from not constructing the proposed golf course and just developing their residential allotments which adjoin private open space so will be sought after lots.

If the golf club doesn’t wish to accept their offer they do have other money earning alternatives for their open space land. That is why their offer of the land to our club must have a time frame attached to it.

Our committee is actively seeking professional advice as to what improvements should be made to our course. I understand they have received a report which involves improvements to nearly every

existing golf course hole. The easiest way to carry out these improvements would be to put the holes being revamped out of action for 3 to 6 months. If we constructed 3 holes on Ibis land this would be possible.

The cheapest way to construct additional golf course holes is for the work to be done by a local civil contractor and our green staff. Currently we employ 5 green staff and they finish work each working day around 1.00 pm. Thus our plant and equipment sits idle in the sheds most of the afternoon. Our staff does have a small nursery which they use to grow grass for our greens. It would be a simple exercise to increase the size of this nursery so that after each green coring season we could plant our expanded nursery and grow all the grass we require for the new greens. The expanded nursery could occupy two separate locations with one of them on existing Ibis land. It should be noted that the average size of the new greens is 671 m2 which is a lot larger than most of our existing greens so this would give our green keepers the option of more pin locations per green than they have at present. We all accept now the mix of grasses that make up our fairways. If we cored the best types of grasses on our existing fairways we could easily plant 3 new fairways per year and quickly they would be to a better standard than our present fairways. The civil contractor could complete the bulk earthworks on each fairway as required bulk out the bunkers and green sites install the irrigation systems and construct the golf buggy pathways and respread the topsoil and then allow our green staff to complete the construction of each hole. Our green keeper will control the finish of each new hole so we are guaranteed the quality and our existing staff would be fully aware of the location of all underground surfaces. I have prepared estimates for the different possibilities. Please note these designs are the property of Pacific Coast Golf Design so there would be a fee for each new golf course hole as it is being developed. The estimate does not allow for pathways for the existing course. We would all agree that with present number of golf buggies using our course that these are now urgently required.

Financing New Capital Works

Due to the actions of our committee and our members we now have options as to how to finance improvements and additional works.

(A) With our increased guarantee yearly income the club should be able to borrow additional funds from our bank. The construction of a third 9 holes will increase our yearly income.

(B) The club could stage the work to develop slowly and fund from exiting surplus yearly funds.

(C) The club could resolve to sell residential lots adjoining Tooth Street and Old Maryborough Road so the expansion can be done with a lower increase in its debt levels.

The revenue that the RSL derives from our members is in direct portion to the number of players on our course. This report has already demonstrated that an additional 9 holes will substantially increase the number of social golfers using our course and the RSL clubhouse. It is being assumed that RSL revenue will be increased in the ratio of additional players. May be it is reasonable to assume that increasing our available golfing holes by 50% we can request a 50% increase in their monthly payment. This figure will be used in the financial calculations. The fairest way for the RSL may be for our committee to negotiate an extension to our existing agreement that when the club increases the available golf holes by 9 or more holes the monthly lease payment is increased by the same portion as the increase in the no. of green fees collected?

If the club resolved on option © then consideration must be given to the small group of members who have made the decision to live nearby our existing club house so they are able to walk to and from the club house. This group of members contains some of our most active members. It would be suggested that the club may consider retaining some buggy sheds near present location of the club house and offer these members free hire of these buggy sheds until these members retire from golf. Then these golf buggy sheds could be hired to golfer living in the new residential estates.

Alternatives 1

27 hole layoutAlternative 1

Appendix A is one possible option. With funds being borrowed from our bank the work would be completed within 12 months so our members and visitors would be able to enjoy a 27 hole course facility during 2017. The additional 9 holes within Ibis land already has the bulk earthworks completed on 6 of the additional holes so we should be able to turf the additional fairways within the 12 months period. For this funding exercise it will be assumed that the golf club will pay for their portion of the works from the RSL monthly contributions plus the increased green fees collected. Total development costs has been estimated at $5,080,572.First year we will have an interest only payment schedule which is a monthly amount of $21,676. Then we will have monthly payments of $59,583 for 10 years. I have assume that during the first year we are only meeting the monthly interest payment whilst the patronage of the additional 9 holes is advertised and achieved. Then for the remaining years the monthly repayment should be possible from the increased revenue discussed before. It would be ideal to construct 28 holes so the club is able to have one hole out of play at all times for maintenance purposes. The costings are only for 27 holes.

Alternative 2

27 hole layout new club House Alternative 2

Our members decide that they would prefer to construct a new club house which will give our members more freedom within the club house, an additional 9 golf holes and minimum debt. To achieve minimum debt our members must sell our high land which fronts Tooth Street and Old Maryborough Road. I have obtained an appraisal of the return to our club from the sale of these lots to a developer . The anticipated return from this sale is $6.24 million. We never obtain any advantage as golfers from the golf holes located on our high land. If one of the holes in our low land is unplayable due to wet weather than the course is closed to completion.

New club house

Allow a 2 storey building 40m by 30m.

Car parks allow 10,000m2

My report costings has assumed these costs will be borne by the RSL.

Buggy sheds 28.3 by 6.5 by 6 1104 m2

Green keepers Buildings 18 by 15.5,29 by 7.5, 9 by 6, 551m2

Pro shop 21 by 9 189m2

The first stage of alternative 2 would be to carry out alternative 1 including burrowing those funds for a few years. Then we would develop additional holes on the Ibis land and sell our high land to a

developer. On opening an additional 3 holes on Ibis land , say 2, 15 and 20, then existing holes on present course, holes 10,11 and portion of 15 will be closed to play and available for development. It will take two to three years to sell these lots. Once the lots are sold then the balance of the holes on Ibis development will be constructed to allow holes 9,8,6 and part of 5 on the existing course to be closed and the lots sold over three years. Then the re arrangement of holes on our existing course could be done to suit our new layout.On completion of the new club house, the existing one will be closed, the buggy sheds relocated and all activities will be from Martin Street. Comments have been made that the proposed new club house will be in sand fly infested country. This isn’t correct. Sanctuary Estate Stage 1 has been completed. These lots are further north than Martin Street and closer to the creek. Sand flies aren’t an issue for this estate. The RSL benefit from the increased patronage from the additional holes as well by the additional sporting members due to the extra sporting bodies using the nearby sport’s fields. It is being suggested that the RSL constructs the clubhouse building, associated carparks and external roadworks, the golf club is responsible for the proshop, green keeper’s buildings and buggy sheds relocation.

Total development costs have been estimated at $5,564,035.First year we will have an interest only payment schedule which is a monthly amount of $25,565. Then we will have monthly payments of $55,778 for 11 years.

Alternative 3

Alternative 3 High Land Sale First StageAlternative 3 High Land Sale Second Stage

Our members decide that they don’t wish to construct a new club house . They do wish to develop an additional 9 golf holes and minimum debt. To achieve minimum debt our members must sell our high land which fronts Tooth Street and Old Maryborough Road. I have obtained an appraisal of the return to our club from the sale of these lots to a developer. The anticipated return from this sale is estimated as $5.5 .million. I haven’t prepared detail plans for this option at this stage.

Total development costs have been estimated at $5,546,535.First year we will have an interest only payment schedule which is a monthly amount of $25484. Then we will have monthly payments of $55,602 for 11 years.

Conclusion

I am only an ordinary member so it definitely isn’t my privilege to advise our members what course of action they should follow. Each member is entitled to their own decision as to whether they wish our club to adopt a forward plan to develop our golf course into a 27 hole course.

Members if you believe our club should carry out a cost benefit analysis of one of the above options please discuss with members of our committee your views.

Please note that in all these costings I have used input from Pacific Coast Gold Design, Pumps and Irrigation, and Harcourts with the blanks filled in myself.

Most of Ibis’s land is zoned private open space which attracts a very low valuation. Thus the adjoining of their proposed golf course land to our land won’t alter our valuation or rates by any large amount.

Thanks for taking your time to read my discussion paper and good golfing in the future.