... availability of funding will be an overwhelming issue.
When the Beals and Thomas consulting group presented its Feasibility Study findings to the Park Commission in early November the report contained information that would torpedo, if not sink, the proposal to build an athletic field at Mount Hood.
Earlier, the consultants had presented three different variations of an athletic field for the Commission‘s consideration.. One included a regulation-size running track, another required major modifications to the 17th hole and the third was a simplified version that, like the other two, had an artificial surface but was less costly and required little, if any, modification to the 17th hole.
In addition to the athletic field proposals, the consultant presented two proposals calling for major modifications to the golf course that included installation of a driving range and building an extra par 3 hole, both in the so-called fill area and a change which would considerably lengthen the 17th hole. The Park Commission’s job was to select one version from these options, so that Beals and Thomas could subject it to a more advanced study, in order to determine, among other things, a realistic cost for the selected option.
Park Commission Chairman Mike Interbartolo reviewing sites of proposed projects.
Prior to the selection at the Commission’s July 20 meeting, the consulting group had presented an overview of the proposed alternatives which included estimated costs for each one. Emphasizing that they were only rough estimates, the consultants' presentation showed a vast disparity in the cost estimates for each athletic field proposal. The running-track version, for example, would require a $3 million premium just to prepare the surface; the cost of the athletic field and running track would be extra. Estimated cost for the simplified version of athletic field, on the other hand, was significantly cheaper at $1.5 million.
Commission selects least expensive proposal for refinement
After deliberating the alternatives at its September 2 meeting, the Commission selected the simplified version of the athletic field. This choice was projected to be significantly less expensive than the other two versions and would have to deal with many fewer environmental issues. This was the version that was submitted to Beals and Thomas to be more fully developed.
Beals and Thomas returned in November with its fleshed out plan for the simplified version of the athletic field. Its projected cost was $4.2 million, a significant increase over the earlier $1.5 million rough estimate. This new cost struck at the heart of the plan that was to be used to finance the athletic field. Currently golf cost revenues are paying off the costs of two bonds. The bonds will be retired, that is payed in full, in the near future.
The bonds whose original value was about $1 million each would be paid off in 2013 and 2015 respectively. With the bond obligations gone, the revenue that had been used to pay for them could be used to pay for a new bond which would cover the cost of the athletic field. These freed up revenues would be be adequate to fund a $2 million bond. This would not cover the costs of funding for the athletic field, however, which would require a $4 million bond.
In the past, funding for improvements to the course have been supplemented with grants from the State. The one needed for the athletic field would have to be the biggest ever.
The new, projected $4.2 cost has severely complicated the funding issue. The original, rough $1.5 million estimate would have allowed for an almost seamless switch from the paid-off bonds to the bond required to fund the athletic field.
Funding issue goes unnoticed at Aldermen's Appropriation meeting
This funding issue has gone almost unnoticed in the current contentiousness about the athletic field. The issue involved in the wrangling is about the field itself. The environmentalists and Mount Hood neighbors who fear that the auto traffic involved with the athletic field and golf course threatens the safety of their streets are forcefully objecting to building the field. People like coaches and parents of kids who participate in lacrosse, field hockey, and soccer say the field is badly needed to accommodate these programs.
No one at the recent Aldermen's Appropriations meeting asked how the golf course revenues would be able to finance the athletic field. Remarks like, “The City can’t afford $4.2 million right now” were made by a number of people. Most meeting participants didn’t recognize that the money involved is not tax money but golf course revenues.
The subject of the Appropriations meeting was whether the Aldermen would ratify the $30,000, money that had been set aside by the Park Commission, to fund three studies which would allow the commission to conclude the feasibility study involving the athletic field. This money had already been set aside by the Park Commission, and this too, is money from golf revenue, not taxes. One of the studies about traffic could very well support the contention that the increased traffic from the athletic field would be a hazard to adjacent neighborhoods.
The meeting attendees were reminded a number of times by the aldermen that the meeting was not to approve or reject the athletic field but to ratify $30,000 for the studies and that approval of the funding did not constitute an approval for the athletic field.
Despite the rancor that was being expressed about the athletic field, which was not the subject of the meeting, the Aldermen approved funding the three studies in a 9 to 2 vote.
When the feasibility study is finished and the Park Commission brings its recommendation to the Board of Aldermen, it will contain the findings of the studies.
At this same meeting, the entire Park Commission came forward to sit together in a body. Although they were there to address any questions, Commission chairman, Michael Interbartolo acted as their spokesman.
Commission Chairman said golf course gave over $200,000 to the City in 2009
After answering many of the charges made by the previous speakers, he made a very significant statement. The golf course gave more than $200,000 to the City last year.
A real unstated issue is will the city allow funding the construction of the athletic field, or any other facility, at Mount Hood when the current bonds are paid off or will it take the golf revenues previously used to pay for the bond instead?
Total revenues at Mount Hood in 2009 were $2,173,435. This is an increase of $1,943 over 2008 revenue. The amazing thing is that the previous year, 2008, was Mount Hood’s best year ever. In a recession-plagued year when other businesses were suffering major revenue declines, Mount Hood golf course eked out an increase without any raising of its prices.
The city in 2009 benefited from the Mount Hood operation in three ways. First, the course paid $165,000 in bond payments. At least some of this money was to pay for the bond that covered the damage resulting to the Mount Hood Park (not the golf course) from the big dig fiasco. Instead of paying for damage to the park from city revenues, i.e. taxes, it instead pushed the costs to the golf course.
The second way the City takes money from the golf course is to charge it for “indirect costs” i.e., indirect costs to the police department, etc. In 2009 the City took $121,188 for these indirect costs, up from the $106,728 the City took in 2008.
The third way the city takes money from the golf course is for “payment in lieu of taxes”. In 2009 this amounted to $99,061 up from $57,210 in 2008.
The above numbers show that while total revenues at Mount Hood for 2009 increased by $1,943 over 2008, the city took $56,311 more from the course in 2009 than 2008.
A question to be asked is, if the city were not taking these monies from Mount Hood would the course have enough money to fund an athletic field when the bonds are paid off?.
Another question is, will the $165,000 now being used to pay for the bonds find its way into the “indirect costs” and “payment in lieu of taxes” after the bonds are paid off?
Another is, will the city increase the amounts it takes from the golf course by an amount larger than the increase in golf course revenues, like it did last year?
The reason that financing an athletic field at Mount Hood is a long shot is that the way things are going now the city may have other plans for the money.
Writer's note:> Sources for the above numbers. 2009 revenue and costs from Melrose Park Department. 2008 costs from Melrose Auditor's Office.
March 5, 2010