City golf courses stuck in financial sand trap
08/12/2011 12:00 AM
08/05/2014 6:30 PM
Dan Self and Richard Roehrman took advantage of a break in the heat to play a round at L.W. Clapp Golf Course one afternoon this week. "We thought we'd come out before it closes," Self said.
Actually, closing a course is only one of the options that City Manager Robert Layton suggested last month to help resolve the financial distress of the five city-owned courses, including Clapp.
But he firmly has his eye set on doing something very soon. The numbers say it's a must:
If everything stays as it is and all the planned capital improvements are made, the courses would be more than $6 million in the hole by 2020.
Right now, the courses are a separate enterprise. The golf system must make it on its own without any tax dollars. That might change.
"If we don't turn this around, we'll never be able to pay the debt service and we'll have a permanent property tax subsidy for the golf course system," Layton said after a hearing Wednesday night at MacDonald Golf Course. "That's fine, if that's the City Council's policy, but right now we've backdoored into it."
The courses are making money — $180,000 in 2010 — but they haven't made enough to meet their debt obligation since 2004.
Over the past six years, they've made only 10 to 20 percent of their annual principal payments on the golf revenue bond to build the city's newest course, Auburn Hills, in 2001. The balance on the bond is $3.13 million.
To make up the shortfall, the system has had to borrow from a taxpayer-supported fund that pays the city's debts.
The golf courses currently owe the debt service fund $3.8 million. The city hasn't required that money to be paid back until the bond is paid off, which is scheduled to be done in 2015.
Beginning in 2016, the courses will have to make annual payments of $250,000 to the city for probably more than 15 years to repay the debt service, according to a Park and Recreation Department report.
So where does that leave things now? Can anything be done to salvage all five courses without taxpayer support at a time when golf's popularity appears to be waning and the economy is down?
National studies show that the number of core American golfers — those who play eight rounds or more per year — has dropped 4.5 percent every year since 2006. The city says its courses are operating at 47 percent capacity. In 2010, 161,179 rounds were played on the five courses — a 15-year low.
"If we were at 200,000 rounds, we wouldn't be having this conversation," said Doug Kupper, Park and Recreation Department director.
One of the purposes of Wednesday's public hearing was to get ideas on how to improve the courses' draw and discuss options. A second hearing is set for 6:30 Monday night at the Boston Recreation Center, 6655 E. Zimmerly.
A crowd of nearly 140 packed into MacDonald's clubhouse was full of ideas.
Better publicity was one. "Is there a billboard in town anywhere that markets the golf course?" asked Jason Wenzel, one of more than two dozen citizens who spoke.
Other suggestions included creative pricing for green fees, returning to giving incentives to the courses' golf pros, improving the pace of play and issuing a liquor license to the clubhouses.
Criticism of customer service and the golf pros was strong.
Until 2003, the city hired all of its pros on a contract that allowed the pros to get nearly all of the income from cart rentals, concessions and sales at the pro shop.
In 2003, the city switched to hiring pros as employees for Clapp and MacDonald. In 2005, the courses at Sim and Tex Consolver went to the same format.
"All our pros are PGA certified," Kupper said. "They have the same credentials as before."
The only incentives the pros get now are from pro shop sales, where they get 95 percent. The city gets 100 percent of the cart rentals and concessions. As a result, some golfers say the pros aren't as enthusiastic about attracting golfers.
Johnny Stevens, a former PGA golfer, told Wednesday's audience that he has gone to a course at 6:30 p.m. to play nine holes and been told by the pro he can't rent a cart unless he's back in by 7:30 p.m.
"It doesn't get dark until 8:30," said Stevens, who also spent three years as the head pro at Wichita State University's golf course. "What you're doing is running players off. These courses used to be open until 30 minutes after dark. You increase your play by accommodating your players."
Kupper said the idea of offering more incentives to the pros is something to consider. He also said that as recently as two weeks ago all the golf course staffs went through customer service training.
"I think I have great people," Kupper said. "Can we be more visible? Do they need to wear shirts that say, 'Hi, I'm your pro?'
"It's like any other business. We have to keep giving them a refresher course."
A tough market
Regardless, the area is a tough market for golf courses. There are 30 courses in the four-county area, including 16 within Wichita's city limits.
"The city's courses are good," Stevens said after the meeting. "The players will come back, but we have to wait for the economy to come back. People don't have the money to play right now."
Waiting isn't part of Layton's plan.
"What we're doing now isn't sustainable," he said. "We can explore some of these options, but if they only impact the margins, then you're still stuck with the deficit position. It's very clear from the numbers that we're going to need property tax subsidy."
Unless there are significant changes. One suggestion is to shut down a course, which was unpopular Wednesday.
Taking a course out of the city's system would mean 120 fewer youngsters would be able to take part in the Wichita Junior Golf Foundation's summer program, said Sue Raymond, the group's program director.
"And we're maxed out with what's available now," she said. "The decline in golf hasn't happened to junior golf."
No one at City Hall has named Clapp, at Harry and Oliver in southeast Wichita, as the course that would be eliminated. But Clapp had the fewest rounds played over the past five years among the city's courses.
"If they close it, you wonder what would happen," said Roehrman, who was golfing at the course this week. "It isn't prime real estate. If they make it into a park, you know the city isn't going to take great care of it. They have a problem just mowing the parks as it is."
Kupper conservatively estimated that closing any one of the courses would save the system $300,000 to $400,000 annually in upkeep and personnel.
That's also assuming that 65 percent of the golfers who played the closed course would shift over to play at the remaining four, Kupper said.
The cost of converting a course to a park would depend on that park's amenities. But less mowing would be needed.
Kupper said a golf course is mowed anywhere from two to six times a week at $2,500 per mowing. A park is mowed every 21 days.
The city plans to spend $6.3 million in capital improvements at the courses through 2020.
But not making those improvements wouldn't wipe out the projected $6 million deficit, Kupper said. The projects would be financed by bonds, and their costs would extend way beyond 2020, he said.
The city's improvements include parking lot repairs, cart path bridge rehabilitation, new driving ranges and bunker repairs. Clubhouse renovations account for $3.2 million of the planned spending.
"I like the clubhouses," golfer Mike Lange said. "We don't need to knock them down and build new ones. I'm just here to pay my green fees. I want to enjoy the course."
Not all of the work will be done, Kupper said. For example, a $1.5 million renovation of MacDonald's clubhouse in 2018 was planned before the clubhouse's roof was replaced in 2010.
"If I did the plan now, I'd take the new clubhouse out for MacDonald," Kupper said. "With a new roof, it's good for another 15 years."
One of the more popular plans for the courses is for the city to maintain ownership but to hire private companies to manage them.
That's what Newton did with its Sand Creek Station Golf Course. Kemper Sports, a Chicago-based firm, has operated it since it opened in 2006 and has been in the black each year, club pro Chris Tuohey said Thursday.
At the same time, money from the course's income hasn't been taken to pay off the bond to build the course. General obligation bonds totaling $7.5 million were issued by the city of Newton to pay for the construction and will be paid off with taxpayer money.
But there is support to switch to private management of Wichita's municipal courses.
"My preference would be to turn it all over to a management company," said council member Jeff Longwell. "Let's see if they couldn't do a better job of getting our costs down and revenue up. Let's keep all of our courses open."
James Clendenin, a council member whose district includes Clapp, agreed.
"City ownership, private management. That's what I'd like to see us work toward," he said. "It's more of a knee-jerk reaction to say you have to close one down."
The Park Board will make a recommendation to the council later this year.