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Fri, April 19

In the hole: Antelope Hills grapples with budget deficits

PRESCOTT - With "strong headwinds" detracting from its operations, the Antelope Hills Golf Course has struggled in recent years to generate enough revenue to cover basic expenses, say city officials.

In fact, ever since the city chose to build the new south course in the early 1990s and pay for it with a $5.1 million bond issue (loan), the municipal course has had a difficult time paying both the loan installments and its expenses.

In recent years, the loan burden has contributed to the golf course's need for inter-fund loans from the city's general fund to help cover costs.

"The golf course has not been able to overcome its negatives over the last few years," Budget and Finance Director Mark Woodfill told the City Council earlier this month. "It has gone further into the hole. The (general fund) debt comes from the negative operations out there."

The city's Comprehensive Annual Financial Report for 2010 - a 148-page document that appears on the city's website - lists the golf course's "inter-fund payable" (general fund debt) for the past fiscal year at a total of $2,962,519.

That was up from the $2,270,779 inter-fund golf course debt for the 2009 fiscal year, which, likewise, was up from the $1,843,644 in the 2008 fiscal year.

Antelope Hills' debt has regularly put the golf course in the midst of public controversy. Just two weeks ago, the city faced criticism when it agreed to purchase new electric golf carts about six months ahead of schedule. And earlier this year, a proposal to spend about $150,000 on repairs to the old golf course clubhouse also generated a flurry of complaints.

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Antelope Hills Manager Mack McCarley notes that the general-fund debt stems from a variety of factors. For instance, he said, the ailing economy has affected golf play in Prescott, as it has in other communities in the state.

"We've had some strong headwinds with the economy," McCarley said.

While Antelope Hills was attracting as many as 90,000 rounds per year in the 1990s, it is now down by some 35,000 rounds.

"We're tracking right now to do about 65,000 rounds by the end of the (fiscal) year," McCarley said. "That is about 1,000 rounds higher than last year. We're holding our own."

And he points out that other municipal golf courses, such as those in Phoenix, have also experienced decreasing rounds.

Indeed, information from Phoenix Golf Resource Development Coordinator Laura Soldinger shows that rounds at five municipal golf courses - Aguila, Cave Creek, Encanto, Maryvale, and Palo Verde - have dropped by about 9,700 rounds over the past year, decreasing from a total of 255,847 to 246,147. Since the 2005/2006 fiscal year, the rounds on those five courses were down by about 20,500.

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Along with the economy, McCarley and other city officials also attribute the drop at Antelope Hills to the growth of golf opportunities in the private sector.

Acting City Manager Laurie Hadley pointed out that Antelope Hills was virtually the only game in town back in the 1990s, when the south course was built. But since then, she noted, private courses such as Prescott Lakes and Hassayampa have opened.

"When the rounds were that high (at 90,000), we had very little competition," Hadley said.

In addition, she maintains that the 90,000-round figure was inflated by a large number of complimentary rounds that Antelope Hills offered at the time.

While the amount of the golf course's deficit has fluctuated over the years, the city's annual budget documents show that it has regularly experienced a gap between the amount of revenues it generates and the amount of expenditures.

But officials say that situation should be righting itself in coming years, because the amount of bonded debt is decreasing.

Leaving out the debt for the golf carts, which Woodfill said the city regularly purchases on a "capital lease" arrangement that involves a guaranteed buy-back of the old carts, the golf course currently faces total bonded debt of $73,235.

That includes loans that the course earlier made for things such as mowing equipment and beverage and ball-picker carts.

The total is down considerably from the $544,173 total in the past fiscal year, and the $796,229 and $869,595 in 2009 and 2008, respectively.

City officials say Antelope Hills shed one of its major financial obligations in 2010, when it made the final payment on the $5.1 million bond issue for the 1990 construction of the new south course.

With that additional money available to help pay for expenses, the goal is that the golf course should begin to pay off the general-fund debt. Woodfill said Friday that it is still too early in the budgeting process for the next fiscal year to say whether that will happen in the 2011/2012 fiscal year.

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Because the city has long operated Antelope Hills as an "enterprise fund," it expects the golf course fund to be self-sufficient, with no help from other city sources.

But officials pointed out that the city routinely offers other recreational opportunities without a similar requirement. Ball fields and hiking trails get regular subsidization from the city, they said.

"The whole thing has to be looked at as an asset to the community," McCarley said of Antelope Hills. "It is a worthwhile recreation, and a lot of people use the golf course."

Mayor Marlin Kuykendall has expressed similar views. "Each council has to struggle with - is there an economic benefit to having a golf course?" he said prior to the council's March 8 decision to buy the new carts. "It's pretty easy for me to understand the golf course is a benefit to the community."

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