Although not on the agenda, discussion of a new concept for management of Superior National at Lutsen golf course in Lutsen took up a large part of the Tuesday, June 8, 2010 meeting of the Cook County – Grand Marais Economic Development Authority (EDA).
At the start of the meeting, “golf course presentation” was added to the agenda under Superior National business and when the time came, EDA Board Member Mark Sandbo, a member of the EDA golf course committee, Scott Harrison of Lutsen Resort, and Mike Larson of Lutsen Real Estate led the EDA board through a presentation entitled Superior National Golf Course:
Fulfilling Original Promise of a Vital
Recreational Asset.
Larson said the presentation had been put together by the EDA golf course committee and the recently formed Friends of Superior National. Larson explained that the presentation was a concept to be considered. “We’d like to discuss this so when people talk about the future of the golf course we are all on the same page,” said Larson.
Sandbo clicked through Power Point slides, briefly describing the state of Cook County’s tourism economy, the history of Superior National at Lutsen and its current status, and finally offered a possible solution for the challenges facing Superior National. Sandbo said the proposal would stabilize the golf course’s financial needs and provide for stable, long-term management.
A consistent theme was carried through the presentation—Superior National at Lutsen is a world-class golf course that is not being marketed to its maximum benefit and capital expenditures are not being made to maintain the golf course’s premier status.
Regarding the lack of re-investment in the golf course, Sandbo credited Golf Course Superintendent Mike Davies for doing the best he can with his budget. “Mike and his crew have been patching patches and rewelding welds, etc. There is $1.5 million of deferred capital equipment,” said Sandbo.
“We have a helluva asset here,” said Harrison. “It is not being used to its full potential.”
Bond payoff plan
Thefinancial piece of the proposal is three-pronged. First, it calls for use of $440,000 of the county’s paymentin lieu-of-taxes (PILT) funding to pay off the remaining golf course bonds.
EDA Board Member Hal Greenwood questioned whether PILT funds could be used to pay off the golf course bonds. PILT is an entitlement paid by the federal government to counties in which it owns land, such as the Boundary Waters Canoe Area Wilderness (BWCAW). The entitlement is paid because federal lands provide no direct fiscal benefits to support schools, roads, and other infrastructure. Greenwood suggested that the golf course group talk to County Auditor-Treasurer Braidy Powers to ascertain if PILT money could be used in this manner.
If PILT could be used to pay down the golf course, the proposal is to use the funds held in the EDA’s Minnesota Association of Governments Investing in Counties (MAGIC) account to pay the remainder. The EDA is required to keep funds in the MAGIC account as a backup fund from which to pull bond payments in a budgetary crisis. Since the MAGIC fund has not been used, it can be applied to pay off the golf course bonds when the final payoff is near.
Using PILT and MAGIC funds to pay off the golf course bonds would save the EDA $180,000 in interest, said Sandbo. That money could be used to market the golf course—and Cook County, bringing more visitors and more money to the county.
The second part of the proposal is to use $1.2 million of the 1% sales and use tax enacted in April 2010. Sandbo said the 1% funding would pay for immediate golf course improvements, such as equipment, sand traps, tees, and irrigation. He added that when the golf course first approached the county for use of the 1% sales tax funds, it asked for $950,000 for capital improvements at Superior National. However, he said the true cost of necessary improvements is $1.2 million.
“There has been no new equipment at the golf course for six years,” said Harrison.
“This concept gets us back to ‘par’—no pun intended,” said Larson.
Once the golf course’s immediate needs have been met, the proposal calls for an increase to the EDA’s levy of $140,000 per year to fund future golf course capital needs.
New management model?
In addition to the concept for stabilizing golf course finances, the group proposed a change in management. Sandbo asked the EDA board what it felt was the best model for management of a golf course—the current organization or one that allowed for private management by people skilled in golf course operations? Sandbo asked if the EDA wanted its director to spend time managing a golf course—or spearheading other economic development activities?
Sandbo answered that he felt it would be better to lease the long-term management of Superior National to a new non-profit corporation with a board of directors with countywide representation. The proposed non-profit board would consist of interested community members with knowledge of golf course operations. He suggested that the Cook County Events and Visitors Bureau (CCEVB) could assist in selecting the citizens to serve on this board. The nonprofit corporation would not be owned by CCEVB, interjected Larson, but they would work together to market Cook County—and Superior National.
Larson said the golf group made a similar presentation to CCEVB yesterday and they were interested. “Obviously this will need some tweaking,” he said. “But they are on board. We want to know what the EDA thinks.”
EDA endorses concept
EDA Director Matt Geretschlaeger lent his enthusiastic support. “You guys are right on with this. Conceptually this is the people supporting the people’s enterprise,” he said.
Board Member Hal Greenwood expressed his support, but reiterated that use of PILT funds would have to be researched.
EDA Board Member Don Davison spoke up. “Frankly, I think it’s too much, too soon. I don’t think we can go to the county board with a Power Point presentation. We need to know the nuts and bolts of how this would work. It’s too preliminary.”
Greenwood replied, “I think it’s almost too late.”
Sandbo said that this really wouldn’t be new discussion for the county board. EDA Chair Mike Littfin agreed, noting that there has been a great deal of debate over the future of Superior National in recent months. “We’ve been asking if we should go as far as selling the golf course. We need to consider all this anyway. In reality, what would the EDA do in four years when the bonds are scheduled to be paid off? I don’t think we want to own a golf course. If we can get the golf course to stand on its own, the EDA can move ahead with other matters.”
Larson asked, “So you’re willing to authorize us to move ahead with this?”
The EDA’s response was affirmative— Hal Greenwood made a motion to endorse the concept and to authorize the golf course group to present the plan to the City of Grand Marais and Cook County. The motion carried with Greenwood, Sandbo, Bruce Martinson, Jan Sivertson, Jim Hall, and Mike Littfin voting in favor. Don Davison cast a nay vote.
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