Woodbury driving to keep Eagle Valley public

  • Article by: JOY POWELL , Star Tribune
  • Updated: April 27, 2012 - 6:21 PM

A task force urges a three-year financial plan, with benchmarks, to keep the Woodbury golf course a municipal amenity.

Each year the number of golfers dwindles, those still in the game play fewer rounds and Woodbury's only municipal golf course, Eagle Valley, struggles through tough economic times.

Every important financial-health indicator of the course has fallen since 2000. Operating income last year was $50,671 -- not even one-tenth of what it was in 2000, when it peaked at $566,514, according to a new task force report.

It has been a struggle for this municipal course and others, but the task force has found positive trends in Woodbury -- including operational changes at the course and a growing population -- that could help Eagle Valley remain a public amenity, said Paul Rebholz, a City Council member who heads the task force.

The task force is recommending a three-year plan, with a minimum operating income of $157,500 to be generated annually to cover capital replacement expenses, he said.

If those goals are not met, city leaders said they will discuss other changes, including selling or leasing the course.

The priority, however, is to keep Eagle Valley a community amenity, Rebholz said.

"If we didn't believe that we have a reasonable chance of improving and stabilizing the golf course in its current operations with some of the changes that have already been made this year, the task force likely would have been recommending something else," he said.

After studying options, the task force established the benchmarks and three-year plan.

"We need to make some operational changes. We need some things to happen that are going to be in our favor. Those may or may not play themselves out, and if they don't, then we will have to take another look at what needs to happen with the golf course, as will most other municipal golf courses in the country," he said.

"We're not alone in this particular regard. I think we're perhaps better positioned than many others. But we take very seriously the commitment that we have to running this enterprise so that it pays for itself."

The city anticipated consumer appetite when building the course in the 1990s. That was when the demand for golf was in its growth years.

The market overreacted, however, with a 33 percent increase in the national supply of golf courses (18-hole equivalents). But in 2001, the number of rounds played began falling. Nationally, for example, the total number of golfers fell nearly 13 percent between 2005 and 2010, according to the National Golf Foundation.

Various options available

If Eagle Valley does not turn around, options include contracting for course management, operating under a lease arrangement or selling the course.

City officials, meanwhile, are looking at a way to reduce interest on long-term debt of $3.4 million for the course. Referred to as a "call provision," it gives a borrower the right to redeem debt before the scheduled maturity date, in this case 2026.

February 2015 is the first date the city could use the provision. If it does, $446,000 in net interest expenses could be saved, City Administrator Clint Gridley told council members recently.

A covenant on the land, however, requires it to remain a park or golf course until 2026.

Bad timing

The course opened in July 1998 on 225 acres, with an 18-hole course, 60-station practice range, deli and a room for meetings and banquets.

It started well, but competition from a growing number of courses and a recession that cut leisure spending had golfers playing less in recent years.

With declining margins, the council agreed in 2008 to fund capital equipment from reserves at $92,000 to $95,000 annually from 2009 to 2011.

That amount is part of $1.36 million that the city contributed to the course from 2005 through last year. Other contributions were for course improvements, cash flow, debt service escrow reserve, and capital and operating expenses.

Despite that help, at the end of last year, Eagle Valley's fund balance was negative. The city gave the course an interest-free loan of $259,168 from the general fund.

Meantime, the course is cutting staff and streamlining operations.

In late 2014, Woodbury officials will decide whether to pay off the remaining $2.84 million debt principal and whether to stay in the golf business.

"At the end of the day, it will really be a testament to whether we can position ourselves, among the golfers in the east metro and elsewhere, as a place to come and play golf," Rebholz said.

"If there aren't enough golfers, the courses overall will continue to struggle."

Joy Powell • 651-925-5038

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