Collaboration in Civic Spheres

Privatize management of Lynnwood’s golf course, report urges

by March 4th, 2013

In a report to be presented tonight to the Lynnwood City Council, the city’s director of parks and recreation strongly recommends the city privatize the management its troubled, money-losing golf course. The facility was the subject of a critical state audit in December because it has relied on continued bailouts from the city’s utility fund including a $1.3 million chunk of recent borrowing repaid slowly enough to constitute a “permanent diversion” of funds in violation of state law, auditors said. The city pledged to explore new options including closing or selling the course, or contracting out its management. The new report says the latter would “produce significant cost savings and efficiencies coupled with a strong marketing approach to produce higher revenues.”

The report to the council from city parks chief Lynn D. Sordel cites several factors that have combined to dampen chances for business success at the Lynnwood Municipal Golf Course in the highly competitive regional market. There’s been no renovation or expansion of the Pro Shop, and the clubhouse lacks full service dining and beverage service, harming chances for major events or tournaments that can fatten coffers. Reservations for tee times can only be made by phone, “a very cumbersome and outdated process” that gobbles up time and turns off potential customers used to making online reservations at other regional courses. The course as yet has no social media presence to promote the facility and tee time availabilities, as part of a larger and also absent marketing strategy, the report says.

Sordel explains why choices other than contracting out mangement don’t seem to make sense. Converting the course to nine-holes to control costs would hurt marketability, no one is much interested in playing a nine hole course. Closing the course and selling the land is also dicey because its rolling topography and water features would make its marketability weak, while neighbors who perceive the course boosts their property values would likely rise up in concern. The current debt and future debt could be written off to the city’s General Fund if the City Council decides the course should be a recreational amenity rather than trying to be a self-supporting operation, but this would be “a major policy shift.”

Under the recommended approach, the city would pay a regular monthly service fee to an experienced third-party who would provide day-to-day operational staff and oversight plus marketing and promotions, and revenue “management” and “optimization.” The city would pay most of the operating expenses, and get most of the revenues and all of the profit but there would be a lower base cost to the city, as municipal workers salaries and benefits are replaced with contractor-hired workers. Labor costs are 30 to 40 percent less, on average, Sordel writes.

Seattle, Bellevue, Maple Valley, Everett and another seven publicly-owned courses are run under contract by private-sector management firms, the Lynnwood report says. City workers currently at the Lynnwood course would be let go and while they might well be re-hired, it would be with “a reduced salary and benefits package,’ the report says.

Most of the 11 municipal courses in the region reported they were very satisfied with outside management when contacted by Lynnwood. Industry data show that although the number of rounds of golf played at municipal courses is “generally in decline, the courses that are operated by third-party management and marketing have shown increases of 8-12%….The marketing, promotion and technological systems and strategies in place by the private sector are unmatched. Databases are in place to offer ‘deals’ through email andor social media…operators..bundle their products and cross-market their venues and services which entice golfers to play. Labor costs are generally much lower, usually 30-40 percent less than municipal operations.”

In a phone interview Sordel said he conducted extensive research for the report including reviewing the operations of 11 privately-managed public courses in pierce, King and Snohomish counties. Bellevue, Seattle and Everett were among those. “What really convinced me is that the private operators are in the retail business. We are not. They have so many tools” with which to market courses. “I don’t think there is any other way” the course will achieve real financial health. “I will say that to the council tonight and i will say it again in two weeks” at the next work session, Sordel added. Funds to update the Pro Shop and add full food and beverage service could come either from the city’s General Fund, or enhanced operating revenues under contracted management, said Sordell.

The Lynnwood City Council will make the finall decision on what’s next for the city golf course. That will need to come by this month’s end, according to a timeline pledged to by the city in its reply to the state audit, Sordel said. Public comment will be sought at next week’s council meeting, March 11. A vote would likely occur not later than the business meeting of March 25th, according to Sordell.

Meanwhile, at least two other city-managed golf courses in the region are struggling with similar problems, including Tumwater in Thurston County and Sumner in Pierce County.

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