Tuesday, May 27, 2003 | 11:07 a.m.
Boulder City's new municipal golf course cost about $480,000 more to operate than it brought in during its first four months, leading some of the course's top supporters to say that original projections showing the Boulder Creek Golf Club would turn a profit by the end of June were probably too optimistic.
However, course supporters Mayor Bob Ferraro and City Councilman Bryan Nix said they still think Boulder Creek will eventually turn a profit, although it may take a little longer than expected. Nix said it is too early to say whether the city golf course will have to borrow more money to subsidize operations, although City Finance Director Bob Kenney said that would be an option.
Meanwhile longtime course critic and mayoral candidate Bill Smith said the figures show he was right all along when he said the course would lose money.
But Smith said the information made available Thursday still doesn't answer all of his questions about the course. He said he still doesn't know if the city has enough money to finish construction or whether the course paid for water used during construction and the grow-in period, but he suspects the money is gone and the city footed the water bill.
Kenney says there is enough money to finish what little construction remains, and the course has paid for all of the water used there. The report does not say how much was paid for water.
A maintenance building still needs to be built, and grass on the last nine holes is growing in.
Smith has made the course a top issue in his campaign against incumbent Ferraro, a course supporter. Smith says the city should not have opened the course and eventually it will become a financial drag if it isn't already.
But Ferraro says that even though the course isn't making a profit now, it will eventually. In addition, the new course will draw more tourists to Boulder City, which will help other businesses, Ferraro says.
With his message of pending financial doom, Smith took the top spot in the city's April 8 primary, beating Ferraro by 134 votes. The two candidates face off in the June 3 general election, for which early voting is already under way.
Expenditures at the course from the beginning of January, when it opened, through April exceeded revenues by $483,663, according to a report scheduled to be presented to the City Council on Tuesday. The report was created by the city using figures provided by Triad Golf Management with the help of independent auditor Richard Bowler, Kenney said. Triad Golf Management is the company hired to run the course.
According to the report, costs exceeded revenues by $177,141 in January; $115,235 in February; $87,652 in March; and $103,635 in April.
An accompanying letter from course General Manager Scott Jones said the April figures were due to abnormally high winds, which reduced the number of rounds played, and golfing discount offers made during that month. Jones did not return calls Thursday seeking comment.
Financial projections presented last July forecast course revenues exceeding expenses by $95,000 for the months ending June 30. To fulfill this projection, Boulder Creek would have to show a profit in May and June, which Kenney said appears unlikely.
"It would be a stretch in my mind, but I don't know the golf business," Kenney said.
The city's golf fund originally held the $21.9 million that the city borrowed to build the course. There's enough money left in the fund to cover the remaining course costs plus $1 million to make payments on the debt until June 2004 and an additional $200,000 to cover operating deficits, Kenney said.
City Councilman Bryan Nix, a strong supporter of the course, said he did not expect the course to make a profit right away.
"My guess is that we'll continue to have to carry the course until it's profitable," Nix said.
He said it's too early to say whether the city would need to borrow more money to keep the course afloat.
"This shouldn't be something we should freak out about. It will absolutely make a profit," Nix said. "If we're not exactly where we want to be, we need to find a way to get there. The golf course is there. We need to find a way to make it a success."
Ferraro said he expects the course will slowly improve its financial condition until it is "very, very profitable" in its second year.
"I had hoped we might see a little better figures now," Ferraro said. "But I think this is a natural occurrence for starting a business."
Smith has long argued the city shouldn't have gotten into the golf course business, a venture he says should be left to private companies.
Smith said that while the operating figures are along the lines of what he expected, the course is doing even worse if one includes debt payments in the financial scenario.
"If you add the debt service to this, you're in a hole big time," Smith said.
Money has been set aside from the the loans taken to build the course to cover all but $300,000 of the debt payments until June 2004, Kenney said.
After that, debt payments will be about $2.25 million annually for the next four years, and then almost $1.5 million annually for the 15 years after that, Kenney said.
Smith predicted the course will lose $2 million next year.
"We've got a business to run. It's important to know if we need to find another couple million dollars," Smith said.
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