City Council Agenda and Packet 2010 02 09 SP

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PAGE TWO SUBJECT:ADDRESSING CURRENT AND LONG-TERM FINANCIAL ISSUES FACING LOUISVILLE DATE:FEBRUARY 9, 2010 Actions Taken So Far The current economic recession began adversely affecting the City of Louisville’s revenues in early 2009. To keep expenditures within anticipated revenues the City Council approved and staff implemented over 50 actions to reduce cost and increase revenues with a net impact of over $315,000 in 2009 and over $1 million in 2010. Table 1 lists all of these actions. Reducing the Gap Between Revenues and Expenditures To provide the City Council withadditional options to keep expenditures within anticipated recurring revenues, staff revisited and reconsidered what we might do and prepared a new list for Council’s consideration. Table 2 lists those actions staff recommends taking or has already taken, those actions staff recommends taking if the City’s budget shortfall worsens, and those actions staff considered and recommends against. Revenue and Fee Options. IfConocoPhillips’ fiscal impact is what they project, it will provide a significant boost.However, as mentioned previously, that development alone will not increase recurring revenue sufficiently to support the current level of services without further budget cuts or tax increases. Table 3 lists the options available for increasing tax or fee revenue if the Council wishes to consider any. Golf Course. Another significant financial issue facing the City is financial condition and approach to managing the City’s Coal Creek Golf Course. Beginning in 2008, all costs associated with the Golf Course, including capital costs, have been charged to the Golf Course Enterprise Fund. Although the Golf Course used to generate an operating surplus, that surplus has steadily declined for ten years. The economic recession and the continuing decline in golf revenue (not just at Coal Creek, but at most golf courses in the nation) contributed to Coal Creek Golf Course experiencing an operating deficit in 2008 and 2009. In addition to that, the City had to invest in two large capital projects at the Golf Course, reconstructing one of the ponds and resurfacing the parking lot. To cover these issues, in 2008, the Wastewater Utility Fund loaned $700,000 to the Golf Course Fund to cover the 2008 overall deficit (operating and capital). Staff projects that between 2008 and 2015 the Golf Course Fund will require at least $2.3 million in loans to cover expected deficits. To address this issue, starting in October of last year, staff worked with a focus group of people interested in the golf course operation and finances. Based on the comments of this group, staff prepared and negotiated a new contract with the contractor that currently operates the Golf Course for the City, Western Golf Properties. Staff proposes thatthe Wastewater Utility Fund loan an additional $370,000to the Golf Course Fund to cover the 2009operating deficit and loan an additional $800,000 in 2010to defease the remaining balance on the bonds used to refinance the golf course operation in 2002. Staff will review the fiscal implications of this approach and other options for managing the Golf Course.