St. Paul has reached a tentative agreement with Prom Management Group of Oakdale to take over operations this year of two city-owned golf courses, officials said Tuesday.
The agreement, which needs approval by the St. Paul City Council, will be the focus of a public hearing Wednesday evening before the Parks and Recreation Commission. It calls for awarding Prom all management responsibilities through 2018 for the Phalen and Como golf courses, two of the city's four municipal links.
Those responsibilities would include food and beverage services, a key reason why parks officials believe privatizing the courses will increase revenues, wipe out operating losses and save St. Paul an estimated $400,000 annually while continuing to keep the courses under city ownership.
Food and beverages are "where they're really going to have the opportunity to grow," said Parks and Rec spokesman Brad Meyer.
St. Paul's two other city-owned courses, the Highland 18-hole and nine-hole tracks, will remain under city management. Tax-exempt bonds that financed a $4.5 million renovation in 2005 of the 18-hole course are still being repaid, making it hard to switch to private leasing and turn a profit.
The agreement would affect the futures of about 20 full-time unionized public employees who work at the Phalen and Como courses. Meyer said that most probably would be reassigned to work at the Highland courses or other open jobs in the department, possibly at reduced salaries.
The Parks Commission, which is an advisory panel, is expected to make a recommendation after Wednesday's hearing that would then go to the City Council as early as next week.
In recent years, as golf's popularity has waned, St. Paul residents have ranked the sport behind many other park and rec offerings. Use of the city-owned courses has declined. Operating losses for the four courses reached $1 million in 2013, and officials predicted a similar outcome for this year without private management.
In the past decade, golf losses have added up to a deficit of more than $7 million, a hit that city officials said was threatening St. Paul's top-rated credit rating.
Family-owned Prom Management Group has grown from a business that operated a popular ballroom on University Avenue into one of the largest caterers and concessionaires in professional golf. It operates food and beverage services at three local courses, Theodore Wirth and Columbia in Minneapolis as well as Tartan Park in Lake Elmo.
Under the tentative agreement, Prom would provide the city with monthly financial statements and an annual performance report. In addition to handling food and beverages, it would sell golf merchandise, schedule tee times, run leagues and handle private events.
The city would have final say on any proposed changes to course rates and greens fees. It also would continue to operate Como's ski program and Phalen's cross-country skiing during the winter months.
Prom would be responsible for financial losses and would share 4 percent of gross revenues with the city, with an annual minimum guarantee of $65,000 from both courses regardless of financial performance.