Golf Course Options Analysis

Prepared by Rob Crawley

For presentation at city council meeting on 5/19/2015 

The golf course has been a subject of controversy in the City of Cedar Hills for over 10 years.  It is appropriate and good for the city to have discussions over the golf course as $13,650,000 has been spent on the golf course since its inception.  If we only count ½ of the community recreation center, the cost is $12,150,000 through June 2014.  For a city of our size with approximately 2,600 residences, the total cost from inception to June 2014 is nearly $5,000 per residence.  This is a very significant cost and should be analyzed on a regular basis.

Last year we had a decisions survey.  In that survey we found that 11% of residents surveyed said that their first order of business would be that they would close the golf course down if they were mayor for a day.  The only answer that got a larger response than this was regarding the commercial development South of Wal-Mart as that was a hot discussion item at the time of the survey.  We owe it to the residents to make sure that we analyze all options regarding the golf course going forward.

I don’t have a lot of answers at this point about what the best solutions are, but I would propose a short list of options that we currently have as follows:

1)      Maintain the status quo

2)      Convert the golf course to parks/cemetery/soccer fields/dog park, etc.

3)      Develop and sell the land

4)      Let the golf course go back to native

5)      Sell the golf course to a group that wants to operate the golf course

6)      A Combination of the above

I don’t have my mind made up regarding any of these ideas being superior to any of the other ideas.  However, all of these ideas come with challenges to overcome and costs to the city.  The overall goal in my mind is to find the solution that serves the residents best for the investment.  I would suggest the business formula, return on investment, adjusted to relate more to the city.  The formula would be 10-year project cost divided by average number of residents that use the service at least once a month or 12 times per year.  For the golf course, if I take the $11,800,000 (first 10 year expenditures less $1.5M of the cost of the Community Recreation Center) and divide that by 50 regular users of the golf course, I get 1 happy resident for every $236,000 spent.  I was told by several in the city that we have about 30 residents that golf regularly throughout the golf season.  I bumped it to 50 in the above analysis to make sure that I am not understating the number of regular golfers.

Let’s face it, we are in the golf business.  We need to think like business people regarding the golf course.  In business there are opportunity costs and sunk costs.  In business, you don’t make decisions looking backwords, but rather looking forwards.  Opportunity costs relate to what you could do other than your current plans.  You consider, what benefits you would forego by choosing one choice over another.  What residents would we neglect to serve if we keep the status quo?  The other cost that must be considered is sunk costs.  We have spent upwords of $7 Million developing the golf course that we cannot get back.  This should not be part of the equation on our future decisions.  This means that the debt that we are servicing should not be part of the equation going forward as that debt will need to be paid regardless of what choices we make with the golf course.  The golf course will not cost as much to maintain over the next 10 years as it cost to build originally.  I would estimate that over the next 10 years, the additional cash requirements would be between $2,000,000 and $4,000,000.  If we use $3,000,000 as the cost and divide that by 50 regular users, we would get $150,000 per regular user, which is less than the calculation of $236,000 for the first 10 years.

There are other considerations rather than just cost and utility considerations such as aesthetics and keeping city commitments.  About 29% of the homes in our city were built in conjunction with the development of the golf course.  It is very important that the city consider the desires of those nearby the golf course that would be affected by any changes that could be made.

Following are some additional considerations that need to be part of this discussion:

• 1)      The first 10 holes are in a flood plain and would therefore would have to be planned carefully regarding what can be done with the acreage in the flood plain.
• 2)      We are currently paying an outside group (Wilkinson) $3,351 yearly per acre to maintain our parks.  This includes maintaining sprinklers, tree trimming, pest control, mowing and fertilizing.  Any decision that requires maintaining green space will need a similar rate allocated to the cost.
• 3)      We have 65 acres of golf course irrigated and manicured and 115 acres overall.  This means that a little under ½ of the golf course land has native foliage.
• 4)      We are considering spending $300,000 on a golf maintenance shed soon.  If the city decided on an option other than the status quo, this could be $300,000 of savings.
• 5)      The city has been planning on buying property East of Deerfield Elementary for approximately $1,800,000 plus attorney fees as there is currently a dispute regarding this purchase.  This money could be saved if the flood plain areas were used for soccer fields and baseball fields.
• 6)      The original HOA agreement with Cedar Hills allows for 750 residences in the area covered by the golf course and surrounding developments.  Currently 728 residences have been built leaving on 22 remaining per the agreement.  This agreement needs to be analyzed by our attorney.
• 7)      If an alternative plan to maintaining the status quo uses more or less irrigation water than our current plan, this could affect the need to spend $2,000,000 on a metering system.
• 8)      There are many other considerations that will come to light as we discuss this further.

My goal is to present an alternative to the status quo for the golf course over the next few council meetings with the help of all willing parties.  I would suggest that we would present the best alternative to the status quo that we can come up with and if it looks like it is worthy of additional consideration, we move forward.  If the best plan is clearly inferior to maintaining the status quo, then we communicate that to the residents, help resolve concerns regarding the golf course and communicate that the best option for the city is to stay the course with the golf course.

Although this will cause some short-term conflict and discussion, we need to keep the discussion civil, intellectually honest and unbiased by past circumstances.  I hope that through this exercise we will have more oneness as a city and more of a spirit of cooperation going forward with less conflict.