Reading the city consultant's business plan for the golf course is like reading a prospectus of a company with a bad idea trying to make money in a declining industry.
Dear Sarasota City Commissioners:
Let’s try this one more time …
If you are truly representing the taxpayers of the city and acting as responsible stewards of their tax dollars, you will not hesitate or delay in withdrawing, shutting down, stopping, rejecting and killing the proposal to renovate the Bobby Jones Golf Club for $16 million.
Make that $20 million — once you include the cost of interest on the borrowing.
It would be a tragedy and travesty of immense proportions to do otherwise.
Even though most people intuitively know without doing much research that spending $20 million on Bobby Jones would be fiscally irresponsible, we urge you to read the “Preliminary Business Plan for the Bobby Jones Golf Complex in Sarasota, Fl.” authored by NGF Consulting.
Any half intelligent investor would not sink a dime into this venture.
Seriously, read NGF’s preliminary business plan (yourobserver.com/businessplan), and look at it as if you are considering investing your own money into a company undertaking an initial public offering.
If you don’t want to read all 76 pages of the plan, we’ll give you some of the key passages — along with the above table showing the proforma projections. In fact, that table is all you really need.
Consider from the plan:
- “… [E]ven with this projected increase in performance, the city may find that the new revenues will not be sufficient to cover all on-site operating expenses and all of the capital cost reduction required to complete the project (debt service).”
- “In addition, the review shows there will be considerable strain on the golf fund economics during the period when the facility is undergoing its renovation, and thus the city’s need to over-capitalize the project so as to ensure the shortfalls during construction are covered.
“While the shortfall during construction will be significant, it can be minimized through the adoption of an ‘all at once’ approach …
“By shutting BJGC completely in April 2020, completing all renovations together over an 18-month period, and then re-opening all elements together in October 2021 (begin FY2022), the city can save just under $1.1 million in accumulated facility losses.”
- “As such, the city has a reasonable expectation that while the market will provide support for significant improvement in activity and revenue at BJGC, this support is not likely to cover all capital costs associated with completing the enhancement, especially in the early years during and just after the renovation.
“In addition, the city expects that the increased golf revenue expected in future years at the renovated BJGC will still be subject to the seasonal nature of this market and the limited window within which to sell premium-fee golf.”
- “Still, even with this projected increase in performance, the city may find that the new revenues will not be sufficient to cover all on-site operating expenses and all of the capital cost reduction required to complete the project (debt service), assuming an estimated $1.598 million annual debt service.
“Under this scenario, the net income available to the city of Sarasota for replenishment of the golf fund balance will remain negative throughout this review period.
“This is primarily due to the large debt service estimate and the rareness of public golf courses producing much higher than $1 million in net operating income, even after a full-scale renovation as is proposed in Sarasota.”
Serving taxpayers as an elected commissioner often requires tough choices. This is not one of them.
When you consider the city’s fiscal precariousness to begin with (huge unfunded pension liabilities, cost overruns on pumping stations, etc.), its need for revenues (to fund the Bay and a performing arts hall) and its especially desperate need for affordable workforce housing, throwing $20 million of good taxpayer money into a venture that AT BEST will generate ONLY $4.5 million a year in revenues, would be a colossal crime.
Do what’s best: Sell the property and convert it to housing.