(Portland, Ore.’s five city-owned courses)
Even after a taxpayer-funded $800,000 bailout in 2017, the five city courses continue to operate in the red overall and remain “at a crossroads,” the auditors reported. Recommendations included better negotiating and monitoring of course-management contracts and allowing City Council oversight of the Parks Department. The Parks Director disputed the findings, saying the courses are self-supporting. An online report about the audit generated over 650 comments in less than 24 hours.
The publicly run golf courses in Portland, Ore. are essentially bankrupt, city auditors concluded in a report published on May 23, The Oregonian of Portland reported.
The five city courses are “at a crossroads,” the report said, and were kept solvent in 2017 only through an $800,000 taxpayer-funded bailout, The Oregonian reported.
The city has owned golf courses for more than 100 years and currently owns five courses: Colwood, Eastmoreland, Heron Lakes, Rose City and RedTail Golf Center (located in the suburb of Beaverton). Those courses cost $9.6 million to run in 2018 and are supposed to generate at least that much in revenue from players who use the total of 99 city-offered holes, The Oregonian reported.
The city’s golf program as a whole is a money-loser, however, according to the audit. Colwood and Rose City both lost money for four straight years, for example. Administrative costs top $1 million a year, the audit found.
The auditors pointed to multiple causes, The Oregonian reported. Golf is declining in popularity, and fewer rounds are being played on the courses. The city also employed “lax contract management” over the companies it hires to run the courses.
Losses caused the city council to approve an $800,000 bailout in 2017, but the conditions that caused it “are projected to worsen,” according to auditors, because of mounting employee retirement and health care costs, The Oregonian reported
The Colwood Golf Center, located near the Portland International Airport, has posed a particular challenge, The Oregonian reported. The city borrowed money to buy it in 2014 and restore wetlands on part of the property. But “construction challenges” delayed its opening and the city could not repay its debt as originally planned. A “balloon payment” is now due in 2023.
RedTail Golf Center is also in a unique situation, The Oregonian reported. Because the course is operated under a lease agreement, state law requires the city to pay property taxes on the course grounds. The bill in 2018, according to a parks bureau spokesman, was $163,806.
The Heron Lakes, RedTail and Eastmoreland courses consistently break even, but not enough to keep the city’s overall program whole, The Oregonian reported.
Parks officials have tried to stave off the losses, The Oregonian reported, through cost-cutting measures that having included cutting groundskeeper positions and leaving two superintendent jobs vacant. Officials have also tried to promote golf’s appeal to recruit new players.
But it’s unclear if those efforts have done much, auditors found, because the city “has not collected data about consumers.”
Problems caused by declining revenues compound each other, the auditors said. Deferred maintenance on city-owned course clubhouses makes them less appealing for players, leading to fewer customers, for example.
The city is also inconsistent with how it manages the courses, the audit found. In one instance, a city-hired course manager has become increasingly hands-off. Contract provisions are not followed at other courses, where managers have not completed required marketing plans, performance reviews and building repairs. Management contracts were extended every five years “with little, if any, review of their terms,” auditors said.
The parks bureau should do a better job of negotiating and monitoring course contracts, coming up with alternative financial forecasts, and allowing City Council oversight, the auditors said in making recommendations as part of their report, The Oregonian reported.
Portland’s Parks Director, Adena Long, rebuffed the auditors’ conclusions, The Oregonian reported, saying in a response letter that the golf courses are “a good investment for Portlanders” and that they are “self-supporting,” despite the auditors’ findings.
“The golf program is unique in the city as it successfully promotes environmental stewardship and recreation opportunities, while being a self-supporting business model that responds to market forces,” Long said. Nevertheless, she committed to carrying out auditors’ recommendations, The Oregonian reported.
The Oregonian’s report on the audit findings generated over 650 comments in less than 24 hours after it was published online.