Offers to lease course rejected

Wednesday, April 27, 2005 | 9:21 a.m.

Boulder City rejected two offers Tuesday to lease its Boulder Creek Golf Club and will aim for a June 7 ballot initiative to help repay its $22 million debt for building the course.

The City Council turned down offers from Colbert Golf Development & Design of Pahrump and GolfXtreme LLC of Boulder City, which city officials said would have provided little return for a facility worth about $1.5 million to $2 million a year.

Colbert proposed a lease that would have yielded the city $200,000 a year in the first five years and $950,000 a year in years six through 10 of the deal that could have ranged from 15 to 25 years.

GolfXtreme proposed a lease that would have netted the city $250,000 a year through 2007 and $750,000 a year thereafter as part of a 41-year lease.

Boulder City took over the operation of the course in March 2004 after it bought out the contract of a private firm, Triad Golf Management, which managed it on behalf of the city at a loss of more than $2 million after 18 months.

City officials wanted to lease out the course to a company that would pay for its maintenance and operation. The course has lost hundreds of thousands of dollars under its operation even though it produced a profit of more than $127,000 in March before debt payments are calculated. Boulder City has annual payments of $1.5 million a year for its $21.9 million debt.

"It is disappointing, but not surprising," Councilwoman Andrea Anderson said of the lease offers. "We were hoping to get a lease to cover most of the debt payment, but I would have been surprised if we had gotten greater offers. We just wanted to see what was out there. The city will just continue to run it, and keep it going as it is."

Even if the proposed lease agreement were as lucrative as some hoped, Boulder City wouldn't have been able to sign the contracts anyway, officials said. Boulder City's bond counsel reported that if the city earned more than $256,700 a year, the city would either have to pay off bonds or reissue new ones as more costly taxable securities. Some 60 percent of the course was funded by tax-exempt debt, officials said.

Councilman Roger Tobler said it would have been prudent for city officials to know about the lease payment's effect on tax-exempt debt before it sought the proposals, but he said the revelations are informative to the public.

Voters will go to the polls June 7 to decide whether or not to sell 45 acres on the northeast side of the course course to help repay the debt. There have been estimates the land sale could fetch between $15 million and $17 million.

If the land sale goes through and the tax-exempt debt is repaid, Boulder City would no longer have to worry about how much it earns in a any future golf course lease, officials said.

"I think people need to think about it if they want the city to have options down the road," Tobler said of the June 7 ballot measure. "We have to get out from under the debt; otherwise, this will ensure we always have to maintain it ourselves."

Some 40% of the city's debt for the golf course in the amount of $8.7 million is an investment from Boulder City's utility fund.

In other action, the council:

Fenton wrote for the Boulder City News, donated money and brought in grants for many city projects, city officials said. Fenton donated to build the Reflections Center sculpture park near the filter plant on Railroad Avenue.