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Do City-Owned Golf Courses Need To Go?

May 17, 2022

Do City-Owned Golf Courses Need To Go?

 

By Marc Joffe is a senior policy analyst at Reason Foundation.

Golf is a widely popular sport in Calif., but many public golf courses operate at a loss at a taxpayer expense; while consuming vast amounts of potable drinking water. These public courses are now becoming under scrutiny by state and local governments.  

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While golf courses have made great strides to store and use “grey water”supplies, others have continued to tap into wells that could otherwise provide drinking water for a thirty SoCal population.

As the drought gets worse and the housing crisis deepens, more pressure is mounting to sell off “taxpayer-owned” city golf courses as cities also eye these courses as sites for affordable home construction.

The Reason Foundation recently identified 221 local governments that reported running public golf courses in their 2020 financial reports.

Of those 221 local governments, 155 lost money operating golf courses in the 2020 fiscal year. In the aggregate, these 155 local governments lost $61 million of taxpayers’ money managing golf courses in 2020.

Among the 221 entities, 27 are local governments in California. And of those 27 local governments, 24 lost money operating muni golf courses in 2020 when an interest in golf peaked as Covid raged.

These 24 local governments lost a total $20 million of taxpayers’ money on golf-related operations. The largest operating loss, over $4 million, was recorded by Indian Wells Golf Resort, owned by the city of Indian Wells.

The course earned $11 million in revenue but had $15 million in expenses.

The other California golf courses showing financial losses greater than $2 million in 2020 were in the cities of Carlsbad and Dinuba.

Carlsbad’s facility, The Crossings Golf Course, roughly breaks even on a cash flow basis but does not cover its depreciation. Dinuba’s Ridge Creek Golf Club also reported revenues largely offsetting cash operating expenses but not covering depreciation.

Three local governments; Mission Viejo, Pacific Grove, and Seaside turned an operating profit, making a combined $300k operating courses in 2020.

Many other government-run golf courses could not be included in this examination due to how some governments report this information.

Los Angeles, for example, owns 13 golf courses, but the city does not separately report the courses’ financial results.

Instead, financial information about Los Angeles’ golf courses is included in the giant bucket of the city’s larger parks and recreation fund. 

Based on the national and state data showing so many local governments are losing money, some taxpayer groups believe it is time to sell these municipal golf courses OR partner with the private sector to run them.

Antioch, California, for example, contracts out the operation of its muni golf course to a private company. Antioch Public Golf Course, Inc. and has been operating the city’s Lone Tree Golf Course since 1982 and has the concessions contract through 2033. The city does not subsidize it, and its operating results are not reflected in the city’s financial statements.

As Reason Foundation Vice President Adrian Moore put it, “Government-owned golf courses are a real head-scratcher. “They serve no public interest that the private sector is not already done well. Indeed, they are often a nice subsidy for relatively wealthy golfers, paid for by all the non-golfing taxpayers.” claims Moore.

“Ideally, local governments should be looking to sell this valuable real estate they are sitting on to pay down unfunded public pension liabilities, fund needed infrastructure repairs and expansions, and maximize the value for taxpayers rather than losing money on golf. “ he added.

Between home builders, companies looking for large swaths of land, and professional golf course management companies, many of California’s municipal golf courses would generate significant money in sales.

Some state legislators are eyeing these money-losing public golf courses as a way to help reduce the state’s housing crisis.

Calif.  Assemblymember Cristina Garcia, Bell Gardens, recently proposed a measure, AB 1910, to give local governments an incentive to convert their public golf courses into a mixture of housing and public open space.

Under the proposal, state redevelopment grants would be provided only for projects that make at least 25% of new residential units affordable units limit non-residential units to one-third of the development’s square footage.

While some of the restrictions are onerous and ideally would not be in the final bill, they are imposed as a condition for unlocking state grants and are necessary to build the coalition of support needed to advance the policy.

“There are important debates about how to best proceed with golf courses and properties, but, ultimately, governments shouldn’t own and operate golf courses when they lose millions of taxpayer dollars. says Joffe.

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