could go out for a new r.f.p. process. i totally agree. >> we all approve contracts, so -- with similar language that we're going to potentially back out of them if something is not performed. that's something that can happen but it's not something we go in eyes wide open to do. so i feel somewhat uncomfortable with that. my question about the kemper standards, what are the standards right now we have in place for the city to -- to meet. how do we know we're meeting those standards under the kemper contract, and now we have a standard that seems to be different based on a dollar amount. >> with the kemper contract i don't believe that was specifically a provision of the agreement with kemper. there are maintenance standards in the master tour agreement but frankly, other than the pga making a decision not to hold tournaments at harding, there is no enforcement mechanism in the provision which is one of the reasons, this was a deal point frankly pushed by the

pga. they are doing this on a nonprofit basis, even their incentive payments they're interested in giving that money to the first tee and various charities. >> they have other agreements related to harding about the fees that are paid there, that are about meeting certain standards for the pga. and so it seems like another layer that's on top. i'm wondering if it's necessary. >> again, this was the product of a negotiation with the pga. and what this provision basically says, supervisor, is that if we -- we can become more efficient under this agreement. but we have an obligation to maintain the course standards. so if we decide -- we can reduce our staff, but if we reduce our staff and don't meet the tour standards, then the pga can basically put us on notice you've reduced your staff and we don't think you're meeting the course maintenance standards and if we disagree, then in arbitration provision

is is what resolves this. it gives them an opportunity to say look, if you're not going to meet the course standards, we're not interested in managing the golf course for free. and by the way, it also gives us the ability to make a policy decision. right now there has been a policy decision made by the city, by this board, by the mayor to -- to meet these maintenance standards so that we can have these first-class tournaments at harding. >> my concern is if we're reducing staff that's going to be what the standard is. and there's no other mention of what the standard is. the dollar amount and i guess it could be measured in staffing. and then that would be -- give tpc the ability to -- >> the tour -- we do have maintenance standards referenced in the agreement to the master tour agreement. it includes course maintenance standards. so what the provision is saying is that if we don't -- if we

reduce our staff, and we don't meet the maintenance standards, then there is the ability to actually seek the dispute resolution process. >> mr. chairman, members of the committee, first of all the city doesn't have to reduce staff to become more efficient. it doesn't have to be a reduction in staff. it can be, for example, equipment that is more economical. or a variety of things. so it's not necessarily staff. but let me read you the exact provision that's in the agreement. this is on page 2-6. if the annual r.p.d. course management budget is decreased by an amount less than 15% and the tpc, quote, reasonably determines -- in fact, that provision by itself raises a question, what does that mean? if the tpc reasonably determines, not the rpd. that the city cannot meet the master term maintenance standards, tpc can initiate a

binding arbitration process which could result in tpc being given the right to terminate the proposed agreement with rpd if the arbitrator agrees with the tpc's determination that the city cannot meet the master turnlt maintenance standards. and the second provision is if the annual course maintenance budget is decreased by 15% or more and the tpc, again, quote, reasonably determines, end of quote that the city cannot meet the master tournament maintenance standards, tpc has the right without arbitration to terminate the proposed agreement with rpd. this is a significant savings to the city if you approve this agreement. 78%. we acknowledge that. we just feel this provision is unnecessary and unwarranted. >> supervisor elsbernd.

supervisor maxwell? >> it seems to me that this is something that can be managed. and -- because i, too, have a concern, it's almost like somebody is dictating to us what we need to do and not taking into consideration the other issues. and for me, that's a huge concern. but i think it's something we could probably work out and maybe -- because there are things like reasonably. again, who determines that? in the contract it's best to have things pretty well spelled out. maybe you have what reasonably is, but i don't know it, and the rest of us don't know it. it seems to me there has been shb something we can say okay, that's what they mean if this were to happen. again, as has been mentioned, i want our course to be the best. i think all of us do. and i was very proud of the presidential cup. so therefore i want it to be the highest standard. however, if we are able to do it like any other business and

be able to deal with our costs like any other for-profit business may do, we should be able to have that opportunity and have things spelled out. >> your point is very well taken, supervisor. we actually don't disagree with it. i think the arbitration provision is a relatively typically dispute resolution procedure for when the parties don't agree we are continuing to maintain the minimum course standards. if we -- our primary objective and our primary obligation in this agreement is to meet the course maintenance standards. if we can do it more efficiently, i don't think the pga and they're here and could you actually ask them, they're not going to have any issue with that at all. the challenge is what happens if they believe that we're not and we believe that we are. then the arbitration provision essentially helps us resolve it. there's no cost or penalty to us even if we were not to prevail in that case. it just gives them the option to say we're going to provide

you 270 days or nine months' notice to identify another management entity. i think from their perspective and again, they're here and you can ask them -- >> i understand that but that's not the easiest thing to do. we don't want to get to that point as far as i'm concerned. >> of course not. >> when you get there, seems like you've gone too far. and i can understand you know, the course and having it meeting a certain standard. the problem is, if we go below a certain amount, which to me is very specific, but reasonable is not specific. so on their side, there's nothing real specific other than reasonable but on our side it's 15.0%. so if we were going to go with that, what is reasonable? i think we need to have that spelled out a little bit more and not just whoever determines

what reasonable is. >> it's a very valid point. these were -- this is again the product of some negotiations in which the pga was willing to forgo any profit and this was one of their important deal points. >> then could they just since they're forgoing a profit, then at any time could they say look, we're tired of not getting a profit, this is not reasonable? i mean that could always happen as well. maybe that's why it's there, a way to get out of it. >> i think under the agreement only if we were to reduce course staffing beyond that threshold. i think there are a lot of other provisions in the agreement that actually do speak to the management issue you were referencing. for example we now have a course agronomist and the purpose of that agronomist is to help us with our course maintenance issues, to frankly do it as efficiently and effectively as possible. there's a lot of communication

points in -- throughout the lease and throughout the management agreement where we're meeting constantly. we get together to discuss annual budgets so it's possible that actually with -- after communication we say look, we've got new technology here that we think can help us keep the course standards where they're supposed to be and as long as there is some mutuality to the discussion they're going to be fine with it. there is a whole series of layers in the agreement that actually foster the type of management interaction and communication. this particular provision is really the source -- sort of the ultimate dispute resolution provision. a lot goes into it. hopefully we never get there. >> i'm just looking at the agreement, i'm not sure what page it is, but talks about the mature reduction in harding park course budget.

if at any fiscal year during the term of this agreement, the city reduces the harding park course budget to an amount that is 85% or less of a prior fiscal year, harding park -- the harding park course budget then the city shall notify manager of such reduction. upon receipt of such notice the parties shall meet and confer for a period of not less than 30 days, next page, to determine in good faith whether management believes the city can meet exhibit b, section a of the master agreement, the general course operating plan summary. that's exhibit d which i don't have available to me. so the actual reduction in the budget does not trigger that, it's based on whether those standards that are referenced here which i don't have before me. what do those standards look like?

>> thank you, supervisors. this is an exhibit to the master tour agreement and it talks about the whole seven paige document and by the way, we've continued to discuss with the pga these standards and we do re-evaluate from time to time but they talk about a general course maintenance operating plan summary and they talk about for example the number of times the greens should be mowed, every day, the -- when the tee boxes are moved, when cups, tee placements, ball water service, when traps are raked, certain things that just maintain the condition of the golf course. and so they're laid out here

rather specifically. so we can do that more efficiently, again and you can -- they're here, you can ask them. the pga is not going to have a problem with it. i think what happens is that if what they were -- lie understanding of their position when we negotiated this agreement they wanted some protection we were going to continue totain this as a world-class golf course and that was frankly their consideration for doing this on a nonprofit basis. and i think that that whole 30-day notice period and meet and confer speaks to supervisor maxwell's point about not letting it get to that point. so you know, if we reduced the -- our maintenance budget to a point where the pga had concerns about our ability to meet the standards laid out here, they would provide us notice, we would get together and have a meet and confer and talk this through over a period of 30 days to try to resolve those issues. so i think -- if we said to them look, we've got a

brand-new piece of technology which we think we can do this faster or more inexpensively, i think we're really in this together and it's one of the aspects of this agreement that we're most proud about, is they're making a long-term investment at harding over the next decade because they care a lot about the course. >> so question. what are your plans for reducing expenditures in these standards? >> we're not looking to do that. we have not embarked on our 10-11 process but we think we're at a point right now where we're operating the golf course effectively well,. you know, our staff, there is tremendous morale. the staff is functioning well. obviously we do not know where we are headed in the future, but we will continue to try to maintain the course. >> we have a $406 million budget -- budget deficit for

next year. the parks department is often hit harder than others, which i do not believe like, but it is almost inevitable that we have to do that. we do have to reduce expenditures and meet standards. but you have not thought that out? >> we have thought that out, that is the primary reason we put that out for the proposal, to see if we could do better, we do have the opportunity over time to save over $2 million. flax i think that you have done great work in bringing the contract to was that is better than the current contract, but the detail about the standard of the golf course that has not been thought out yet, i know this is something you have to do the devil is in the details.

supervisor maxwell: maybe with the money that you have saved it would help with the layoffs, you would not have to necessarily go there. it would be whatever the amount is that they would ask you to reduce your staff by. is that what your thinking? >> for example, this last year we were faced with a 20% across- the-board general fund reduction and if we have got 30 -- we have a total of 30 staff, they are not all gardners. but $200,000, $220,000, it helps to offset that reduction. this is a challenging issue. harding is also a revenue generator. frankly it is a treasured asset of the city and we have an obligation to maintain it.

>> under the gulf fund legislation -- supervisor avalos: under the golfing fund legislation that goes generally to the parks, this is now saying that this contract, 80% of the gulf fees will be going to tpc. wondering how that change was made, how was it determined that it would be taken out? what was the function under the current fund? >> this point has been raised and we would disagree with this. that the fees should go to the city, we have had multiple conversations with city attorney offices about the revenue due to the city going to the city, meaning contractually.

this is the point that the attorney, we have conferred with her about it. as well as the city attorney. it is not that all of the revenue generated goes to the city, just that the revenue due to the city goes to the city. >> one of the pressure points that was brought to bear back in 2002 was this notion that the city, for decades, had generated revenue from golfing and never put it back into golfing. that is one of the reasons that the fund was put in place, to make sure that the funding revenues would go back to the golf. supervisor avalos: in this case is going back to the instructors in the contract rather than to the courses? >> absolutely. and that would be the same as what happened with management

fees, $192,000 each year. supervisor avalos: from instruction? >> from the entire pot of money. supervisor avalos: now we are saying that we're taking one strand and moving it directly to tpc. >> i know that this issue has been raised, but this is the model for how a golf course construction happens. the person giving the lesson with a certain skill set, then another percentage goes back to the golf course. if you look not only a hours but public and private golf courses across the country, you will see very similar relationships. there's nothing unique here. supervisor avalos: the question is, this is a resolution. we have a funding ordinance that talks about how the fees might be used, do we need to make an

amendment to the funding ordinance? i am hearing no. ok. next question is around and related to the golf courses on puc land, correct? >> they are part of the watershed, but they are our property and we have an agreement to provide recreational activity and that property. -- on that property. supervisor avalos: it is puc property? >> in 1950 the board of supervisors passed a resolution authorizing the parks department to permit or allow recreational activity on these properties that was an agreement with no end date. the future board of supervisors

could of course the cyber control of the property back over to the puc. as the current agreement exists, the parks department will continue to permit recreational activities on the properties. supervisor avalos: well, let's open this up for public comment. unless there is more from supervisor maxwell? two minutes per speaker? >> good morning, hon. supervisors. i am here to represent local 261 labor. i came here today to show the full support for this puc agreement with the park and we commend them for coming up with innovative ways to bring savings while innovating staff and service.

thank you. >> good afternoon. my name is bruce and i am a gardener at harding park. i am also a shop steward. also the acting chair of the gulf committee for local 261. i will read a statement on their behalf. the local 261 membership and public employee gulf committee supports the approval of the proposed partnership between the pga and the city of san francisco, especially the agreement that allows our staff to continue to maintain harding park as they have been doing since the 1930's. our qualified greenskeepers, teamers, -- teamsters, farmers, mechanics, they'll take great pride in their work and look forward to see the park as center stage in the tournament ahead. we look forward to working with

pga as we initiate a new chapter in san francisco and its historic golf courses. supervisor avalos: thank you, next speaker, please. >> i am the president of the pga golf into our properties and thank you for your consideration today. we are honored to be considered as a partner to the city. we put our money where our mouth is, so to speak, investing a substantial amount of money, annually, committed for a couple of years. not only are we not making money on this, we are investing capital in the golf course because we believed in the future of this golf course, we think that it can make a difference for the kids. i would like to briefly speak to the issue of the arbitration provision and production maintenance expenses. the intent behind getting this provision was to protect the golf course from what could

potentially happen down the road, which is a policy decision to materially change how the gulf force is maintained. if that means a reduction in how it is maintained, we would like the ability to say that that is not consistent with the agreement and we do not think that standards can be upheld, putting in place a provision to force a dialogue around the subject so that we can work through that reduction in maintenance costs. if we believe that the golf course standards can be met at some number below 15%, we are all for it. i can tell you, operating 31 golf courses across the country, achieving annual reductions in maintenance reduction disclosure of payments of 15% in one year is nearly impossible.

we have demonstrated through our actions that we are very eager to see this golf course maintained as efficiently as possible and that as high a quality level as can be achieved. [tone] that is what we hope to accomplish. thank you for your consideration. supervisor maxwell: 15% is an industry standard? >> it was negotiated at 15%. the conversation started with a discussion in which the pga said that look, if we agree in the spirit of this agreement, that this golf course is one of the finest in the country and should be maintained to a very high standard such that we can hold professional tournament golf here that we can be proud of, let's say that five years from now there is a very different group of people in the room and it is a policy decision that the

golf course should be maintained at a different level. do not care about gulf, fees, or a world-class facility, and we will cut your budget by 15%. we said we want the ability to say that we think you are making a mistake and if you go down this road i do not think we can hit the standard. we think it is important, frankly, for the city to have this provision to protect harding park for generations to come. thank you. supervisor elsbernd: another question going back to the first, incentive. can you talk about your plans? should there be incentive payment? >> the spirit of the conversation, initially, was driven from the objective that we all have to see that as the golf course performance improves, the net proceeds are turned back to the community

through the asset itself, capital spending and making sure that all of the things are having a -- happening on the golf course to maintain it. also for the kids in the city of sentences go. particularly those at the park that are unfortunate, where less privileged children cannot have the benefit necessarily, we wanted to create a sustainable funding model. we said we wanted to take our incentive fee, which was negotiated, and contribute that back to san francisco. we put in place over time a sustainable funding model so that after this contract expires it will become part of the spirit of the park and how it is run to make sure the kids learn in life skills through golfing can have the funding to make sure that these programs go forward. >> thank you. supervisor avalos: thank you

very much. thank you for coming. next speaker, please? >> good morning. i urge you not to approve the pga tour contract today. as a concerned citizen about public finances, not a golfer, i have followed the harding park renovation and the promises made to the public since the beginning. i have studied the mishandling of the fund and analyzed the loopholes in the contract that led to the inappropriate use of funding revenue. this contract takes the cake for putting the city in jeopardy for lawsuits and contractor needs. the city is working for the pga instead of the other way around. it is badly written and unfortunately forces the city to make inappropriate commitments to the contractor, ignoring the law that governments have made about revenue usage.

i am told that the city has wave a magic wand and protection disappeared from the agreement. the contract is missing all of the factors that directly affect the scope. rule number one in signing the contract is to leave no blanks. this contract need serious amendments to correct many flaws and be in compliance. speaking of approval, where is the puc in this long-term arrangement? they do own the property, including the golf course, and had they not been asked to be a signatory, there was not a public that was committed to allowing to the park -- allowing the park to be controlled in perpetuity. if the puc wants their land back, will they keep the contract as written? or will they find themselves in

court, using taxpayer money to get out of the appeal that does not meet their long-term needs? i cannot stress this strongly enough. before we have two departments signing on. [tone] thank you. supervisor avalos: next speaker, please. >> walter ♪ fly the pga golf ball management to the moon and let me play under the stars and let it be that harding park has come along so far. in other words, please be true as i am to ♪