[W.H. Cosgrove]

This appeared in The Tacoma News Tribune this morning.  Comments?  Is this the appropriate relationship between govt and news?  Think a water side course in Tacoma Washington can survive after spending 20 million to build it?

 
Diamond in the rough deserves polish

DAN VOELPEL; THE NEWS TRIBUNE
Published: September 21st, 2005 12:01 AM

Imagine you inherit the world’s largest diamond.
Market value: $90 million.

Even though you need the money, you can’t bear to part with your heirloom. The gem’s sentimental value far outweighs its dollar value.

So you devise a scheme to sink deep into debt to erect a $20 million exhibition hall to display your jewel. People will travel from far and wide simply to stand in awe of the world’s largest diamond.

 
You will pay off your debt over 30 years from the admission fees to your shrine. And from the sales of concessions such as Diamond Iced Tea and Shaved Diamond Ice. From the sales of merchandise such as replica Diamonique jewelry and T-shirts that say, “I Saw The World’s Largest Diamond And All I Got Was This Lousy T-Shirt.”

Plenty of folks, frankly, tell you they think you’re nuts – and they’re not talking about cashews.

Perhaps they’re right. What if your plan doesn’t work out? Well, at least you’ve still got the diamond. And you can enlist an expert diamond cutter to carve off a chunk, sell it to pay your debt and still have plenty of diamond leftover to pass along to your heirs.

Welcome to Pierce County.

Last week six members of the County Council voted to go $20.77 million into debt to transform our diamond in the rough – an old gravel mine in University Place – into a precious gem of a golf course.

The Chambers Bay Golf Course will draw well-to-do travelers from across the U.S. who will pay big bucks to enjoy the scenic beauty and matchless experience of playing a Scottish-style course right here in Washington.

Are council members Shawn Bunney, Roger Bush, Barbara Gelman, Terry Lee, Calvin Goings and Tim Farrell drinking from the same bottle of crazy juice that County Executive John Ladenburg is?

Hardly. The vote should rank as one of the easiest decisions the council has ever made.

Will the golf course become the huge drawing card county officials hope it will?


   
Maybe. Maybe not.

Yes, the latest cost estimate for Chambers Bay Golf Course came in 7 percent higher than the previous one. That’s a concern.

But if you read through the 40 pages of legalese in the two ordinances required to build the course and sell the bonds, you’ll see Pierce County has strung up more safety nets than a high-wire act at the Ringling Bros. and Barnum & Bailey Circus.

First, golf course revenues – green fees, golf cart rental fees, practice range revenues, pro shop merchandise sales revenues, restaurant food and beverage revenues, and meeting room rental revenue – will pay down the debt.

The county’s financial analyst, Golf Catalyst, projects the course will generate enough money to cover annual operating expenses and debt payments, with some left over, every year.

If Golf Catalyst’s projections don’t come true, then the county can use money from its sewer utility or general tax fund, according to the ordinance.

Those two legal options don’t sound politically palatable. Who wants to pay a higher monthly sewer bill or sacrifice sheriff’s deputies to keep a golf course afloat?

That’s why the council added these words to its ordinance:

“As an additional safeguard against the use of sewer revenue or general fund revenue, the council notes that the Chambers Creek Properties are a significant financial asset, with the land upon which the golf course would be located having an estimated net developable value for residential use of $90 million.

“It is the intent of the council to sell or lease real property assets at the Chambers Creek Properties to satisfy the golf course’s bonding obligations prior to pursuing any sewer rate increases or using any general fund revenues.”

By Dec. 1, Ladenburg must present the council with a written strategy for using the 610 acres of land under and around the golf course for paying down the debt – should the course turn into the financial boondoggle some predict.

I don’t think that will become necessary. In the best case, with the design of pre-eminent golf architect Robert Trent Jones II and the private management and maintenance of KemperSports, Chambers Bay Golf Course will become the economic boost for tourism and conventions we hope it will.

And we can enjoy the public trails, nature preserves and beaches around the course whenever we want.

But even if the county eventually must carve off and sell a few chunks of its $90 million jewel to pay the debt, the county will still have plenty of public land left to preserve for generations to come.

Dan Voelpel: 253-597-8785

dan.voelpel@thenewstribune.com
 

[Brad Klein]

This is simply delusional. In an overbuilt market where private clubs are begging for members, and folks are going to spend $150 per round? This is the worst sort of Feasibility Study nonsense.

[Dan Kelly]

Last week six members of the County Council voted to go $20.77 million into debt to transform our diamond in the rough – an old gravel mine in University Place – into a precious gem of a golf course.

The Chambers Bay Golf Course will draw well-to-do travelers from across the U.S. who will pay big bucks to enjoy the scenic beauty and matchless experience of playing a Scottish-style course right here in Washington.

As we all know, all of the great Scottish courses were built in old gravel mines.

Imagine you inherit the world’s largest diamond.
Market value: $90 million.

Even though you need the money, you can’t bear to part with your heirloom. The gem’s sentimental value far outweighs its dollar value.

So you devise a scheme to sink deep into debt to erect a $20 million exhibition hall to display your jewel. People will travel from far and wide simply to stand in awe of the world’s largest diamond.
 
You will pay off your debt over 30 years from the admission fees to your shrine. And from the sales of concessions such as Diamond Iced Tea and Shaved Diamond Ice. From the sales of merchandise such as replica Diamonique jewelry and T-shirts that say, “I Saw The World’s Largest Diamond And All I Got Was This Lousy T-Shirt.”

Plenty of folks, frankly, tell you they think you’re nuts – and they’re not talking about cashews.

Perhaps they’re right. What if your plan doesn’t work out? Well, at least you’ve still got the diamond. And you can enlist an expert diamond cutter to carve off a chunk, sell it to pay your debt and still have plenty of diamond leftover to pass along to your heirs.

I'm not qualified to speak about the financial aspects of this -- but holy cow! That's the most painfully extended metaphor I think I've ever seen (with or without cashews).

[RJ_Daley]

Is there no less costly option to design and construct a good course.  RTJjr, the right man for the job?

[A_Clay_Man]

More muni mayhem?

W.H.-
 What's the projected rounds per year?

The good folks in the city of Santa Fe bought into projections that had the rounds at 135k. They can't do 35k, let alone 100k

Sure, someday they will be financially positive, but that wont be for a very long time. While in the meantime the management Co. and other contractors get the gravy.

[RJ_Daley]

What is it about the willingness of the public as voters or investors to buy into so much B.S.,  blue sky or otherwise...?

[Jeff_Brauer]

Having interviewed for this and seen the site, I can add a bit to this discussion.  (I throw that in, so I don't get accused of generalizations)

It is a difficult site, including environmental remediation and other paths, as noted. so the $20 Mil may not be out of the question for TOTAL development costs, especially since the plan was for 27 Holes (at least originally) and the clubhouse was to feature several other functions.

I do recall that Landenburg was very much for the golf course, almost regardless of the feasibility. The article hints at that.  

I can't comment on how much play would be generated, or the feasibility study, but a few other Pac NW waterfront resorts seem to do alright.  But Pierce Co. got independent figures and then is covering its backside several ways.  Doesn't sound like they have gone wild, sounds like they are pretty sensible.  I think the plan to sell off the southern portion of the 610 acres to developers to fund the rest of the improvements is pretty savvy.  That should happen and they will never have to dip into the sewer or general funds to pay off the golf course.

Please remember that they also get great public land on the Bay, a multi use park facility, and as I recall, have protected some trout habitat, etc. It is worth the $21Mil just for the county to turn that waterfront eyesore into a public space for everyones use, a function governement should definitely be looking into.

As to RJ's question of whether RTJII is the best man for the job, the country thought so, after a nationwide search.  You may not, and that is your perogative, but he did turn a similar quarry site into Spanish Bay, and is familiar with the coastline regulations, in addition to being a pretty good gca overall.  I think that is what got him the job.  I personally thought the commission was going with a big name golf pro, like Peter Jacobsen, since the agency head was so in love with golf, but it sounds like they did vote based on site specific relevant experience, like they should.

[RJ_Daley]

Jeff, can you give us a good location address so we can look at it on the google maps and aerial photo site?  I did not declare that RTJjr was not the right man, I asked if he was.  Is it wise to spend so much up front on total development cost.  Could a decent course be built for under $5million with modest clubhouse and maintenance, until the market is more fully explored?  Then, come in with the multi facility clubhouse after the course and depth of the market is established?

[Brad Klein]

Jeff, landfill remediation is worthy, and expensive. Maybe the project makes sense because of the work that would have been undertaken anyway, so that on a cost-plus basis the course is marginal. But then planners need to be up front rather than anticipate that the course will be an engine of development, pay for itself, possibly attract a PGA Tour event, and be able to compete at $125+ green fee in a sluggish regional golf market.

When we did Wintonbury Hills at $11.3 m. we didn't lie or misrepresent a thing and told the towns people it would require subsidy on a declining basis for 7 years until we could make all payments-  not just operational expenses but bond money, too. Now in year three we're still right on target financially.

[Jeff_Brauer]

Brad,

You must be reading some other info beyond what was in the post.  

I do understand that the powers that be wanted this, and were going to do it whether it was self sustaining or not.  In their defense, it was concieved several years before the golf market tanked, and the original projections may have seemed a bit better, but they are now committed.

While your contentions about up frontedness, or lack thereof, may be true, I can't necessarily come to the conclusion that Golf Catalyst or was misleading anyone, at least from what I read here. And the commission did take a public vote.  I recall a condition of designing the course was to attend several public hearings.

At least both projects were upfront about the total costs. I know many munis that sell themselves as a $4.5 Million project, hiding even more infrastructure costs somewhere else in the city road budget.

RJ,

When I said "You may not agree" it was a rhetorical you, a "You all" not directed at you specifically.  I started that sentence with "As to RJ's question...."

Having seen the site, I would say that a golf course could not be built for $5M.  Of course, you could save some clubhouse funds in my view, but some would tell you that you would also blow any chance of getting the $125 greens fees without a clubhouse matching the experience of the golf course.

Sorry, but I don't recall the aerial link.  But it is sw of Tacoma somewhere.  

[Brad Klein]

Jeff, as usual, you are right. Read a few articles in the local paper, plus a version of the feasibility study that went public.

[W.H. Cosgrove]

Web site for Chambers Bay
http://www.co.pierce.wa.us/pc/abtus/ourorg/ccp/2index.htm

I haven't seen a feasability study lately.  The original feasibility study projected 43,000 rounds in year 1 and 48,000 in year 10.  This was on 27 holes.  The projected costs were less than 15 million.  Average round was going to be $93 in year 1.  The project is now only 18 holes.  

The new cost estimates are now 30% higher.  No land acquisition costs are included, that cost was approximately $11 mil.  

One more thing: Jeff the plan is not to sell the southern end of the property, it is the site of the Pierce County Sewage treatment plant.  The idea(I presume)would be to sell the land adjacent to the golf course.

Should government be competing with private industry while using low cost money(municipal bonds) to fund the project?

[Jeff_Brauer]

WHC,

Glad to hear its only 18.  Despite having allocated 245 acres to the golf course, the steep mining slopes made that an effective 200 acres, or so.  As to cost and study differences, costs especially aren't unusual to see change.  Whoever did them initially did so without benefit of the final gc plan.

I couldn't recall where the extra land was, and knew the water treatment plant was on the south somewhere.

The question of whether the public sector should compete with the private sector in golf has been asked since the Van Cortlant Park Course opened in what, 1895?  Courts have ruled repeatedly that building public courses is within the realm of a public service that can be provided by government.

I know conditions in the last ten years have allowed private enterprise to do well, but for much of the time, Golf wasn't lucrative enough to attract private sector money, unless it was to gain it back somewhere else, like in real estate premiums.  I suspect that the role of public agencies in golf development will increase, not decrease in the next quarter century.

[Jeff_Brauer]

BTW,

I noticed looking at the routing that RTJ proposes a 6-6-6 routing.

RJ,

The clubhouse facility is planned for future expansion.

[W.H. Cosgrove]

Jeff, I am no attorney, but still firmly believe that the place of government is to supply those services for the public good (fire, military, police parks) or where they would supply a need to a segment of the populace that would be underserved otherwise.  These would be a more traditional municipal model where the population would not be served in any other case.  A $25 muni would be an example.

What is the incentive for the private sector should public money and funding be used on this grand scale, using the tax law to compete on an uneven playing field?  Who does this benefit?  Make them pay market rates for the $20 million and then look at the feasibility.

[A.G._Crockett]

Last week six members of the County Council voted to go $20.77 million into debt to transform our diamond in the rough – an old gravel mine in University Place – into a precious gem of a golf course.

The Chambers Bay Golf Course will draw well-to-do travelers from across the U.S. who will pay big bucks to enjoy the scenic beauty and matchless experience of playing a Scottish-style course right here in Washington.

As we all know, all of the great Scottish courses were built in old gravel mines.

Imagine you inherit the world’s largest diamond.
Market value: $90 million.

Even though you need the money, you can’t bear to part with your heirloom. The gem’s sentimental value far outweighs its dollar value.

So you devise a scheme to sink deep into debt to erect a $20 million exhibition hall to display your jewel. People will travel from far and wide simply to stand in awe of the world’s largest diamond.
 
You will pay off your debt over 30 years from the admission fees to your shrine. And from the sales of concessions such as Diamond Iced Tea and Shaved Diamond Ice. From the sales of merchandise such as replica Diamonique jewelry and T-shirts that say, “I Saw The World’s Largest Diamond And All I Got Was This Lousy T-Shirt.”

Plenty of folks, frankly, tell you they think you’re nuts – and they’re not talking about cashews.

Perhaps they’re right. What if your plan doesn’t work out? Well, at least you’ve still got the diamond. And you can enlist an expert diamond cutter to carve off a chunk, sell it to pay your debt and still have plenty of diamond leftover to pass along to your heirs.

I'm not qualified to speak about the financial aspects of this -- but holy cow! That's the most painfully extended metaphor I think I've ever seen (with or without cashews).

Spoken like a true editor!

[Jeff_Brauer]

Jeff, I am no attorney, but still firmly believe that the place of government is to supply those services for the public good (fire, military, police parks) or where they would supply a need to a segment of the populace that would be underserved otherwise.  These would be a more traditional municipal model where the population would not be served in any other case.  A $25 muni would be an example.

What is the incentive for the private sector should public money and funding be used on this grand scale, using the tax law to compete on an uneven playing field?  Who does this benefit?  Make them pay market rates for the $20 million and then look at the feasibility.

You aren't alone in your beliefs, which are very understandable. But, the courts have ruled.

Another factor in building upscale courses specifically is that governments themselves are taking a more business like approach to everything, and are tired of investing only in money losing "opportunities" that the private sector ignores.  The general public complains about those more than the sucesses governments have had with golf, including, my Giants Ridge courses for a Minnesota state agency, for instance.  In many ways, as long as a project is a sucess, most theoretical scrutiny goes away, for the most part.  

Is that right or wrong?  I don't know, it just is.

[Rick Baril]

Jeff,

I distinctly remember that miserably wet day at Chambers Creek.  

But, what isn't as clear (in my memory bank at least) is the entity developing the golf course.  I thought I remembered Joe explaining Chambers Creek had some "autonomy" and didn't necessarily need to conform to "normal public rules/procedure.  However, the website say's, "The Chambers Creek Properties are owned, operated and maintained by Pierce County?s Departments of Public Works and Utilities and Parks and Recreations Services."

Do you have any recollections in this regard?

[Brent Hutto]

The name of the game is "Everybody wants to be a big-shot". Government officials don't want to be stuck running a crummy muni course. If they are going to be in the golf business then why not start at the top? Where's the fun in treating someone you want to impress to a freebie round of golf at a $30 course?

The podunk city I live in (Columbia, SC) and the allegedly budget-strapped state university where I work (USC) recently had a massive pissing contest over the fact that each of them wants to build their own hotel in the downtown area. This in a city that is totally overbuilt for downtown hotel rooms with the result being constant bankruptcies and sales of the existing properties. But each of these august entities believes that with enough of the capital provided by the taxpayers, they can make a go of it and have hotel rooms to comp for their buddies and visiting big-shots.

[Jeff_Brauer]

Rick,

I recall they were autonomous, but don't recall they were outside of the public procedure.  As their vote (public or otherwise) shows, they did not have to ask the public for approval. I don't know if the commission is elected or appointed. Certainly, being elected would bring accountability.

Brent,

I am sure a lot of what you say goes on.  I always hate to lose a public design job to a higher fee Tour Pro, just because the mayor can get an autograph on taxpayers money......

[W.H. Cosgrove]

Jeff and so the courts have ruled, I am simply libertarian to believe that in a city there are problems with the funding.  

In answer to the question of Chambers Bay the County Council is elected.  Unfortunately, this is a case where the electorate is not prepared for some of the possiblerealities to come.  

Local government recently completed our 4th convention center in Tacoma.  None is successful.  Make your own judgements as to the reasons, but construction jobs and unions may have a lot to do with it.

Finally; Was Giants Ridge created to draw tourism to an otherwise depressed and underserved area?  That would provide a rationale behind government support.  

[Bill Shamleffer]

This was interesting to stumble upon.

[Gary Sato]

Classic thread.  Thanks for digging it up.

[Tom_Doak]

This was interesting to stumble upon.

Bill:

Yes, indeed.  But will we ever know the answer to whether the project was a good investment for the county?  I guess it depends on one's perspective.  I don't think the course has been profitable so far, but it's peanuts in comparison to some of the taxpayer-funded sports stadiums across America.

[Carl Rogers]

This was interesting to stumble upon.

Bill:

Yes, indeed.  But will we ever know the answer to whether the project was a good investment for the county?  I guess it depends on one's perspective.  I don't think the course has been profitable so far, but it's peanuts in comparison to some of the taxpayer-funded sports stadiums across America.

or other "job creation" welfare schemes ..............

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