Palm Coast Concedes: Keeping Golf Course At Taxpayers’ Expense No Longer Tenable
FlaglerLive | February 25, 2016
If Palm Coast government’s eight-year efforts to stanch taxpayer losses at the Palm Harbor Golf Club have been the equivalent of slathering lipstick on a pig, the city’s more recent “rebranding” attempts have as if soaked up the late Tammy Faye Bakker’s stash of make-up: the more the city has projected improvements or schemed to dissimulate deficits, the heavier the losses. Last year’s red ink ran the deepest.
This year’s appears little better, even with the city’s chief make-up artist deciding to paint the latest portrait of the failing enterprise: the reason City Manager Jim Landon did so Tuesday morning, he told the city council, “is that on staff I’m one of the few people involved with actually having the city start the Palm Harbor Golf Course that’s still here today, and also the tennis center. It was one of the first projects that was handed to me by the previous manager. So I thought I would probably be the best person to tell the stories.”
And this time, the make-up was kept to a minimum as the city has reached the point where it’s realized that keeping things as they are is no longer tenable, no matter how the operation is sliced—as an “amenity,” as a business or as a trickle-down, stabilizing benefit to the surrounding neighborhood.
The Palm Coast City Council’s realization, albeit slow and reluctant, is following the same path as its realization that its red-light camera program, which the council so cherished for so many years, was more harmful than beneficial to the city. As with red-light cameras, the city is positioning itself not to sever the program outright, but to gradually pull away by minimizing its own exposure.
Landon cautioned that this latest presentation on the golf course was not intended as a financial sum-up of any sort so much as a history on how the city ended up with the golf course and the tennis center “and some of the issues and history of all that.” Nevertheless, it was the first time even he conceded that the future of the golf course can no longer be a repetition of its losing past. He was not much more sanguine about the city’s tennis center, which has suffered its own annual losses, but in somewhat smaller amounts.
So his presentation was, going back to the ITT days in 1971 and the subsequent golf courses that opened locally since, when golf was still a viable business, as it hasn’t been since the mid-2000s. Ironically, Palm Coast acquired the Palm Harbor Golf Club in 2008 well into the housing—and the golf industry—crash. The Centex company, which was bailing from its local development, was donating the property to the city. But it was a loaded donation.
“At the time it was promised that we can open this golf course and it would pay for itself and we would not have to subsidize it with tax dollars,” Landon said. “That was based on average rounds of $46 a round.” (Today it’s around $26 a round.) And that was based on 40,000 rounds a year, which the golf course matched only once, and not at the $46 price. The rosy picture was also based on other public golf courses converting into private clubs.
“Well, none of those assumptions happened,” Landon said. “So we were not able to meet those targets and have not since day one.”
Landon never explained why, since day one, the city did not explore changing course rather than continuously pumping tax dollar subsidies into the enterprise. He jumped right to 2015 to repeat what he has claimed previously: that the golf course is like other city parks and recreation “amenities” that don’t make money. But city parks are not run as businesses. The golf club is. So is the tennis center. It’s run by KemperSports, an Illinois-based company, has been since 2009.
Palm Coast Golf and Tennis Operation Losses, 2009-2015
|Year||Golf Course Operating Losses||Golf Course Losses With Depreciation||Tennis Center Losses|
The latest contract was signed for two years by a reluctant council that decided that come this year, the city might look at alternatives. Landon said the procurement process can start soon. “Instead of going out and doing the same old same old is actually start the discussion with city council as to what that procurement process ought to be,” Landon said. “We talked about instead of having a management company”—that is, KemperSports—“actually looking at the idea of leasing it.” One company has shown interest in doing so. If that doesn’t work out, it could go back to a management company, Landon said. If neither of those options works, the city could take over fully.
“In previous discussions, and I don’t want to belabor the point because I’ve been down this road many, many times,” said council member Bill McGuire, who’s been the strongest critic of the city’s ownership of the golf course, “the central issue here is there simply aren’t enough customers to make that golf course a paying proposition no matter how well it’s managed. If people aren’t going to pay to play there, the greatest management team isn’t going to make a difference.”
Council member Jason DeLorenzo favors starting the procurement process sooner than later. “I want to hear all the options,” he said, “but paying a management company to run it as an amenity and lose money seems like the worst of the options, because we could run it ourselves and lose money. Why pay the management company to lose money?” Leasing, however, remains DeLorenzo’s primary choice. That would absolve city taxpayers of subsidies, leaving it in the hands of the lease holder to succeed or fail.
If the city were to run the facility, the savings would not erase the deficit, but losses would be less steep if the city were to take over, Landon said. McGuire said the city could save $30,000 to $60,000, but not more. “We’d have to hire somebody to run it and promote it,” he said.
Mayor Jon Netts cited Flagler Beach’s recent decision to buy and lease a golf course at the south end of town and run it as a nine-hole course. Based on that experience, Netts said, Palm Coast could explore turning Palm Harbor into a nine-hole course. Meanwhile Netts said the city should explore either a lease or a take-over.
The administration will be putting options together. “What I don’t want to do is what we did in the past and be surprised,” Landon said. But he noted that if the city were to go in a different direction with the golf course, it would have to do so with the tennis center as well, since Kemper manages that operation too. But if the city were to seek leases, Landon suggested separate leases.