The management firm informed the county that it would cease its involvement with The Habitat, The Savannahs and Spessard Holland as of July 30, citing “the net loss for the three properties [as] something we cannot continue to subsidize financially.” The county is looking into legal action for breach of contract while arranging for temporary management by other companies and also exploring new long-term solutions.
The company that manages three golf courses owned by Brevard County, Fla. has terminated its operating agreements with little notice, Florida Today reported.
That leaves county officials scrambling to find a new entity to manage The Habitat in Grant-Valkaria, The Savannahs on Merritt Island and Spessard Holland, south of Melbourne Beach, Florida Today reported.
Orlando, Fla.-based Integrity Golf Co. LLC — which has managed the courses for Brevard County since Feb. 1, 2016 — this week notified the county that it is terminating the management agreements, effective July 30, because it was losing money on the operation, Florida Today reported.
“I’ve got serious problems with this,” County Commissioner Jim Barfield said during a County Commission workshop on July 13, at which commissioners were briefed by county management on the issue.
“We have a two-week notice. That’s just unacceptable. I don’t know how else to put it,” Barfield said. “We need to learn from this, and don’t let this happen again.”
Brevard County management and parks department officials said they had no definitive indication that there were problems with Integrity until getting the notice this week, Florida Today reported.
In a letter to Brevard County Parks and Recreation Director Mary Ellen Donner, Integrity Chief Executive Officer Gene Garrote wrote: “The net loss for the three properties is not something we can continue to subsidize financially. Over the last few weeks, we have been trying to come up with a feasible plan to continue operations of the golf club, and despite the hard work and enormous investment we have placed at the Brevard County golf courses since inception, in addition to our engagement with Cypress Golf Management to further enhance the condition of the golf courses, we have no choice but to terminate this agreement.”
County Attorney Scott Knox said the notice put Integrity Golf in breach of its contract agreement with the county, and that the county attorney’s office would be exploring legal options, Florida Today reported.
In the meantime, county commissioners voted 4-0 to take steps to assure the three golf courses would continue to operate, including:
- Authorizing the county staff to begin negotiating temporary management agreements with Cypress Golf Management and with International Golf Management to operate the courses for up to six months, until a more permanent solution could be found. International Golf Management has done maintenance of the golf courses for the county since 1995. Interim County Manager Frank Abbate said the “emergency, interim” step would allow the county to “continue providing an appropriate level of service for the people who are enjoying the golf courses currently.”
- Transferring $705,000 now in a county golf reserve fund for use in running the golf course operations for the next six months, including paying for management services, golf cart leasing, lawn-mowing equipment and utilities.
- Starting the process of preparing documents to seek proposals from companies that may be interested in managing the courses on a long-term basis.
Abbate said he hoped to have a long-term arrangement with a new company in place by January, Florida Today reported, citing January as the beginning of the “high season” for golf courses locally, when they are busiest and have the highest revenue.
County Commission Vice Chair Rita Pritchett, though, questioned why Brevard County still is in the golf course business, when that business is in a downturn, Florida Today reported.
“I just got a general perspective of golf courses being money pits,” Pritchett said. “Is there any way that we can get out of the golf course business? I don’t know why the county government is in the golf business. I would like to get out of the business, and quit losing money.”
But, county officials have pointed out that seeking to sell two of the three courses presents legal issues, Florida Today reported. The Savannahs has deed restrictions under which the course cannot be sold by the county, and the property would revert back to a homeowners’ association if the county abandons it. And the Habitat cannot be sold because the property is owned by the Federal Aviation Administration.
Assistant Brevard County Manager for Community Services Venetta Valdengo said county officials “got a little curious” about Integrity’s management of the courses during the last few weeks, when they were getting “ambiguous responses” and “mixed messages” from the company, Florida Today reported.
But she said there were only “minimal complaints” from golf course patrons after Integrity took over operation of the courses, and the number of rounds being played at the courses rose after Integrity came onboard.
“We thought they had the corporate capability to withstand that first-year loss,” Valdengo said.
Financial data submitted by Integrity to the county indicated that all three courses had an operating profit in the first quarter of this year: $168,228 for The Habitat; $149,730 for Spessard Holland; and $48,611 for The Savannahs.
However, all three had operating losses both the third and fourth quarters of 2016 — time periods in which fewer rounds are played.
In his letter, Garrote wrote: “I believe that the Brevard County golf courses have come a long way since our inception, and I am confident that the properties will be profitable in the near future with the right company operating them. We will work diligently to transition without any disturbance to the operations of the golf clubs and members.”
Abbate said Integrity recently told Brevard County officials that the company was looking to divest some of its courses, but not the three it was running for the county, Florida Today reported.
Combined, the three courses had year-over-year gains in rounds played for five consecutive months before a slight drop was recorded in April. Donner said the company has not yet reported its May and June figures.
In public comment Thursday, Viera resident Pam LaSalle said: “We shouldn’t be in the golf course business, if at all possible.”
LaSalle said she was “not surprised” about the turn of events.
“I’m disappointed that we’re having to go through this, but this is what you get when you contract out,” LaSalle said.
In January 2016, Brevard County commissioners approved the deal with Integrity by a 4-1, with then-Commissioner Trudie Infantini voting no.
At the time, Infantini said she felt more comfortable with the county not switching to an outside management company, especially without details on how Integrity would work to improve the courses.
Before the deal was implemented, Brevard County had been running the courses with county staff, Florida Today reported.
Under the deal, Brevard County would receive a minimum of $100,000 a year in payments from Integrity. It would get more if Integrity’s annual revenue from the courses exceeds $3.33 million. In that case, the county would get 3 percent of total revenue, Florida Today reported.
Company officials promised to make major upgrades to the courses, including to golf cart paths and bunkers; to buy new golf carts; and to make other improvements, including new carpeting and painting in the clubhouse buildings.
At the time, Integrity operated 35 other golf courses through management and lease agreements, including 21 in Central Florida, with the portfolio including both privately owned and government-owned courses, Florida Today reported.
Combined revenue from the three courses for the county budget year ended September 30, 2015, was $2.71 million, up from $2.54 million during the previous budget year.
The number of rounds played rose to 103,262, up from 93,207 the previous year.
Nevertheless, the courses posted a combined financial operating loss of $129,500 that year, and that figure did not include the $200,000 the county spent to lease its fleet of golf carts, Florida Today reported. Nor did it include money that would be needed for future capital improvements.
The annual combined revenue for the three courses peaked at $3.51 million in the 2008-09 budget year, Florida Today reported, and the annual number of rounds played peaked at 163,867 in the 1996-97 budget year.
The total rounds played stood at 104,027 in the most recent full budget year, with four months of county management from October 2015 through January 2016, and eight months of Integrity management from February through September 2016, Florida Today reported. That included 38,475 rounds at The Habitat, 37,636 at Spessard Holland and 27,916 at The Savannahs.
The Habitat and The Savannahs are 18-hole, par-72 courses, while Spessard Holland is a shorter 18-hole, par-67 course.