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CONCLUSIONS <br />As the purchase of Pinewood Golf Course is contemplated by the City of Elk River, the City must be <br />aware of the following factors that limit the value of the property as a golf business. <br />1. Market Conditions. Analysis of both national and local market characteristics indicates a <br />combination of declining participation rates, declining rounds played, and a correction to golf course <br />supply in its beginning stages. <br />2. This type of golf facility draws from a relatively small localized market only. The majority of <br />golfer visits will come from within the local community or immediate border community. Golfers <br />participating on a short length nine hole course will tend to limit their travel time to fifteen minutes or less. <br />3. Executive length golf courses appeal to beginner and intermediate level golfers who tend to <br />participate on good weather days only. In a typical season, the number of effective business days for <br />an executive length nine can be 20 to 30 percent less than that of a full length eighteen hole golf course. <br />4. By nature, the business size of a short length nine hole golf course is limited due not only to <br />volume factors but to localized resistance to rate increases. Further, this golf course will become more <br />and more reliant on senior age golfers into the future. In order to attract and retain this category of golfer, <br />discounting rates in the range of 10 to 20 percent is inevitable. As a consequence, the average rate <br />achieved may very well decrease over time with no appreciable upside to round volume. <br />5. Revenue from ancillary businesses is also very limited. No driving range, or space for a driving <br />range exists on this property. With a short length course and minimal terrain challenge, demand for golf <br />car rentals is minor. Food and beverage sales are confined to basic snack and beverage items due to <br />the short length of the average golfer visit. <br />6. Required Property Improvements. Beyond the supportable purchase price of $375,000, the <br />City would need to be aware of an additional $175,000 of equipment replacement and property <br />improvements necessary in the next three (3) year period: <br />CATEGORY4TEM __ _ OUANTITV ESTIMATED COST TOTAL_ <br />GOLF COURSE <br />Irrigation System Upgrades <br />MAINTENANCE EOU/PMENT <br />Triplex Mower with Reels <br />Fairway Mower <br />Heavy Weight UGNty Vehicle <br />Sprayer Attadvnent <br />Light Weigh lm4ty Vehicle <br />Turf Ae2br <br />CLUBHOUSE <br />Parltirg Lot Seal CoaVCradc Repar <br />~ 30,1x10 30,000 <br />1 25,000 25,000 <br />t 35,000 35,000 <br />~ 20,000 20,000 <br />1 15,000 15,000 <br />1 5,000 5,000 <br />~ 20.000 20,000 <br />1 5,000 5,000 <br />Interior Upgrades _ 1 _ 20,000 20,000 <br />TOTAL IMPROVEMENTS $175,000 <br />