One question that came up often during the campaign and continues to come up is how much money has been invested in the golf course via taxpayer funds. At the November 22nd meeting, Konrad went through the most recent Statement of Cash Flows and provided an answer to this question. These are my notes from that meeting. I will be going down the column for the Golf Course Fund in the 2011 audit, which you can find on page 23 of this link http://www.cedarhills.org/pdfs/auditors_report_2011.pdf
The first cell shows cash received from customers, meaning money the golf course made through greens fees and other sales related to golfing. For 2011 it was $653,011. The next two cells show cash paid for golf course employees ($426,637) and golf course suppliers ($309,244). Subtracting these two expenses from the cash received from customers shows the net cash from operating activities (-$82,870 for 2011). This cell is where the term "operationally profitable" came into the picture last year when it was reported the golf course was operationally profitable. I'm not an accountant so am not going to get into the argument over whether or not that is an accurate statement, however, it should be noted that our auditors sign off on our financial documents every year and that this number just takes into account customer cash coming in minus expenses for employees and suppliers, nothing else.
The next section shows cash flow from noncapital financing activities. The first cell shows cash paid from other funds. This is any money that has been transferred into the Golf Course Fund from other funds. In 2011 that amount was $371,726, which came from impact fees and are being used for the building of the Community Recreation Center. The only other time cash came in from other funds was in 2004 when the Golf Course Fund was created and its assets and liabilities were transferred in from the Capital Projects Fund. The next cell shows any cash paid to other funds ($2,332 for 2011) and the next shows property tax revenue ($398,591) that is used to pay off the bond. The next cell totals up these three amounts and is the net cash from noncapital financing activities ($767,985 for 2011). In most of the years past the only amount in this section is the property tax revenue collected to pay the bond. The increase for 2011 shows the impact fee money coming into this fund to be used for the recreation center.
The next section shows cash flows from capital and related financing activities. The first cell shows an amount of -$215,025, which includes money spent on maintenance equipment ($25,820) and on building the Community Recreation Center ($189,205). The next cell shows a total of $27,950 which is money the City made after selling the Sunset Room ($2,000) and after selling old golf carts ($25,950). The next cell, proceeds from the issuance of debt, would have an amount if we had gone into any new debt for the year, but is zero for 2011 as we did not. The next two cells show the amount of money we paid on past debts, $256,803 in principal payments and $267,758 in interest payments. The final cell in this section shows the net cash from capital financing activities, which for 2011 is -$711,636. This amount reflects the money we paid for our debts, the recreation center, and money we made after selling assets.
The next section shows cash flows from investing activities, which we did not have for this fund.
The final section shows the net increase or decrease in cash for the year (-$26,521 for 2011), the cash at the beginning of the year (-$1,674,450) and the cash at the end of the year (-$1,700,971).
Going back to the original question, the investment being made to the golf course each year from tax dollars is the amount collected in property tax revenue as well as the cash shortfall for each year. The City has considered the cash shortall a loan that will be repaid at a later date once the golf course is profitable overall. My personal belief is that this amount should be considered a subsidy until and if that loan is repaid, but the rest of the Council may disagree with me. In any case, whether we consider it a loan or a subsidy, the amount of tax dollars that have gone to the golf course each year (both for the bond and cash shortfalls) is as follows:
**The large shortfall in 2008 was due to money spent to reconfigure the golf course in order to create 29 new residential lots owned by the City. The City still owns these lots and when they are sold the proceeds will go back into the fund to help pay down the bond.
After going through all of this I still feel our best option is to continue to operate the golf course to the best of our ability until we can sell it at a fair price. We will have to pay the bond no matter what and making significant changes to the course to turn it into something else could be even costlier. Our hope is that the new recreation center will increase revenues from customers as we will now have a nice facility that can be used for golf tournaments as well as other events in addition to recreation classes and activities. I'm excited for this new facility and hope we all work together as a community to make it a success.
This is a very high level overview of one aspect of the Golf Course Fund. If you have more in depth questions you are always welcome to reach out to our City Manager, Konrad Hildebrandt; our Finance Director, Rebecca Tehero; the Mayor or any member of the Council. As I mentioned earlier, the Golf Finance Advisory Committee will go over all of the numbers in depth and provide a more detailed analysis. In the meantime I hope this information is helpful.
Questions? Feel free to email me at jrees@cedarhills.org or call me at 801-358-8730.
