After years of being stuck in a sand trap, the city of Napa may be about to hit safely onto the green.
The city is negotiating a lease with the management company that runs the Napa Golf Course at Kennedy Park, an agreement it hopes will make the course profitable and no longer a drain on city finances.
Officials said the lease could be signed by Feb. 1, making CourseCo Inc. financially responsible for the course that has been sucking General Fund money for at least the past decade.
“If this whole thing turns out well, as everybody thinks it can, we would have a positive cash flow for the city,” said Larry Mazzuca, director of the city’s Parks and Recreation department.
“The golfer out there playing today is going to benefit from this because the course will be in better condition (and) it guarantees that we can have our own municipal golf course. ... It’s a hell of a deal, a great thing for Napa golfers.”
The lease, which would take effect upon being signed, would bolster the course in the uphill battle that seems to be facing public and private golf courses everywhere, Mazzuca said.
“Courses across the country are losing money,” Mazzuca said. “Cities all thought golf courses were money makers, and then there became an over- saturation of golf courses. When the recession hit about five years ago, golf courses really started suffering. ... Ours was no exception, except that it was suffering before the recession.”
Mazzuca said for the first time in history, more courses are closing nationally than are opening. Younger generations are not latching onto the sport like their senior counterparts, he said.
Napa County is home to at least seven public or semi-public courses, and there are numerous others in surrounding cities.
About 35,000 rounds are played at the Napa Golf Course annually, a drop from the roughly 43,000 to 44,000 it hosted five years ago, Mazzuca said.
The lease would allow CourseCo to expand the course’s limited food and beverage service options and install a semi-permanent tent to host weddings, tournaments and other events that can supplement course expenses, Mazzuca said. CourseCo would, in effect, make the course not only a place for golf, but a place for special events of groups 150 to 175 people.
“It’s not increasing rounds of golf necessarily that’s going to change the course of golf in our community,” Mazzuca said. “It’s other things in addition to golf we could do to bring in revenue.”
Until now, the course lacked facilities to host large event, including golf tournaments, said Mazzuca, who described the tent as a well-built structure with cloth walls, hard wood floors, heating and air conditioning.
“We lost a lot of our golf because we didn’t have golf tournaments,” Mazzuca said, explaining that a fair amount of business likely went to the nearby Chardonnay Golf Club and Eagle Vines Vineyards and Golf Course, which are set up for events.
Mazzuca said the city turns down tournaments and weddings “all the time” because the course cannot currently handle such events. CourseCo, which conducted a market survey, said there is a place for an event venue that locals can afford.
“We think we can come in at a better price point than (surrounding courses) and offer a different type of experience,” said Michael Sharp, vice president of operations for CourseCo.
“We’re not trying to compete with the five star and $200 per plate facilities. We think we have a specific price point we can hit in Napa. We’re sitting on a gem here and we think once we get the people out here to show them the facility, they will give us the thumbs up and book with us.”
The subject of how to save the golf course and end ongoing General Fund subsidies is not a new one to the council, which in December, allocated $125,000 from city accounts to keep the course solvent through the current fiscal year. Since 2008, the council has spent $410,000 from its General Fund to keep the doors open, Mazzuca said.
Mazzuca said he did not know the specifics of subsidies in the five years before 2008, but said they were probably similar to the past five years.
“Since 2005, we’ve had one year the golf course has made money and it was less than $5,000,” Mazzuca said.
In 2011, the city raised fees on rounds of golf by several dollars, something Mazzuca said proved not to be enough. “It made a dent but it didn’t come close to addressing the issue,” he said.
About two years ago, the council told staff it no longer wanted to subsidize the course and directed them to find an alternate course of action. In November, 2011, the council discussed potential options for the course in a closed-session meeting.
“We brought to the council a list of what we thought were viable options,” Mazzuca said. A city may discuss real estate and property negotiations in private so as to protect the value of an asset, per open meeting laws.
Among the options presented to the council were to redevelop a portion of the property and keep only 9 holes; close the course and fence it up; or lease the asset, Mazzuca said.
Mazzuca approached CourseCo about the idea, which he said got a less-than-enthusiastic response initially.
“It was one of the worst times to do that because who wants to take someone else’s loss and make it their own,” Mazzuca said. Over the course of six or seven months, the Petaluma-based company, which runs public courses along the West Coast, from Southern California to Washington, came around to the idea, recognizing that leasing a course in Napa is an asset to a company, he said.
Under the draft lease, which is in the hands of CourseCo and may come before the city within a week, CourseCo would make an initial investment of at least $375,000 into the course. That would cover purchase of the tent, a parking lot upgrade, new landscaping, restoration of course paths and an upgrade to course drainage. Currently, the course can flood in small storms.
CourseCo will pay the city a base rent starting at $1,000 a year in the first few years, then increasing to more than $15,000 per year over the course of the contract, according to a city report. CourseCo will also pay a rent for the food and beverage space, also beginning at a rate of $1,000 and increasing to more than $25,000 per year. If food and beverage revenue exceeds that rent amount, the city will receive a portion of the sales.
Both CourseCo and the city would enter into a capital improvement plan for the course, each contributing a percentage of course revenue to a fund beginning in year four of the agreement. They would each contribute 2 percent of course revenue, up to $20,000. That cap will increase by $2,000 annually, up to $32,000 in 10 years, according to the city. The fund will be used to purchase equipment and make physical improvements to the course and facilities.
Sharp said capital investment in the course has almost been non-existent in the past decade because the city has not had money. Only last summer, for the first time in 10 years, did the city balance its budget without the use of reserves, following years of operational cuts and concessions by employees.
CourseCo would receive a 10-year-lease, which could be extended another five years. At the 15-year mark, both parties would have to agree to extend the lease another five years, for a total lease of up to 20 years.
The city stands to make at least $278,200 in the first 10 years of the lease, just from rent alone, according to a city staff report. The actual amount could be twice that if the revenues brought in through golf and events are higher than the base rent, the city said.
Of that pot of revenue, the city would pay a maximum of $182,000 over 10 years for course maintenance, regardless of how much additional revenue the city receives. The city could net at least $96,200 in 10 years, officials said.
Some have questioned the city’s plan to lease to CourseCo. Karen Stratvert, a Napa golfer, has voiced concerns over what have largely been behind-the-scenes negotiations.
“I find it deeply disturbing that there was no public input, and that this deal is being done without solicitation of bids from other parties,” Stratvert wrote in an email to the Register. “I expect government to be conducted in an open, visible manner.”
The city is not required to put a lease out to bid, per its municipal code, but Stratvert said she’d like to see that happen. She said the course is a public asset and the city owes it to its citizens to get the best available deal.
Former Councilman Mark van Gorder, who left the council in December when his term expired, was the only member of the board to vote in November against authorizing the city manager to execute a lease agreement. He said his dissent had nothing to do with the quality of the proposed lease, but rather with the little public input received on the pending agreement.
“I didn’t feel we had done enough to get public input,” van Gorder said. “I don’t have any issue with the Parks and Recreation Department’s recommendation or with CourseCo. I just think it could have benefited from a little more public input.”
On Thursday, the city held a meeting at the course to address why it did not issue a request for proposals to lease the course and why the matter was discussed in private.
“Why did we not go out (to bid)?” Mazzuca said. “I still have a (management) agreement with CourseCo for a year and a half. When we started this process, it was for 2 1/2 years. If my operator gets the idea that I want to test the market out, he has a clause in there that he can leave. In this economy, I might have a harder time finding another operator who would do as good of a job. On top of that, (CourseCo is) a good partner.”
CourseCo said it had discussed with golfers other ways to possibly improve the golfing experience. Sharp said it’s unlikely the Napa Golf Course will get into the business of high-end dining, but took suggestions ranging from expanding current food service hours to security to lighting the driving range.
Following Thursday’s two-hour meeting attended by about 15 golfers, golfer Jack Walters said he came to the meeting skeptical, but left happy after hearing the plans.
“I am all for the lease,” said Walters, who added that he didn’t have a problem with the city subsidizing the golf course. The city subsidizes its non-golfing parks, he noted.
Mazzuca said figuring out what to do with the course has consumed him for the past year and he feels the city has found the best deal.
“At the end of the day, what really drove us was what’s best for this community,” he said. “And we thought that this was.”