The City Commission of the northeast Florida town will vote January 18 on whether to sell its two LPGA International courses to Consolidated-Tomoka Land Co., which has been leasing them for 40 years. “This is a golden goose for Daytona Beach,” says one commissioner of the deal that would net the city $2.2 million and 14 acres of free land, while shedding properties that have collectively lost $15 million.
A deal up for a vote at the January 18 meeting of the City Commission of Daytona Beach, Fla., will offer the city a chance to shed two golf courses that have collectively lost $15 million, and walk away with $2.2 million along with more than 14 acres of free land in a strategically important spot, The Daytona Beach News-Journal reported.
“This is a golden goose for Daytona Beach,” City Commissioner Rob Gilliland said of the deal.
But critics of the proposal to sell the two city-owned LPGA International golf courses to Consolidated-Tomoka Land Co., the company that has been leasing them for 40 years, are afraid that Daytona Beach would be settling for way too little money and question if the 14.28 acres of land next to the city’s Municipal Stadium are worth taking, The News-Journal reported.
“What we’ll get is only what we’d get in rent anyhow,” said City Commissioner Ruth Trager, who feels the golf course land could easily be sold for “much more” for new development.
“With all the growth there, the land value can do nothing but go up,” Trager told The News-Journal. “I’m doing a lot of investigating into it. As of now, I don’t feel it’s a good deal for the city.”
Gilliland counters that the low-lying, narrow swaths of golf course land don’t have enough space to build roads and homes, and getting rid of the courses would be economic suicide for the upscale area that attracts high-end home buyers who want to golf somewhere nearby, The News-Journal reported.
Trager would like to see the sale vote delayed, but it was already pushed back when commissioners decided at their December 21 meeting to slow down and do more research, The News-Journal reported.
“There’s no reason for us to delay this anymore,” Gilliland said. “We have an environmental study done on the 14 acres that shows there have been no spills or contaminants that would give any me concern.”
The proposal now up for a vote is to sell the 657 acres spread across the two courses for $1.5 million to Indigo International, a subsidiary of Consolidated-Tomoka Land Co., The News-Journal reported. The deal also calls for Indigo International to pay the city at least $70,000 every year from a $1 surcharge on every round of golf, which will run until the city has received $700,000.
In addition to those payments, The News-Journal reported, the city would also receive a little more than 14 acres near Municipal Stadium that is owned by Indigo International, which has been leasing the LPGA course since 1977.
The 14 acres near Municipal Stadium are badly needed for extra parking and flood mitigation, Gilliland said.
“It’s the only adjacent raw land next to the stadium,” he said, noting it’s worth around $500,000. “We have significant problems with parking and flooding, and this is the only property that would help with that. Its strategic value to the city is [in the] millions.”
The deal also promises that if Consolidated-Tomoka were to sell the golf courses in the future, the city would receive 10 percent of any profits in excess of a $3.6 million sale price, The News-Journal reported.
The city would not be responsible for maintenance, and Consolidated-Tomoka would shoulder the roughly $1 million in needed improvements to the courses’ greens and clubhouse, Gilliland said.
The city would pick up the annual $13,405 community-development district assessments on the 14 acres, The News-Journal reported, but Gilliland said that burden is a galaxy away from the millions he believes the city would be out if it took over the courses when the lease with Indigo International runs out in five years.
The LPGA golf courses were assessed at around $3 million two years ago, The News-Journal reported, but Gilliland feels that was an inflated value. Either way, he said the city is getting at least a $3 million value in the deal with Consolidated-Tomoka.
Located west of Interstate 95, the LPGA International facility consists of two 18-hole golf courses, a clubhouse, restaurant and fitness center.
About four decades ago, the city paid roughly $3 million to build the first golf course and lost $1 million the year it ran the course, Gilliland said. Consolidated-Tomoka took over in year two and later built the second course and clubhouse.
Since the late 1970s, the city has owned both courses and has been leasing them, along with its 20 percent portion of the clubhouse, to Consolidated-Tomoka, The News-Journal reported.
The courses lured the Ladies Professional Golf Association to relocate to the west Daytona Beach courses in 1989. The hope was the LPGA would attract large, lucrative tournaments and a new hotel, and scores of new homes would be built near the courses, said John Albright, President and CEO of Consolidated-Tomoka.
But that’s not how things worked out.
“The growth in the area didn’t really support two courses, and golf has been a challenging industry,” Albright told The News-Journal.
Consolidated-Tomoka has chosen to buy the city’s interest in LPGA International, Albright said, because several updates are needed, including a rebuild of the greens and a renovation of the clubhouse, which suffered some damage in Hurricane Matthew. Rebuilding a single green can cost tens of thousands of dollars.
“The city doesn’t want to put the money in it,” he said. “And we don’t want to put the money in it knowing there is not an economic reason for us to put money in it.”
Owning the courses is incentive for Consolidated-Tomoka to try to make the venture profitable in the long run, Albright noted.
Gilliland told The News-Journal that the city needs to find a way out of its lease with Consolidated-Tomoka, because “if the courses were to be shut down or to go down in quality significantly, it would have a devastating effect on that community and all development of the area west of Daytona.”
If the lease were to reach its end in 2022, The News-Journal reported, the city would be responsible for the golf courses and their operation, which has been losing between $800,000 and $1.5 million annually since 2011, according to Consolidated-Tomoka records. Memberships have shot up from 118 in 2011 to about 400 last year, but revenues haven’t kept pace with expenses.
“It’s always been a large loser,” Albright said.
The city would have to raise property taxes to keep its head above water with the courses, Gilliland told The News-Journal. “If the golf courses went to the city, we’d lose $15 million in 10 years,” he said.
But walking away, he said, would leave the city with about $10 million from the course rent and taxes collected over the years, as well as what would be garnered from the sale.
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