The City Council is considering a $2 million loan for the cash-strapped Debell Golf Course — more than the $566,878 in proposed budget cuts to the Fire Department, libraries and other public services — after Mayor Jess Talamantes called the municipally owned course “too big to fail.”
Also on the table is suspending the golf course’s payments to the city on $2.1 million in outstanding debt, and combining the two loans for repayment by 2016.
The council is scheduled to make a final decision next week after some on the dais voiced initial support for the proposal.
“As far as I’m concerned, there’s a jewel up there that’s too big to fail in my opinion,” Talamantes said during a May 26 budget hearing.
He added that he would support the $2 million, but planned to request quarterly updates on revenues generated by the golf course.
Park Recreation and Community Services Director Chris Dasté said the construction and subsequent depreciation in the value of the new clubhouse, lost income, rising costs and the poor economic climate contributed to the $718,215 deficit projected for the fiscal year ending June 30.
The proposed $2 million loan would cover past debts and create a reserve that would earn interest, officials said.
“We had no indications like Wall Street or anyone else did, and we were assuming that our golf rounds would be increased,” said Dasté, citing record numbers of rounds at the course within the past 10 years. “The economy started to tank, our rounds went down significantly, and that results in about $300,000 a year that we’ve lost in revenue.”
The golf course accommodated a record 75,723 rounds in fiscal year 2001-02, according to the city. But that dropped to 56,397 rounds in 2009-10 — a record low. And officials project another 11% drop this fiscal year.
Councilman David Gordon said he doubted the golf course would be able to turn around its attendance numbers to generate more revenue.
“A decrease in operating revenues with the rounds being played couldn’t make the $2 million loan; what magical turnaround in utilization is going to occur to pay back a $4 million loan?” Gordon asked.
Councilman Dave Golonski also asked for more details on a revenue turnaround plan before he would consider the loan.
But city officials said any plan to turn the golf course around would carry some amount of risk.
“There is not a no-risk proposal in this recovery plan,” said Financial Services Director Cindy Giraldo. “With more rounds, the revenue increases.”