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Seattle Parks and Recreation expects to have a financial modeling report completed before the end of summer to help guide future decisions about its municipal golf courses, which could either get a boost from the mayor’s office or be removed to make way for some other public good.

SPR commissioned Lund Consulting, Inc. to prepare a strategic business plan to guide future use of the city’s four golf facilities, which was published back in March.

The study found that the percentage of income from green fees decreased from 54 percent in 2013 to 45 percent in 2017, while the percentage for driving ranges went up from 16 to 22 percent. Miniature golf offered at Interbay Golf Center accounts for just 3 percent of its revenue.

Interbay Golf Center has an annual net operating income of $900,000 to negative $200,000, according to the Lund report, but “is able to pay its debt service and Park Fund contribution without a deficit, except in 2026.”

A 1993 study by SPR found that municipal golf courses receive about three times more play than private courses, which impacts maintenance.

The Lund report states SPR has identified $35.6 million in unfunded capital improvements for the courses, and provides a financial projection for what would happen if this deferred maintenance were covered by a 20-year general obligation bond at a 5 percent interest rate, which would result in an annual debt service payment of $3.3 million.

Another scenario explored in the report would reduce the issuance of new debt down to $16.3 million, but require a new user fee, policy changes to reduce contributions to the Park Fund and a new funding source to cover existing debt service payments that has not yet been identified. That would reduce the annual debt service payment to $1.3 million.

Interbay Golf Center would receive the smallest level of capital improvements at 12 percent under this scenario while the Jackson Park Golf Course would receive 38 percent, 39 percent for West Seattle and 10 percent for Jefferson Park. Of the $4.9 million in new equipment costs for the courses, Interbay would receive $600,000.

The Lund report assumes the older courses would need $100,000 per year for major maintenance while Interbay would need $50,000.

“The new debt service of $1.3 million is offset by a dedicated user fee of $0.2 million leaving the same level of debt service ($1.1 million) as in the baseline once the Interbay debt service ($0.4 million) is paid off,” the report states. “On an operating basis, expenses are higher by $1.0 million per year in equipment lease ($0.6 million) and major maintenance expenses ($0.4 million). The difference between a 3.5 % Park Fund contribution and no Park Fund contribution is $0.4 million to $0.5 million annually.”

If nothing were to happen, a 1 percent increase in rounds played from 2018 to 2019 is expected to be followed by a 4 percent increase from 2019 to 2020, primarily due to Jefferson Park resuming full play after damaged holes are repaired. A non-operating expense deficit would reach $4.1 million by 2027, according to the Lund report.

The Lund report also explored a scenario where golf course maintenance would be transferred to a private vendor, which projects a reduction in the standard maintenance service cost from $800,000 in 2020 to $400,000 in 2027.

Depending on whether golf courses would continue to have to make contributions to the Park Fund, total operating loss would reach $4.5 million or $4 million (no Park Fund) in 2027, the report states.

The city’s golf program has contributed nearly $4 million to the Park Fund since 2006, which is the same year it was determined that the program should achieve self-sufficiency, at 103.5 to 105 percent revenue cost recovery.

The Lund report notes that other Seattle Parks and Recreation programs are not self-sufficient. The aquatics program covers 50 percent of its operating expenses with revenue, according to the report, not to be confused with swimming pools, which cover 77 percent. Community centers cover just 15 percent of operations with revenue, according to the report, and none of these programs contribute to capital cost recovery.

The report recommends multiple changes for how the four municipal golf courses are operated and maintained, and one recommendation is to set more realistic revenue targets and doing away with contributions to the Park Fund. It also recommends creating a dedicated golf manager position and establishing a Golf Advisory Committee.

“At the same time that the City has set an expectation to contribute to the Park Fund from golf, some have argued that because the City is charging fees to access the golf courses, the courses are elitist and do not allow public access,” the report states. “In addition, there is a need to balance the goals of achieving revenue through fees and encouraging play.”

A 2017 EMC Research study found 13 percent of residents use Seattle public golf courses two or more times per year.

Interbay Golf Center is the most financially successful facility, according to the Lund report, but driving range revenue is impacted by restrictions on using drivers and hybrid clubs on the upper tier to avoid balls going over nets and into Seattle Pacific University playfields.

“This is a significant safety liability and also a lost revenue opportunity,” the Lund report states. “Addressing this need must be a priority for SPR which means funding and staff resource commitment to complete design and permitting in a timely way.”

Premier Golf has been under contract to manage the four municipal golf courses since 2003, and the report suggests its next request for contract proposals bundle operations and maintenance.

“While the Premier and SPR staffs have a good working relationship, there are benefits to having one-entity handle both maintenance and operations,” the report states.

Members of the public recently came before the Interbay Public Development Advisory Committee to make pitches for how to repurpose the Washington National Guard’s 25-acre armory site, which is located to the south of the Interbay Golf Center. A number of presentations assumed the golf center would not be there by the time redevelopment began.

That’s because Seattle Mayor Jenny Durkan is assessing whether Interbay and the other three municipal golf courses should continue operating, or if those properties could also be repurposed to provide a greater public benefit, which is why financial modeling is now taking place.

“As we weigh options for the future of the City of Seattle’s four golf courses, Mayor Durkan believes we have an opportunity to examine our golf courses with the goals of supporting our parks and green space, addressing affordability and meeting our racial equity goals as we build a city of the future,” according to a statement from Chelsea Kellogg, senior communications advisor in the mayor’s office. “As a next step, the City will support further analysis of long-term models to see the financial sustainability of the courses. Under the Mayor’s direction, Seattle Parks and Recreation, working with other departments, will also begin to explore a range of potential options for these City-owned properties, which could include continuing these outdoor recreation facilities or other potential uses such as adding additional parks and green space, or creating affordable commercial space and housing.”

Lund Golf Study Executive Summary by branax2000 on Scribd