Lakewood Wants to Sell Red Tail Golf Club for $1.9 Million

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.

Lakewood's Red Tail Golf Club loses money in the winter and doesn't make enough during the rest of the year.

Lakewood’s Red Tail Golf Club loses money in the winter and doesn’t make enough during the rest of the year.

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.

Erin Smith

Erin Smith

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.


Comments

Lakewood Wants to Sell Red Tail Golf Club for $1.9 Million — 15 Comments

  1. The only option is to allow the course to return to a nature/open recreational area.

    The demographics are bad and there are simply too many courses that are failing all over the Chicago area.

    I doubt there will be any interest in RedTail, no matter the price.

    Great example of overreach by local government, costing taxpayers.

    Hope it serves as a reminder before more local government excursions into the world of private business..

  2. When President Bill Young stood up, after his election to the Lakewood Board, said, I am a “Change Agent”, the hair on your neck should of stood up.

    The Village Attorney should have many questions asked of him regarding this purchase to begin with.

  3. Some interesting numbers:

    After twenty years, RedTail has lost $1.6 million in value, or 45% of the original cost to taxpayers. Even with the horrible loss in value since 2007, most residential and commercial property is worth more today than twenty years ago.

    Strike one.

    IF the Village actually GETS $1.9 million, the taxpayers will have incurred a loss on their “investment” of about 11% a year for twenty years.

    Strike two.

    Finally, the golf course raised the property taxes of the average family in Lakewood by around $250 to $300 per year, every year, for 20 years, and is still operating at a deficit.

    Strike three.

    And now Lakewood is busy speculating in real estate (excuse me, “engaging in economic development”) by buying land at 47 & 176 to “control” development.

    I’m sorry, but Lakewood has no business risking taxpayer money like this.

    They don’t need to own the land to “control” development.

    In fact, they don’t need to “control” development, period!

    If some private party buys the land at that corner and does something with it that meets code and zoning, that is their right.

    How dare the Village risk taxpayer money because some government official has some grandiose idea about what might be there!

    I’ve got an idea.

    How about a big arena?

    We can get some advice from Hoffman Estates about how their “investment” in Sears Centre is working out.

    The fact is that, historically and across all types of government all across the county, governments have a horrendous track record of losing money at this type of thing.

    If the Village board members want to risk their own money on real estate because they think it’s a great deal, they should do so.

    But how dare they risk taxpayer money!

  4. Steve,

    Excellent post. I appears we are being way over taxed based on these three examples.

    Erin Smith says the following examples do not require any funding from tax increases. She needs to explain where the money is coming from (or came from) to fund;

    1. The over $300,000 payment plus legal fees to Crystal Lake for the Fire Protection Fiasco

    2. The real estate purchase at 47 and 176

    3. A new municipal center on Haligus

    All of which the board and Erin Smith have stated no additional taxes are necessary.

    Certainly appears to me that we are providing the Village with way too much revenue.

  5. They even missed on the name. Should have been ‘in the’ Red Tail.

    Meanwhile, a fresh utopian visionary scheme is hatching at MCC.

    What every taxpayer dreams of, a fitness center.

    The MCC line item on our tax bills is on the launchpad and ready for liftoff!

  6. Gee, maybe as Smith and her rich buddies are sitting around sipping their evening cocktails, dreaming up their next tax payer headfck, why not call the Chicago Cubs management and tell them you want to build them a ball park if they come to McHenry County!

    Where do the Smith’s and the likes of her, we know who you all are, dream up such unbelievable schemes.

    They want to be in the sports arena business during a depression, they keep open a losing golf club with trailers no less.

    Truth is you have people running Lakewood who know how to ‘spin’ fancy words to make us taxpayers feel all warm and fuzzy. Kind of like the lipstick on a pig saying.

    Smith is the best at it to be sure….she sure has led you Lakewood folks down a path to absolutely know where but broke town!

    But I’m sure like all the others who have been jamming it to you for about 40 years, will just get re-elected and they will insert a new set of Double D batteries and keep giving it to you!

  7. Come to the meetings and participate. The Lakewood voters lack of willingness to participate allows many things like this to happen.

  8. Do they plan to distribute what is left of our failed investment back to the residents?

  9. Great comments and all true . . . at one time it was the Home State Bank, Trust Department, that had the list of all the Bond Holders.

    WHO WERE THE BOND HOLDERS?

    I would say Rich Flood could be asked a few questions.

  10. I think someone in Lakewood, should be asking, who did the audit in the early 90’s, and thereafter. What bank did the Village use.

    Maybe Erin should have a Past Village Trustees Family Reunion.

    That would be the right thing to do.

    Could it be RODEO time?

  11. It is interesting and troubling that Lakewood is selling the golf course for a loss at a time when other cities/municipalities are purchasing golf courses, such as in Huntley and Cary.

    What is it they know that we don’t or vice versa?

    No doubt, Erin Smith made it clear from the time she took office that she did not believe the Village of Lakewood should own and run a golf course — at that time her husband was President of Turnberry Country Club which is in their backyard.

    She’s even discussed publicly how Turnberry’s clubhouse could be possibly modified to be used as a future village hall?

    Possible connection???

    To all Residents of Lakewood — please attend this meeting, you have to be engaged whether you agree with selling Red Tail or not.

    Be there.

  12. Lakewood Resident, keep up the questions and get as many people there as possible.

    When a decision is based on a lie, more lies will follow.

    The first lie was buying the Lakewood Golf Course.

    It is a good thing Mike did not get elected to to the McHenry County College Board.

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