ANAHEIM : Privatization of Golf Courses Proposed

A long-awaited report shows that the city could save an additional $500,000 a year by privatizing its two municipal golf courses, mostly through lower wages and benefits that would be paid to maintenance workers.

But city administrators are reluctant to endorse the proposal, fearing that the courses’ quality would suffer if they are leased to a private operator. Officials argue that by fine-tuning the current operation, $300,000 could be saved.

Anaheim Hills and H.G. (Dad) Miller golf courses are the last remaining municipally operated courses in Orange County. The cities of Garden Grove, San Clemente, Costa Mesa and Huntington Beach all own 18-hole golf courses, but each has leased its courses to private operators.

The city’s courses already make a profit, adding $1.2 million this year to its treasury. But the report said that if the courses are privatized, the annual profit could jump to $1.7 million.

The report, by Economic Research Associates of Los Angeles, says the courses are maintained at a better level than most others in the surrounding area but have higher labor costs.

The $1.6 million spent on course maintenance each year using city workers could be cut by 25% if a private firm leasing the courses used its employees to do the work, the report said. The savings would mostly be attributed to the lower wages that maintenance workers in the private sector typically receive, the report said.

The report was made at the request of Mayor Tom Daly, an outspoken advocate of privatizing many city operations, late last year. He could not be reached for comment Friday.

But administrators are balking at adopting the report’s recommendations.

City Manager James D. Ruth said the city staff already has plans to increase golf course profits by $300,000. The Golf Department--which has been autonomous--is being consolidated into the Parks, Recreation and Community Services Department at a savings of $110,000 annually, and other cuts will save an additional $220,000.

The report said the city has three choices for operating the courses:

* It can maintain the status quo. Currently, the city manages and maintains the courses, paying for all functions from administration to bookkeeping to grounds keeping.

A private concessionaire, who leases space from the city, owns the pro shops and driving ranges and collects the golfers’ fees for the city.

The upside is the city’s control of the courses’ quality. The downside is the city’s profit will be less than if the courses are privatized.

* It can privatize both courses entirely. A company would be chosen to operate the courses for 10 to 30 years, and it would pay a yearly rental fee to the city. It would have almost full autonomy in deciding how the courses would be run.

The city would have greater profits, and the company could attract private investors to fund course improvements. But the courses’ quality might suffer, and the city might be stuck for years with an operator it no longer wants.

* It can opt for a hybrid operation. The city would hire a management firm to operate the courses for three to five years, with incentives paid if it improves the courses’ operations and their profit. The city, however, would maintain the final say on all administrative matters.

This change would give the city additional profits of $330,000 while assuring the courses’ quality. But it would do little to attract private investment for future course improvements.