In the quarterly newsletter from the Lakewood, Village President Erin Smith reports that her Board wants to sell the golf course that cost so many of us an extra $500 a year in real estate taxes because revenues were rarely high enough to pay off the so-called “alternative revenue bonds.”
The cost was about $3.5 million…plus lots of interest.
The Village Board wants to sell it for $1.9 million.
Here is her pitch:
RedTail Golf Club
RedTail Golf Club is an important amenity within our community that is currently owned by the Village of Lakewood.
In 2011, the final payment was made on the bond that was issued for the purchase of RedTail Golf Club. This was a historic moment for our community as our residents would no longer have any financial obligations related to the purchase of the golf course.
RedTail now operates as an enterprise fund which is supported solely by the revenues generated through golf course operations.
The final payment on the bond also meant that the golf course was 20 years old.
Similar to our homes, the age of the golf course dictates that capital improvements and reinvestment are needed. The parking lot, cart paths, and bunkers/sand traps are high priority needs that must be addressed in the short term.
An initial assessment indicates that these improvements will cost approximately $1M. This figure does not address the need for a permanent clubhouse as the trailers that are currently utilized range from 12 to 20 years old.
While there are some financial benefits to a municipality operating a golf course (most notably there is no obligation to pay real estate taxes), these savings are more than offset by the Prevailing Wage Act and other regulations to which we are bound that often result in about a 25% percent increase in project costs.
There is a small reserve in the RedTail Golf Club Fund, but that is set aside for operational expenses during the winter months when few revenues are generated and to offset any operational losses that might occur.
n order to make significant capital improvements in the near future, the Village of Lakewood would have to borrow the funds.
Given the financial performance of the golf course during the past several years, the Board of Trustees is unwilling to obligate the residents for these payments if the revenues generated by RedTail Golf Club are not sufficient to make the payments.
We recognize, however, that the continued deferral of capital improvements may negatively impact RedTail Golf Club, both in terms of value and operations as customers seek superior amenities elsewhere.
As an owner of a golf course, the Village of Lakewood constantly seeks to better understand and monitor the golf industry.
According to National Golf Foundation statistics, the golf industry peaked in the year 2000 in terms of the total number of golf courses, golfers and golf rounds played.
Increased competition resulting from golf courses all vying for a diminishing pool of potential golfers has decreased the average revenue per round as golf clubs compete to retain existing golfers and attract new ones.
At RedTail Golf Club, the average revenue per round in Fiscal Year 2003/2004 was $44.20. In Fiscal Year 2012/2013 it was $34.71.
Against this backdrop, at its meeting on October 22, the Board of Trustees will consider a motion to approve an agreement with Links Capital Advisors to serve as a broker for the sale of RedTail Golf Club at a list price of $1.9M.
We recognize that this list price is lower than the purchase price, but it reflects the reality of a depressed golf industry with an overabundance of golf courses for sale at distressed prices.
This scenario is not expected to change at any time in the near future.
The original decision to purchase the golf course was also predicated, in large part, on the completion of the subdivisions surrounding the unfinished golf course.
This aspect of the purchase was a success as beautiful homes have been built on the golf course, generating millions of dollars in impact and building fees.
These fees have contributed significantly to the construction of our infrastructure and our strong financial position.
For those residents whose homes are adjacent to the golf course, please be assured that the Board of Trustees has adopted a set of covenants for RedTail Golf Club that insures it will remain a golf course or other open space.
Redevelopment of the golf course for residential or commercial purposes will not occur.
Finally, it is critical for me to note that this upcoming decision is in no way a reflection of the staff at RedTail Golf Club, all of whom have consistently provided an excellent golf experience for players given the resources made available to them.
Our primary goal is to secure a buyer for RedTail Golf Club at the highest price possible but who can also make the investments needed to insure that RedTail Golf Club remains a premiere golf facility for many years to come.