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Voices of the Peninsula: Golfing community disappointed with council vote

Posted: April 29, 2014 - 3:39pm  |  Updated: April 30, 2014 - 8:14am

Pat and Myrna Cowan, the entire golfing community including over 200 individuals who either delivered written support or personally attended two council meetings, several charity organizations and non-profits are very disappointed and shocked that the Soldotna City Council voted down (4-2) the opportunity for the city manager to negotiate with the Cowans to attempt to find a solution including funding sources to purchase Birch Ridge Golf Course land (92 acres) and then lease it to an operator who would own the buildings and equipment to run the golf course, thereby eliminating the responsibility and liability for the operation of the golf course.

The day before the meeting the City Manager sent a document to the members of the council entitled “A Risk Based Analysis of General Fund Reserve Requirements for the City of Soldotna” conducted by the Government Finance Officers Association. This document is 18 pages long and we are sure that some of the council members didn’t have time to read it prior to the meeting. (The two council members that voted in favor did read it.) He then used this document to insinuate that the council didn’t have sufficient funds in its reserves to make the purchase, when in fact the city has too much in its reserves, so much, that it could be argued that excessive reserves should be returned to its citizens (page 2 of the analysis).

He went on to say that sales tax is volatile; again, wrong. According to page 7 and 8 of the analysis, the sales tax in Soldotna is not very volatile and has been very stable from 2008 to 2013.

It’s also strange that the city manager, who suggested the land purchase and lease back agreement was in support when first introduced, is now not supportive. Why? Does he believe that a fund balance reserve of 80 percent is really necessary, when a 60-65 percent fund balance would actually be above that suggested by the GFOA analysis, or are there political reasons that we don’t understand?

A couple of the council members talked about whether the citizens who live in Soldotna would actually be in favor of the purchase. Let’s set the record straight, the City of Soldotna does not receive its sales tax revenue from just the citizens who live within the city limits of Soldotna, as a matter of fact, it would have a very hard time managing the city affairs if they only collected sales tax from 4,100 people. Sales tax revenues comprise over 90 percent of the city’s general revenues (page 7 of GFOA analysis). They know that, and that’s why prior councils have supported libraries, sports arenas, parks, trails, etc. that serve the greater Soldotna community, including Ridgeway, K-Beach, Sterling, Kasilof, Funny River, and all others who shop in Soldotna and call Soldotna home. It is a fact that those 4,100 folks elected the present council, but they did so because they thought the council would represent the greater Soldotna area. That sales tax allows Soldotna citizens to maintain quite low real estate tax rates.

Also it appears that the City Council chose to ignore the economic benefit that Birch Ridge Golf Course supplies the City. 10,000 rounds per year, and after a game of golf many folks stay in town to have dinner, a couple of beverages, shop, buy gas, etc. Also out of the 10,000 rounds, 3,500 of them are from out of town. Those folks play golf, stay in our hotel/motels, and shop in our community. Economic studies suggest those folks spend $150 a day in our community and the GFOA analysis indicates the “multiplier effect” (page 3) is 2.0. That means $300 spread around our community as a result of these travelers. 3,500 multiplied by $300 = $1,050,000. Six percent sales tax on that total is $63,000, divided by 2 (3 percent borough, 3 percent city) is $31,500 in lost sales tax to the city in addition to the loss to businesses, as that business will probably go to Kenai.

There appears to also be some misconceptions regarding the purchase and lease agreement. The Lessee Birch Ridge Golf Course Inc., would still own the buildings and equipment and would operate the golf course. Then Birch Ridge Golf Course Inc. could sell the buildings and the equipment to a person of our choice. Right now, our choice to run the business is Nolan Rose, et al; however, if Nolan was no longer interested we have been approached by other golf pros. Our interest in Nolan is after observing him since he was 7 years old and recently for the last five years where he has been our employee and general manager.

The mayor said that they’ve received unanimous emails in favor; because of that we would hope that the city manager was sincere when he said he was willing to work with us to try to find a solution out there that we haven’t looked at. We will explore that possibility next week with our broker and the city manager.

We urge every resident who lives in the City of Soldotna to request, read and study the GFOA analysis.

Finally, we would like to thank all of you that sent emails or attended one or both of the City Council Meetings. We would also like to thank the Mayor, Linda Murphy and Pete Sprague who did do their due diligence, read the analysis and supported the resolution.

We would also like to thank the other council members who voted no, Keith Baxter, Regina Daniels, Megan Bos and Paul Whitney. Perhaps, after reflection and reading the analysis you might reconsider your position.

 

Pat and Myrna Cowan are 100 percent stockholders of Birch Ridge Golf Course Inc.

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Suss
3271
Points
Suss 04/30/14 - 08:45 am
4
0
Golfing Blues

Soldotna voted no on the purchase of the golf course for the very same reasons the Cowans have not been able to sell this property for eight years.

There will always be a question of costs vs benefits that was decided correctly with the NO vote.

Why is it the fault of the City of Soldotna to not buy a golf course with conditional leases that no other entity would consider purchasing?

Please hold firm on the No Vote. For a seller to suggest that just because you have the money, you would be wrong not to buy and lease this on their terms, is insulting and not the way business is done.

There are reasons this property has not sold. There are many more reasons for Soldotna to not be cowed by the Cowans into a purchase and lease that does not make sense.

The costs are too great for the value. The future costs and liabilities will increase while State revenue sharing will decrease.

Elmendorf (JBER) just closed one of their golf courses because Anchorage was not supporting enough for the economic viability for the course to stay open at a break even level. (Million plus debt).

The true financial numbers will show that just because Soldotna could buy the property, the prudent fiscal course is to NOT purchase the golf course.

leewaytooo
1603
Points
leewaytooo 04/30/14 - 11:46 am
4
0
get the 200 to pony up the

get the 200 to pony up the cost of buying part of a golf

course and let them deal with whomever controls the

access to the golf course.....

seems like a sweet heart deal for whomever controls

the buildings, equipment and parking .....

once you buy it (just the grass and sand) you are stuck..

again.........have those that actually play golf pay for it....

make it private..... and see how long it lasts financially.

10,000 rounds....... combine the three prices for weekly

green fees for 18 holes.... which is a "round" divide by 3

and the avg fee is $22.83 X 10,000 = $228.333.00 in

revenue minus expenses..... is not much of a profit....

of course the "3" is not equal..

just because the city has "excess" monies, does not

mean that it need be spent on a bad deal. too funny

that some think that because they have a business

the city as a whole should give it financial consideration...

and I wonder if they vote repuke......you know, the party of

"NO"............I say give it another 8 yrs of being listed and

see what happens... you might actually sell it at a fair price.

cheapersmokes
816
Points
cheapersmokes 05/03/14 - 09:18 am
1
0
Birch Ridge

While, I was originally marginally in favor of this purchase the more I see and learn my views have changed. It seems to me that if they want to sell it so bad, why don't they co sign for a bank loan for their special buddy, Nolan Rose. to purchase the property and business and let him make the loan payments. This way the land would still generate property and sales taxes for the community and borough. Could it be that all banks have also turned him down or does he just want to dump it onto all of our shoulders?

I also have no faith in any report that was prepared to show that this was way too good of a deal to pass up! Let him find a real buyer or continue to run it himself.

Observer
21
Points
Observer 05/07/14 - 04:49 pm
3
0
So you didn't get your way...

This editorial sound like sour grapes to me.

You started out by talking about the document that was distributed by the city manager regarding the city's fund balance needs. You state, "This document is 18 pages long and we are sure that some of the council members didn’t have time to read it prior to the meeting. (The two council members that voted in favor did read it.)" How can you be sure that only the members who voted against you didn't have time to read it? All the members of council were likely sent the document at the same time, and if one of them had time to read it, I think all of them would have had time to read it. You even go on at the end of your article here to imply that none of the 4 who voted against the resolution read the analysis. Did you poll the entire council? Do you KNOW who read it and who didn't?

Another statement you made: "It is a fact that those 4,100 folks elected the present council, but they did so because they thought the council would represent the greater Soldotna area." That is not why we elect council members. We elect them to act in the best interests of the residents within the city limits. By voting this ordinance, they did exactly that.

If there's anything here that's volatile, it's the golf season. It's a short season as it is, and weather always plays a factor as to how many good golfing days there will be. A loss of only $31,000 in revenue as you predict is a small price to pay for peace of mind. Probably not even enough to require a bump in my property tax mill rate.

Finally, why should you get to hand pick who the City leases the golf course to? Why not allow for a competitive bid process. After all, as you state, there are other people willing to do it. If you want the course to be owned by the city, then while I agree that leasing the business out is probably a good idea, let's do it competitively.

My personal opinion is that this was nothing more than the Cowans attempting to liquidate their investment from the golf course to fund their retirement at the expense of the taxpayers. They have failed to do so, and now it's just sour grapes. This course is obviously overpriced, otherwise it would have sold long ago. I'd be curious to know the value of any offers that have come forth in the 8 years it has been listed for sale. But of course, the Cowans aren't likely to be forthcoming with any of that information because any of those offers, which would really reflect the true value of the course, will be well below the amount they are trying to sell it to the city for, and those offers would have even included the buildings and entire business too.

Suss
3271
Points
Suss 05/07/14 - 06:43 pm
3
0
Too Much Money

When asking for someone, anyone, or an entity to purchase the item or property you wish to sell them, do not try telling them that in your opinion they have too much money, so they had better buy my stuff!

"He then used this document to insinuate that the council didn’t have sufficient funds in its reserves to make the purchase, when in fact the city has too much in its reserves, so much, that it could be argued that excessive reserves should be returned to its citizens (page 2 of the analysis)."

Stick to golf and let a sales professional negotiate the deal. There could be a reason for the inability to sell the golf course.

Soldotna is proud of their City Council and Manager for how they preformed on this small ball deal. Keep the finances sound and do not fall for the "Too Much Money" tactic.

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