City mulls way to improve golf course finances

Mountain Home City Council, golf board members, staff from the golf course and members of the public gathered for a study session last week to discuss the golf course fund status.

Mayor Joe McNeal stressed the study session was an opportunity for discussion only. No decisions were made, but participants had an opportunity to put forth ideas for how the city might best meet the payment requirements for the certificates of participation issued for golf course expansion. Even with more than $80,000 of annual assistance from franchise fees, deficits are projected to begin within four years and progressively increase until they reach a crisis point in 2021.

Over the last five years revenues from the golf course have increased by $117,121. Revenues for FY2003 were up by $81,000, due primarily from cart rentals and the addition of franchise fees, plus user fee and green fee increases.

However, other revenues generated by the golf course have not increased beyond their 1998 level, noted city treasurer Leanna Taylor. On the other hand, she pointed out, total rounds at the course were at their high in FY98 and at their low in FY03.

While no analysis has been done to cross-reference fee changes to the changes in rounds played, the annual green fee/18-hole rounds have declined by 4,000. Season pass/weekday rounds have reduced by more than half, while 9-hole green fee and weekend season pass rounds have both increased.

Taylor pointed out that maintenance and operation expenses over the last five years -- not including Certificates of Participation payments -- have fluctuated. This year the annual cart lease payments begins, in addition to costs for replacement of carts within the current fleet, so total costs will increase. Expenses and payment costs are projected to be lower than revenues.

"The looming dilemma for golf course solvency is the payment requirements of the Certificates of Participation. Even with more than $80,000 of annual city assistance from franchise fees, deficits are projected to begin within four years and progressively increase until the crisis point in FY21. Up to FY06 all money paid for the certificates are interest only, with no reduction in principal," reported Taylor. Beginning in 2007, annual "maturities" principal payments begin, starting with a low of $10,000 in FY07, spiking three years later to $185,000 and reaching a peak in FY21 with a pay off payment of $384,656.

The study session provided an opportunity to put forth ideas of how to turn the situation around. Suggestions of how to improve the outlook ranged from taking a closer look at the payment schedule and ways the payments may be reduced to making changes in the image of the course -- making sure that it is perceived as a public golf course, not a private club -- to increase revenues.

While no decisions were made, the session gave participants plenty to think about and hopefully they will come up with more ideas to improve not only the financial outlook, but also the public perception of the golf course.