Town-owned golf course turns a profit
By Cristina Kumka
STAFF WRITER | November 03,2012
Albert J. Marro / Staff File Photo
Mark Hefferman of Ekwanok Country Club in Manchester blasts from a fairway trap on the 10th hole at Green Mountain National Golf Course during first round of the Vermont Amatuer Golf Championship last summer.
KILLINGTON — Green Mountain National Golf Course, a point of contention between Killington residents and town officials, turned a profit this year for the first time in years but the town's auditor doesn't think that, even if that pattern continues, it will ever cover the debt.
A portion of the profit, which was more than $150,000, will flow back into the General Fund to pay off some of the town-owned golf course's existing $5 million debt.
Ron Smith, the town's auditor, said Friday that even then, the course doesn't make financial sense.
“I'm not sure it will ever be able to cash flow itself and tackle its own debt,” Smith said.
That concept was accepted by town officials who switched the burden of the debt onto the taxpayers last year.
Smith said no matter where the debt is paid from, it doesn't look good for the town from a financial perspective.
“It reflects poorly back on the town,” Smith said. “Municipalities should not be in the business of running golf courses.”
On the other hand, Town Manager Seth Webb called it a “good year” at the course.
“It was a step in the right direction. I credit (course manager) Dave Soucy for his work,” he said.
The course, completed in 1996, was initiated in 1994 after voters approved a $5.5 million bond to buy the property and build the infrastructure. Since then, it has been one of the most talked about topics in town for the last two years as the three-man Select Board looked at years of mounting debt and how to pay it off.
From the start, the plan was to use revenue the course made from golf to pay off the loan, according to information from the town.
But the course never made enough to pay its operating costs, the debt payments and the interest on them.
Records dating back to 2003 show an annual shortfall of about $122,000 that increased to $446,000 by 2010 and the coordinating debt in those same years went from $122,000 to $2.4 million, prompting the current Select Board to take out another note to liquidate the debt at $2.53 million.
But when that note was taken out, the Select Board also decided not to have the course pay down the debt. The town and its taxpayers would do so instead.
The debt payments, including interest, now come directly out of the town's General Fund budget.
This year, however, at least $50,000 will come from golf course profits and the course has made enough money to pay for its own operating costs, attributable to cost-cutting at the course, customer retention, tournament growth, and the increase in out-of-town golfers, Webb said.
“What we would like to see is how an operational profit would pay the ongoing needs of the course and that would be the new expectation set for the course,” Webb said.
According to year-to-date budget information for the course dated Oct. 22, the total debt and capital expense payment to be made on the course this year is a projected $637,219.
Budgeted net revenues from the course were $95,000 this year but the projected net revenue total by year's end is more — $157,403.
The Select Board has yet to decide what the remaining $107,000 of profit will be used for.
Webb said the course's newly formed golf committee is ironing out a 15-year capital plan that will likely call for money to be set aside in a reserve fund to be used for future maintenance expenses at the course, an idea supported by Smith.
Smith, during a recent audit presentation, also suggested the town may look at privatizing some aspects of the course.
The course is currently tax-free because it's a town property. Webb said no assessed value of it is available.
On Thursday, Selectman Bernard Rome said the course should not be sold.
Rome ran on an election platform of using some of the town's 1 percent option tax for economic development to pay down the course's debt, arguing that the course was one of the only sustainable sources of economic development in town.
The town's 1 percent option tax money now flows into the General Fund to contribute to town expenses like the course, and the town's economic development and tourism activities are paid through the General Fund.
Last year, EDT activities were paid through a pool of money that was strictly local option taxes.
This year, the EDT budget and the money used for it was cut nearly in half.
“Resoundingly, 'no,' it doesn't make sense,” Rome said of the suggestion to sell the course. “We've made the investment and until someone is going to come forward and pay what we have in the course, the town would still lose money on the course. That number (the $5 million debt) doesn't go away if you sell the course, unless the party who buys the course takes the debt with it. If we sell it for $1.2 million, that's all we get back. It doesn't make sense to sell it.”
Rome said “the only benefit of selling the course would be to modestly reduce the long-term debt ... The major point is that the golf course is in a positive framework now.”
Webb said the course is “not paying down its own debt but it is serving the mission it was intended for.”
According to the 1994 town report, the purpose for the golf course construction was “to foster summer visitations to Killington from beyond commuting range ... the principal benefit to the town will be the inflow of tourist dollars to the Killington lodging, retail and restaurant businesses.”
The vision statement also said there was a “delicate balance” between resident expectations, regionwide golfer hopes, tourism usage and the price of golf that will have to be “sufficient to generate more revenues to pay operational expenses and debt without asking property taxes to subsidize the golf course.”