This report was corrected Oct. 18, 2011. An explanation follows the story.
A political golf ball made it to the hole after about 23 months in a sand trap.
The Rockville mayor and City Council voted unanimously Monday to lease RedGate Municipal Golf Course to a private company for 10 years, guaranteeing the city at least $180,000.
Billy Casper Golf, a Vienna, Va.-based golf course management and marketing company, will lease the course for 10 years, paying the city $12,000 per year from 2012 through 2016 and $24,000 per year from 2017 through 2021.
“There’s no change in ownership, no change to the grounds,” said Councilman John Britton. “This is a City of Rockville operation. And I think because of the size and the scope of Billy Casper, we’re going to get all of those things we have tried to do. I don’t think we can ever match [their] marketing acumen and expertise.”
Operating and non-operating expenses at RedGate reached a total of nearly $1.6 million in fiscal 2011. But the course generated only $879,764 in revenue from users. This means the course lost $717,445 in fiscal 2011.
The Rockville Mayor and City Council transferred $2,390,645 from the general fund — taxpayer dollars — to cover the fiscal 2011 losses and all previous cumulative RedGate losses.
City officials began debating the future of RedGate in earnest in July 2010, at the beginning of the final year of a five-year business plan that failed to make the course profitable. A request for management proposals was sought in June.
City staff recommended in its report released last week that the mayor and council approve the lease agreement with Billy Casper Golf.
And so the financial and institutional benefits of the deal — earning money by leasing the course rather than spending taxpayer dollars to support the course — proved too good to pass up.
Councilman Mark Pierzchala, who expressed interest last year in letting the course return to nature rather than have taxpayers subsidize the course, put the motion on the table.
“We got a proposal I don’t think any of us was expecting,” Pierzchala said. “One that allows RedGate to remain as a golf course for up to 30 years.”
The city can opt to renew the lease four times, each for five-year periods.
The lease will begin no later than Jan. 1, 2012.
Billy Casper will pay the city 25 percent of cart fees, green fees, driving range sales and annual pass sales when those profits exceed $1.1 million annually and 50 percent of those profits when they exceed more than $1.3 million annually. Projected profits for the city from this additional revenue over the term of the 10-year lease is $594,993.
And finally, the company will pay the city 5 percent of food and beverage sales, pro shop sales and room rentals when those profits exceed $250,000 annually and 10 percent of those profits when they exceed $450,000 annually. Projected profits for the city from this additional revenue over the term of the lease is $48,534.
Billy Casper Golf plans to spend $175,000 in 2012 to freshen up the course and club house, said Joe Goodrich, senior vice president of the company. Over 10 years, that amount will reach $575,000.
The city faced a problem with the course not because of the people who ran it, Goodrich said, but because of the operating structure.
“The reality is you have a golf course in a great market,” Goodrich said. “You have a great facility. It’s got great infrastructure ... it’s viable.”
In its heyday in the mid-1990s, the course boasted about 60,000 rounds of golf per year. That number dropped to about 35,000 this year.
Billy Casper projects that number will grow to 36,000 next year, and eventually to 43,883 rounds of golf in 2021.
In many cases, Billy Casper takes input and feedback from an advisory committee or stakeholders, Goodrich said.
“We want that feedback. We want that input,” he said.
Billy Casper Golf operates 130 golf courses nationwide, including two in Anne Arundel County and three in Prince William County, Va.
Company staff will conduct interviews with RedGate employees to determine their futures at the course, Goodrich said. In some cases, the company managed to maintain staff or promote staff to new positions. In others, not all golf course staff can stay employed at a given course.
The city adopted 9.8 staff positions at RedGate in fiscal 2012.
“You’re facing a business reality and those are tough decisions,” Goodrich said. “And I can assure you those will be handled with the utmost decency.”
City staff is working with its human resources department to determine severance packages, said Burt Hall, director of the department of recreation and parks for the city.
But overall, the decision to lease the course appears the best option for taxpayers.
“Almost everything you’re suggesting is what our staff has been trying to do,” said Councilwoman Bridget Donnell Newton to Goodrich. “I wish you all the best. I seriously want you to succeed because I want RedGate to succeed.”
abryant@gazette.net
The golf course’s address in the photo captions was incorrect. The course is on Avery Road.
The Gazette inaccurately reported RedGate’s operating and non-operating expenses in fiscal 2011. Those expenses totaled nearly $1.6 million and the course generated a loss of $717,445.
Copyright © 2012 Post-Newsweek Media, Inc./Gazette.Net