Two days after Vargo Golf Detroit received a one-year contract extension to manage the city’s four golf courses in a last-minute deal that seemed to eliminate the threat of a delayed season opening, it was revealed that the firm owes nearly $450,000 from its previous management of the properties.
Two days after Vargo Golf Detroit received a one-year contract extension to manage the four golf courses in Michigan’s largest city (http://clubandresortbusiness.com/2016/03/24/detroit-sorts-golf-management-one-year-contract-extension/), it was reported by Crain’s Detroit Business and the Detroit Free Press that the management firm has a delinquent water bill of $442,000 stemming from its previous management of the properties.
A spokesman for the Detroit Water and Sewerage Department (DWSD) said that shutting off Vargo’s water services is under consideration, but that a decision could be weeks away, the Free Press reported. So the revelation did not put the opening of Rackham Golf Course, the first of the city-owned courses to open for the season, in immediate jeopardy, the Free Press reported.
Bryan Peckinpaugh, a DWSD spokesman, did not immediately know how far back Vargo’s current delinquency dates, the Free Press reported. The newspaper previously reported in July 2014 that two Vargo water accounts had delinquencies totaling $507,960.
Rob Vargo of Vargo Golf told the Free Press that the company disagrees with some of the charges, but has been working to find a solution.
“We’re trying to resolve it,” Vargo said. “There’s a lot of issues to it. We’re just in discussions to try to fix the problem so everything works for the city, the recreation department— so everything’s on the same page.”
Vargo’s previous five-year contract to manage Detroit’s four courses expired in 2015. The extension with Vargo was approved by the Detroit City Council on March 22, to arrange a last-minute solution that would avoid a delayed opening of the four city-owned golf courses.
Mayor Mike Duggan’s office originally supported a 10-year golf management contract with another company, Motown Golf Management Group, but the administration changed course and instead sought a deal with Vargo, after questions were raised about the bidding process.
Peckinpaugh, the DWSD spokesman, said the agency’s decision on whether to cut Vargo’s service could depend on whether it enters into a payment plan, the Free Press reported.
The city’s top lawyer, Melvin (Butch) Hollowell, told the Free Press that payment-plan discussions with Vargo are imminent. Duggan’s spokesman, John Roach, passed along this statement from Hollowell:
“Up until the time their contract was initially canceled recently, Vargo had been in a payment arrangement with DWSD. The city intends to sit down with Vargo to properly assess the water rate and water bill to come to a mutual understanding as to an appropriate payment plan going forward.”
DWSD has faced criticism in recent years for its aggressive policy to shut off water service to delinquent residential customers, many of whom cannot afford to pay their bills, the Free Press reported. Residential customers can receive a shutoff notice if their bill is two months late and the delinquency is at least $150.
Under Vargo’s previous contract to manage Detroit’s golf courses, it paid the city an annual fee of $125,000 and between 1% and 5% of gross receipts in excess of $3.6 million. The one-year extension approved on March 22 included the same terms.
Among Detroit’s four courses, Rackham Golf Course in Huntington Woods. Mich. was scheduled to open on March 25; Rouge Park, on the city’s west side, was scheduled to open on April 1; the Chandler Park course on the east side was scheduled to open April 8, and the course at Palmer Park was scheduled to open on May 2.