Management agreement with CourseCo approved for city golf courses
A new golf company will take over management of Great Falls’ two municipal courses effective Feb. 1.
The City Commission voted unanimously during their Dec. 18 meeting to approve a three-year management agreement with CourseCo, a California company.
Mike Sharp, CourseCo’s president and CEO, and Tom Bugbee, the chief operating officer, joined commissioners during their work session to discuss their plans and answer questions.
CourseCo plans to keep operations largely the same for the first year to analyze the data and then make needed changes. They also plan a “meet CourseCo” kind of event and job fair for current golf employees. CourseCo typically retains about 95 percent of existing staff when they take over management, Sharp and Bugbee said.
“We’re not expecting to do anything radical in the first year,” Bugbee said.
Members of the local golf leagues attended the meeting and spoke with the CourseCo executives afterward. The CourseCo team said they wanted to work with those groups since they’re the most active users and that they also anticipated working with the city’s Golf Advisory Board.
Sharp and Bugbee said Tuesday night that they believe they can keep both courses open for the city and start generating better revenues for the golf fund.
That’s welcome news to the city since the golf fund owes the general fund roughly $1 million and City Manager Greg Doyon has recommended closing Anaconda Hills if the golf fund doesn’t stabilize.
The golf fund has been operating at a deficit for the 14 years and has required taxpayer subsidies to operated. Golf is an enterprise fund, meaning it should be self-supporting, as are the aquatics and parking funds.
“The debt and ongoing taxpayer subsidies reduces the ability of the city to appropriate funding to other areas of the city’s annual budget including fire, police, and other Parks and Recreation programs,” according to the staff report.
In 1998 and 1999, the city approved revenue bonds to enhance the golf courses, but during the term of the bonds, covenants were only met twice, because of poor financial performance.
The debt service was retired in 2016, but the golf fund has not stabilized and continues to accrue operating debt, according to the staff report.
Writing off the debt would reduce the general fund’s undesignated balance to 18 percent. City policy dictates that the fund balance be 17 to 20 percent, or about two months of operating expenses to cover payroll in the event of unanticipated major expenses.
But city officials are hoping CourseCo can make improvements to the golf courses and reduce the debt.
CourseCo’s plans include renovating and developing a tap house concept at Eagle Falls Golf Club to attract more activity and draw more community members who may not be interested in golfing. They’ll also host various community events to again make the courses more appealing to community members who don’t golf and develop additional revenue streams to avoid reliance solely on golf fees.
“We see a lot of potential,” Bugbee said for programming based on the courses themselves and the views on the properties.
According to the agreement, the city will pay CourseCo an annual $80,000 management fee, something officials originally didn’t want to do, but even with the fee, the CourseCo proposal still shows the city making a more than $100,000 profit the first year. The city would also pay a $24,000 accounting fee.
The Park and Rec department would also save on internal service charges to the tune of $59,870.
Sharp said CourseCo was conservative in its first year revenue projections.
“We’re pretty comfortable we can achieve those numbers,” Sharp said.
He said their company prefers long-term partnerships and they don’t have other contracts shorter than five years, but Great Falls staffers were tough negotiators, he said, and they settled on a three-year term to see how it goes before committing to a longer term contract.
“We’re trying to build something to be here a long, long time,” Bugbee said.
Sharp said CourseCo has an excellent reputation in the industry and they want to maintain that as they add Great Falls courses to their footprint, which is largely courses in the western U.S. He said his company wouldn’t take the job if they didn’t think they were up to the task.
“This is very important to us,” Sharp said. “We have to get this right and I want to turn this into a success story.”
The city has already been working on an inventory of its golf equipment and it will retain that equipment under the agreement. Once CourseCo takes over Feb. 1, they’ll conduct an extensive inventory.
CourseCo has also worked with the city finance department and Melissa Kinzler, the finance director, told commissioners Tuesday that she was comfortable with how the company would report their financials so that the city would be able to quickly and accurately spot any issues.