Member/Board Exchange, June 13.

Going above and beyond here by giving board members and management the questions before i ask them. In fact, i am giving them more than two weeks advance notice so they have ample time to prepare their answers. This isn't trying to be a "gotcha moment," there's little value in that. I'm trying to get my head around where board members are coming from, or more importantly, going to.

To be clear, the next member/board exchange meeting is June 13, 9 am at the Sundial auditorium. These June meetings are some of the least attended of the year, simply because so many have already left for the summer. The upside is we should have plenty of time to delve into the details, the nuts and bolts of issues of concern.

I need to be clear on one topic that relates to my ultimate points and questions for the board. I suspect the general manager will have to answer that, which is fine. He mostly likely knows more so than board members. It is relative to the form 990's the RCSC submits to the federal government every year. Oddly, the one from 2020 hasn't been posted yet so i will be using the 2019 form.

Here is the data in question: Section 3, 4b), shows the following for golf: Expenses: $8,011,411. Revenue: $5,143,779. I have no interest in arguing the numbers, i merely want someone to verify if in fact they are accurate? It seems safe to assume if these are the figures you are giving the Feds, they should be right. Should be easy; yes or no.

Once we are clear on that, i want to go back to the first member/board exchange meeting in April. At that meeting, three avid RCSC female golfer members spoke. Their concerns were all similar. Was outside play affecting the RCSC members? Some of the issue was tournament play and we were told that tournaments were only scheduled when courses had open tee times. That of course was nonsense as tournaments are scheduled at least months in advance.

At that meeting, it was pointed out that non-members who purchased full play golf passes could access the RCSC golf portal. There was some indignation from the board about whether that was true. We heard one board member tell us pointedly she was going to get to the bottom of it. Apparently all the above triggered a session where the board was given relative data to our 8 golf courses.

Unfortunately that information triggered nothing from the board. At the second member/board exchange, they had issues resolved listed on the white board, and nothing was mentioned or done about golf. They did have the director of golf there who verified that non-resident full play passes can in fact register for tee times using member's web portal. He also answered some questions, but solved none of the issues raised by members at the first meeting.

I made the assumption, the board would act on it at the next board meeting. Much to my shock, nothing was done there either. Nary a word or a mention about changing the dynamic regarding outside play by non-members. That's a problem, and i will tell you why...at least from my perspective. Stay tuned.

 

Let's start with some quick down and dirty numbers, again this isn't to be argumentative, it is solely for a point of reference. We (the RCSC) bought the golf courses from Webb in 1975/1977 (18 month trial period). The cost was $10 and a cup of coffee (only 7 of the courses, we got Quail Run a couple of years later). The agreement said the courses would be self-sustaining, but i have no interest in arguing or debating that point in this thread.

We know the Preservation and Improvement Fee (PIF) was started in 1999. Since its beginning, through 2022, my best guess in investments from the fund for golf is between 50 and 60 million dollars. Again, not a point of argument, PIF was started to keep our amenities updated. I would argue the RCSC's accounting as they tried to bury numbers by misplacing which side of the ledger expenditures went on (Facilities or Golf), but again irrelevant to this discussion.

We also know from the available 990's they've spent another 25 to 30 million dollars from the capital budgets subsidizing golf. Stay with me here gang, because this point isn't about whether golf deserves or needs the money. It's about the point the three speakers made at the mic in April. It's about those who who have invested some 75 to 80 million dollars in our golf courses over the past 20 years. That would be the RCSC membership; the entire membership and not just the 12-14% that golf.

With all of this out of the way, knowing we all have helped subsidize our golf courses, i have these two questions to ask our 9 member board of directors:
1). Do you believe non-residents should be allowed to displace the RCSC members who helped fund this 75-80 million dollar investment?
2). Do you believe non-residents should be allowed to pay less for a round of golf than a member of the RCSC who helped fund this 75-80 million dollar investment?
These aren't hard questions. These are the questions that were asked by RCSC golfing members and the board elected to take no action. Which tells me, you aren't troubled that non-members have more rights than those who paid and paved the way.

How do i know, they did nothing? It's quite simple, if you dig. Full play golf passes are sold for a one year duration. If you buy one in April, it's good for one year, till the following April. It is in fact a contract with the RCSC that we now know includes the right to access our web portal for reservations. I also know by looking at the financials on the RCSC website for the month of April, they doubled the sale of outside full play passes from the same period the year before. Which oddly enough had doubled in sales from 2020 to 2021. Non-residents have found that cheap golf is alive and well in Sun City and we all are subsidizing them.

It's pretty clear to me, management has decided the number of rounds of golf is the only thing that matters. It's a foolish argument, because related costs also increase. But for the purposes of this discussion on Monday the 13th, i want to focus on whether non-members should ever have more rights than those of us living here and paying the freight? And, to close out my thoughts, i would encourage board members to reread the Articles of Incorporation that says this: 1. To establish and conduct a general social, cultural, recreational and amusement enterprise for the benefit of its Members (members capped for a reason). Nowhere does it mention your role being to provide service to those outside Sun City, especially at cheaper rates and accessibility.

 

Thanks, Bill - you made all the numbers and resulting questions quite simple to understand. I am very interested in the answers coming from the Board on this topic.

 

This should have been a no brainer Cheri. Instead, it was ignored. Lest readers think i am making this crap up, here's the numbers from the RCSC financial handouts the other day:
Line item prepaid greens fees-Non: April actual: $25,211/ April budget: $10,940. Year To Date actual: $101,552. Year To Date budget: $44,520.

These numbers reflect an astounding increase from the year before and that was when we jumped from around 50 non-resident full play passes to about 125. Word has gotten out the best deal in town is a full play golf pass in Sun City. The board heard the members speak loud and clear about their concerns with non-members using our courses and the reaction was to sell even more passes to the outsiders in that month.

Let me be clear. I don't care about how much we dumped into golf over the years. That's over and done. I do care going forward because we already know costs are exploding. I am really looking forward to the feds posting the 2020 990's. Until we found them we had no idea how much golf was costing, now we know. We can argue about how much the members subsidize golf for the 12-14% of the membership. We should never have to argue how much we are going to subsidize the golf for those living in Peoria, Surprise and Glendale.

I get it, management just looks at data and numbers, community means little. The board is elected to represent the community. Oh wait, that's right, "loyalty to the corporation and all." We are the corporation, not people coming in from outside the walls wanting cheap golf. Why is this so freaking hard to understand? The bigger issue now is the longer they wait the longer the time to fix it. I suspect the RCSC will just keep selling non-resident full play passes over the summer which will take us well into 2023 before they expire.

This is what happens when take away the membership's involvement and just let the employees do what they think is right.

 

I've been accused of being callus when speaking about employees from the RCSC. To be clear, it's most often directed at management, and to be even more clear, it's not a personal attack. I have been writing this for a very long time. If you know and understand our history, you know the general manager's job is to run the corporation and oversee the day to day operations. It's been that way from the very beginning.

On the other side of the ledger is the board, they are elected to serve the community. There absolutely should be a separation of power. The documents were specifically written that way so as to create two sides of the coin. The problem is the equation has been changed to the point where the purpose of the board has been undermined and undervalued. Worse yet, the purpose of the membership became even less important. With every rewrite of the bylaws, our role (the membership), simply became the cardholders and their responsibility was to pay the bills. Management would take care of everything; still think the "Original Fun City was an accident?

I don't fault the management for running the corporation. It's easy for them to look at golf and 10 pin bowling and say; geez we need the outside revenue to support both so lets just tap into that massive number of outsiders and let them have at it. That's where the board should come in. That's where those elected to serve the community have to say, enough is enough.

There is the reason the general manager works directly for the board. They are his/her boss. However, over the years the language in our bylaws and board policies shifted to allow the management the freedom to make decisions and choices with little or now input from either the community or the board. Think i am blowing smoke? Watch the first member/board exchange and the look of how clueless the board was regarding what was happening on our golf courses. They had no idea. I'm not sure they do now.

To make it worse, two people approached me after the first exchange meeting who were on or had been on the golf advisory committee and asked me what could be done. I've always assumed all of the decisions were made by those committees. Obviously not the case. Apparently all of these decisions have been made by management. They simply were looking at amenities and asking how can we maximize utilization?

Ultimately, when the board lets management make critical decisions with no input, i guess we are just hoping they get it right. We know how that simply isn't the case. No bigger red flag than where we are from a technology standpoint. We trusted management to get it right...it's frankly a shit show of epic proportions. We trusted management to make choices on who plays on our well-subsidized golf courses and how much they should pay...how is that working out for us? Now i hear 10 pin bowling is being used by large percentages of outside bowlers who are paying a fraction of what play would cost them in the real world. And, don't even get me started on management deciding arbitrarily on what gets put into new structures being built and then having to go back and retrofit them to get it right.

I've written this too many times to even begin to count. Sun City was built in a way that there was indeed a symbiotic relationship (as one former board member used to call it). That bus has long since left the station. Those changes were made to allow management to do it all quicker and without the hassle of interacting with the membership. Now, we know they've also carved out the board, apparently for those very same reasons. With the boards approval by the way.

From a management perspective, i get it. From a community/membership perspective and from a board perspective, it was pure and utter foolishness.

 

RCSC mindset, “Ignorance is bliss.”
Ignorance is not stupidity. It is a chosen, detestable state of mind. The more knowledge you have, the better.

Members still have voting rights to intervene and effect change!

“Where ignorance is bliss, ’tis folly to be wise.”
Thomas Gray’s poem “Ode on a Distant Prospect of Eton College” (1742).

 

Bill, you and I have a gentlemen's disagreement on the impact of the original transfer agreement and I respect your opinion. Thanks for your insights. May I ask what you think the best proposed solution to this subsidizing of golf and outside play is. It seems the choices are (1) raise the rates on non-members and no annual passes. (2) Don't allow non-members on the courses unless they are a guest and raise the rate on members to make up for lost revenue (i.e., make the courses private) (3) Only allow nonmembers to book a tee time 24 hours in advance by phone so members have ample opportunity to make their tee times and don't sell nonmembers annual passes; adjust member rates according to level of total play (4) Close down the courses as they can't be operated profitably as intended. Your thoughts sir?

 

Hey John, nice to see you signed in. Great questions BTW. Let me explain it this way, i think you'll agree, or at the very least understand. I've made a mountain out of the golf issues for a reason. Here's why; i sobered up 47 years ago and the one absolute truth we were taught in treatment was if we didn't admit we had a problem, we could never fix it. For too many years, the RCSC has been cavalier about golf and the expenditures. Going forward, we cannot afford to be.

The one obvious solution to start with is involving the golf community via the golf advisory board into the discussion. I can tell you based on the comments from both the mic and in person at the exchange meeting, that hasn't been the case. In way too many cases they were clueless about what was being done. To be even more blunt, the golf advisory committee should have all of the data necessary to make decisions and recommendations. They haven't had it and honestly, it is apparent even the board had no idea until last month.

As far as outside play, think about this. A resident full play pass in Sun City West is $3300 per year and in Sun City Grand, it's $4000. Now picture this; a 45 year old living in Peoria, Surprise or Glendale can purchase a full play pass in Sun City for $2000 no golf car or $2500 with golf car. Want to really smile, that Surprise 45 year old could well live in Sun City Grand (which is Surprise) and play here every day for that $2500. Does that make any sense to you, because it makes none to me.

My bigger point is this; we know from the 990's in 2019 the expense side was over 8 million dollars. We know rounds of play went up dramatically in 2020 and 2021 by about 50,000 rounds each year. This year, given the stats, look like it will break that and clearly full play pass purchases are up again this year. We know there is a diminishing return on full play passes as the more they golf, the less each round of golf costs. Worse yet, there are less available tee times for full pay or surcharge rates. My bigger concern won't be answered until we see the 2020 990 where we can see how much the expense side has gone up. We know the revenue side has hovered around 7 million dollars each of those years.

We also know the crazy inflation we are seeing and golf will be no different. The question is, how much? I'm no numbers guy, but in the case of golf, it cannot be business as usual. For sure, we have to stop the bleeding where outside play bumps RCSC members off our courses. Allowing non-members access to the 75 to 80 million dollars we have invested in our courses in the past 20 years is lunacy, especially when you consider we are telling the RCSC members who paid the freight they have to pay more than the outsiders and they may not even be able to get a tee time.

Sun City was built on the basis of an ownership mentality. So, to answer your questions, make the board and the golf advisory committee responsible to find solutions. To do that though, you can't keep playing hide the weenie. You need to put it all out there and figure out what works best for those living here and insures golf stays sustainable without flushing money down the drain.

 

Helllo Bill, I hear you loud and clear and we are saying the same thing: A power greater than us must return this situation to sanity, so to speak. Rightly or wrongly, I view this as the classic trade off decision. Reduced public play will result in higher fees or higher subsidy for member play. Increased public play lowers fees for member play but comes with the inconvenience of crowding and difficulty getting of tee times. Your point is well taken that the higher powers are those most affected by where on the trade off scale we land; member golfers represented by the GAC and the Board. They should be the policy decision makers and be able to rationalize the decision to other members. Golf management can advise on the decision but should not be the ones making the decision.

 

Whenever i think about the past 15 years, the once popular song by Bobby McFerrin comes to mind; "Don't Worry, Be Happy." After 45 years of working towards building a community based on ownership and involvement, we spent the next 15 pushing people away. Dispatching the concept of "volunteerism" with one of just having "fun," we watched as the members were told, "we'll take care of everything."

It's why when you asked the questions regarding the solutions for golf, i saw the opportunity to move backwards to a better place in time. A point where those impacted by the problems became responsible and accountable for the solutions. Let's be realistic, if you know none of the facts and have none of the data, there's no chance to solve or resolve anything. When i say the RCSC treated golf cavalierly, that was an understatement. Virtually no one knew anything. It's the way the GM wanted it.

The board knows next to nothing about the inner workings of golf. That wasn't by accident, but by design. Over those same 15 years, they dealt away the concept of ownership and simply trusted management to do the right thing. It's why i have so often written about the separation of powers between the board and management. I expect management to look out for the best interests of the corporation. I expect the board to look out for the best interests of the membership. Back 15 years ago, board members were given instructions on how to best serve the membership (copies available). Those no longer exist.

All of that changed when the new GM convinced board members that loyalty to the corporation was their duty. So much so, she rewrote the bylaws to say that. Worse yet, as board members served longer terms, they translated that loyalty to the general manager. They are clearly not one in the same. Historically we know Sun City was built through a collective and inclusive process where the membership and the board were constantly working through problems together. To be clear, there were some butt ugly issues, but they were always resolved.

We've now gotten to the point where committees, clubs and even the membership are inconsequential. Singular management people make decisions on the best choices for affected members. Even when they are wrong, they are seldom held accountable. For far too long the one measuring stick for employees was their loyalty to the GM. It's exactly what happens when boards abandon their responsibilities and just let the management do their thing.

Don't worry, be happy...indeed.

 

I love that song! (Particularly when I was in a secluded Bahamian Island and still drinking.) Can you send me a copy of the document you refer to. Thanks, John

 

Must have been the Bob Marley version eh? The document is 5 pages and used to be in the notebooks they gave new board members. It was pretty straight forward with the header on it reading: Now That You're A Director. A Guide For New Board members. The first page was the introduction and the first topic covered was Representing Your Membership.

It was pretty detailed, and i found it telling the Membership was the top of the list. I'm working on getting you a copy of it. Staggering how far we have fallen from those years when the concept that board members were elected to represent the membership. Of late, we've spent a good number of years having the board tell us they were there for the corporation, not the membership. It's a little like the argument which came first the chicken or the egg; circular by design and an easy out for the board has they handed everything off to management.

 

Sun City golf really is a fascinating discussion. I'm not talking about your 30 foot putt for a birdie on a par four, i'm speaking directly to the problem there are too many courses and not enough golfers. Think not, just look at the three private country clubs within our walls and the fact they are now all open to the public. I went looking for their rates and the only one i found showing winter pricing was Sun City Country Club, where a round of golf is $64 Mon-Thursday and $72 weekends and holidays. Summer rates are about half that

The problems are magnified by the 8 RCSC owned courses. That makes a total of 11 golf courses in an area 3 miles wide and 7 miles long. From 1960-1978, when Sun City was built, golf was king. The only way to keep them filled enough to justify that many courses is to sell golf passes at really low prices. Sadly, even that wasn't enough apparently, because the RCSC management team made a decision to open up full play passes to non-residents. Then to compound it, they said let's give them access to our web portal and let them sign up just like a member.

Think of it in these terms, if you owned a restaurant and sold all you can eat passes to 25% of the your client base, and if they came and ate constantly, how would that work out for you? I know, not a perfect comparison, but every retail operation has a break even number per customer. This isn't rocket science; if a plate of food in a restaurant has value of $15 to produce it and you buy an all you can eat pass, and you end up paying $7 for it, how do you make ends meet? Simple, you pass on the costs to the other people entering by charging them enough to cover the shortfall.

If it were only that simple, this would be an easy fix. It's not. The last two years the RCSC has booked close to 350,000 rounds of golf. That's up significantly from the traditional 300,000 rounds played in the past. The pandemic, when golf was the only game in town, saw a spike in rounds played. That of unto itself is not a bad thing. The question is, how much did that increase in play cost us? We don't know because they never show the expense side of the ledger. That has long been the case till a reader on TOSC posted a link to the RCSC's 990's.

We know from the last one posted (2019), the expense side for golf was just over 8 million dollars. We also know that everything golf related has been increasing through inflation (like everything else). Just using raw data, for the RCSC to break even they would need to average $22.85 per round (8 million divided by 350,000 rounds). To be clear, the number means nothing because they haven't come close to breaking even in a very long time and because they offer any number of gimmicks to increase rounds played.

The problem is simple from my perspective. It is time for the RCSC to acknowledge there is a problem regarding golf. If for no other reason than to address the concerns raised by RCSC golfing community and their ability to get tee times. It's also time to start sharing with the community and more importantly with the Golf Advisory committee all of the data relative to golf.

If the decision to fund golf through outside play is the solution agreed to by members, i would be stunned. I've been wrong before, but if selling way below cost rounds of golf to non-residents is a solution, then so be it. The problem is bigger than that though. Because the cost of a round of golf is just going to go up. We know water is going to be an issue. We know fertilizer is getting more expensive, as is grass seed. We know the cost of labor won't go don't. I expect in time, rounds of play will fall off as well, unless the decision to let outsiders and even the 25% of the RCSC member golf population that buys full play passes keeps playing for well less than the rate needed to subsidize their play.

It gets worse though. If you look at the RCSC Long Range Planning budget, through 2030, there is an additional 25 million dollars coming from PIF for golf. That includes the turf reduction mandated by ADWR and the replacement of two golf maintenance buildings. That will bring the RCSC's investment into our golf infrastructure, since PIF began, to 100 million dollars. That is on hell of a lot of money.

Most of you have never read the purchase agreement between DEVCO and the RCSC. I've shown it to a handful of people. Several have told me they didn't think it said golf should be self-sustaining. It's an argument, but i would point out, in it the agreement specifically states for purposes of this agreement, all costs for the maintenance of Viewpoint Lake would be equally divided in half and allocated back to golf. Viewpoint is and has been a feeder system for watering Lakes East/West and why that allocation was spelled out. By the way, they've never done that, added in the costs of the lake (to my knowledge).

The point to this exercise is truly about the following questions: Should we subsidize golf and the related fees? If the 100 million dollars from PIF we will have shoveled at golf isn't enough, how much more is okay? The biggest problem is much like the argument regarding the Mountain View project; how much is too much. Because if there is no accountability, then they'll just keep throwing good money after bad. It was the exact reason the RCSC was reluctant to take the golf courses in the first place...they feared they would become a money pit.

 

Not sure why you deleted your questions oneday, because they were spot on. There is a long and rich history regarding golf in Sun City. As i have written dozens of times, Sun City was built as a golfing community and always will be a golfing community. There were two tenets that were always bantered about regarding the purchase agreement. From the 80's, 90's and early 2000's, it was common knowledge that RCSC golf courses should always remain golf courses and that golf was supposed to be self-sustaining.

Here's the oddity; golf seldom had enough play to pay for itself and the second was there is in fact time sensitive expiration and renewals on golf courses having to stay exclusively for golf. Neither are worth arguing here, i am more interested in what happens as we move forward. I wrote the other day, there are simply too many golf courses in Sun City. I've also written, the most vulnerable are the three private country clubs.

If and when the ADWR shoves the 5th management plan down their (Sun City CC, Palmbrook CC and Union Hills CC) the shit will hit the fan. It is slated for 2025 and in essence it says golf courses will only get water for tee boxes, fairways and greens. All of the rough will be excluded from watering. Their option is to let it go to seed (dirt) or convert to desert landscaping. If they elect to convert, the cost will be greater than the current owners paid for the courses. It's simply not in their budgets to do that.

There is speculation the state will give them time, but i suspect that will only happen if they lay out a plan or a timeline. The reality is, they paid in the neighborhood of a million and a half to 2 million to buy the courses (the conversion on courses is in the two to three million dollar range). The larger factor is, the land as a building site might be worth as much as 25 or 30 million dollars. The fly in the ointment will be the infighting with property owners on the golf course. These fights have been going on for the past 15 or 20 years. Eventually the property owners get a cash settlement and the golf course goes away.

If and when that happens, the number of courses will be reduced and all of the new homes built on those courses will result in more golfers to play on the remaining RCSC courses. In time, it will help us as golf numbers start to dwindle again. The pandemic influx of golfers will be a short term fix. We know from looking at the next wave of buyers, Gen X, there just won't be as many golfers as there were from the Greatest Generation or even the Boomers. Sorry folks, it's just data.

It's why i keep beating this dead horse to death. We have decided it was okay to throw huge sums of money at a game that a small fraction of the community play. The former general manager made that her priority. If you think not, ask yourself, why are we so far behind from a technology standpoint? Why haven't we built a performing arts theater? Why do we have less pickleball courts per capita than our competition?

This is what happens when a gm decides what matters and what doesn't. This is what happens when a board elected by the community becomes fixated on loyalty to the gm rather than loyalty to the community/corporation. They seldom challenge or question direction, they just rubber stamp decisions.