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Palo Alto nears deal on paying for golf course revamp

Original post made on Apr 17, 2013

As Palo Alto plows ahead with a complete overhaul of its Baylands golf course, city officials are finding themselves balancing the ambitious renovation plan against a broader effort to improve flood control around the San Francisquito Creek.

Read the full story here Web Link posted Wednesday, April 17, 2013, 9:56 AM

Comments (9)

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Posted by Crescent Park Dad
a resident of Crescent Park
on Apr 17, 2013 at 10:59 am

So the city wants to borrow $5mil (i.e., issue bonds) to cover a reconfiguration of the golf course and to add playing fields. The SFC-JPA will pay $3mil to cover the costs of reconfiguration for the flood control field.

Just wondering how the city plans to prioritize which bonds they want the citizens to vote (and pay for) in the near-future: Infrastructure bond, Safety Services Building bond and now the golf course.

And let's not forget that we are already paying for the Library bond and the two PAUSD parcel taxes/ bonds. And that the city is considering raising fees on developers to pay for a new public art fund. The state just voted to raise our income taxes and sales tax. The federal government just raised/restored upper tax brackets --- with more coming via the proposed budget from the White House.

At some point we have to say, "Stop"!

For once I would like to see the city come up with a funding program that will pay for itself instead of bleeding the tax payers.

Why not have the golf course fees and playing field fees pay for the loan? It's called "self-sustaining"...and the city needs to consider this option more often.

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Posted by Crescent Park Dad
a resident of Crescent Park
on Apr 17, 2013 at 11:03 am

BTW - I realize that the plan says that the city "expects" fees to cover the costs, but there are no guarantees. Which means we, the taxpayers, are the back-stop. That's my point - we're still on the hook.

Just like HSR...the funding model is suspect at best. State taxpayers will be on the hook for that too.

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Posted by Sell-The-Golf-Course
a resident of Another Palo Alto neighborhood
on Apr 17, 2013 at 8:07 pm

> For once I would like to see the city come up with a funding
> program that will pay for itself instead of bleeding the
> tax payers.

The City can sell bonds that are paid off with the proceeds of the golf course. These are called "Certificates of Participation".

It would be bestif the City were to move the golf course into an Enterprise Fund, so that General Fund monies would not be used to subsidize this activity. Over the years, the non-resident use has become dominant (about 75% non-resident use).

What's needed at this point is a list of fee increases that will be needed to pay for the bonds/interest. If things get too expensive, there could be the possibility of a default--which would might require taxpayer involvement. Of course, the City could purchase Bond Default Insurance.

Given the lack of resident use, it would be a good idea for the City to get out of this business.

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Posted by Jan
a resident of Midtown
on Apr 17, 2013 at 8:38 pm

I haven't used the Palo Alto libraries for several decades. I should not be expected to pay for them, with my own taxes. A library use fee should be used to pay for the entire cost of the bonds issued to pay for them.

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Posted by think about what you are saying
a resident of Crescent Park
on Apr 17, 2013 at 9:09 pm

@ Sell the Golf Course - Actually, having so many non-residents use the course is good - they pay more (5.4%), and are effectively subsidizing the course for the City (and the residents).

@ Jan - you probably haven't used the fire or police services either in the last decade - should your taxes not support them either, but instead be paid for on a "per use" basis? For example, that may result in a homeowner who is burglarized paying a huge sum when the police catch the person...not a good idea.

We pay taxes to have a nice city with lots of nice services. It is perfect? No way, but it could be worse - we need to keep an eye on things, but when you propose an idea, think it through.

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Posted by Sell-The-Golf-Course
a resident of Another Palo Alto neighborhood
on Apr 18, 2013 at 8:37 am

> non-residents subsidize the golf course

To a great extent, this is true—until you consider the total cost of operating the facility vs revenue possible from other land use. In other words, what are the lost opportunity costs to the City from continued operation of this facility?

The land is worth, nominally, about $5M/acre. This means that the value of the course is about $400M (or more). Putting aside the question of how to sell that land, and what it’s actually worth to other owners, there is no rent being charged the golf course for the use of the land—like the City charges the Utility for the use of public safe for its offices that is already publicly owned.

Charging only 1% of the nominal land value as rent would add $4M to the operational costs of the course. The City’s gift of “free land” to the users of the golf course is the problem.

If the land were used for other purposes, it would generate a lot more revenue for the City. Given the low number of Palo Alto users (maybe no more than 500 unique people)—making a gift of $400M of highly valuable land for non-residents does not seem sustainable to a well-managed City financial model.

> we pay taxes ..

Well, maybe. But that mindset opens the door to some very expensive City expenditures that most people are subsidizing, but not using. Palo Alto is a very small city, geographically. We have over 4,000 acres of park, and open space. Most Palo Altans don't use these parks, yet we pay taxes for them.

Time to come to our senses, and think through about how all of the "services" cost, and who is actually using them. Most of us aren't--and the costs for maintaining these services is going up daily.

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Posted by Jayne
a resident of Midtown
on Apr 18, 2013 at 9:11 am

The number of out-of-city people who use the golf course has increased over the years with local PA residents decreasing.

The golf course is rather the same as the soccer fields. Most of the adults who play soccer at JLS are non-residents. Most of those who will play soccer on the proposed new soccer fields will come from other communities.

Which begs the question how much should Palo Alto tax payers subsidize these facilities for the benefit of those living outside the City?

Also Councilman Pat Burt, who chairs the City's Finance Committee, is also a long-time Director and current Chair of the Joint Powers Authority." Isn't this a conflict of interest?

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Posted by Resident
a resident of Another Palo Alto neighborhood
on Apr 18, 2013 at 10:44 am

I think it is worth saying to Jayne and others that if we can move some of the adult team sports to Bayshore from the Mitchell and Greer Parks, it will mean that there will be more field space for our younger kids to play in parks nearer home.

If the adult teams only have one PA resident they are still allowed to play (or some such rule) in Palo Alto, and getting these teams to a commute park would leave space for AYSO teams in our own parks for our own younger players who are also residents of town. At present, we have large numbers of players wanting to play on AYSO teams which increase with more and more housing, and they are squeezed into the available slots in our neighborhood parks. Getting more space in these parks would be a useful reason for approving more playing fields at Bayshore.

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Posted by think about what you are saying
a resident of Crescent Park
on Apr 18, 2013 at 9:56 pm

@ Sell the Golf Course - I think there is a fundamental issue at the heart of this discussion - development (and increased City revenue) vs amenities a City provides. There must be a balance - both need each other. If you only have massive deveopment, you get traffic, noise, crime. If you only have amenities, well, you can't - no way to fund them.

So you need a balance of each.

As to your specifics, I question the value of the land as you state it. It is unimproved land, adjacent to an airport. Also, it is subject to flooding and is poor ground to build on. Could it generate revenue by being sold? Sure, but that is a one time gain, and I'm pretty sure it would be well under $400M.

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