County renews contract with golf course manager for lower fee
Monday, September 17, 2012
It may be a stretch to say the county's publicly owned golf course is the subject of renewed optimism, but it is the subject of a renewed contract.
Earlier this month, county commissioners signed on for another 10 years with the operators of Tri-Mountain Golf Course, Virginia-based Billy Casper Golf.
The 10-year contract lowers the monthly fee the county pays Billy Casper to manage the course -- payments will decrease by $19,235 a month, from $115,068 to $95,833 -- but adds incentives for Billy Casper to earn more if revenues increase.
Mark McCauley, Clark County's general services manager, said executives from Billy Casper had been asking for years for performance-based incentives, but the county and the company could never agree on terms.
Through August, the county's Tri-Mountain Operations and Maintenance Fund had a profit of $171,065, but McCauley said it's too soon to tell whether the course will turn an annual profit in 2012. Business slows down at the end of the year, as the days turn shorter and wetter.
In 2011, the county lost $134,374 on the course, narrowing a $160,518 loss incurred in 2010. The course turned profits for the county in 2009, $53,572, and 2008, $182,925.
McCauley anticipates the course will do better financially than last year.
Billy Casper Golf operates more than 135 courses in 28 states, said Bill Rehanek, senior vice president for operations.
Rehanek sounded optimistic about Tri-Mountain, mentioning the new irrigation system that was installed a few years ago. He said the course can be managed more efficiently and that Billy Casper will be committed to spending marketing dollars in order to hit the performance incentives.
"It ensures the future of Tri-Mountain," Rehanek said of the new contract.
The county became the owners of the golf course in 1997, after the Port of Ridgefield defaulted. The county had backed the bonds for the course, which the Port of Ridgefield built in 1994 in the name of economic development.
McCauley said the county has received a few inquiries over the years from people possibly interested in buying the course, but they lose interest quickly when they learn about the debt. In 2005, the county refinanced the bonds at a better interest rate (4.2 percent). The county would have to pay $6.6 million to retire the debt, McCauley said.
The earliest the county could retire the debt is 2015, according to the terms of the bond.
Debt payments get larger as the years go on, with the idea the course will be making more money.
The county currently pays roughly $525,000 a year in debt service, using real estate excise taxes, which are collected whenever a home is sold.
Rehanek said Billy Casper will spend money to advertise Tri-Mountain and entice more players from outside of Clark County. The course, described by players as better-than-average for a municipal course, was so named because it offers views — on a clear day — of Mount St. Helens, Mount Hood and Mount Adams.
The course is conveniently located east of Interstate 5 at 1701 N.W. 299th St. I-5 motorists can easily glimpse it near the Ridgefield Port of Entry truck scale.
Unlike many golf courses, Tri-Mountain isn't ringed by houses, an aspect Billy Casper will use as a marketing point, Rehanek said. "A lot of golf courses were built as amenities to communities," he said. "It's a popular way to sell homes. Tri-Mountain wasn't built for that purpose."
He said players like that they aren't hitting balls near homes.
While golf rounds nationally have been down 5 percent over the past three years, rounds at Tri-Mountain have been relatively stable, Rehanek said. Between 2008 and 2011, annual revenues were off by less than $50,000.
"The revenue performance has been much more stable than the industry," he said. Through August, rounds at Tri-Mountain are up slightly from last year, he said.
At the Sept. 4 commissioners' meeting, Camas resident Margaret Tweet questioned why the contract to operate Tri-Mountain was not put through a competitive bid process. She urged commissioners to reject the contract and go through the bid process to see if the county could get a better deal.
Chairman Marc Boldt said it's not unusual for the county to renew contracts with companies, and Commissioner Tom Mielke said the contract was the result of months of negotiations.
Billy Casper's contract was set to expire in December. Putting the contract out to bid would take two to three months, commissioners were told.
Commissioner Steve Stuart was absent, but County Administrator Bill Barron said Stuart had signed off on the contract.
Mielke said he was comfortable with renewing the contract.
Under the performance incentives, which go into effect in 2014, Billy Casper can earn 20 percent of gross golf revenues if the course brings in more than $1.05 million a year and can earn 35 percent of gross golf revenues if the course brings in more than $1.25 million. Billy Casper can also earn up to 10 percent of other revenues (food and beverage sales, space rentals and golf merchandise sales) if that figure tops $350,000 in a year; the company gets 15 percent if that figure comes in higher than $450,000.
Billy Casper can also earn 80 percent of gross revenue from golf instruction courses.
McCauley said later that the county did consider alternatives to renewing the contract, including staffing Tri-Mountain with county employees, but decided that staying with Billy Casper was the best option.
A different company first managed Tri-Mountain, but did not live up to the county's expectations. Billy Casper's tenure hasn't been without controversy, such as a troublesome audit years ago that led the county to require more rigid accounting.
When the county believes it may renew a contract, it puts language in the original agreement to allow a renewal, McCauley said. By approving the contract, commissioners were simply exercising a provision in the original 10-year contract with Billy Casper.
Stephanie Rice: 360-735-4508 or email@example.com.