Leader Blues

Friday, April 24, 2009

TOP STORY >> Surveys show golf course idea is expensive

Leader staff writer

At last week’s city council workshop on making North Hills Country Club a viable golf course again, Sherwood Parks and Recreation director Sonny Janssen said he wasn’t sure how much revenue would be generated from greens fees, cart rentals or purchases at the snack bar.

But perhaps he does have an idea.

In 2007, three different studies were done to determine the cost of bringing the golf course back up to par, the cost to maintain the course and the number of rounds that had to be played to break even.

All three studies suggested the course would lose money for the first three years before holding its own in its fourth year of operation and those figures were based on 23,000 to 30,000 rounds of golf being played there annually.

Many of Sherwood’s aldermen have expressed a desire to spend up to $500,000 to turn the defunct North Hills Country Club into a playable golf course even though three previous studies have suggested much higher costs.

City officials will listen to residents’ input at two public hearings – one from 5 to 7 p.m. Monday at city hall and the other May 11.

Council members are considering reopening North Hills Country Club by next spring as a golf course, but in increments to help offset costs.

Just how much it would cost to maintain the course year to year at this point is another unknown, Janssen said at Monday’s meeting, adding that consulting with a knowledgeable golf course manager to pin down costs is needed.

Yet the city has already consulted with three different professional organizations and has cost figures available.

In May 2007, the city received an analysis and projections report from W.P.D. Golf Management and Consulting. Also in May 2007, the city reviewed a market profile report from Paladin Golf Marketing, and about the same time the city received a 28-page golf course maintenance evaluation for North Hills Country Club from International Golf Maintenance. A month earlier the city reviewed a preliminary “Review for Financial Viability of North Hills Public Golf Club” from Spears Consultants.

Spears Consultants projected a reasonable cost for the 106-acre country club and golf course was $1.5 million. The city, through its condemnation procedures, ended up paying $5.5 million for the property, meaning a $28,000 monthly payment.
Spears projected that the cost for the necessary improvements to make the facility a viable course again was $1.19 million, plus another $81,500 in pre-opening costs. The consultant estimated first year expenses at $234, 587 for clubhouse expenses and another $357,409 for course maintenance and $124,339 in general administrative expenses.

The city has already spent more than $100,000 renovating the clubhouse so it can be used for meetings and gatherings and more than $20,000 to fill in the old pool on the property.

The council now wants to spend $500,000 to get the golf course going.

So the tentative plan as it stood after the long discussion on Monday was to “go slow, try it out two or three years, then re-evaluate,” Janssen said. “If it makes a profit or breaks even, it could be a good venture.”

In looking at probable income, Spears based its figures on 23,380 rounds of golf the first year at $24 a round, plus incremental increases in rounds played each year. If everything went according to the projections, the course could see about a $50,000 profit at the end of its full second year.

International Golf Maintenance estimated a maintenance budget of $424,000 annually for the golf course, which included $284,000 for staffing and $139,000 for maintenance supplies and equipment.

IGM also suggested leasing all new maintenance equipment because “virtually all of the existing maintenance equipment is in need of replacement.” That cost, according to IGM, is about $400,000.

Now, the city can circumvent some of that cost using its own equipment, but then its equipment will wear out faster.

The report from Paladin called the local golf market healthy but “nearly saturated,” adding that there were about 20 golf courses already in a 20-mile radius.

The Paladin report stated that it sees “an opportunity for North Hills Golf Course to garner more than their “average” share of golf play by offering a respectable product and service while monitoring demand and pricing closely.”

Currently, upkeep of the 106-acre facility requires two full-time workers plus the help of a crew of other city workers one day a week. The golf course is open to the public now for hikes, dog walks and the like, said city parks and recreation director Sonny Janssen.

Landscape architect and golf course designer Steve Hales of ETI has suggested that it will cost $150,000 to rebuild the greens,
Other costs, according to Hales and others, just through 2009, include sprinkler system repairs at $100,000; maintenance and cart repairs at $50,000, clubhouse repairs at $50,000; signage, tools and flags at $25,000, and equipment leasing at $28,000.

Salaries for six months would be $35,000 for a golf course superintendent; $13,500 for a full-time maintenance worker and $20,400 for two part-time laborers.

Janssen said that “there are a lot of things we can do in-house” to cut costs on the project.

On a scale of 1 to 10, the initial investment of $500,000 would bring the course up to a three or four in quality, said Hales.

“That golf course has great bones and is extremely visual and fun to play,” Hales said, acknowledging also it has the reputation among some as being somewhat challenging.

“Why don’t we do a trial run to just get it up and running to see how it holds up and to limit your investment, then later bring it to full potential,” Hales suggested.

That way, the city would see if the course attracts enough golfers to justify more improvements