INTERESTING ARTICLE -- SHOULD GOV'T GET OUT OF THE GOLF BUSINESS ?
Where I live -- I'd say no but other locations may be in a far different position.
Comments ?
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Government's role in owning golf courses a hot topic as industry struggle
They were Jackson County’s first 18-hole public golf courses and remained the only ones for decades.
They are the places where generations of Jackson residents have learned the game that has remained a lifelong recreation.
They are the sites of many of the most memorable moments in Jackson golf history.
But the City of Jackson and Jackson County’s merger of oversight of their Sharp Park and Cascades golf courses this year in the midst of industry-wide struggles has raised again the question:
Should government be in the golf business?
Officials managing the county-owned Cascades and city-owned Sharp Park courses say the tradition of their facilities and their importance to the growth of the game mean they should continue to operate under municipal control.
Those opposed to courses operated by governmental units generally fall into two camps. Golf course owners contend that municipal courses provide unfair and unnecessary competition that adversely affects the industry. Government watchdogs say they divert tax dollars to the benefit of a small portion of the population.
“It’s something that needs to be debated: What do you want your government to do?” said Rich Karasek, owner of Lakeland Hills Golf Course near Michigan Center for nine years. “There’s no reason for the government to be involved in golf. Stick to what you’re supposed to be doing.”
The Mackinac Center for Public Policy, a free-market research institute in Midland, calls it the Yellow Pages Test, and it applies to more than golf: If you can find it in the Yellow Pages, it might not be a necessary function of government.
“When governments subsidize or run businesses that provide below-cost governmental competition to American businesses, they are taxing us in order to undermine our own private businesses,” said Michael D. LaFaive, the Mackinac Center’s director of fiscal policy.
‘We were here first’
The issue might be more cloudy in Jackson County than in some other locales where municipal golf courses have drained taxpayer money at the same time they have hurt privately owned courses.
The golf courses at Cascades and Sharp Park have in most years produced profits for their respective parks systems. Even with the downturn in golf during the past decade, figures show the courses to be at least revenue-neutral.
That, coupled with the fact that both courses were built on donated land, makes Jackson’s situation “less troubling,” LaFaive said.
Sharp Park Golf Course opened in 1923, when golf was gaining a foothold in the U.S., and Cascades opened in 1932. They were among the municipal courses that were built throughout the country as a way to expose the masses to a game that was largely the province of the well-to-do at private country clubs.
“This was the foundation, the starting point for Jackson golf,” said Eric Terrian, who began as Sharp Park’s golf pro before becoming the park’s superintendent and this summer adding the duties of director of the golf operation at Cascades.
Terrian said there is a difference between government courses opened decades ago, such as the ones here, and those built more recently.
“We were here first. I think that’s part of it,” Terrian said. “If the government at this point in time (built a course), I could understand people having a problem with that.”
Karasek said circumstances, not history, should dictate the necessity of government-owned courses.
“They were here first,” Karasek acknowledged. “But that doesn’t mean they have kept their end of the bargain as responsible citizens in the industry. Industries change, and needs change. It’s not unreasonable to say they should re-evaluate their position.”
‘Stealing customers’ Government-owned courses here and elsewhere have long viewed themselves as a means to provide recreation to residents at a low cost and introduce them to the game.
“We take pride in the growth of the game,” said Brandon Ransom, director of county and city parks under the reorganization this summer. “That’s a real niche for us.”
Terrian said it is a regular occurrence for him to be thanked by one of the senior-citizen golfers Sharp Park caters to with its low prices.
“They’ll say, ‘If I wasn’t doing this, I would be sitting home,’ ” Terrian said. “We try to make it affordable.”
That is where they run afoul of the privately owned courses. Those course owners maintain they are fighting on an unbalanced playing field when it comes to pricing.
“When they charge minimal fees, they’re stealing customers,” said Tony Spink, manager and in the ownership group of Calderone Golf Club, which opened in 2001. “It doesn’t make sense. It’s hard to convince people of that. They like the lower rates. But a businessman might understand if he had a gas station and was competing against the government.”
LaFaive offers another way of looking at the argument.
“When America wanted to help low-income people obtain more and better food,” he said, “we didn’t start government grocery stores; we developed food stamps.”
Steve Shotwell, chairman of the Jackson County Board of Commissioners and owner of Miller Shoe Parlor, said the government provides competition to his store.
“They have five or six shoe stores — Medicare, the state of Michigan provides shoes to youth,” Shotwell said. “I’m not afraid of competition. I welcome more of it.”
A primary advantage government courses enjoy is they do not pay property taxes.
“That changes everything,” said Karasek, who said his course pays some $30,000 a year in property taxes.
“Property taxes and capital investment — those two things represent the difference between survival and failure,” said Bill Schott, who pays $60,000 a year in property taxes on the 36-hole Hickory Hills Golf Course he has owned since 1982.
Private course owners contend that Sharp Park and Cascades benefit from the lack of a necessity to make a return on investment and the ability to handle debt with public money. The county parks received a $600,000 loan from the county’s delinquent tax revolving loan fund in 1999 for capital improvements to the course. The county allowed a delay in payments on that loan until 2005. It is being repaid through golf course revenue, Ransom said.
A renovation to Sharp Park Golf Course in 2000 cost $600,000. The city sold bonds that are being repaid through the city’s public improvement fund.
Such loans are virtually impossible for privately owned golf courses to obtain these days, Schott said, because of the industry-wide lack of profits.
“A golf course is considered a toxic asset,” he said.‘A stand-alone operation’
On the issue of using public money to sustain the golf courses, the two sides agree.
“If a single penny of taxpayer money goes to subsidize a golf course, it’s one penny too many,” LaFaive said. “This is the least necessary of least necessary government services.”
“They don’t subsidize it, and they shouldn’t,” Ransom agreed. “An activity like golf should be a stand-alone operation.”
That is what the county did with the Cascades course (including the short course and learning center) beginning in 2006. The course that at its peak generated more than $200,000 in annual profits for the county parks became a separate entity.
“We can’t post a red number,” Ransom said. “It’s not going to happen.”
The city handles Sharp Park in a different fashion that makes it more difficult to track exactly how well the golf operation fares financially.
The revenue from the golf course is added to the profit from the park’s miniature golf course and the learning center along with interest from the Sharp Park Endowment Fund, and that total goes toward expenses to operate the golf course and the rest of Sharp Park.
(The miniature golf course has been a financial bonanza with annual profits of $75,000 to $85,000 the past five years.)
Any shortfall is covered by a transfer from the city’s general fund. That amount has ranged from $67,000 to $142,000 the past five years, a figure that city officials say would be considerably higher without the golf operation. No money was needed from the general fund for many years before that.
While the cost of maintaining just Sharp Park cannot be determined, by way of comparison, the budget for maintaining Sparks County Park — separate from the Cascades Golf Course — is about $100,000 annually.
“People have gotten Sharp Park basically for free, based on golf,” Terrian said. “It’s been a plus for the community.”
LaFaive sounds a note of skepticism about government accounting practices.
“The ways that counties can make their courses appear cost-effective when they are not are endless,” he said, referring to golf course costs that can be charged to different departments.
LaFaive is among those calling for municipalities to sell or privatize/lease their golf courses.
Jackson’s city charter would require voters’ approval to sell any Sharp Park property. Property in Sparks County Park could be sold or leased by a vote of the County Commission — the head of which is a staunch supporter of the municipal courses.
“They’re a draw to the community, and they’re important,” Shotwell said. “They are prides and jewels of Jackson County.”