Hey there, time traveller! This article was published 6/5/2011 (3632 days ago), so information in it may no longer be current.
Six semi-private Winnipeg golf clubs are bracing for a potential rent hike after auditors found they each pay the city's cash-strapped golf agency only $1 a year.
An audit report released this week flagged the city's six lease agreements with semi-private golf clubs as "significantly adverse" to Winnipeg's financial interests. Winnipeg Golf Services is $8 million in debt, but auditors found it collects only $1 every year in rent from Assiniboine, Canoe Club, Rossmere, Transcona, St. Boniface and Wildewood golf courses.
Winnipeg could collect upwards of $500,000 annually on these lease agreements, auditors said. Lease-holders failed to produce financial statements, the report states, and do not maintain the courses with the required capital investments.
Winnipeg Golf Services is a special operating agency that runs 12 local golf courses under five different management arrangements. Other golf courses on city-owned land, including Harbour View and Tuxedo golf courses, are contracted out to management firms that pay the city between $50,000 and $150,000 a year in rent, a percentage of their total revenues, and will invest about $1 million over the next 10 to 15 years.
Iain Day, acting chief operating officer for Winnipeg Golf Services, said the original leases for the semi-private courses were signed before municipalities amalgamated to form Winnipeg in 1972. They initially stipulated they will pay the city $1 per year to lease the land and did not pay property taxes.
Winnipeg renegotiated the agreements around 2002, but Day said golf services decided to collect property taxes instead of rent. Last year, Winnipeg collected $214,147 in property taxes from the semi-private clubs.
Winnipeg Golf Services is projected to lose another $1 million in 2011.
"If we had them paying rent at that time, there would have been a big uproar so we said, 'Let's get them paying taxes.'," Day said, noting parts of the agreement are due to a "historical quirk".
Auditors recommend Winnipeg move to renegotiate its leases with semi-private golf clubs in the short term and consider selling some of its golf courses or converting them into parks in the long run. On Friday, council's audit committee referred the report to the alternate service delivery committee for further review.
"I can see our lease going up or the club having an opportunity to purchase the land," said Geoff Kehler, director of operations at St. Boniface Golf Club. "It sounds like it's more of a when than an if."
The leases were part of a troubled financial picture delivered by auditors, who found the special operating agency has not adopted best management practices. The report states the agency did not implement accounting systems to create meaningful financial reports and the price charged to the golfer "exceeds the value provided."
Auditors say financial losses will continue to mount unless Winnipeg takes swift action to contract out the management of Crescent View, Kildonan Park and Windsor Park golf courses. The report said Winnipeg should consider selling Assiniboine, Wildewood and Canoe Club golf courses when their leases expire.
Assiniboine Golf Club director Glen Mills said his facility is profitable and the city will spend more money to maintain the land if they plan to convert it into park space. Mills said the city has contemplated selling its golf courses before, and hasn't acted on it. The 93-year-old golf course's lease expires in 2025, and Mills said he hopes club staff and members will have input before the city makes any decisions.
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"We're providing a service and if the city wants to take it away, they have to provide logical reasons as to why they're doing it," he said. "I've got a couple members who are 86 years old and they're bringing out their six-year-old grandkids."
Colin Craig, Prairie director of the Canadian Taxpayers Federation, said it sounds like the lease agreements were not negotiated properly in the first place and that Winnipeg should get out of the golf business. He said there's no reason for the city to subsidize golf, when it complains it has no money to fix roads.
"The city should focus its efforts on fixing our roads and keeping people safe," Craig said. "If you're going to go play golf, you should pay for it. Why should the city subsidize it?"
Auditors found the city is subsidizing recreation programs for fewer than 20 per cent of Winnipeggers. While the number of playable days has dropped seven per cent between 2000 and 2009, the total number of rounds played declined by 40 per cent during the same time period.
"If you want people to come and spend their hard-earned money on your golf course, you've got to make it attractive, which means you have to continue to invest money in it," Mayor Sam Katz said. "I think from what I've seen there's been a lack of investment."
$1 rent raises flags
AUDITORS recommend Winnipeg renegotiate its leases with semi-private golf clubs since they pay only $1 to lease city-owned land -- an arrangement auditors say will see the city subsidize golf by as much as $25 million over the next 50 years. Auditors say Winnipeg is missing out on collecting upwards of $500,000 every year in renting the city-owned land to these golf clubs.
The city only collects property taxes from these semi-private golf clubs.