Duluth’s municipal golf courses have been greening up nicely for another season of play, but their finances have not been doing likewise.
This week, members of the Duluth City Council learned the city’s golf fund is now $1.47 million in the hole, and that hole keeps getting deeper.
Given the daunting situation, the city is looking at a possible change in the management structure of its two courses and also is exploring the possibility of selling off its most costly operation: the Lester Park Golf Course.
Turning the 200-plus-acre course into a new residential development is one of the options being considered, especially in light of the city’s growing need for workforce housing.
That idea doesn’t sit well with golfer John Marciniak, who called the notion of turning the course into a housing development “ridiculous.”
“If the city thinks it’s going to close this golf course down, it’s going to have a revolution on its hands,” he warned, describing the deep sense of affection people feel for the 80-year-old operation on the eastern edge of Duluth.
But the numbers don’t bode well for the city to continue operating its courses at Lester Park and Enger as it has in the past, according to Jim Filby Williams, Duluth’s director of public administration.
He noted that from 2006 to 2013, the number of rounds of golf played at the two municipal courses dropped from about 81,000 to 63,000.That’s a decline of 28 percent in the span of seven years.
The local decline in golfing activity mirrors a larger trend that shows the number of recreational golfers in the nation declining by about 17 percent since 2005, when about 30 million people were engaged in the sport. By 2013, America’s active golfing population had fallen to about 25 million.
While golfing revenue has continued to erode in recent years, the capital needs of the courses at Enger and Lester Park are mounting. Filby Williams said that it would conservatively take a capital investment of $13 million to bring the two golf courses back up to snuff.
If Duluth were to sell a 20-year bond to finance improvements of that scale, he said the debt service alone would annually cost $1.2 million, further exacerbating the city’s financial problems.
“Given our financial state of affairs and our priorities as a city government, we’re thinking that maybe operating two municipal golf courses is a luxury the city can no longer afford,” said David Montgomery, Duluth’s chief administrative officer.
He noted that other cities, including St. Paul and Eagan, also have looked at selling off unprofitable municipal golf courses lately.
The Lester Park course hasn’t managed to break even for seven straight years, and last year it lost nearly $243,000.
Meanwhile, Enger has fared better, generally eking out a modest operating profit in recent years or at least nearly breaking even. Last year was an exception, however, with the course losing nearly $67,000. But the painfully-slow-to-arrive spring of 2013 probably deserves much of the blame.
Filby Williams said the city will seek management proposals for both of the 27-hole courses and will look for a partner who would be willing to invest the money necessary to make major capital improvements in return for the promise of a long-term operating agreement.
Montgomery called the idea “a quasi-ownership arrangement.”
The city will entertain management proposals that include both courses or only one. Filby Williams expressed confidence that Enger will generate interest but said it was less clear if a private partner would want to take on the risk of running Lester Park, considering some of its challenges.
The city will simultaneously ask for proposals from developers interested in converting the Lester Park course into housing.
The city has received appraisals of the Lester Golf Course property ranging from about $1.5 million to $2 million. But Montgomery said those are very rough numbers that may not reflect the true market for such a piece of land.
Virgil Boehland of Esko has purchased a season pass at the Lester Park Golf Course for more than 20 years and said the decision about the operation’s fate should be based on more than just financial considerations.
“Not everything has to make money. Some things have an intrinsic value that exceeds anything monetary,” he said during a round of golf Tuesday. “There are no other public golf courses I know of with a world-class view like this.”
“I don’t see why we would take some our most beautiful land in the city and turn it into townhomes,” Boehland said.
Jim Jordan, a golfer who lives on Fish Lake, agreed that dollars alone shouldn’t govern what becomes of the Lester Park Golf Course and said that his deceased father’s ashes had been spread around the grounds, making it a very special place for him personally.
Montgomery said that if the Lester property is sold, the city administration intends to plow the proceeds from the transaction back into the city’s remaining golfing operation at Enger.
“We tend to think that one thriving, well-maintained course is better than two struggling and deteriorating courses,” Filby Williams said.
Besides the relatively stronger performance of the Enger course in recent years, Filby Williams also noted that it is located in the center of Duluth, making it more accessible to a wide range of residents.
Montgomery said the city probably couldn’t even consider selling off the Enger Golf Course property because of covenants and other restrictions detailing the permissible use of the land. He said the Lester Park Golf Course was not encumbered in the same fashion, providing the city with more flexibility.
