City golf course budget numbers complicated by needed $25M in capital projects

The city’s five golf courses were profitable last fiscal year — at least on paper — as city officials continue to look at plans that could reduce the number of courses because of declining usage.

The city estimates it made $221,369 on operating revenue at the Randolph (two courses), Silverbell, El Rio and Fred Enke golf courses in the 2017 fiscal year, primarily due to its decision to hand off day-to-day operations to a third party, OB Sports.

The courses lost money on operations the previous three fiscal years, including nearly $400,000 in fiscal year 2015, city reports show.

When you include what the city refers to as “depreciation and interest payments,” the news for last year, however, is not as rosy. Under that calculation, the city lost $522,842 in golf operations last year.

Those figures do not reflect the estimated $25 million in capital improvements city officials believe the courses will need in the next 15 years. Nor does it include the $1.6 million the city’s golf operations still owe to the general fund.

Councilwoman Regina Romero said while the latest results were an improvement she cautioned city staff on using the $221,369 figure. The revenue loss of more than $500,000 last year was better then previous years, where losses were $700,000 to $1 million, she said.

“Depreciation is an accounting practice; depreciation must be included in your accounting numbers to be fair and transparent and clear to the public. We are lying to the public if we say that revenues are exceeding expenses if we don’t include capital needs and depreciation,” Romero said.

“Pete Saxton, the city’s finance director, said forecasts for fiscal year 2018 have the city courses bringing in more revenue than 2017 — although it doesn’t take into account depreciation. “We are expecting revenues to increase and expenditures to increase,” Saxton said last week.

City Manager Mike Ortega said the Tucson City Council would dig deeper into the future of golf at a meeting next month. “The number of rounds is down slightly, but the revenue is up,” Ortega said. “What they are really doing is tweaking the model to maximize the revenue.”

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Mayor Jonathan Rothschild said OB Sports has turned around the city’s golf game.

“Since we brought in our private vendor, we’ve reversed the operations, which helps a lot,” Rothschild said.

However, Rothschild said the council will debate how much of the $25 million in capital needs is worthwhile.

Earlier this year, city officials took public input on other possible uses for Silverbell, El Rio and Fred Enke golf courses as well as the two 18-hole Randolph golf courses next to Reid Park.

The ideas range from redevelopment, including business and residential, to creating other recreational uses for the courses, with the closure of one or more of the courses possible.

Romero said the issue of golf is complicated with the fact that millions are needed in capital improvements. “I don’t think it is as simple as we’d all like to make it sound,” she said.

Councilman Steve Kozachik agreed, but says he wants to hear from the community, city commissions as well as OB Sports on possible solutions.

“We are not going to be able to simply ignore those needs away, he said. “We are not unique in having an asset that needs to be maintained, so how are they doing it in other places short of tapping the general fund.”