Save Sligo Golf.com

CIVIC ASSOC. MEETS WITH MCRA

SaveSligoGolf.com was sent an e-mail containing a file about a major Silver Spring Civic Association meeting on June 10, 2009, between a key representative of this association and MCRA director Keith Miller and CFO Michael Boone.

This file was written by the individual who attended this meeting with MCRA staff as a report to other civic association leaders. Because the file contained personally identifying information it is presented here in its entirety with only the personal information redacted.

 

"MNCPPC will have more than enough revenue to operate Sligo Creek Golf Course with money FROM GOLFERS into the foreseeable future.

Under the 30-year lease agreement MNCPPC is due to receive $480,000 for each  of the first six years (2007-2012) from MCRA for the use of the former MNCPPC courses. In the fifth year the lease terms are to be renegotiated for the remaining 24 years.

We have frequently heard the argument that the County Council's position is that taxpayers should not subsidize golf. Philosophically, I agree, with certain exceptions for youth programs, the elderly and the handicapped. But I do not think it is fair to ask golfers to subsidize the construction of basketball courts, playgrounds, hiking trails, etc. by MNCPPC, which is what the council has done with this lease.

In addition, Sligo is generating $3,000 a month in revenue by renting out 55 parking spaces during the week for employees of Holy Cross hospital. According to Miller, the hospital wants to continue renting those spaces.

MCRA has not met a key provision of the lease agreement.

According to MNCPPC staff presented to the board when the lease agreement was approved in 2006, the agreement says:

"MCRA shall assure access to golf for members of lower income communities through (1) continuation of programs such as First Tee and high school golf at a reduced rate, and (2) development of new programs and funding therefore in partnership with MNCPPC, the Montgomery County Department of Recreation and other county agencies."

There is no question that MCRA has met the first clause. It has expanded the high school program to middle schools and started a "family tee" program where families can pay $10 after 5 p.m. Miller stated that the First Tee operations at Sligo would be moved to the inside 9 at Northwest.

But MCRA has not initiated any new golf recreation programs with MNCPPC or the Department of Recreation or developed new funding for these activities. It is my belief that these programs should be developed and continued at Sligo using new funding from MCRA and MNCPPC's lease revenues.

There has been no analysis of the impact of closing Sligo Creek Golf Course on the minority, elderly, youth or women golfers.

According to the MNCPPC staff analysis in 2006, one of the "desired outcomes" of the lease agreement was to ensure:

"The long-term availability of high-quality golf opportunities at all levels for residents and visitors on the Park and RA golf courses through their integration into the golf program managed by the RA."

Miller stated to me that there was no evidence that Sligo serves a different demographic population than other county golf courses. I would suggest that there is no data at all. It astonishes me that a county which prides itself on diversity would sanction closing a major facility without even a study on whether this would result in a disparate impact on minority populations. I believe this was a major failing of The National Golf Foundation study that was used to justify closing Sligo Creek Golf Course.

The conflict-of-interest for The National Golf Foundation is probably less than what I supposed it to be.

The Foundation was paid $18,000 by MCRA for the study. The Authority also pays The National Golf Foundation $9,500 a year to survey its golfers. Miller stated that The Foundation would not jeopardize its reputation to give a biased report just to maintain such a small contract. He has a point. Nonetheless, I think there could be some impact from "clientitis." I would add this is the first time I have been given these numbers.

The lease agreement has been a very good deal for MCRA.

In the July 1, 2007 to June 30, 2008 fiscal year revenues were $17.1 million compared to $15.8 million for the previous year, according to an audit of MCRA by McGladrey _ Pullen CPA. Sales revenue for the nine courses increased by $1.2 million and the four former MNCPPC courses accounted for 75% of this increase, $917,000. Even in the face of a national decline in golfing, MCRA courses increased their rounds played. Miller attributed this to the changes they made at MNCPPC courses, including peak time and seasonal pricing variations. He said they were using the revenues to make improvements at Northwest and Needwood, the two most profitable courses. Management by MCRA has been good for the golf courses, at least revenue-wise.

Indeed, a May 2008 article in Golf Course Industry stated that the most troubled courses for MCRA were Poolesville and Rattlewood. (The article was about MCRA agronomist Jon Lobenstine.) Miller stated that Poolesville is their next focus. He said one advantage there is that MCRA owns 250 acres in addition to the golf course itself. Little Bennett is a major loser, more than $300,000 a year, but must remain open until at least 2012 under terms of the lease and because the Revenue Authority is paying off the bonds. Little Bennett, which opened in 1994, was a mistake by MNCPPC. Sligo is paying the price.

Personnel costs for the central management at MCRA went up 52 per cent between 2007 and 2008, from just under $800,000 to $1.2 million. Miller attributed this to absorbing MNCPPC employees and the need to fill positions to manage nine golf courses instead of five. MCRA had to assume some pension liabilities too, added Boone.

An accounting change exacerbated the losses at Sligo Creek Golf Course. In 2007, MCRA allocated different amounts to each golf course for the costs of the central management. Sligo was assigned $68,000. In 2008, each golf course was assigned the same share of central management expenses. Sligo's share increased to $139,000. Miller stated that the across-the-board allocation was how they did it prior to 2007. This is a reasonable accounting decision. The point is that in planning for the future, we should not assume that the cost of managing Sligo by MNCPPC is $139,000.

But even if you accept all the accounting decisions made by MCRA and The National Golf Foundation it is clear that profits from Northwest and Needwood, a combined $1.2 million, more than make up for the losses at Sligo and Little Bennett, a combined $495,000. Even if you add the $480,000 lease payment to MNCPPC, MCRA made a profit of $263,000 on the lease deal in 2008.

The lease agreement remains a problem.

Miller said the county council wanted one agency to decide the number of golf courses. That is the reason for the provision that states MNCPPC cannot operate a golf course in competition with MCRA. He said this was intended to keep MNCPPC from opening a new golf course. He noted there was a provision that allows MNCPPC to take back one of the golf courses and use it for other purposes. Rather than allowing MCRA to veto operations at Sligo, he said the lease puts the burden on MNCPPC to prove by a study that Sligo would not compete with MCRA courses. Miller does not believe they can meet that burden.

We need more openness at MCRA.

The Authority is a state-chartered government corporation. It is clear to me that the Authority officials do not consider MCRA to be a government agency even though the board is appointed by the county executive and approved by the county council. The structure allows MCRA to issue revenue bonds that are strictly speaking the obligation of county tax payers but on the other hand they don't face the same tax burden as private golf course management companies.

I asked Miller if MCRA falls under the state Open Records and Open Meetings laws. He stated they "choose to adhere" to those laws. Unlike the County Council or MNCPPC you cannot find either minutes or meeting notices on the MCRA website. I would recommend that [OUR CIVIC ASSOC.] ask the county legislative delegation to introduce legislation to clarify that MCRA falls under the same laws as other county agencies.

The Revenue Authority needs to be included in our discussions. 

"We're still here. We're not going anywhere," Miller stated at the end of our meeting. Boone noted that they were willing to float a $4.5 million revenue bond to improve Sligo. He was referring to the plan for the two-tier driving range, the mini-golf courses and rebuilding the clubhouse, as well as improvements to the irrigation system. Miller stated he believes the golf course has outlived its design life and needs major renovation. Whether his comments were a genuine attempt to reopen negotiations or an attempt to revive the discarded driving range plan, I cannot be sure, but it may be worth testing."

 

While SaveSligoGolf.com has no affiliation with this civic association we thank the member who provided this information. SaveSligoGolf.com welcomes all input from the community and applauds this group for making their meeting available to the public.

 

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