On November 13, Cook County commissioners agreed to commit $3.1 million of the county’s 1 percent recreation and infrastructure sales tax revenue to improvements at Superior National at Lutsen (SNL) golf course. However, the motion to earmark that amount for the golf course did not pass unanimously and there were some questions about the future management of the course. At the subsequent November meeting of the Cook County – Grand Marais Economic Development Authority (EDA), board members heard a proposal on managing the golf course from the consultant hired by the county to study golf course operations, John Wait of Sirius Golf Advisors.
Wait, of Waxahachie, Texas and Jacksonville, Florida, was hired by the county in May 2011 to evaluate operations at SNL, along with subcontractor Jeff Brauer, with GolfScapes Inc. of Arlington, Texas. Sirius Golf Advisors provided recommendations on golf course operations and was then hired to complete a business plan for the course.
Wait helped the EDA board convince the county board that it should invest the $3.1 million of 1 percent recreation and infrastructure sales tax in Superior National, telling commissioners that not enough money has been invested in marketing or maintenance in recent years. Wait said although the golf course has not been subsidized by the county to date, if nothing is invested in the course, he predicted it would deteriorate to the point where it would run at deficits of up to $150,000 a year.
However, with the renovation and expansion of SNL, Wait and Brauer believe the golf course would continue to benefit the county in the form of sales tax, property tax and lodging tax. At a special meeting on November 13, Wait told the EDA that the business plan estimates an annual positive cash flow of $66,000, up to $94,000 by 2017. Wait also said he anticipates about 18 fulltime employees during construction and 8.8 full-time employees after.
Wait told the EDA he would like to continue to be a part of the improvements at SNL. He presented a draft contract with four possible options for continuing his consulting services, ranging from continuing his current contract to an option for Sirius Golf Advisors to serve as the SNL management company. Fees ranged from $2,600 per month to $5,800.
Wait said he didn’t feel that the EDA used his services enough under the current contract which included only three site visits. Wait said, “I don’t think that is enough. I don’t think that I was ‘used’ enough.”
He recommended increasing his fee to $2,600 per month, which would include 22 hours per week and four site visits. He also gave estimates for assisting with marketing— handling negotiating graphic design and ad placement. “One of my biggest disappointments this year has been marketing. We talked about billboards and changes to the website. We talked about it, but nothing got done,” said Wait.
Wait said he was confident that the business plan he has developed will make the golf course successful, but he said it needs to be implemented. He said less than 30 percent of the things in the business plan had been implemented. “I think Bob [Fenwick] has done a terrific job, but his attentions have been focused on the political side—on getting this course funded—as he needed to be,” said Wait.
Wait said as a consultant it is not his job to follow-up to see that the things recommended are being done, but he told the EDA that he had followed up anyway. He said he was disappointed to see that the point-of-sale (POS) system, which the golf course spent a lot of money on, was not being used. He also went on-line to check tee times and found that the system was not working. It was fixed, but not before part of the golf season had passed. “That was frustrating,” said Wait.
Wait also noted that most of the vendors who work with the golf course offer discounts if bills are paid within 10 days. By only paying bills once a month, the golf course is losing an option for saving money. “That is something a managing firm would do. It would take on accounts receivable and made sure invoices are paid in a timely way for savings.”
Wait said, “We need to make sure that what we’re working on gets executed. My fear is if it is not implemented, the EDA will lose credibility.”
Wait said he would be happy to continue as a consultant under the first option, but he said he thought the golf course would benefit if the EDA chose one of the other options which would give him more time and involvement with SNL. “I’m charging about half what a big management company would charge. And you’ll recover these fees, I promise you,” he said.
“I think it’s what you need. I think I have the advantage of being an insider, with an outsider viewpoint,” said Wait.
The board thanked Wait for the proposals. After he left there was some discussion of the various options. Mark Sandbo said he was not comfortable with the most expensive option, but said, “Maybe what we end up doing is a combination of the different options.”
Bruce Martinson said he wasn’t sure that the EDA needed Sirius to act as management, but he said now that they have a business plan, they need to see that it is followed.
Mike Littfin said, “I see the golf course as three distinct departments—Bob [manager] on the political/financial side; Mike Davies who takes care of the grounds; and Greg Leland in operations and marketing. We may need to reevaluate structure and how it’s working; how it’s taking us forward.”
Martinson said looking at the business plan that Wait put together for the course, he didn’t see where they could afford to increase what is paid to the consultant.
The board agreed to discuss the options further at the next EDA meeting which will be Tuesday, December 11 at 3 p.m. at Grand Marais City Hall.
In other business:
. SNL Manager Bob Fenwick said that the grant application for the golf course improvements to the Iron Range Resources Board has been submitted. He said IRRB representatives made a site visit to SNL and they seemed supportive. Fenwick said one of the representatives said improving the golf course would be a good use of IRRB funds.
Fenwick also said he had talked to Bruce Kimmel of Ehlers and Associates, a bonding consulting company and had been told that bond interest rates are very favorable right now. Fenwick said that is good news for the EDA’s effort to bond for part of the golf course project.
. Mark Sandbo gave an update on the EDA’s litigation with SEH Engineers regarding Minnesota Pollution Control Agency (MPCA) fines at the Cedar Grove Business Park. The EDA is being represented in the matter by Kim Kozar of the League of Minnesota Cities. Kozar contacted Sandbo to tell him that SEH has turned down the EDA’s proposal, so the case would be going to court. Kozar will inform the EDA of the court date.
. Mark Sandbo logged on to the new EDA website so the board could review it. The web addresses are grandmaraisEDA.org and cookcountyEDA.org. Both addresses take viewers to the EDA’s website, which is titled “Prosperity North.com.” Everyone was pleased with the website, which will continue to be updated.
. The EDA board discussed the need for cash flow at the start of the golfing season. In the past the EDA has gotten a loan from the county, which it repays with interest. At the end of the golf season this year, the EDA repaid the county $227,250. Mark Sandbo noted that it would better for the EDA to have a line-ofcredit from the county to meet cash shortfalls at the beginning of the season, instead of a loan. That way the EDA would not have to pay interest on the amount not borrowed. The board agreed to seek a line-of-credit from the county for $225,000, to be drawn from as needed for the coming season.
. Scott Harrison presented a draft vision and mission statement for the board to review and discuss at a future meeting.
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