As financing for the next phase of the project gets worked out, renovation of Superior National at Lutsen golf course continues. The Cook County/Grand Marais Economic Development Authority (EDA), which operates the golf course, is pleased with the work done to date by MidAmerica Golf. At the last EDA meeting on August 12, Bob Fenwick, project manager for the EDA, said the weather has caused some delays. It is doubtful the new holes will be open in the spring of 2015 as hoped. The opening will likely be in early July 2015.
The Cook County/ Grand Marais Economic Development Authority (EDA) appeared before the county board on Tuesday, August 26, 2014, asking the board to schedule a public hearing on the EDA’s proposal to have the county issue tax abatement bonds for $2 million to fund continued improvements at Superior National at Lutsen (SNL) golf course.
EDA President Mark Sandbo gave a brief history of the funding for the golf course and reminded the county board that it had hired Consultant John Wait of Sirius Golf Advisors in 2011 to come up with a long-range plan for Superior National. “We’re in the middle of that reconstruction,” said Sandbo. “But the bonding for this project, we feel is important, to finish this project and bring it up to be one of the premier golf courses in the state.”
Howard Hedstrom, who was appointed to the EDA board in January, said, “I’m new to the EDA, but the EDA is not new to the golf course business.”
Hedstrom shared what he had learned in his brief tenure, that the EDA had created a plan for development of SNL with Golf Course Architect Jeff Brauer of Golfscapes. He said phase 1 of the improvements would be done in September 2014 and phase 2 is expected to be completed by mid-September 2015. Hedstrom said the EDA has been handling all the “mundane details” of the construction project.
Hedstrom said the EDA was surprised when it learned from its bonding firm Ehlers & Associates that it was going to be very expensive to seek traditional general obligation bonds. “We found out that if we go out for tax abatement bonds, we’d save $1.4 million over the term of the contract.”
Hedstrom asked the county board, “Why wouldn’t you want to save $1.4 million? It makes the chance for success for the project that much better.”
Hedstrom acknowledged that the county didn’t want to go for the tax abatement bonds, unless the Lutsen Tofte Tourism Association (LTTA) agreed to be the guarantor for bond payment. LTTA agreed, Hedstrom said, with the understanding that LTTA would manage the golf course. Hedstrom said such an agreement had been approved at the last EDA meeting, which was August 12.
“I’m comfortable with what we’ve put together. It looks like all the parties are on board. The next step is a public hearing to get the tax abatement bonds,” said Hedstrom.
The agreement states that the EDA and LTTA have agreed to joint responsibility for the payment of the Tax Abatement Bonds. The agreement further reads: As a condition to LTTA agreeing to assume responsibility under the terms of the Bond Agreement, LTTA requires that it control the management of the Golf Course and the EDA has agreed to allow such management, according to the terms and conditions hereinafter set forth in this management agreement.
Commissioner Sue Hakes asked EDA Treasurer Scott Harrison to speak about that agreement. Harrison came forward to explain that under the agreement, LTTA will have what equals a year of golf course bond payments taken from its lodging tax collections and held in reserve. The reserve fund of lodging taxes will be used if net revenues of the golf course are not sufficient to pay the bond payment. Harrison noted that with the agreement the LTTA had made a commitment to accept a $2.8 million risk— to pay $140,000 per year for 20 years if necessary.
Commissioner Hakes asked if the Lutsen, Tofte and Schroeder townships, which administrate the lodging taxes, were in agreement with use of the lodging taxes to cover the bonds. Harrison said the agreement had not yet been presented to the townships as the EDA wanted to first complete the agreement with LTTA and get the go-ahead from the county. Cook County Chamber Director Jim Boyd said that the agreement with the towns should be in place before the public hearing.
Commissioner Heidi Doo-Kirk, who sits on the EDA board, said, “With the declining appearance of the golf course, the golf course had made their $180,000 bond payment annually and we’re $40,000 less— and we’re going to have an improved golf course. We’re going in the right direction.”
Commissioner Garry Gamble noted that the county’s primary concern is seeing that the taxpayer is protected. He said, “…We can debate the nature of golf and different courses, resort courses versus municipal courses, in cities or outside of cities, but what it comes down to for me as a commissioner is not an issue of our tactical approach, it’s a financial one.”
Harrison pointed out that an additional condition of the agreement with LTTA is a commitment from the tourism entity to pay $50,000 toward marketing Superior National each year.
The board agreed to schedule a public hearing in the commissioners’ room on Tuesday, September 3 at 10 a.m.
The $6 million golf course renovation project has received $3.1 million from the county’s 1 percent local option sales tax and $600,000 from the Iron Range Resources & Rehabilitation Board (IRRRB).
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