...uses Enterprise Fund to circumvent City Charter provision that would keep golf course revenue at Mount Hood.
Waiting to tee off at the first.The Melrose City Charter is a document that provides a framework of how our city operates. It provides, for example that we will be governed by a mayor and a legislative body consisting of Aldermen It says how many Aldermen there will be and when and how often they and the mayor will be elected. It establishes a School Committee and states how many members it will have and when they will be elected. In summary, it is a very important document that establishes how our city will be run .
One of the many provisions of the charter includes an act that established a municipal golf course and recreation center at Mount Hood. The act says that all money received from operations shall be paid into the city treasury and kept in a separate account. The City may appropriate money from this account “for expenditure only for the development, maintenance, and operation of said golf course and recreation center.”
In summary, money earned at Mount Hood stays at Mount Hood.
This very specific condition set down in the City Charter now has all the value of Confederate money. The Enterprise Fund, used by the City to control financial operations of Mount Hood and its money-producing golf course, has circumvented the limitation.
Information comes out at public meetings
The information that lead to the elevation of this issue came about as a result of the Feasibility Study that was conducted by the Park Commission. Retaining a top-notch consultant, Beals and Thomas, the commission was looking to develop alternative facilities that would improve and add to the recreation options available for citizens at Mount Hood.
The Commission held a number of public meetings to discuss the consultant’s proposed alternatives. Some of the meetings drew large crowds and some were sparsely attended. The proposed alternatives narrowed down to an artificial-surface athletic field which had been offered in three variations, all of which would be built in an area close to the 17th hole.
Locating the new field at the vicinity of the 17th hole would certainly increase the traffic on Slayton Road, an already sensitive issue because of the cars using it to get to the golf course.
The alternatives had produced a battle between two groups, people who were stressing the critical need to accommodate the expanding youth programs involving soccer, lacrosse, and field hockey and people who felt the field threatened the environment because of the land and tree clearing involved. The latter group included people living in the vicinity of Slayton Road who see the environment that’s threatened is their neighborhood.
The issue was especially tough for Ward Six Alderman Peter Mortimer, a two-team soccer coach and the Ward Six Aldermen. The Slayton Road neighborhood is in his Ward, and this issue was emerging during his run for reelection.
His alternative, locating the field in the "fill area", the scene of the infamous Big Dig dumping fiasco, was not possible. Access to this location would require a road being built out to Route 99, and the abutters have long-term leases to this land with options to renew. Additionally, the Big Dig glacial fill that had been dumped was still under the grassy field that covered it and was not conducive to a synthetic surface.
Alderman Mortimer energizes athletic field debate.
Although the Alderman’s alternative is not possible, his participation very much energized the debate. His article that appeared in both Melrose weeklies undoubtedly caused the large turnout at the November 10 Park Commission meeting where people stood up and spoke out about where they stood on the issue.
For all of the Alderman’s remarks about the athletic field, the ones he made that had nothing to do with the athletic field at all were the most edifying.
At an earlier September 14 meeting the Alderman said to the Park Commission, "You have all the money … the City doesn’t. Mount Hood has more money than the City has." He was going to propose that the Massachusetts Legislature change the provision of the Enterprise Fund that keeps all the money at Mount Hood.
The Alderman was stating a very popular point of view, namely that the golf course had a lot of money and that the City had no way of getting at it, because of some kind of a limitation that prevented it from taking money from Mount Hood.
The limitation, as later investigation proved, was the one that was established by the City Charter, not the Enterprise Fund. That limitation was not at all clear at the September 14 meeting.
A surprise from the Commission.
It was a surprise to many to hear Park Commissioner Mike Interbartolo respond that, after all of Mount Hood’s expenses had been deducted from its revenue, $275,000 remained. Of that amount the City had taken $200,000.
Mount Hood had paid the $200,000 to the City “in lieu of taxes.”
"In lieu of taxes" is a provision of the Enterprise Fund, a system which governs the financial operation of Mount Hood. The Enterprise Fund is a procedure established by the State that municipalities can use to run the financial operations of an entity like Mount Hood. What the Fund does is to provide a way of containing all the revenues and expenses involved in operating Mount Hood within the Mount Hood Enterprise Fund. All of the course’s costs, both direct, such as salaries, and indirect, such as health insurance, can be charged to this Enterprise Fund.
Additionally, all the revenues collected from the golf course are kept within the Enterprise Fund. It prevents money from being siphoned off for other purposes not related to the course. It also prevents, at least in principle, expenses not involved in running the golf operation from being charged to the course.
Enterprise Fund enables charge for "payment in lieu of taxes."
The course operation is obliged to pay its expenses. One of them that the State allows is the City to charge the Enterprise Fund “payment in lieu of taxes.” The State describes this payment as “expense or revenue if it had involved a private party.”
How much the City can charge to the Mount Hood Enterprise Fund is not based on the course’s revenue but on the City’s assessed value of the course itself, an amount which is very much larger. The City is allowed to use its commercial tax rate multiplied by the assessed value of the enterprise’s land, buildings and personal property.
Mount Hood’s assessed value for 2009 is a little over $8 million. The city’s commercial tax rate is 17.5% which, when multiplied by $8 million would allow the city to charge the Mount Hood Enterprise Fund $1.4 million as a “payment in lieu of taxes.”
Clearly the course does not have that much money available, but it seems that the “payment in lieu of taxes” provision enables the city to take just about everything the course does “make”; that is, the money that the course has left after it has paid all of its expenses.
City takes 72% of golf course revenue after expenses.
This amount, according to the Park Commission chairman, is $275,000. The city’s cut is a little over 72% or $200,000. This money goes into the city’s general fund along with other revenues, like taxes.
What should be noticed is that this is not a one-time event, the city will be able to use the same budgeting procedure next year. There will be an Enterprise Fund Budget for next year and for the year after that. If the city increases the “payment in lieu of taxes” amount each of these years the cost of operating the course, according to Enterprise Fund rules, goes up. It provokes the question should golfers expect rates to go up even when the cost to operate the course doesn’t increase until the “payment in lieu of taxes” amount is added?
One of the reasons prompting the Mount Hood Feasibility study is that a bond issued to pay for upgrades to the course in the 1990’s will soon be paid off. The golf revenues being used to pay off the bond will become available to fund improvements to the recreational opportunities at the Park such as the proposed athletic field .
The question that arises is why would the city use Mount Hood revenues for things like athletic fields when it can take them to pay for city expenses?
When John Bensley of Beals and Thomas consulting group presented the updated plan for the proposed athletic field to the Park Commission’s November 10 meeting, it contained a painful surprise. Of the three alternatives which had been proposed earlier by the consultant the one the Park Commission chose to be developed was the cheapest and least disruptive to the environment. Earlier estimates for this choice had been in the million-dollar area.
Bensley submitted a new estimate for the fleshed-out plan he was presenting to the Commission … $4 million plus any costs necessary to deal with environmental issues which are expected to be many.
The proposed plan still has to undergo an environmental review by the City Conservation Commission and a traffic study which will examine the effects on the neighborhoods that will be affected by the new field. After that, the Commission will have to go before the Board of Aldermen for its approval of the bond that will be issued to cover the costs of the athletic field.
Will the city keep the golf money to pay for its own projects?
What the unspoken issue will be then is whether the Aldermen will approve a plan that will use money that will flow to the city in “payment in lieu of taxes” to build an athletic field instead?
Using the Enterprise Fund to operate Mount Hood has changed the discourse from which improvement do we fund with Mount Hood revenue to whether we fund any improvement at all and let the city take the money instead.
December 4, 2009