Officials look to cover golf club’s debt

Dan Kulin

Thursday, Oct. 16, 2003 | 11:17 a.m.

Boulder City's high-end Boulder Creek Golf Club, which opened in January to high expectations, including projected profits in its first year open, looks instead like it will be a drain on the city's general fund as critics have long warned.

City Manager John Sullard and Finance Director Bob Kenney on Wednesday presented the City Council with $1.2 million worth of budget cuts and new revenue that would be enough to make the coming debt payments for the course and cover operating shortfalls, or possibly to settle a lawsuit from the company that built the course.

The budget changes included an additional $58,000 from increasing building and zoning permit fees; about $110,000 in cuts at the police and fire departments, with the savings coming primarily through putting off purchasing new equipment; and $132,000 in cuts by cutting the equivalent of four temporary workers from a landscape construction crew the city has had for about four years.

Sullard said the city will seek grants to keep the landscaping positions funded, although if no such funding is available those positions could be cut. Sullard and other officials pointed out that the workers are not city employees, but temporary contract workers.

The fire and police chiefs said the budget cuts won't affect service, as the departments will continue using existing equipment instead of replacing it this year.

Sullard and Kenney said the permit fee increases have been talked about for years. They said the fees haven't been increased for about 20 years, and Sullard said the fees are so low now that they are a joke. For example, he said an electrical permit costs $5.

The $22 million Boulder Creek Golf Club was projected to turn a profit of $60,000 over its first six months open, according to original financial projections, which city officials cited as late as May in a newsletter to citizens.

Instead the golf course hasn't been able to cover its operating costs, not including debt payments. About $600,000 in debt payments are still due this fiscal year; the payments climb to $1.3 million next year and about $1.5 million annually in the following three years.

The debt payments do not include any payments on an $8.7 million loan taken from the city's utility fund, which will continue to accrue interest, but is not expected to begin receiving payments for several years, Kenney said.

City Councilman Roger Tobler said the course has an $800,000 operating loss so far this year, and he questioned whether the staff was setting aside enough money to cover Boulder Creek's expenses.

Kenney said that in general golf courses make most of their money during October, November and December, and how Boulder Creek does during these months will greatly affect how much money is needed to subsidize the course.

Sullard said that if the budget changes aren't enough, the city has a $4 million general fund reserve that could be tapped.

Former City Councilman Bill Smith's recent mayoral campaign was based in large part on his claims that the new golf course would turn out to be a financial boondoggle.

"It's much worse than I thought," Smith said after the Wednesday meeting.

Smith presented the council with his own estimates showing Boulder Creek will cost the city about $7.3 million by the end of this fiscal year, June 30.

Tobler said Smith's numbers need to be substantiated and checked out before being accepted, and Smith conceded that his estimates could be $1 million off.

But Smith's estimates aside, Tobler said he expects the city will have to subsidize Boulder Creek at least this year and maybe next year too.

"This is a guessing game," Tobler said.

Tobler said he was comfortable with the budget cuts because he thinks there is always room to cut from a government budget.

Councilman Mike Pacini said he still thinks Boulder Creek was a good project for the city, and he said all golf courses in the area are going through hard times.

Councilwoman Andrea Anderson said she expected the city would have to subsidize the golf course since she heard in late May that the course was losing money.

"It certainly didn't turn out the way it was originally projected to us, but today wasn't a big surprise," Anderson said.