... Snack bar and Pro Shop sales are adversely affected, too
Mount Hood golf pro Mike Farrell had some unsettling news for the
days for golfers this year.
Park Commissioners at their November 14 meeting. Golf revenues were down $148,974
compared to the same period last year.
Farrell, who is also the operations manager and a member of GMC management company
which runs the course for the city, said the reason was the 64 days of rain that the
course had experienced since opening in March this year. Rainy days are not unusual
during the golf season, but 64 of them constitute two months, a significant cut in
the 10-month period that Mount Hood is open to play.
Farrell went on to point out that many of the rain days occurred in June through
September when the course experiences its busiest play.
Snack bar and pro shop sales suffered, too. In a subsequent phone conversation Park
Superintendent Joan Bell said the records show that snack bar and pro shop sales
were down $35,936 and $20,977 respectively. Add the $148,974 drop in golf revenues
and the course is down $205,887 compared to the same October year-to-date revenues
In previous years this would have been mildly disturbing news for the Commissioners
when the numbers only affected the golf course. A revenue drop of $200,000 could be
comfortably accommodated by a course that produced more than $2 million in revenue.
Course must pay for both itself and the new athletic field complex.
The situation now is much different. The course must be able to pay not only for
itself, but in addition for the cost of servicing the $5.2 million bonds used to
fund the new Athletic field complex, including the new running track at Pine Banks
which will be shared with Malden.
The $5.2 million in bonds was approved by the Melrose Board of Aldermen in May,
2011. It was a result of passing legislation that the Mayor and Aldermen initiated
in October, 2010. when the Aldermen set aside the provisions of the laws which had
prevented the city from taking money from Mount Hood
There is a perception that the golf course is paying for everything. But the $5.2
million bonds are not held by the golf course, they are held by the city. If the
golf course canít produce the money to pay for the bonds then it is the
responsibility of the city. Thatís why maintaining a high revenue at the golf course
is so critical. The $200,000 revenue drops are not welcome news to the individuals
who said the course will pay for everything.
The athletic field complex bond costs are to be paid from the excess of the costs of
running the golf course. This excess has accumulated over the years in the Mount
Hood Stabilization Fund. Each year an excess from running the golf course is added
to the stabilization fund.
Excess from 2009 not added until 2011.
In January this year (2011) $245,814 was added to the stabilization fund. This was
an excess not from 2010 operations, as one would expect, but from 2009.
The overage is made up of two elements. The first is how much the city clears after
it pays all its expenses; the second is how much the city receives when the golf
revenue exceeds $1.2 million.
The city receives 35% of all volume over $1.2 of total golf revenue. If the total
golf revenue is $1.5 million, the city gets $105,000. If the total golf revenue is
$1.7 million, the city gets $175,000. A comparison with an excess that runs at a
$250,000 level shows that a large portion of the excess that will go to the
stabilization fund depends on how much golf revenues exceed $1.2 million.
Conclusion: a high golf revenue at Mount Hood is necessary to pay off the cityís
$5.2 million bond obligation.
For the city to get the money it needs to pay off its obligation for the athletic
field complex, it will have to continue to provide the neat, little golf course that
Mount Hood is now and maximize the revenues it produces...with lots of sunny days,
December 2, 2011