The Bennett Valley Golf Course in Santa Rosa is losing hundreds of thousands of dollars a year and will be nearly out of money by next summer unless the city can help it swing back to profitability soon.
City officials say that without substantive changes, the course will lose $262,000 next budget year, the sixth straight year of losses and the fourth year in a row with losses exceeding $200,000.
At that rate, the once highly profitable course will be broke, with just $18,000 in reserves by next July, down from more than a $1.1 million five years ago.
Taxpayers will be on the hook if losses continue, a fact that is lending a sense of urgency to the city's effort to understand the challenges facing the course and craft solutions.
"We're on the edge, and we've got to take corrective action, and it needs to happen immediately," said Mayor Scott Bartley.
The heightened scrutiny of the course's finances comes at a sensitive time for the operator, Bob Borowicz, who, it was revealed last month, for years gave thousands of dollars worth of free golf and other gifts to two former city officials, one of whom was responsible for negotiating Borowicz's contract.
The 18-hole course, opened in 1970, is the most popular in the region, with just over 70,000 rounds played last year. It is known for its competitive rates, excellent maintenance and modern facilities.
An outside performance review praised the course in general, but recommended several financial, operational and capital improvements to make the course profitable again. The report, conducted by Sirius Golf Advisors, concludes that course is in need of a "major overhaul" that could cost up to $5 million.
One item in particular, replacing the course's aging irrigation system, could cost more than $1.2 million, money the city has not set aside.
The need for such major capital improvements comes as the course struggles to repay the debt on the $10 million clubhouse and pro shop completed in 2007.
The new facilities, which have been criticized as extravagant by the previous course operator, opened just as the economy began to sour.
Bartley, an architect, recalled being surprised at how expensive the buildings were compared to other facilities under construction at the time.
Now the bill is coming due. Payments on the $5.6 million in bonds sold to finance the clubhouse and pro shop have run about $400,000 a year since the clubhouse opened. In addition, since 2011 the course has been repaying a $862,000 city loan needed to fund the higher than expected <NO1><NO>construction costs. The money was diverted from park development fees meant for park projects in other parts of the city, with the promise that it would be repaid with interest over 20 years.
Combined, that creates a total debt payment of nearly $500,000 annually and is the main factor affecting the bottom line, said Assistant City Manager Jennifer Phillips.
But it's far from the only one.
Another key finding of the review is that the revenue may not be equitably split between the city and Borowicz.
The 10-year contract Borowicz struck with the city in 2009 calls for the city to receive the green fees while Borowicz, in addition to his management fee of about $900,000 a year, receives about <NO1><NO>90 percent of the other revenue, including that from the driving range, golf cart rentals and merchandise sales.