Supervisors whacked a drive down the middle of the fairway in accepting and debating a report on Eagle Valley Golf Course problems, but then kerplunked into a water hazard Thursday.
To put it in less sporting terms, the Carson City Board of Supervisors accepted a performance auditors' report on lease terms with golf complex operators. But it couldn't agree yet regarding what to do next.
The water hazard?
"We're in a box," said City Manager Larry Werner, noting wastewater effluent goes to Eagle Valley. He said the wastewater problem means if the operating firm that leases the two courses should walk away, there would be an immediate $500,000 impact.
The Moss-Adams internal audit work, called a cost recovery analysis, determined the Carson City Municipal Golf Corp. isn't meeting lease obligations to the city. It made recommendations that included, among other things, enforcing lease terms, renegotiating or re-bidding the lease.
The report sparked testimony from representatives of Silver Oak and Empire Ranch golf courses, two private Carson City links, urging action to alter matters because of advantages the city-owned but leased links enjoy.
Those testifying on behalf of the private courses said the city-owned courses don't pay property tax, competing with private sector firms in a golfing environment ravaged by the recession and fewer players.
Jim Kepler, Eagle Valley manager, said the two courses pay sales tax and are very functional, serving a need in the community while financially clawing their way back to what he called "the right track."
Supervisors weighed in as well.
"This issue is much more complicated than just Eagle Valley," said Supervisor John McKenna. "It may not be dealt with as fast as people think it should be dealt with, but it's being dealt with."
Supervisor Brad Bankowski expressed concern that lease payments aren't providing cash flow to help meet bond payments, so the sinking fund of $707,000 is eroding. He said the third option is city general funds.
"We have a case of default that's been going on for years," he said. He worried the sinking fund could be depleted in less than four years.
Werner, however, said sewer funds could be tapped rather than general funds if necessary.
Supervisors voted to accept the report, but Supervisor Karen Abowd's motion directing staff to renegotiate the lease and get an operating budget from Eagle Valley died for lack of a second motion.
Supervisors reviewed two other reports from Moss-Adams on options regarding public defender protection for the indigent and other city facility cost recovery. All three were presented by Mark Steranka of Moss-Adams LLP.