Topgolf Moves Closer to Taking Over The Lakes in El Segundo

Topgolf, a golf-centric operation that’s built a brand on merging golf with technology, food, and entertainment, moved one step closer to finally opening in El Segundo Thursday night when the El Segundo Planning Commission voted 5-0 to move the project forward to City Council for further discussion and potential approval. The Topgolf matter is expected to be on a City Council agenda in March.

Topgolf has a lengthy history in El Segundo, where, since 2012, it has sought to replace the city-owned financially under-performing The Lakes at El Segundo, a 9-hole golf course, driving range, putting green, clubhouse and restaurant, at 400 South Pacific Coast Highway.

Topgolf’s initial proposal included replacing the existing driving range with a three-story, 102-tee, indoor/outdoor technology-centered venue. Food and drinks, including alcohol, would be served. Topgolf, which originated in London, just opened its 52nd location worldwide in January in Louisiana. The enterprise calls itself a “global sports entertainment leader.”

City Council nixed Topgolf’s initial proposal in 2017, voting 3-2 against it. At that time, an Environmental Impact Report (EIR) and other documents, reports, and studies had been generated during the five years leading up to Council’s vote.

This time, the road ahead looks more promising for Topgolf, which beat out eight competing proposals after the city issued a Request For Proposal (RFP) in 2017 to determine how to turn The Lakes facility into a more prosperous venture for the city.

Topgolf’s 2012 proposal resulted from an economic initiative through the El Segundo Economic Development Advisory Council (EDAC), a forum (founded in 1995 by then-Mayor Carol Jacobson) for collaboration designed to lead to the identification of responsible development strategies in the city. Officials noted that unlike when the city is looking to purchase a service, the fact that Topgolf’s proposal came through an economic initiative meant the process did not legally require an RFP.

The Topgolf proposal the Planning Commission looked at its meeting adds 350 square feet to the building, making the lobby and lounge smaller, and the circulation areas larger, said Tanner Micheli, Topgolf director of real estate development. He also said that the Topgolf building would be the company’s “Gen 2” configuration, an improved version of what it had proposed years ago. He noted that Topgolf owns and operates all U.S. facilities and that its global operations are franchises. The business is often rented out entirely for business and corporate meetings and events and the company has partnerships with the PGA and LPGA to promote each other. “Right now, we’re creating a lifestyle brand,” he told the Planning Commission.

After Micheli addressed the Commission, three members of the public spoke, expressing concerns about the Topgolf proposal, including traffic and re-zoning the land to allow for a commercial operation like Topgolf, not to mention the sports bar atmosphere, including alcohol.

After the public hearing, the five Planning Commissioners publicly discussed their views on the matter.

“I think that Topgolf is going to bring some money into the city,” said Commissioner Carol Wingate. “And I understand people not wanting it (The Lakes) to change but the golf course has been running for a long time and has not been self-sufficient economically. It would be nice to be able to keep things the same but the demands of the city financially are such that I think that this will continue to provide opportunities for people to play the 9-hole golf course, they’ll have the putting green, and the Topgolf is still there, and there have been arrangements made for
youth and El Segundo groups to have special pricing at Topgolf. So, taking everything into consideration, I think this is a positive thing for the city.”

“What’s before you tonight is perfectly appropriate to be decided by the Planning Commission and the City Council,” said Mark Hensley, city attorney, when asked by Commissioner Brenda Newman about legality issues posed by xxx Courtney, a Manhattan Beach resident in favor of The Lakes remaining more closely aligned with its present operation. “From our office’s perspective, we don’t see any need that this has to be approved by the voters. Of course, cities can always opt to delegate these types of decisions to the voters if they choose but from a legal perspective there’s no legal requirement that the city has to.”

Newman also queried Hensley about Chevron’s approval of Topgolf’s proposal (Chevron donated the land to the city — not the public — with requirements on how the land is to be used), saying, “The good thing for me is that it’s still golf. We still have golf. We haven’t changed its use. We’ve changed the way it’s played over there and who ultimately will profit from it.”

Said the newest member of the Planning Commission Michelle Keldorf, “Commissioner Wingate articulated very well my thoughts on this. I think it’s somewhat important to note that this meeting is not happening in a vacuum. I am the most recent commissioner so I wasn’t here the last time Topgolf came around but I’ve followed what happened then and attended City Council meetings which went into great detail on the operational aspect and the financial aspect of the business…and the way that it was articulated and agreed upon at that point, and how it was financially presented, the city is essentially subsidizing a public use at this point in time. And it’s a use that will still be available for the game of golf to residents of Manhattan Beach and El Segundo and everywhere else alike. I am grateful that Topgolf has continued to come back, seven years in. It’s some commitment, and I think so many arguments have been articulated along the way. We really have vetted them to a good degree.”

Added Planning Commission Chair Ryan Baldino immediately after Keldorf’s comments, “I think that’s a great point. The reason we’re here is because of a change of 350 square feet. And the city hired an independent environmental consultant to determine if a new Environmental Impact Report (EIR) would be required. And the report came back that it did not. With respect to parking, the facility is deemed to need 464 parking spaces. They will provide 523 parking spaces. And I, as member of the Planning Commission, was appointed on the RFP process for The Lakes and the most lucrative proposal was for an outdoor music venue. So, get rid of the golf course completely, make that open park space, and we’ll put in a music venue in there, and the city was projected to make 20 times as much money. But you would have lost the golf course. That plan had no golf whatsoever. With Topgolf, we had a chance to save a 9-hole golf course, which, as we drilled down on the RFP committee, has lost money for the city consistently. It is an Enterprise Fund. It was designed by the city to not only sustain itself but to get money back. It’s never been able to do that. So when you hear people say we’re subsidizing golf, we are subsidizing golf. And we’re subsidizing golf for 85% of people who do not live in the city. So, if you really are serious about saving The Lakes and having a backyard 9-hole executive course, I don’t see a better plan than the plan proposed by Topgolf, who is going to redesign our golf course for us, give us a brand new clubhouse, and if you don’t want to step foot in Topgolf, you don’t have to step foot in Topgolf. You can come play your 9 holes, You can go home. But I have talked to a lot people about this, and they’re people who have lived here their whole lives and said ‘I’ve never set foot in The Lakes but I’ve been to two Topgolfs.’ Our job here is to review what the consultant has done with respect to the Environmental Impact Report. That’s all here for you to look at. The change of 350 square feet does not require a new Environmental Impact analysis and I’m glad that Topgolf is bringing us their best design, their newest and greatest, what’s going to work best at that venue, what’s going to work best for us. That’s what I want them to do, that’s what we all want them to do. We want this thing to succeed. So again unless there are any further comments, the role of this Planning Commission is to approve an Environmental Impact Report, recommend to the city council that they approve The Lakes Specific Plan, which includes all of these adjustments to make this a possibility, but the real nuts and bolts about the bathroom and the kids having free lessons at school, that’s all hammered out at the City Council level. We’re here for the zoning, we’re here for the planning. And from everything I’ve read from my years of dealing with this, I’m satisfied that it’s the right move for the people of El Segundo.”

View the Planning Commision Meeting below courtesy of El Segundo TV:

Topgolf in El Segundo History At-A-Glance

The approximately 26.5 acres that make up The Lakes at El Segundo, a 9-hole golf course with a driving range, putting green, clubhouse, and restaurant, was originally owned by Chevron and gifted to the City of El Segundo with a deed restriction on the use of the land (requiring Chevron’s approval on any future proposed use).

Thus far, Chevron has not stated whether or not it is officially in favor of The Lakes conversion to a Topgolf facility, which requires a zoning amendment.

The Lakes at El Segundo, which opened to the public in 1994, after Chevron gifted the city with the property stipulating it remain a golf course or for outdoor recreation, was financed from the city’s enterprise fund for $5.6 million. In 2004, El Segundo refinanced the enterprise fund used to build The Lakes with a $5.6 million loan from its general fund.

The Lakes has underperformed financially for a number of years, calling into question its ability to be sustained by the city. In 2012, via the city’s Economic Development Advisory Council, Topgolf designs a proposal to lease the land/facilities, replace the driving range with a three-story Topgolf state-of-the-art, tech and entertainment driven operation that includes hitting bays, food, drinks, and rooms for rent, redesign the nine-hole golf course, and more.

• August 2012 – The City of El Segundo-owned The Lakes at El Segundo, has yet to fully pay back the city’s general fund, with $5.6 million remaining and a $200,000 annual debt service payment the golf facility has met sporadically.
• August 2012 – Topgolf presents its vision to City of El Segundo for a $15 million renovation of The Lakes at El Segundo as part of an economic development initiative.
• 2012-2013 – Topgolf proposal, which includes El Segundo-based developer CenterCal, makes rounds of City Council, Recreation and Parks Commission, Golf Course Subcommittee, Economic Advisory Council, Chamber of Commerce, Kiwanis and Rotary public meetings.
• November 2013 – City Council approves Topgolf proposal (estimated to put $20 million in renovations into The Lakes at El Segundo golf course and facilities) 3-2.
• 2013 – The Lakes outperforms expectations, generating $750,000 in revenue, enough money to meet expenses, pay the debt service, and net $98,000.
• By December 2014 – Conceptual design plans for the golf course and the driving range, a California Environmental Quality Act analysis of the proposal, and settling various land-use issues to be completed.
• August 2014 – City Council tables Topgolf deal; Projected revenues of deal at issue (November 2013 city staff projected Topgolf would bring city $332,000 annually then in new assessment downgrades annual revenue to $66,000; CenterCal declines to execute its part of the contract.
• August 2014 – City Council asks for independent financial study.
• August 2014 – TopGolf and CenterCal reaffirm commitment to build proposed project, increase financial terms to benefit city.
• May 2015 – City Council votes 3-2 to re-enter negotiations with Topgolf for what is now a $25 million technology-driven driving range, and CenterCal Properties, which will fund $2.5 million in upgrades to the 21-year-old golf course.
• May 2015 – Consultant hired to conduct a third-party analysis of the Topgolf proposal says concept will bring the city nearly $210,000 in annual revenue, compared to the $5,600 currently received from The Lakes. Consultant also says concept would produce more than 400 jobs and nearly $40 million in regional gross product.
• May 2015 – Sub-lessee CenterCal will cover the cost of much-needed improvements to The Lakes’ 9-hole golf course.
• May 2015 – Topgolf sweetens original proposal, which now offers $525,000 ground lease rent to city, escalating by 2 percent each year until the fifth year and 10 percent every five years after, $400,000 toward lighting on the golf course, waiver of Topgolf’s qualification for the business license sales tax credit, offers a revenue share on beverage sales, and more.
• May 2016 – City Council agrees to amend redesign and improvements of The Lakes’ 9-hole golf course.
• May 2016 – City Council says it will reach out to The Lakes’ neighbor West Basin Municipal Water District about possibly leasing 20,000 square feet of land (at a cost of $1 per year) to provide 60-70 additional parking spaces to handle overflow at new Topgolf facility.
• September 2017 – Perceived disparities between what El Segundo will gain (capital contributions of new clubhouse, golf course redesign, night lighting considered to be worth over $5 million, including $3.5 million in construction costs) from Topgolf vs. what City of Burlingame will have set forth (annual ground lease of $1.5 million escalating to $2 million after 20 years compared to El Segundo’s ground lease of $525,000 to $687,000 after 20 years) cause concern for City Council.
• October 2017 – City Council votes against Topgolf proposal 3-2.
• April 2018 – City issues Requests For Proposals for The Lakes at El Segundo via The Lakes Task Force, calling for an outdoor recreational facility that is financially “self-sustaining” and welcoming to residents, visitors and community groups alike.
• September 2018 – Topgolf with partner CenterCal among nine proposals submitted to City of El Segundo for The Lakes at El Segundo. Topgolf competitors Drive Shack and Flying Tee among those submitting proposals. (eGundo story here)
• September 2018 – City Council votes to move ahead with two proposals
• November 2018 – City enters into exclusive deal with Topgolf/CenterCal. Negotiations begin.
• January 2019 – Topgolf zoning and other issues go before Planning Commission, passing 5-0.
• By February 2019 – City hopes to finalize deal with Topgolf/CenterCal for The Lakes at El Segundo.

Here is information on Topgolf, from their website.

About Topgolf
Topgolf pioneered a technology to make golf more fun and engaging. It has since emerged as a global sports and entertainment community focused on connecting people in meaningful ways. Today, Topgolf continues to blend technology and entertainment, golfers and non-golfers, children and adults – to create an experience that makes socializing a sport for everyone. No matter the occasion or who you share it with, we believe every great time starts with play, is fueled by food and beverage, moved by music and made possible through community. Every Topgolf venue features dozens of high-tech, climate-controlled hitting bays for year-round comfort, a chef-inspired menu for year-round deliciousness and hundreds of Associates eager to help create the moments that matter. Topgolf is truly everyone’s game, with 51 venues entertaining more than 13 million Guests annually, original content shows, next-gen simulator lounges through Topgolf Swing Suite, the global Topgolf Tour competition, pop-up social experiences like Topgolf Crush, Toptracer technology as seen on TV, and the world’s largest digital golf audience. For more information about Topgolf, including corporate sponsorships, hospitality opportunities or to learn about and view exclusive digital content, please visit topgolf.com.