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Deficit Be Damned: Palm Coast Golf Course Springs for $200,000 Golf Cart Lease

| September 12, 2013

The golf cart deal is only the latest surprise in a series of deficit-ridden accounts regarding Palm Coast's troubled golf course.

The golf cart deal is only the latest surprise in a series of deficit-ridden accounts regarding Palm Coast’s troubled golf course.

Taxpayers and city council members could be assured of two certainties since Palm Coast contracted with Kemper Sports to run its golf course: the operation has never made money despite City Manager Jim Landon’s predictions since 2009. And 11th-hour surprises, costly surprises at that, have been, like atrocious puns, par for the course.

Two weeks ago the council again discussed the fate of the troubled golf course (and the city’s tennis course, also under Kemper management, also riddled with deficits). Its 2012 deficit was initially estimated at $50,000, but the actual deficit was $70,000. The estimate for 2013 was that the golf course would break even. It is heading toward a $50,000 deficit instead. Council members took heart that the deficit was at least shrinking.

Tuesday, council members were hit with another late-breaking surprise: the administration’s request that they approve a three-year lease worth $194,000 (or $258,000 if a fourth-year option is exercised, as expected) for 70 electric golf carts, a café cart and a driving range cart. The lease is between the city and the golf cart company, not between Kemper Sports and the company, though Kemper worked out the bids first before pushing the purchase through the city’s procurement system.

Council member Bill McGuire has been the most vocal critic of the golf course, and is awaiting an October 8 presentation by Kemper Sports to determine how the company promises to turn a profit—a promise it made four years ago when it won the contract to run the course.

“I would propose that we table this until we hear Kemper’s proposal on how they’re going to make this golf course break even,” McGuire said.

Landon said that wasn’t an option—as much spending with the golf course has not been. “If you’re going to continue the operation of the golf course, I haven’t heard otherwise,” he said, “you’re going to have to do this no matter what you’re going to hear from Kemper in October. You’re still going to do this, and financially it’s going to save us money to do it sooner than later.”

McGuire wasn’t pleased by the timing of the deal. “The other side of that, Mr. Landon, is if we knew these golf carts were going to have to be replaced, and time was of the essence, maybe this should have been proposed some time ago instead of now, we’re at the 11th hour,” McGuire said. “We don’t really have any choice. There’s no other alternative. And if that’s the way it is, that’s the way it is, but again this gets back to how well is the course being managed, because if I am managing an investment for someone else, and I know that coming up I’m going to have a major expenditure, I’m not going to wait until that expenditure falls on my head before I say, hey, you need to start thinking about what you’re going to do about this.”

Landon said it had nothing to do with Kemper. “If you take Kemper out of the equation, this is a lease between us and the golf cart,” he said. “Whether they’re here or not, we would need carts for the course.”

Mayor Jon Netts saw three options: “Get the carts, convert it to a walking only course, which would then automatically bring about the third option, divest yourself of the golf course.”

Bill McGuire. (© FlaglerLive) palm coast city council

Bill McGuire. (© FlaglerLive)

The city is not prepared to divest itself of the course, though if it knew four years ago what its council members and taxpayers know now, it’s unlikely the council four years ago would have approved the deal. It has helped Kemper and the city manager that three of the council’s five members who approved the deal five years ago, including Mary DiStefano, who was the most “nervous” about it, are no longer on the council. That absence of memory helped cloud—or erase—the degree to which the city has gone into debt on the golf course’s behalf. That debt is never mentioned anymore.

McGuire’s objection to an 11th-hour deal was nothing new to Landon, though McGuire was not on the council when council members noted it four years ago, regarding that very issue: spending on the golf course.

The golf course was borne of a surprise: exactly four years ago, as it was getting ready to open, the Palm Coast City Council was slapped with a $1 million bill on top of the $4.5 million it took to build the course. The $1.065 million was start-up costs to launch Kemper and the course.

The council had discussed the golf course matter during a budget workshop, but the $1 million “pre-opening” item was never brought before them at a regular workshop, where such significant items are always discussed. Suddenly, they were faced with having to approve the full $1 million item at a council meeting without having hashed it out ahead of time.

“It was not on your workshop agenda because it was discovered that it needed to come to city council since the workshop,” Landon explained. “It is something that is important from a timing standpoint because the grass is growing, we do need to get the order in etc., so I placed it on the agenda for your consideration.”

Landon made clear that Kemper was to repay that $1 million.

“What is the time-frame that we hope to be reimbursed for this expense?” DiStefano asked the day the council was to approve the deal.

“A good portion of it should be reimbursed within the first five years of the opening,” Landon assured DiStefano. “As you know, we’ve talked about the first year we’ve been very conservative and have a balanced budget, but Kemper knows that the goal here is that there will be a net profit on this facility, and we really believe that that will happen. I can’t guarantee it, but based on projections that everybody involved in this course and the market in this region, we really do believe we will be able to turn a profit on this. And then that profit will go toward paying back these funds.”

There’s never been a profit, so that $1 million expense to taxpayers was never reimbursed.

“And do you foresee them coming forward as we progress for opening for more money, and for the fiscal year ‘10?” DiStefano continued.

“This is what the budget calls for, so the answer to that is no, we don’t foresee it,” Landon  answered. “I can never promise you with a new project and new program, something unanticipated, but this $1.063 million is what the budget that we worked through with Kemper and don’t anticipate anymore otherwise we would bring that forward to you at one time.”

Of course, that, too, proved inaccurate. The golf course has been a money pit for the city from day one, and continues to be, never turning a profit in four years. The $1 million pre-opening expense wasn;t even part of the annual, operating budget. “This does not include any operations fund so once the course opens there’s another whole set of budgets that you’ll be adopting as part of your regular budget here in a month or so,” Landon had told the council in August 2009.

DiStefano was not alone in raising questions. Holsey Moorman, another member no longer on the council, was not comfortable with the equipment the city was buying, without warranties. “We have no type of assurance that this is going to be worth the money we’re spending on it,” he said.

“Your questions are good,” Landon said, “but we have to have some trust and confidence that they are into this for the long haul, because this is their business, and that’s what we’re counting on.”

The council at the time nevertheless approved the deal with Kemper, unanimously.

Moments later, it was slapped with a lease deal for 70 golf carts, exactly like the one the council was faced with Tuesday. It approved that one, too. “I’m getting kind of nervous with all these figures today,” DiStefano said on that score.

Jack Carrell, who attends virtually every council meeting, was leery of what he was hearing even then. “If our expenses are not covered by our income, what happens?” he asked, wondering how the course would get the required 40,000 rounds of golf a year it needs merely to break even. “Do we take more money from the budget to cover the cost of the expenses, or do we close up shop, like most people do when they’re losing money?”

Landon even then was brushing aside the notion that the city would not guarantee the course’s existence—at taxpayers’ expense. “The idea of just walking away from the course I don’t think is a viable option,” Landon said, “and so if it does not pay for itself, you will have the option of using general fund dollars to pay for the operations. Once again, we do not anticipate that. Primarily because we don’t have heavy debt on this course, as many courses do.”

But only general fund dollars have, year after year, kept the golf course going.

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33 Responses for “Deficit Be Damned: Palm Coast Golf Course Springs for $200,000 Golf Cart Lease”

  1. Florida Native says:

    Are they serious? The inept leadership of this town is staggering and disappointing. This mayor, city manager and commission have to go. This is not an option. Please remember to vote folks.

    • Raul Troche says:

      Bill McGuire seems to be the only one that keeps asking questions and continuously appears to be looking out for our tax dollars. Thanks Bill.

      Genie, I agree Landon should go we are overpaying him for his ineptitude. I like most people don’t trust him he is constantly coming up with these 11th hour “rude awakenings. Also I do not think governments should be buying businesses that is not even close to what governing is about. Budget considerations are and a poor job is being done in that department.

      Robert I agree with you except for one thing. I don’t believe Landon is a good salesman but rather a con man. A salesman wants you to buy something for your benefit, a con man wants you to buy something for their own benefit.

  2. Downtown says:

    People that like to fish buy their own boat and trailer it to the body of water they want to fish. How about letting people that golf bring their own electric cart to the links with them if they don’t want to walk the course. Charge them a impact fee to drive their cart on the course.

  3. Salute! says:

    Now that just makes PERFECT sense! LOLOL

    You just gotta have a golf cart ..can’t walk around there and get FIT or anything. That would make sense!

    • Rick says:

      I couldn’t agree with you more Salute. One would believe exercise just might be one of the purposes of golfing, besides chasing a little ball around. This brings to mind some of the people who have to park on top of the entrances to stores. A handful of them could really use the exercise walking half way through the parking lot. I don’t need to hear about the gland problems as the ones that could very well benefit know who they are.

  4. Anonymous says:

    As I have said before, we need a new city manager and council members that think and act for the good of the citizens of this city.

  5. RHWeir says:

    We quit using this course due to the slow play. If they want to draw more golfers, pick up the pace, get those golfers moving along! One way to do that is to not allow walking. Get serious guys, you need to make some $. Make them ride!

  6. fruitcake says:

    You always have a choice and options…go out to bid like your supposed to !

  7. I say says:

    When is the last time the books were audited? Sounds to me like Landon has a personal relationship with Kemper Sports and is filling their pockets. What kind of salaries to the folks make that run this operation? There are lots of questions to be answered….come on council, how long are you going to keep just giving money away?

  8. Johnny Taxpayer says:

    I would assume the $5k a month car lease is already factored into the operational budget of the golf course, no? It’s not as if this is a new expenditure that will take the $50k deficit to $250k… It’s a bit odd that the city is signing the lease, instead of the management company allegedly running the place.

  9. Genie says:

    The City Manager needs to go. He is costing the city too much. This golf course was a going concern before he allowed Centex to tear it all up and then let it go to seed.

    He makes champagne decisions on a beer budget. If you look at this deal carefully, you might even find a connection to the vender. We are paying for the Manager’s incompetence and taking another bullet.

    It seems the only way to rid ourselves of this may be to vote out everybody on that council with the exception of Bill McGuire. That’s the only way we’re going to get rid of this Manager. His contact is open ended.

  10. brian says:

    sounds like palm coast should sell the course to the highest bidder..before going on the hook for anymore cash!!

  11. Sam Spandex says:

    Perhaps a “lease” for 70 3-wheeled bicycles with little baskets to carry their balls. They might even get in shape while pretending to actually accomplish something more then putting their little balls into a hole in the ground……….

  12. orphan says:

    One doesn’t have to live in Palm Coast to see there are SO many situations where just a little more investigation might open up a gigantic can of worms! Holy cr*p!
    Good luck!

  13. Dennis McDonald says:

    What about the up zoning by City Planning[ wanabee planner Landon] for 154 Golf Villas to be constructed on the Driving Range and around the “temporary clubhouse” that were approved when Landon/Netts bought the course for a dollar. Then the Irresponsible Duo spent $5,670,000 of Taxpayer money to revive it so former Mayor Canfield could fix the One problem he saw in Palm Coast….Affordable Golf !

    Opinions from the New Palm Coast

  14. Magicone says:

    I am so glad that I sold my house and I’m out of here in about 90 days. This is this most corrupt city that I have ever lived in and I have been around. The whole city council needs to be replaced, the sheriffs department is out of hand, the red light cameras are a pain in the ass. The worst of all is Barbara Grossman and the circus of clowns that call themselves code enforcement officers. It is the “Lack of Code Enforcement” or “Selective Code Enforcement” There are commercial vehicles parked all over town EVERY night and ALL day Sunday. Just drive around and look!! Anything with more than 3 square feet of advertising is a commercial vehicle, any vehicle that has ladder racks added for carrying ladders or material are commercial vehicles. There are plumbing, electrical, AC and Heating, Cable, Dish network and Direct TV, Flooring specialist, all kinds of commercial vehicles parked all over town every night. If you report it to code enforcement and they ride by during the daytime when these vehicles are not there because they are putting in there 8 hours, there is NO CODE ENFORCEMENT at night. Groosman is like the Ringling Brothers, and she has a cast of clowns working for her. My neighborhood has so many commercial vehicles that it looks like I”m living in a warehouse district. Vote citizens or Mr Landon and his crew will soon be renting jet packs for the money losing Golf Course. I’m out of here !!!!

    • RHWeir says:

      Not that we’re thinking about selling but did you take a loss? Our neighbor up the street sold his recently and he took a huge loss, I mean over $40,000 and he was not that far under water. I don’t think he was in financial trouble, you know the unusual for around here multiple delinquent home equity loans. From what we could tell, they had just had it and wanted out. Man, I miss a variety of golf courses and dining out (Greek, Korean, Indian, Vietnamese) and driving up to the corner to a Whole Foods. This place is a retail and dining wasteland.

  15. Ben Dover says:

    This is why they need 44 red light camera`s and Los Angeles only needs 17 , this is why they hawk booze in the park , which throws the safety issue of lights right out the window and this is why everyone got an 18% water increase even though we`ve paid many times over with high bills for up keep , its because we have a bunch of dirty thieving crooks running or should I say robbing our city, these people really need to be investigated by forensic accountants , they belong behind bars is where they belong

  16. Random Citizen says:

    Okay, so the man Jon Netts oogles over and insists he gets awards, Jim Landon, has screwed up to the tune of not only the $1 million he promised would be paid back within 5 years. He’s also wasted another $200,000+ in four years of deficits and another $50,000 is on the way by the end of this year.

    That’s not management That’s a slacker mismanaging $1.25 million of tax payer’s dollars!

    And now he wants to pull another last minute $200,000 surprise and insist it’s urgent like the $1 million.

    How about he think straight, recognize he’s spending other people’s money and lease or buy the old carts for a lot less because times are tough? A lot of leases have a $1 buyout. What is the buyout option on the existing lease? Answer the question Landon!

    And then fire him for the complete irresponsibility!

    Where is the accountability the council members swear to keep? It’s a sham!

  17. Random Citizen says:

    What if several thousand residents placed “Fire Jim Landon” signs in their front yard?

  18. Robert says:

    Dennis McDonald and Ben Dover are singing to the choir here.

    A minority and I mean a small minority of people kept begging the town council to buy and redevelop the golf course. I said at the time that it was nothing but a foolish idea. Now I can say I told you so.
    Across the county seasoned, experienced golf course owners, investors and operators were trying to get out of the golf course business and here comes the brain trusts on the Palm Coast town council getting into the golf course business. It should be no surprise that it is failing, there is a reason golf courses were and are on the market to be sold.

    The town manager is a very good salesman and they pay this man an inordinate amount of money to recommend and oversee these types of blunders. The town council past and present are very gullible.

    It is really the fault of the voters. They rewarded the mayor who has been part of the miscues for too many years with another and thankfully his last term. Then they turned around and put another one into the county commission.

    And for those who contend that sidewalks and parks also lose money they don’t know what they are speaking about.
    These two operations, the golf course and tennis center were to be self supporting operations.

  19. Jody says:

    I stopped playing golf in Palm Coast when all the Red Light Cameras were installed. It isn’t worth the risk of getting snagged at one of those lights. The mood in Palm Coast about everything just leaves me feeling depressed. I play golf a lot in St. Augustine were the folks are much happier.

  20. oh my says:

    There are too many golf courses in Palm Coast (for now anyway) for the number of golfers. There are also too many golfers that think a course can exist with a $25 fee. They think that because most of the municipal golf courses up north have been subsidized for years.

    This is no worse than our multiple “walking and biking” trails.

    If you want Palm Coast to be an attractive place to be you have to support “public attractions”.

    • Glad I left Palm Coast says:

      Oh My says, you want a good example of a municipal course that makes money? The Town of Dennis on Cape Cod Ma, makes a killing on their 2 courses. Why? Town govt. is run by board of selectmen. When the budget comes up for a vote guess who votes? the taxpayers vote. no city council, no city mgr. no mayor. The town offers a reasonable discount memberships to the residents and promote the courses properly. The courses have a budget and any income that beats the budget goes back into the general fund, The towns of Barnstable, Brewster, Harwich, and Yarmouth all have municipal courses and make money. . Palm Coast could do this but no, it is such a bureaucracy no money will ever be made. I am glad I left and sold my house in Palm Coast, granted I pay more up north but no more nonsense in govt dealings, never have seen such a circus in my 10 years there.

    • RHWeir says:

      Oh, I play up north on very nice private courses for $25 or less in the afternoon. If that course, Palm Harbor, is having such a problem making it here, it needs to be sold to a private entity. There is no excuse for a golf course not to succeed here except incompetence and greed. Playing Grand Reserve (Bunnell) tomorrow afternoon for $21. We played River Bend (Ormond) last weekend for $21 in the afternoon. There are no real public courses in Pam Course except Palm Harbor. The Grand Club mess is semi-private. All the rest, the Resort courses and Grand Haven are private. We, in reality, in Palm Coast, have no public courses except Palm Harbor. I guess you do not play golf or you would know. Palm Coast is a golf desert unless you have a lot of scratch to pay or go to neighboring towns.

  21. shark says:

    Time to get rid of Netts and Landon!!!!

  22. RHWeir says:

    The thing about golf courses is that they bring in visitors and residents with $ to spend. They really are a good use of land and an investment. This area is lacking public courses, believe it or not. Yes it is. There are not enough public options locally. The ones that are here are not run efficiently. As an example, look at Matanzas. One of the highest rated courses in the country, left to rot. There are many more course per capita in the Columbus, Ohio metro area than here. North Carolina and Alabama have built successful tourist economies based on golf courses; Robert Trent Jones is an example. Not to mention Arizona, California, Oregon…the list goes on. I retired here to play golf. What do I have? A hand full of mediocre public or semi-private courses, none of which have any uniqueness and none have signature holes. Oh, there are the unique and very expensive courses at WGV and the Hammock. Hey, I can’t afford those. I’m actually thinking about moving back to Ohio so I can play golf and oh, yeah, shop and eat out at a variety of nice restaurants. We have actually taken summer trips to Ohio to play golf and dine out. This area is so lacking everything except climate and natural beauty. Take those two items and build on it. Golf is a good start to bring in money but make it private, not municipal courses. Let the resident golfers pay their reasonable daily use fee and slam it to the out of staters and sunbirds with higher greens fees.

  23. Magicone says:

    @RHWeir….Yes, I took a loss, not that much; but a loss. It was still worth it just to get out of Palm Coast. When this county was the fasting growing county in the whole U.S.A. for 3 years running; that is when I bought into this beautiful city. It did not take long before the local government officials put a stop to that! Mark my words it is a beautiful city This sitting city council should start their own reality show, it would be a huge success they could call it “Lame Duck Dynasty”

  24. Joey Paparazzi says:

    New York prices in a minimum wage City. No wonder, half the working population is unemployed and what money they have goes to pay Red Light Cameras. Bright ideas from Netts and Landon. These guys need to go next election.

  25. confidential says:

    Palm Harbor Golf Course should be managed the same way as the “Up North” examples mentioned above. Thru a commission of expert local taxpayers that play Golf and have an expertise then of what is needed to maintain the golf courses in good shape and the operation successful and also other committee members with good background in business management and accounting. The management of the golf course to be hired by 3 bids presented and a contract on which all budgets and financials/ expenditures are pre-approved by the citizens committee. After paying all expenses and management, the profit if any left, goes to a golf course reserve fund for maintenance/replacement and refund of the 6.25 plus millions of taxpayers funds owed to the city/tax payers general fund. I firmly believe that we do have local Golf and Tennis players that have the knowledge and best interest at heart to make these courts self sufficient to reassure its permanency within city limits, for them to play and our surrounding homes keep its values. We should also solicit, offer and reward volunteer positions within those Palm Coast Tennis and Golf individual players to help in the 100% owned and managed city-residents sports enterprises.
    I want to make clear that I am neither a Golf or Tennis player, but I sure support them in their sports that also make our city more appealing and beautiful by having these amenities. The only failure I see so far is the Kemper management. I can see that the courts are not sufficiently well maintained but I am no expert, only our Golf aficionados can tell. There is not comparison with the dedicated maintenance done back when ITT owned the golf course and what I see these inexperienced looking workers doing today. I just see a lot of them conversing seating in their carts and equipment while debris and overgrown turf is visible nearby. Complains have been presented to code enforcement by surrounding residents this conditions.
    Regarding Mr. Landon I have to appreciate he got the golf course for us from Centex,,, but I am seriously concerned about those villas intended in the driving range. Landon and Council should have already done away with that clause from Centex (now Pulte) at time that gave us the course in 2008, I think was. We sure paid up enough to Centex now Pulte, with the freebies given and loss of our Palm Coast Resort! If they did not comply with us then give up the villas in the driving range…where is our city attorney regarding this issue? To us Centex now Pulte loss that driving range over incompliance of promised resort amenity to Palm Coasters! We did not spend 6,25 millions plus, to repair the damage they did to the golf course so they can place their villas in the driving range now rendering our court useless.
    A recount of Centex/City events, for the one’s that don’t know, in this link:

  26. Thomas says:

    I do recall the commission had a 3rd party do a feasibility study for the golf course purchase. The recommendation was to not purchase and restore the course. They advised this would be a money loosing endeavor due to the large amount of golf courses in the area creating heavy competition and the amount of money needed to bring the course back to life.

  27. Linda says:

    Watch out – here comes Code Enforcement to try to make the money. Better have that grass just the right length, and don’t have one tire off the driveway. They are still trying to make Palm Coast, a working class neighborhood in a location of high unemployment, into Palm Beach, where the rich by birth can hire caddies and lawn maintenance people and have multi-car garages for their car collections.
    Palm Coast – run by the village idiots.

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