Nearly two years after the Burbank City Council bailed out the cash-strapped DeBell Golf Club to the tune of $2 million, the club's financial health remains in limbo, leaving it unable to afford the loan payments that were slated to start next January.
Factoring in depreciation and the original loan payments, city officials projected the club's cash flow by the end of fiscal year 2013-14 to be in the red to the tune of $303,000.
On Tuesday, the Burbank City Council unanimously signed off on plans to give the club two extra years to boost its revenue before having to pay up. Loan payments on $1 million are now scheduled to start in January of 2016, as DeBell has not needed the remaining funds.
The council also postponed payments on a separate $2.5 million loan to DeBell — which helped fund the new $9.4 million clubhouse in 2007, wiping out DeBell's reserves — by five years. Some payments have already been made on this loan, but the outstanding debt remains roughly $2.2 million.
With the changes, payments are now slated to start in January of 2019 and will span 30 years instead of the original 20. That would reduce annual payments on the construction loan from $125,000 to $78,704, according to a city report.
Postponing the loan payments would save the club $350,000 during the next three years or so. That would allow it time to recover under a new management structure, the logistics of which are currently being drafted, that would minimize the city's involvement in daily operations and prioritize debt payments, said Judie Wilke, director of park, recreation and community services.
The council agreed to examine the solvency of the golf fund annually to determine whether payments can begin earlier. Meanwhile, interest will continue to accrue at 0.5%, officials said.
In January, the club's expenses exceeded revenues by $13,425, which officials attributed to course closures due to bad weather.
With the extra time, officials hope to ramp up enough money not only for loan payments, but also for capital improvements and to keep in reserves.
"I feel very confident we're headed in the right direction," Wilke said. "I just hope that golf continues to be popular."