El Paso

El Paso Taxpayers Losing Money on Golf Courses

El Paso taxpayers have been paying for golf courses for decades under the guise of creating quality of life venues and as hoped-for economic drivers for the city. Every one of the golf projects have been money losers for the taxpayers. The city’s taxpayers own three golf courses.

They are the Butterfield Trail by the airport. The city’s taxpayers also own Painted Dunes Desert Golf Course in the northeast and the Ascarate Golf Course. According to a 2012 financial analysis of golf courses by Sageworks, golf courses have been losing money for several years, including all the El Paso golf courses.

Golf Courses Are Money Losers

Because of the losses in revenues for golf courses, the golf course market has shifted away from privately-held courses towards government owned properties. This shift seems to indicate that the return on investment on golf courses will not support private investment. Thus, golf course speculators need taxpayer monies to try and make a golf course work.

But the users of the golf course services – golfing, club houses and merchandise – have been declining. According to a 2014 Bloomberg report, the number of golfers has been declining since 2002. [Lindsey Rupp, How Golf got Stuck in the Rough, Bloomberg, June 19, 2014]

In 2002, there were nearly 30 million golfers who played at least once a year, according to a study by Pellucid, a golf industry analyzer. By 2015, the number had dropped to 21 million.

Golf revenues have also been declining for years. According to a report by SRI International, revenues related to golfing generated almost $69 billion in 2011. That is down from the $75.8 billion generated by the industry ten years earlier.

Ascarate Park Golf Course

El Paso taxpayers approved a special tax to fund Ascarate Park in 1937. [Laura Laramore, Analysis of Ascarate Park Golf Course, County of El Paso, June 27, 2018] The golf course was opened in 1955.

According to the County’s analysis of the golf course, public courses “accounted for 90% of the course closers in 2016.” The Ascarate report goes on to point out that the County has lost money on the golf course each year since 2008. The losses increased each year from $120,804 in 2008 to over $800,000 in 2017.

Painted Dunes Desert Golf Course

The Painted Dunes Desert Golf Course is owned by the Public Service Board, commonly known as the water utility. The course was purchased by the PSB for $1.87 million from a bank foreclosure in 2006, according to PSB documents.

On average, the El Paso water utility rate payers fund Painted Dunes for about $450,000 each year. Since at least 2014, the water utility has increased the subsidy to the golf course to over half a million each year.

Like the Butterfield Trail golf course, the Painted Dunes course was supposed to be an economic driver for El Paso. It was intended it would reduce the tax burden on El Paso taxpayers by additional housing around the golf course.

Hunt Companies, a local housing developer and part owner of the El Paso Chihuahuas baseball team playing at the taxpayer-funded ballpark, was supposed to purchase thousands of PSB land around the golf course to build a master-planned community. The plan called for building 14,000 new homes.

The land deal was cancelled in 2008, because Hunt could not get funding for the project. In 2018, city officials announced a land deal with Great Wolf Lodge. The Great Wolf Lodge deal fell apart earlier this year when the resort ended the agreement citing the Covid-19 pandemic.

Determining the true cost of Painted Dunes is difficult because the PSB reports its accounting activities under the umbrella of the Water and Wastewater Utility Fund without separating the golf course from the rest of the fund. As of this fiscal year, the fund owes $950,390,244 in debt through 2039. Of that, over $220 million is interest.

Butterfield Trail Golf Club

The City of El Paso owns the Butterfield Trail Golf Club through the El Paso International Airport. It opened on June 9, 2007. Kemper Sports Management was awarded the city contract to manage the golf course on August 24, 2005. The contract was for Kemper to “protect and maintain the assets of the Golf Course” and to “maximize revenue from the operations” of the course. Kemper has managed the golf course, under three-year extensions until May of this year, the agreement was terminated by city officials.

The City of El Paso wanted to close the golf course to reduce expenses “in response to the health and economic crisis”.

City audit reports for Kemper Sports Management in 2009 and in 2019 show that Kemper met the contract services as required. In 2009, Kemper was noted for improper expenses because of lack of supporting documents. In total, Kemper had less than $200 of reported expenses the auditors noted as improper.

Although Butterfield is not funded directly by the city’s taxpayers, it nonetheless uses monies from airport operations. That is money that the taxpayers are unable to use for other airport-related projects.

According to the El Paso International Airport, the Butterfield Trail golf course has also lost money each year since 2008. By 2010, the course was losing over $1 million each year. The airport reported losses of $849,391 in 2008. By 2017, the golf course was losing $1,184,565.

According to Tatiana Favela of KTSM, the Butterfield course has lost $19,434,988 through September 1, 2019. This is in addition to the $11 million the City put into building the golf course.

When the City announced the closure of the golf course it had planned on watering the course with water from its lake until the lake was depleted. Once depleted, the golf course would be allowed to die off.

Savior for Butterfield Announced

After closing the Butterfield golf course in May, the City of El Paso announced on August 11, 2020 that it had signed a new contract with Spirit Golf Management to run Butterfield for ten years.

The City of El Paso maintains that the new golf deal will become a “profit center” for the El Paso International Airport. [El Paso International Airport Presentation to City Council, slide 9] Like the previous arguments over public funding, city officials argue that keeping the golf course is “an important Quality of Life amenity”. [ibid, slide 2]

According to the City, the new deal “emphasizes profitability”. The presentation to city council states that the “concession model projects profit of $125K” for the first year. The agreement says that the rental payments to the city will be based on gross revenues from food, alcohol, green fees, golf cart rentals and pro shop sales. [ibid, slide 5]

A sliding-scale revenue sharing scheme is outlined in the agreement presented to city council based on a minimum of $125,000 annually increasing as revenues increase.

Cost To Taxpayers Continue To Mount

The County Ascarate report noted that the Ascarate Golf Course has cost the County’s taxpayers $4.1 million between 2007 and 2017. The report also notes that the Butterfield Trail Golf Course has cost the El Paso Airport $10.4 million over the same period and Painted Dunes Desert Golf Course has cost water utility customers $4.5 million.

In total, the cost to the El Pasoans has been $19 million through 2017. The losses have continued to mount since then.

The costs to El Pasoans are well over $34 million for the golf courses including their purchases prices.

City taxpayers have been funding a quality of life project that few El Pasoans use or benefit from. As long-term investments, golf courses are money losers.

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