Taxpayers start subsidizing golf courses

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Sunday, January 22, 2012
— For the first time since the mid-1980s, Janesville taxpayers are subsidizing the city's two golf courses.

In 2011, the subsidy was about $115,000. That doesn't include $200,000 that the city borrowed for capital expenses.

In 2012, taxpayers will contribute about $1.60 for every golfer who tees off at Riverside or Blackhawk, the city's two public courses.

Jay Winzenz, assistant city manager, said the need for a subsidy stems from a lack of golfers caused by the economic downturn and increased competition from a growing number of courses.

"We've been very fortunate in the last 25 plus years that the citizens of Janesville have been able to reap the benefits of having the golf courses without having to subsidize them at all," Winzenz said. "We happen to be in a position where the economy has changed, and the golf market has changed."

The city for many years had leased its courses to private operators. Those management companies did well, paying the city rent, keeping the revenue and assuming the risk. The city used the rent to pay for capital projects.

About a decade ago, the Janesville area—along with the rest of the country—saw more courses being built. Newer local courses include Prairie Woods and Glen Erin.

When Glen Erin opened in June 2003, rounds of golf played on city courses dropped by 10,000.

"The pie was only so big, and you divide that pie into more pieces, and those already in the market have a piece of theirs taken away," Winzenz said. "That's what happened to us."

In 2009, the city's former management company, Crown Golf Properties, lost almost $190,000 on the Janesville courses. The company declined to renew its rental contract in 2010.

The city now has another management company, Chicago-based KemperSports, but the rules have changed and the roles have flipped: The city keeps the revenue and pays the company a monthly fee to manage its courses.

The city hoped the courses would break even, but the subsidy for 2011 will be between $100,000 and $115,000, Winzenz said.

The city also borrowed $200,000—$100,000 in 2010 and $100,000 in 2011—to buy furnishings, fixtures and equipment from Crown. The city has about $80,000 of that left.

The subsidy budgeted for 2012 is $85,000. That translates to a subsidy of about $1.60 for each round of golf played, assuming the rounds played in 2011—about 53,500—hold steady in 2012.

Winzenz hopes the subsidy goes down as Riverside attracts more people, but that can happen only if the city supports and improves the course's quality, Winzenz said.

The city surveyed golfers at the start of the 2011 season and again at the end. Staff noted "dramatic" improvement in satisfaction and in golfers' impressions of value versus cost, Winzenz said. Fees are similar to those at other area golf courses.

Golfers, for instance, liked the golf ranger who quickened the pace of play. The city spent $5,000 to add sand to bunkers, and golfers noted that, as well.

Kemper has also partnered with the Elks Club to provide meals and beverages and lure large groups back to Riverside from other golf courses, Winzenz said. Riverside does not have the catering capacity to handle large groups.

Kemper also is working on junior development, Winzenz said.

"In terms of financial performance, I don't think that 2011 was what we had hoped for," Winzenz said. "In terms of management of the course and trying to win that value proposition, I think their performance was very good."

Winzenz said golfers told him Riverside was in the best shape ever.

"We can't expect this to happen overnight," Winzenz said. "We have to give Kemper time and start winning back that business.

"When that spreads by word of mouth, we're hopeful we'll see our numbers and rounds increase, and hopefully that subsidy will go down," Winzenz said.

What other options does the city have?

The city could close Blackhawk, but Winzenz said losing the income while mowing the course to city standards would cost more than keeping the course open.

The city could allow the courses to revert to prairie, or it could sell them. Blackhawk, though, is in a floodplain and might be of little use to developers, Winzenz said.

The current city council has not given direction to city staff to cut recreation, Winzenz said.

"Part of what defines a community are the amenities that the community offers to its residents," Winzenz said. "Janesville is very fortunate to have Riverside Golf Course, which truly is an excellent golf course. The more public courses people play, the more they appreciate what we have right here in our backyard at Riverside Golf Course."

Riverside opened for play in 1924 and has been recognized many times as one of the state's finest municipal courses. It annually hosts the Ray Fischer State Medal Play Championship, which is one of the most prestigious amateur events in the Midwest.

While some residents insist the courses should be break-even propositions, others point to the subsidies paid to the city's other recreational amenities, Winzenz said.

Those subsidies range from about $1 to $3 every time someone enters the ice arena or senior center, respectively, to about $22 per capita to maintain parks.

"So, why do we have to treat golf differently than we treat those other programs?" Winzenz said.

Recent councils have opted to spend money maintaining current facilities rather than investing in new ones.

Winzenz said he hopes the courses eventually net a profit.

"I don't think that's realistic in the short term and not sure in the long term," Winzenz said.

Expecting great things to happen at the golf course is unrealistic as the city struggles through the recession, he said. Rather, the city should give Kemper time to develop programming and services and for the economy to improve.

The community eventually will have to decide whether the golf courses are amenities that it wants to continue to offer to residents and visitors, Winzenz said.

The market could change, as well, because private courses across the country continue to struggle.

Glen Erin, for example, as been for sale since last year. The course opened in 2003 on land leased from Rock County.

It's listed on one website as being for sale for $2.25 million by a "motivated owner" who bought it in 2005.

Last updated: 7:16 pm Thursday, December 13, 2012

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