The Palm Coast City Council deadlocked over the future of the Palm Harbor Golf Club today, split between Charles Gambaro and Dave Sullivan, who want to put the course up for sale at a starting bid of $2 million, and Theresa Pontieri and Mike Norris, who want to keep it under city ownership.
Council member Ty Miller might have broken the tie. He was absent, leaving Acting City Manager Lauren Johnston trying to figure out what the council wanted to do next.
There are other proposals on the table, such as sharply raising rates, bringing in new management, reconfiguring overhead costs, and even asking Loopers, the successful restaurant at the golf club, to renegotiate its lease for a little profit sharing that would benefit the club’s bottom line. But the only thing the council agreed to was to explore all those options further and talk again soon, even though previous councils have done almost exactly the same things for years, almost going back to the city’s acquisition of the 141-acre property in 2008.
“You guys talked a little bit all over the place,” Johnston told them before indemnifying city staff for the club’s years of irrigating its greens with red ink. “Previous city council had a different philosophy and different vision, and we acted on that policy and vision,” she said. “So to blame staff for not meeting an objective now, well, that objective wasn’t the objective five years ago or even seven years ago.”
In fairness to previous councils going back to the club’s earliest years–as early as 2010 and 2011, when the council first started agonizing over deficits–the goal has never been not to run at least a break-even operation. ITT opened the golf course in 1973. The city bought it in 2008 and renovated it for several million dollars in 2009.
But Johnston was accurate in two regards, though she only alluded to the “ominous clouds hanging over the facility”: Until this year, none of the previous councils required the golf course’s ledgers to reflect all costs. By excluding capital costs, which amounted to about $10 million by around 2015 and kept adding up since, the council masked the operation’s true costs, and the extent of taxpayer subsidies necessary to keep it going.
Starting in 2017, and to get around the deception with a greener deception, the council folded the golf course into its parks and recreation operations, redefining it as an amenity no different than a public park, even though it is no such thing: it is a pay-to-play operation, closed to people who like to walk into a park and hang out for the fun of it (or walk onto a free municipal tennis court and play).
The city administration, however, never fully played along with the deception. It kept clear profit and loss statements for the club, which showed that the club kept losing money, with an exceptional year or two. That drew the previous council’s attention (toward the end of his four-year tenure, Council member Ed Danko started harping on accumulating losses there).
And that got them to the point where they are today, which is really no different than the point other councils were in 2013 or 2015 or even 2017, when those councils also discussed selling, discussed better management, discussed cutting costs, discussed creative ways to increase revenue, rate increases, marketing and special programs included. But it is the precious province of new council members at times to imagine themselves reinventors of the wheel, as this council has been doing with Palm Harbor Golf Club.
In late April the council directed the administration to work up a request for proposal to sell the property. The outgoing Chief of Staff Jason DeLorenzo presented that plan today, along with the appraisal, conducted by CBRE Valuation & Advisory Services on May 23, that put the value of the “as is” property at $1.83 million.
According to the RFP, anyone proposing to buy the golf course would have to submit a plan. The plan would have to include a transition timeline, a capital plan and a business plan, past history running a golf course, and proof of financial soundness. The sale would be contingent on a deed restriction. The property would have to remain a golf course in perpetuity. If it fails as a golf club, it would revert back to the city.
DeLorenzo also addressed the club’s current finances and the council’s interest in folding all club costs into one column, capital costs included. Irrigation and renovation of the greens would cost $1.5 million over the next five years, for example. Those expenses were never part of operating costs.
When the administration last presented an update on the club, in late April, it was projecting to all but break even this year. Not anymore. The current projection is for a $165,000 deficit. The reason for the difference is not clear.
Rates were increased last year. But the rates again did not reflect capital costs. Council member Theresa Pontieri asked for those costs to be part of the formula that would set rates in line with total costs, capital included. The new rates would have to increase 18 percent to 26 percent, with Palm Coast residents getting hit with the largest percentage increases, though their rates would still remain $10 to $20 below those paid by Florida residents or others for an 18-hole round.
For example, a non-Florida resident paying $56.65 for an 18-hole round in morning hours would have to pay $66.75 under the new rates. A Palm Coast resident’s fee would go from $39.66 to $49.76. Nine-hole rate increases would be even steeper, with Palm Coast residents seeing a 4e percent increase and non-residents seeing a 30 percent increase. (See the rates here.)
If people keep playing through the new rates, the course would go from a projected deficit of $460,573 to a surplus of nearly $77,000. If rates are to be raised, however, Pontieri is not interested in raising them by that much. She spoke of raising them by about half those proportions.
DeLorenzo’s presentation was clear. The council’s response was fragmented.
“I think $2 million is a fair opening your base bid,” Gambaro said. He also wants whoever buys the course to be required to operate the club as a public course–in other words, the club could not be open to members only. “What prompted me is the proven record of our inability as a team to be able to run this golf course in the black, and that’s without even including the capital expenditures,” he said.
To Gambaro, it would be “irresponsible” not to put out the RFP “to see what we can get.” If it were successful, it would save the city $400,000 a year, it would generate revenue from the sale, and it would generate revenue from utilities and taxes in the future. “It still doesn’t overcome the money that we’ve lost,” he said. “But what I do want if a private entity does purchase it, is a golf course that is a huge destination stop for people to get off I-95 and play golf there.” Council member Dave Sullivan largely agreed, especially with moving forward with the RFP.
Pontieri questioned the appraisal. “I don’t agree with putting the golf course up for sale for $2 million,” she said, recalling how Jacoby Development in 2016 bought a 3.7-acre portion of the property for $5.5 million (JDI donated the property to the city in 2022.) “ I don’t know how this depreciated to this extent 10 years later,” Pontieri said. “I also know that when they donated the golf course to us, the tax write-off that they took for it was much larger than $1.8 million. So we’ve got some issues here before we decide to make this decision.”
But Pontieri wasn’t even ready to get that far. “I’m not prepared to give direction to staff at this point. I’m inclined to try to figure out how we can keep it,” she said. She doesn’t want to lose money on the golf course. “I don’t think we should be subsidizing people playing golf. But I think that if we get in a little bit deeper, we can fix this rather than selling off what is a very precious asset to our community.”
One of the issues she wants to fix is the amount the course pays for other city services. For example, the course allocates $40,000 a year to IT. That doesn’t make sense to Pontieri. It also allocates money for its fleet management. That makes more sense to her, but she wants harder numbers to look at to figure out if they’re fair.
Yet another issue is the city’s lease with Loopers. She said golf courses can make up to half a million dollars on drinks. Loopers pays $18,000 a year. “When I was looking at the comparables in the appraisal for our revenues versus other course revenues, I was floored by what other courses are making on food and beverage,” she said. “We missed the boat, and Loopers got a deal.” Pontieri was part of that council. She conceded: “I didn’t know any better.”
Pontieri said Loopers is a “great restaurant, they provide a great service to our community. I’m glad they’re there, but I think that it benefits Loopers for the golf course to stay with the city of Palm Coast. Perhaps we go back to them and see if maybe we can negotiate some type of 1 or 2 percent, a low percentage, of their revenues as a part of their lease agreement with the city in an effort to keep this golf course with this city. They don’t have to.”
Flagler Beach has just such an arrangement with the Funky Pelican, the restaurant leasing its space on the pier: the lease calls for the restaurant to turn over 3 percent of all gross sales in excess of $1 million per year. (It started at 2 percent in 2011, when the restaurant opened, jumping to 3 in 2016. The restaurant pays $4,500 a month in rent, up from $3,000 in 2011.)
Pontieri prizes the city’s relationship with Loopers, and it was from that perspective that she asked: “Are you all willing to renegotiate the lease just a little bit, just to help out a little bit?”
Jamie Boudreau, who co-owns Loopers, the recently-renovated Landing Strip at the airport and Beachfront Grille in Flagler Beach, was not in the council chamber during the discussion. He said in an interview he appreciated the council member’s compliments. “We do have a lease in place, we did put out a lot of money up front, we do have a couple of options after year five and after year 10,” he said, “but she’s right about a couple of things: we do have a great relationship with the city, we have no desire to ruin a good relationship, so if they have an offer that makes sense, out of respect for her, we certainly would listen. But for the most part we’re certainly set in our lease and we’re happy with it.”
As for the club itself, “I wish I could buy it,” he said. “I could make it work.” Perhaps that’s how the city might approach him.
Norris is outright opposed to a sale as well as to the appraisal. “I was not here when you guys talked about this and put this RFP out,” he said. It was the day the council censured him over his violations of the charter and other misconduct. He has declined to be briefed on the golf club issue, however, as he has all other city issues, refusing to meet with the acting city manager. If the golf course were sold, he said, “I know full well that this, this property, will wind up as housing or apartments or something else, not as it was intended.” He wants better management. (The course’s manager recently quit.)
“We don’t have to make money on the golf course. All we got to do is break even,” he said. He would support raising fees to that end, suggesting that he’d support the proposed schedule. “The fees is a good idea,” he said. He also wants students to pay fees, even though students use the course in exchange for the city using school grounds.
The council’s split extended to the sort of management the facility should have, with Norris wanting it kept in-house, and Sullivan wanting broader options. That left Johnston having to reevaluate smaller elements of the operation on its periphery–whether to lease rather than buy vehicles for the course, whether to renegotiate the joint agreement with the school district (for those fees Norris wants students to pay), asking Loopers to renegotiate the lease, and possibly raise fees, but to what extent is not clear.
Dennis McDonald, a local gadfly who frequently addresses and berates the council and other local governments, often with misinformation, did so today, questioning Gambaro and Sullivan from the lectern during public comments: “You two gentlemen here, are you telling me that golf courses don’t make money? All the other golf courses in the world don’t make any money?” he asked. “Of course, that would be stupid to respond to that. Okay, the point is, they do make money. So the question to ask here is, how come our golf course doesn’t make money?”
If there was stupidity, it was not Sullivan’s or Gambaro’s. McDonald had clearly not researched the matter.
The Reason Foundation in 2022 did. It reviewed the 2020 balance sheets of 221 public golf courses across the country, finding that 70 percent of them lost a combined $61 million. The report acknowledged that Covid affected some of the courses in states affected by long shut-downs. But two years before Covid, a USA Today investigation reported by Golfweek found that Florida municipal golf courses alone had lost a combined $100 million over the previous five years, requiring a combined $65 million to stay in business.
McDonald’s insults of council members aside, the council’s challenge is neither new for Palm Coast nor unusual for cities across the state and the country.
Jason Quadro says
Who asked Danko for his input? If he says sell it, then the correct answer is to fix it.
don miller says
they ding the golf course expense budget for $478K fir IT and “fleet management”. Without that it makes over $250K per year. The restaurant makes them only rent money when it could be 500K income on food and beverages. This City council has probable bankrupted their own households the way the manage out money. Let’s see how much they lose on ballfields, tennis courts, pools and parks. What’s the difference? They are willing to lose on some recreation but not a little on golf. Looney.They pick on the golfing active adults who bear the tax brunt the most.
Dismayed says
The purpose of a “city” golf course is to make it affordable to families who do not live in “golf communities” and who cannot afford exoribant fees to play golf. How do you expect to grow the game if the average person cannot afford to come to the course. Palm Coast is no longer exclusively wealthy.
Critical Eye says
Sell it! Sell the golf course as fast as possible. It’s nothing but trouble. Dump it now!!!
Dennis C Rathsam says
Looks like a perfect spot for low income housing,Cant you see the vultures flying overhead! One thing about section 8, the landlord always gets his money. Throw in a Dollar General, & a liquior store…..HAPPY DAYS ARE HERE AGAIN!
Mike Pullen says
The reason it needs to be sold is that no one in this article knows anything about running a golf course. Food and beverage income at that facility has zero chance of netting $500,000. The course needs to be sold thru an RFP or all complaints about operating in the red need to be dropped and everyone needs to get used to it.