The Bremerton City Council Wednesday approved with a 6 to 2 vote a new contract for Columbia Hospitality to take over operations of Gold Mountain Golf Course.
City Council President Jim McDonald said early in the week that he was confident the board would approve the proposal when the vote came.
Councilmember Greg Wheeler, from the beginning, has been the lone voice on the council opposed to hiring Columbia Hospitality, which already manages the city’s conference center, to run Gold Mountain because the firm has no experience in the golf course management business.
Wheeler felt the Gold Mountain contract should have gone out to bid nationally and said he would vote against the Columbia deal as a matter of principal.
The second no vote came from Councilmember Adam Brockus, unexpectedly.
At least two golf course management firms, Billy Casper Golf and Hampton Golf, have contacted city officials and expressed interest in Gold Mountain.
Scott Winch, a vice president and general council for Hampton Golf, sent the city council an email on September 5.
“I believe you understand the intricacies involved in operating such an important asset, so to retain a company with no experience in managing a golf courses without even reviewing a competing bid could be catastrophic for the city,” Winch wrote. “Although I am obviously biased to Hampton Golf, I implore you to at least review a management proposal from one competing company, even if the review is solely to assist in negotiating the management agreement with Columbia Hospitality.
Rob Waldron, the business development manager for Billy Casper Golf, which operates more than 130 golf facilities coast to coast, with properties in 27 U.S. states and the District of Columbia, contacted the city in July.
“We have been following the challenges the City of Bremerton has been facing with the operation of Gold Mountain Golf Club for the past several years,” Waldron wrote. “You are not alone. Municipal golf courses across the country have been fighting downward trends in rounds and revenue while faced with escalating operating expenses resulting in lower profit contributions to municipalities.”
Waldron said his company has been able to buck that trend through creative marketing and attention to detail when it comes to course conditions, customer service and cost controls.
City Council President Jim McDonald said this week that Gold Mountain management was not put out to bid for a couple of reasons.
“You know, there’s obviously stuff we could have learned,” he said. “The issue is a couple of things, what cost would that of been? We probably would have hired somebody to put together the proposal and evaluate that for us. And what would it mean for the employees at the golf course that have made the golf course what it is today?”
Specifically, McDonald said that the council wanted to make sure that longtime Head Golf Pro Daryl Matheny and longtime Golf Course Superintendent Ed Faulk were kept at Gold Mountain.
“I’m pretty confident (an outside firm) would have brought their own people in and there’s a good chance you would have lost the personnel that have worked very hard to make the course what it is today,” McDonald said.
McDonald also doesn’t believe that hiring a company with no golf course management will be catastrophic.
“I don’t think that’s true and, there again, when Columbia Hospitality hires the guy that’s the pro out there and they hire the groundskeeper, all of the sudden they have all the local experience they need because that’s who’s been doing the course.”
McDonald also noted that the city can opt out of the new contract if things don’t work out and put Gold Mountain management out to bid at that time.
“I think it’s worth giving a shot,” McDonald said. “If it doesn’t work, it’s gonna make for an easy transition to go out and bid it because we’ll have all the numbers, which we didn’t have unfortunately because of the way it was set up. It’s not a permanent situation if we don’t want it to be permanent, but I think it’s going to be very successful.”
Apparently the folks at Columbia Hospitality think so to. Gold Mountain’s net income last year was $409,008, but according to a financial projections put together by the company, they conservatively hope to increase Gold Mountain’s net income by about $100,000. Moderate projections would increase revenue by about $150,000 and aggressive projections would increase revenue by about $230,000.
According to the terms of the contract proposal, Columbia Hospitality will receive a 5 percent base management fee and a 20 percent incentive fee for any net income above $600,000.
Based on city projections, Columbia Hospitality’s management fee for 2013 will be $185,048 and the city would be in the black by $466,864 before any consideration is made for debt service or capital reserve. With debt service and a targeted 4 percent of revenue set aside for capital reserve, the city would be in the positive by $36,796 ($282,030 for 2013 debt service and $148,038 reserved for capital).
A $5 million bond was issued in 1996 for the Olympic Course and $3.1 million bond was issued in 2001 for the clubhouse.