By: Barbara Arietta
In what appeared to be a scathing rebuke of the San Francisco Recreation and Parks Dept (RPD) Accounting methods, Nancy Wuerfel, Vice Chair of the San Francisco Parks, Recreation and Open Space Committee (PROSAC),
delivered a written detailed financial analysis and critique of the
RPD's Golf Fund to the PROSAC Committee on Wednesday evening, November
In her opening explanatory remarks to the Committee
Ms. Wuerfel, a Fiscal Analyst, reminded the PROSAC Committee that
although it was true that they have received many consultant reports in
the past years examining San Francisco's municipal golf situation, none
have provided a thorough analysis of the Golf Fund's accounting, going
back to original documents, ordinances and expectations, and comparing
the Fund's accounting with standard revenue and expenditure management
practices. Ms. Wuerfel stated that her report has done just that.
the better part of the past year, I have studied the accounting for the
first six years of the Golf Fund's existence. I have found both
procedural and accounting problems in the Recreation and Park
Department (RPD) that have distorted the fiscal realities of municipal
golf in San Francisco.
The Golf Fund Ordinance sets out very specific spending priorities,
with Operations and Management expenses paid first, however, RPD has
ignored these priorities, resulting in the accounting problems demonstrated in this report," alleged Wuerfel.
According to Wuerfel's report,
it appears that the problem of the San Francisco golf course's
financial woes begins back in 2002 when San Francisco began making
renovation plans for the 2005 AmEx PGA Championship Tournament held at San Francisco's Harding Park Municipal Golf Course. Wuerfel wrote in her report that by March 2004, the total
for Harding Park's renovation for the 2005 AmEx Tournament amounted to
$8.2 million! She enumerated several findings including the allegation that
capital and non-operating expenses related to the Harding Park
renovations were incorrectly recorded as and charged to everyday
Operations and Maintenance. She alleges that
by doing such approaches to the golf course accounting methods resulted
in the effect of overstating operating account expenses, while hiding
capital costs by $1.9 million. Wuerfel contends that the golf revenue
was understated due to internal practices that allowed to be paid off the top.
this bad accounting is corrected, it is evident that revenue has been
sufficient every year to pay the first priority cost of golf operations
and maintenance for the golf courses," Wuerfel reported."When
the bad accounting that has been used to promote Prop J privatization
of the golf courses and, potentially, the give away of Sharp Park to
the federal government, is corrected, different questions emerge as to
why these actions are even considered."
Wuerfel also stated that the General Fund subsidy to the Golf Fund was needed in part to cover third priority loan repayments to the Open Space Fund and fourth priority Capital cost overruns. One of her most thought-provoking statements was her allegation
that when the accounting methods were corrected, in line with the Golf
Fund Ordinance guidelines, it was shown that the entire $1.3 million
subsidy in FY 2007-08 was not needed for use that year, but was still
kept inside the Golf Fund and carried forward.
allege that the Kemper-Sports bank loan secured for the 2005 AmEx
Championship Tournament was authorized to be used to pay for
pre-opening costs and to furnish the Harding Park clubhouse, but was used instead to build the clubhouse. Additionally, the 2005 PGA Tour
payment was intended to reimburse lost revenue and the gardener
overtime and supply expenses at Harding Park, in preparation for the
2005 AmEx Championship Tournament, but instead was used to build the clubhouse, according to Wuerfel.
intended to repay the Open Space Fund loan are being used for
excessive, unanticipated RPD overhead costs," Wuerfel claims."Paying
fourth priority capital costs before third priority loan repayments with available revenue has resulted in breaking the promise to repay the Prop 12
to the Open Space Fund. And, another disturbing fact is that yearly
public hearings by the Commission to report on expenses and revenues in
the Golf Fund, as required by the Golf Fund Ordinance, have never been
Wuerfel noted that the question of whether or not the
land currently occupied by golf courses should continue as golf courses
or be converted to another use is a policy issue and is not addressed
in her report. However, those decisions, she said, should be based on
good, accurate accounting of the real expenses and revenues generated
by the courses. Wuerfel alleges that the RPD's current accounting
practices do not provide policy makers with the information they need
to make these decisions.
"This report began as an examination
of the accounting of the Golf Fund to answer the question: "Does the
Golf Fund make or lose money?" The short answer is that the Fund does
pay its operating expenses (without General Fund subsidy) when Golf
Fund Ordinance guidelines are followed," Wuerfel stated.
does she recommend for future golf course administration? "I wish to
propose an alternative approach in which RPD retains operational
control of the municipal course, but runs golf like a business with responsible
revenue and cost management within the Department, as was always the
intention. The model for this is the City of San Diego", said
Wuerfel."Its main virtue is its structure...it has one...with a Golf Operations Manager in charge. There are a number of similarities between San Diego and San Francisco: the same number of golf holes, the responsibilities of championship events, similar operational requirements,
public concerns, and financing issues. It is not clear why RPD did not
choose to include this model in their list of possibilities for San
Francisco. San Francisco should be, at least, as capable as San Diego
is at running a first-rate municipal golf course!"
Wuerfel concluded her presentation, the PROSAC Committee requested
that the RPD management officials present at Wednesday
evening's meeting prepare a detailed response to Wuerfel's detailed
allegations for PROSAC's next meeting in December.