City Takes Whack At Populist Services; Golf Unscathed by Austerity Cuts

The proposed $5,430,911 clubhouse for Heron Lakes Golf Course

The proposed $5,430,911 clubhouse for Heron Lakes Golf Course.  From the architect’s website.

By Barbara G. Ellis and Pam Allee
The Taxpayers’ Budget Committee

First of Two Parts

Civic leadership’s real values and priorities tend to be revealed when hard times force significant budget shortfalls. This study of Portland’s Bureau of Parks and Recreation’s Enterprise unit—the Golf Fund—by the Taxpayers’ Budget Committee has concluded that City values and priorities continue to reflect protecting the interests and influence of the few who can afford to play golf, at the expense of most Portland residents who only want  basic recreation programs and safe, clean parks.

This research project is intended as a model for Occupiers exploring the City of Portland’s budget for entities/line items that don’t serve most Portland taxpayers and could be transferred to those that do.

Late last April, Portland Mayor Charlie Hales informed the four City Council commissioners that a $25, million shortfall had been factored into the initial FY 2013-14 budget. Every Bureau was told to cut requests by 10% for what seemed to be across-the-board austerity—even if it meant elimination of entire programs, several of which address the disadvantaged.

One thing assured in this particular “financial exigency” was that the deepest cuts would be applied to programs whose recipients up to the start of the Occupy movement in October 2011 had little influence in City decisions over General Fund allocations: the helpless, the hopeless, and those who can’t afford—or have no energy—to complain.

The greatest indicator that budgets show the truth was in this year’s Parks and Recreation Bureau’s line-items. To save $80,000, it was decided to close the highly popular inner-city Buckman swimming pool. Though it has served tens of thousands of children and adults for decades and for youths requires a $27-51 pass, it has never been self-supporting–even enough to qualify as an “enterprise fund” like golf. And so Buckman has had to be repeatedly rescued from closure usually by the squeaky-wheel outcries of Good Samaritans at the 11th hour, as it was again this year.

On the other hand, the City’s four golf courses—one of which is set to build a $5,430,911 clubhouse—did not suffer the budgetary snickersnee to touch its projected line-item of $1,252,766. Nor was it denied its projected expenditure of $2,716,612 for golf carts. That’s because years ago they were chartered as an Enterprise—the Golf Fund—under the parental roof of the Parks Bureau. Enterprise Funds are mandated to be financially self-sufficient and cannot touch a penny of taxpayer dollars in the General Fund. But they need City services to survive—and the talents and energies of their staffs. The Golf Fund primarily pays for itself, the Parks’ budgetary statement always explains, by profits from greens fees for golf rounds and varying compensation percentages (86-89%) from  concessionaires off sales of food/beverages, clothing/equipment, golf lessons, cart rentals, and driving ranges.

However, the Golf Fund depends on low-cost City services from other Bureau units to survive. True, it reimburses those entities for such in-house services—but not for the talent and energy staffs must shift from regular and far more important duties. One paramount and glaring situation is helping the rising tsunami of residents needing help through no fault of their own.

For instance, although the City now has more than 16,000 homeless people—1,895 were sleeping on the streets by late July—2,869 in January’s cold weeks—only 700 shelter beds are available. But this initial budget axed $100K for shelters and $646,916 for the Housing Bureau. City funding would stop for the Crisis Assessment and Treatment Center. The Janus Youth program which rescues young prostitutes would take a 25% slashing. And just as the Republicans in Congress are poised to push nearly 4 million of the over 47 million Americans off food stamps—Oregon leads state use at 815,221 recipients, or 18.9% of our population—no money was included in the City’s budget to feed the starving in that event. City budget drafters evidently expected the responsibility would fall to state or the overwhelmed Oregon Food Bank, or community gardens, and public schools’  breakfast programs.

Poverty is difficult to sweep under the rug; at the end of July Portland’s poverty population stood at 103,894 people. Yet the budget people obviously turned a blind eye to Portland’s thousands of unemployed, especially the long-termers who have given up looking for work and no longer receive checks. Though the state’s official unemployment rate just rose to 8%, this group is  never counted. Yes, the U.S. Labor Department early this month was reporting that 162,000 were hired nationally in July, but added that 97% of all hirings in the last six months were part-time and most in low-wage sectors (retail/restaurants) without benefits.

Hundreds Rage at City Hall Against 2013-14 Proposed Budget

Hundreds of organized and outraged residents stormed City Hall against the proposed budget to pack three hearings—an overflow audience of 400 on April 11 alone. They belied the timeworn axiom of “You Can’t Fight City Hall.” Most represented youth groups, unions, Portland Community College, Elders in Action, Occupy’s Peoples’ Assembly budget committee, firefighters, social workers, and angry ordinary residents. They vigorously confronted the Council about the social-services cuts, about threats to Buckman pool and especially its unwillingness to raise taxes on the wealthy and/or corporations that would balance the budget.

Photo by Megan Craigan

Photo by Megan Craigan

Reaction Gets Quick Budget Revisions

The impolite howls about this year’s budget cuts at the April hearings– indicating austerity seemed to apply only for the poor–got public and media attention and did get some City Council redress. The Mayor nervously called for a revised budget and quickly embarked on a scavenger dash for cash around town. Enough was found to cut the shortfall from $25 million to $21.5 million. He and his staff had bargained with Multnomah County for sharing money for some services. But they thoughtlessly extracted savings from the Public Employees Retirement System (PERS) and increased the land-line telephone tax, both of which would negatively impact the 99%. At least they found $500K from the Parks Bureau’s 2005 levy to save Buckman Pool. Also saved from the chopping block were three SUN community schools, a domestic violence service center, the Sellwood Community Center, and a needle exchange program. But homeless shelters still took a $100K hit and Janus House lost 25% of its budget.

While all the shot and shell was raining down on Council Chambers, out at the Rose City golf course meeting of the City’s Golf Advisory Committee meeting, Golf Fund director John Zoller cautioned members to stay out of the budget hearings. “Stay under the radar,” the minutes quoted him as saying: “…because the City is overwhelmed with dire crises, and trying to openly argue for golf at a hearing would be met with resentment.”

On June 20 the City Council unanimously passed the revised budget of  $396,727,715. It was obvious to protesters and many victims of cuts that in both budgets, the drafters failed to fine-comb Bureau-submitted budgets for fresh revenue sources. If austerity is indeed ordered for the next few years, it seems appropriate to review the City’s preserving and patronization of a sport that even its major and highly respected leaders admit has been in a death spiral for the last three decades.

Golf has never directly involved most Americans, let alone Portlanders, despite heavy coverage in the media. Statistics still show that 91.7% of Americans—including Portlanders—don’t play golf and have no inclination to do so. Most cannot afford it, including the gas to drive to a course, or the mile walk (carrying clubs) from the MAX light rail to the City’s two world-class 18-hole courses at Heron Lakes.

The demise shows in the plummeting number of golfers (especially future generations), the drop in rounds played, and the rising number of course closures—particularly 105 public links out of the 2,449 just in 2012. Nationally, participants dropped from 29.5 million in 2007 to 25.3 million in 2012. In 2000, 518 million rounds were played in the U.S., but in 2012, that figure had dropped to 490 million. Up to May, the national decline in rounds on public courses had dropped by 11%. In Portland for May, rounds fell 9%.  The National Golf Foundation (NGF) estimates within the 2010-20 decade, 10% of public courses will close.

A few years ago, major tournament sponsors began withdrawing their sponsorship of events like the Ladies PGA competition.  ADT quit in 2008, McDonald’s, 2009; State Farm, 2010; Wegmans, 2012; and Safeway bowed out of  this year’s Safeway Classic in Portland. The decline of golf’s popularity also extends to “couch potatoes.” Only 20% of Americans now watch golf on TV, whether network or on the 20 other channels. A Seattle Times golf writer summed up all the hypotheses about the sport’s expiration except for the well-off:

These have been tough times for golf throughout the nation for two major reasons: the recession and, for many, a lifestyle that makes the five-hour golf round incompatible with parents, who have child-activity obligations and are often putting in longer workweeks as well. Casinos have hurt golf, too…Health clubs often are a better fit for time-starved adults, and a hot topic at some private golf clubs is whether to add fitness rooms and exercise classes. 

How the City’s Golf Program Became an Enterprise

The City’s golf program was cleverly sheltered years ago as a supposedly self-sustaining Enterprise Fund perhaps because supporters recognized that in a Recession, it probably would be slashed from budgets as an unnecessary and conspicuous luxury to a public favoring basketball hoops, swing-sets, free concerts, swimming pools, and walking.  So the City Council voted to charter a “Golf Fund” to operate the City’s four golf courses—Eastmoreland, Heron Lakes, RedTail, and Rose City. It was provided with two reserve accounts separate from its parents, the Parks Bureau: one for current needs/revenues, and one for setting aside money for major needs (Capital Improvement Projects, aka CIPs), a Golf Revenue Bond Redemption Fund. John Zoller, Jr., Heron Lakes’ course superintendent since 1980, was to become its first and present director.

That golf was granted Enterprise status strongly suggests that City decision-makers perceived golfers, supporters, and concessionaires deserved more consideration and preservation than, say, low-income patrons of Buckman Pool, even though golfers are apparently self sufficient enough to afford up to $2000 for a bag of clubs and the hours of leisure necessary to round 18 holes.

At Portland’s five municipal courses, the average golfing expenses are scarcely for those of modest means: 

  • Greens fees: 9 holes, $21; 18 holes, $39
  • Cart rentals: 9 holes, $7.50; 18 holes, $15
  • Driving Range containers of balls: $3.95 (25) to $9.95 (90)
  • Driving Range tokens: $3.50 each
  • Clubs rental: 9 holes, $14; 18 holes, $22

At bottom, an Enterprise bears a strong resemblance to indulgent parents with an adult child under their roof whom they protect and monitor regularly to prevent risks leading to lawsuits or bankruptcy. That offspring thrives and survives off perks and by being able to borrow money, thanks to the parents’ AAA credit rating, when they want to make million-dollar purchases.

Perhaps the best known public Enterprise systems are in sports, mostly at universities with big-time athletic departments. As Enterprises, they, too, have been artfully designed to be separate from university funds. That shuts out outrage from faculty or the public about draining a taxpayer-owned institution’s funds for stadiums, competitive salaries for coaches, special living arrangements and scholarships princely enough to attract promising athletes. That “divorce” from university general funds means self-sufficiency based on gate and box earnings, vendor endorsements, and donations from alumni and booster groups. But it never has fooled those who call them “entertainment enterprises.”

Enterprises at federal or local governmental levels, are usually chartered and also controlled by parental entities. As indulgent parents rescue a pampered child from insolvency, the agency or Bureau somehow will find money to prevent default. With that guaranteed protection system, the Enterprise system is highly profitable to goods-and-services vendors selling by volume, even at governmentally mandated low-bid prices.

Some governmental bodies doubtless have instituted Enterprises to free staffs from daily hand-holding and services required for survival. But many “hosts”—Bureaus, departments, agencies—often come to regard them as troublesome, time-consuming parasites. Their hope may be that the Enterprise will eventually collapse when self-support ends, or when cost overruns become unbearable, and/or when both patrons and participants abandon it.

This brings up past City Council values and priorities in approving the Parks Bureau’s request in 1999 for the Golf Fund’s floating revenue bonds for a $6 million total makeover of today’s RedTail course. Or the Council’s continuing vote for a line-item to float enough bonds to build a $5.4 million clubhouse at Heron Lakes—even if both expenditures came out of the Fund’s revenues. This kind of parental approval does look questionable while, at the same time, cutting a $100K budget item for sheltering thousands of homeless Portlanders, as well as other Draconian cuts to social programs.

In the growing climate of privatization, as public funds dwindle for schools, highways, and prisons, it’s not unsporting to suggest that perhaps the Fund also should be privatized and begin competing with private courses.

As an Enterprise, the Golf Fund is required to pay administrative fees (aka “overhead allocations”) for services from other City reserve accounts (“centralized service providers): attorneys, finance, technology, printing and distribution, insurance, health, workers’ compensation, and large and small purchases. CIP projects like the Heron Lakes club, or volume buys of golf carts, are paid for out of a percentage of Golf Fund profits into its second reserve account, the Golf Revenue Bond Redemption Fund. Significant sums have been accumulating in both reserve accounts as course profits are deposited, according to Zoller, to cover its interagency transfer monies so it remains solvent.

Yet the ability to call on those City services, apparently at cost, are in effect subsidization of significant overhead costs that no private golf course enjoys.  The Golf Fund’s reliance upon City staff also means diverting talent and energies from regular or emergency assignments for the many in order to serve golfers.

What are the principal services the Golf Fund must have?

Because the Fund lacks a finance staff, reliance starts with the critical need for financial assistance—chiefly from the Parks Bureau—on everything from budget submissions to advice on expenditures and operational policies. For questions about investments and bank deposits, for example, the Fund depends totally on the City’s advisory people in those two departments.

One ironclad rule for an Enterprise is that because it’s a separate entity, it can’t commingle its revenues with those in the City’s accounts.  So the Fund has its own bank account, but banks where the City does. True, interest paid to the Fund borders on minuscule—$7,318 in FY 2011-12—but every dollar must count toward its solvency.

Investment earnings are equally small, averaging about $7300 in FY 2011-12. Once again, the Fund’s stock-and-bond portfolio follows choices favored for the City’s investments by its advisory team.

Then, there’s the absolute necessity of help from the City’s Bureau of Technology Services (BTS). It offers perhaps far cheaper rates than outside vendors. Assistance is close by and far more rapid when computers crash or electronic equipment is needed.

If the Golf Fund needs new vehicles—pickup trucks to golf carts, it relies on CityFleet Service because CFS gets volume prices. It then leases them to the Golf Fund. CFS is mandated to go through the low-bid procurement process—advertising for bidders and weighing submissions to awarding and enforcing contracts. Because CFS is the owner of City vehicles, it also resells carts when they need to be retired.

Of the Fund’s two future major CIPs, one is the gradual replacement of hundreds of golf carts for three of the City’s five courses. Heron Lakes’ concessionaire KemperSports will buy carts for its two courses.  The estimated long-term cost for all others—$2.7 million—is to be spread over a five-year period—on a pay-as-purchased basis. To collect money for payments, the Golf Fund deducts $6 from concessionaires’ cart-rental fees and puts it in the second reserve account, the Golf Revenue Bond Redemption Fund, which is tapped periodically to pay CFS’s lease fees.

To maintain golfing grounds on the City’s collective 680 acres, the Golf Fund has the benefit of Parks’ expertise and discounted prices on volume buys of equipment and supplies such as fertilizer, grass seed, sand, and tools, along with consulting advice on aerification, tree/shrubbery maintenance and the like. The payroll for FY 2012-13 includes four superintendents and 20 groundskeepers—10 for Heron Lakes’ courses.

RedTail is the only course on which the Fund pays property taxes, but its contractual duties to the three others involves everything from plantings and parking-lot sweeps to periodic inspections of clubhouse structures and mechanical maintenance of fixtures and equipment.

Concessionaires pay utilities (electricity, telephone, sewer, garbage) at all courses except Heron Lakes which the Fund covers. Outside of the $83K spent for irrigation controllers at Eastmoreland in 2011, water expenses are almost nil because three courses have their own groundwater wells. Heron Lakes has access to the nearby Columbia River.

Water tables under the three courses might have dropped over the years. But groundskeepers use an under-turf ground-mix system that retains most of the water that sprinklers spray on the turf.

What about insurance?

Because the Fund is an Enterprise, it pays an average of $ 62K in annual premiums for insurance (fire/casualty/ liability). Casualty coverage applies to any accidents involving carts, the courses, or clubhouses. All City concessionaires also are contractually obligated to carry insurance. With regard to potential Fund liabilities, the Parks Bureau’s finance manager recently stated that:

…[lawsuits] are not covered under the City of Portland self insurance policy and thus [they] take out their own commercial liability insurance policies to protect themselves (much like a private-sector business would). So in the …scenario of an adverse ruling, the insurance policy for the Golf Fund would cover the pecuniary sums and…insurance rates would go up subsequently. 

Nevertheless, the question arises: Could either the Fund or concessionaires cover the $3 million lawsuit that the Pumpkin Ridge golf course out in North Plains is battling against a teenager who lost an eye from a ricocheted ball off a course building? Or the two fatalities involving alcohol and being thrown from golf carts on a Tennessee course?

Carts are usually at the heart of course litigation these days. Over a 17-year period, 103,387 course injuries have involved carts, according to one medical study. Another report noted 69% of injuries involved the head. The usual causes are legion: overturns, falling or jumping out of a cart, collisions, being struck by a cart, or even getting in or out of a cart.

If the primary push for equity of the disadvantaged rests on at least three of the Portland Plan’s five implementation sources—the Comprehensive Plan Update, budget revisions, new operating practices—the opportunity may have finally arrived to end the City’s long-time parental role with golf as an Enterprise, the poster-child of the well-off. The imaginative routes of cutting the apron strings offer practical, successful, and rapid methods on how to do it.

NEXT: The Golf Fund Enterprise Gets the City Sued

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