Wednesday, Feb. 20, 2002 | 10:45 a.m.
The Las Vegas City Council today is expected to decide whether Evergreen Alliance Golf Limited will manage a course in the northwest. At the same time, the city of Henderson is considering legal action against the company for pulling out of a deal.
The Las Vegas council will look at approving a $22.5 million management contract with Evergreen to operate the Northwest Family Golf Course for 15 years.
The city's decision comes two weeks after Evergreen, based in Irving, Texas, announced it was dropping plans to build a 204-acre course in Henderson after negotiating with city leaders for more than a year.
Mark Vincent, Las Vegas finance director, said the company's decision to back out of a Henderson deal doesn't affect the company's contract to manage the course in northwest Las Vegas. Evergreen officials signed the contract Feb. 7, and now it's up to the council, Vincent said.
Henderson officials are facing a decision of a much different kind.
Henderson City Attorney Shauna Hughes said her office is considering a lawsuit to recover costs incurred by the city during the 17 months the parties worked to solidify the $15.5 million public course.
Administrators are compiling a list of costs the city incurred while planning what would have been the city's first municipal course on land just east of Green Valley in Whitney Ranch.
"We have asked for a legal analysis to determine what, if any, legal route we have to recoup expenses incurred," Hughes said. "The documents (for course construction) were ready to be signed. The deal was done."
Evergreen CEO and President Lawrence Corson, who said his company has acted in good faith with both cities, pointed out that the deals are different.
"It would have been the easy thing to hide the whole Henderson situation until this thing with the city got done, but that's not the way we do things," said Corson. "We knew there was a risk to how the city would react to it."
In Henderson, he said, the company -- which company manages 43 courses in 12 states but has no other courses under construction or planned for construction -- would have risked millions to build the course. In Las Vegas the risk is minimal because the company would only manage a course the city is building.
John Rinaldi, Henderson director of property management, questioned whether the situation simply comes down to a question of management versus construction. Evergreen agreed informally to both build and operate the Henderson course, Rinaldi said.
"It does cause us to question whether our assumption that Evergreen negotiated in good faith was correct when they backed out of this deal while continuing to negotiate with the city (Las Vegas)," Rinaldi said. Las Vegas plans to finance construction of the 78-acre golf course near Gowan Road and Cheyenne Avenue through $12 million in city bonds, but needs a qualified operator to run the course, he said.
Revenue from the course will go to the city to pay for the bonds, and the operator will receive a management fee and be reimbursed for money spent on improvements. The course, which is currently under construction, is being built on land owned by the Bureau of Land Management and will be completed in the fall.
In Henderson, financing was next to impossible, Corson said, as banks were hesitant to lend money after Sept. 11.
"It was an investment decision (to not build the Henderson course), driven by the excess building of golf courses in Las Vegas," Corson said. "There is just no construction loan financing available in the market today."
Hughes hesitated to offer an opinion on Corson's comments regarding risk management.
"At this point we don't know what the truth is. They have given several different versions of why they've withdrawn," she said. "But what we do know is that Evergreen is a company in good standing. It's something we checked out thoroughly during the selection process."
Lee Hetrick, executive director of the Golf Course Builders Association of America, based in Lincoln, Neb., said, though financiers have tightened the purse strings, opportunities to obtain funding remain available.
"(Lenders) have really ratcheted down the process," he said. "But if you present a tight enough case, then the money is there."
Evergreen's long-running negotiations with Henderson were a factor in at least one Las Vegas City Council member's decision in October to originally pass the company over in favor of another potential operator.
Councilwoman Lynette Boggs McDonald told the Sun in October that she voted against Evergreen because she had heard from a Henderson staff member that the company had asked for more money to build the project after it was awarded the contract.
The council originally awarded negotiation rights to golf course developer Billy Walters, saying he had a proven track record in Las Vegas. The unanimous vote went against a staff recommendation that stated Evergreen had more accurately responded to the city's requests.
Walters faced criticism that he won the contract based on his influence and political connections.
He defended his company and its successes. In addition to saying that he would have generated more revenue for the city had he been awarded the contract, Walters also correctly predicted in October that Evergreen would not build the golf course in Henderson because of the prolonged negotiations.
Walters, who did not return phone calls seeking comment for this story, withdrew his proposal in October, and the Las Vegas project was offered to Evergreen.
At the time, Corson said negotiations in Henderson had taken more than a year, in part because of soil tests conducted first by Evergreen and then by the city. Both studies showed that due to high salt content in a shallow water table the soil would need to be improved before turf could take root.
To do that, Evergreen said it needed an additional $2.2 million on top of the initial $13 million estimate. The company later raised the estimate to $15.5 million. After an exchange of letters that began in April 2001, Evergreen wrote the city on June 4, 2001 to say that it would proceed with the project, despite the added costs. From there the two entities fine-tuned the contract based on the new numbers until the abrupt change in plans by Evergreen two weeks ago.
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