Collaboration in Civic Spheres

Lynnwood’s struggling city golf course might be offloaded

by Matt Rosenberg December 26th, 2012

The City of Lynwood has in effect permanently diverted funds from its utility account to prop up its money-losing city golf course, in violation of state law, according to a newly-released accountability audit from the State of Washington. The city says in response it will stop raiding the utility fund to keep the golf course solvent – and in 2013 will decide whether to sell the facility, contract its operations out to the private sector, or keep it afloat through General Fund loans or transfers.

The report from the State Auditor’s Office says Lynnwood’s city golf course hasn’t been able to pay back in a timely manner more than $1.3 million in loans from the city’s own utility fund, which comes from utility ratepayer fees and is meant to be used for the maintenance and operation of the city’s utility systems.

Escalating annual utility fund loans to the golf course since 2008 totaling more than $3 million have been paid back, but with repayments lagging into the next year while similar new loans were made, according to the state audit. City rules require a payback within 90 days of temporary inter-fund loan. The latest loan to be paid back slowly was for $1.3 million.

The audit accents the ongoing unprofitability of the city golf course and the disservice to utility ratepayers of the city’s recurring bailouts.

“The city’s elected officials continue to approve inter-fund loans even though the Golf Course does not generate sufficient revenue to cover operating costs, capital improvements and repay existing liabilities…The lending fund has not received the expected principal and interest and the loaned money has not been available for its intended use.” The audit also noted, “The significant delay in repaying these large and accumulating inter-fund loans constitutes a permanent diversion of funds. A permanent diversion of funds from the Utility Fund violates state law as the use of this money is restricted to the operation and maintenance of the city’s utilities.”

In addition, principal and interest remain unpaid on a separate loan of $137,485 from the General Fund to the course, dating back to at least 1996.

In a response in the audit, the city says it will stop making short term loans to the golf course fund and that the facility’s financial performance may improve now that $400,000 per year in long-term was retired at 2011’s close.

However it doesn’t appear the city is expecting black ink anytime soon. The city also says in its response that within three months the city manager will report to the city council on options for the golf course’s future, including inter-fund loans or transfers from the general fund rather than the utility fund; or contracting out the operations of the golf course to a private management firm; or “closing and liquidating the assets of the golf course.” Any such decision would have to made by the city council.

The state audit also found the city golf course was improperly dispensing preferential treatment to certain users. Players in the annual tournament of the Lynwood Parks and Recreation Foundation, a non-profit, were charged almost $12 less per person to than general public users. There was no policy authorizing the special discount. The Foundation’s Executive Director is also the city’s Parks and Recreation Director.

There is also no formal policy authorizing the free use of the course which is granted to Professional Golfers Association and Golf Course Superintendents Association members.

In addition, the state accountability audit reported, the city’s web site, telephone lines and the course’s chipping and putting greens and hitting net are used in connection with private lessons offered by the city’s PGA instructors at the course, without recompense to the city. Finally, there aren’t established procedures to resolve discrepancies in inventory at the course, according to the state audit.

The city responded in the audit that it would review and tighten procedures as recommended.


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