Sickles Golf Associates, Inc. seeks city help
What was to be a discussion item by staff on the golf course at times turned into heated debate on how to keep the course open and minimize the losses by SGA.
According to Chief Operations Officer Dusty Cady the daily receipts need to equal $1,500 or more a day for SGA to see a profit. He said weather plays a big part in keeping the golf course in the black. He also shared a PowerPoint presentation of pictures of golfers enjoying the course.
City Attorney Kathleen Lazard told the council the lessee, SGA, Inc., entered an agreement with the city to lease the course for 30 years with the proviso the corporation would be in charge of all operations and would not have to pay any lease payments for the first 10 years. The waived payments equals $22,000 a year.
However Frank Cady, an investor with SGA, said the lease is not feasible and the corporation is losing money each year on operating the course. He said he wants to work with the city to make the golf course viable but not if he will continue to lose money.
“The last thing my father ever told me is not to get into a lawsuit. A bad settlement is better than a good lawsuit any day of the week,” said Cady at the beginning of his presentation.
He also said if the city breaks the lease agreement with SGA it will take 18 months to 2 years for the city to regain the golf course and it will be nothing more than a cow pasture.
SGA, Inc. owes Plumas Bank about $1.4 million and because the golf course is not making a profit the investors, Frank and Sue Cady and Eric Vial, have been talking to financial consultants about bankruptcy. Cady suggested if SGA has to go bankrupt, the bank will remove all equipment, including pump stations, sprinkler hoses and heads, leaving nothing. He said once the city got the land back it would have to invest at least $3 million in redeveloping the land for a golf course.
Vial told the council SGA’s intent was to have an 18-hole golf course but three experts, who gave projections on revenue for the golf course, overstated its worth.
“All three of them were wrong. The numbers are half to 60 percent off … We can proceed down all the legal avenues with the lease but it is going to be an ugly divorce,” said Vial.
“It was a private venture and it didn’t turn out. The city gets this back but what are they going to get back. Do we want to go down that avenue? Or do we want to look for other possibilities to see how we can work together to keep the golf course?,” asked Vial.
Councilmember Kurt Bonham asked Vial what SGA is looking for because in the presentation by Dusty Cady there was no mention of what the corporation members were looking for.
“We are looking to keep the golf course a golf course. We need help,” said Vial. “A real estate play is one option. We need support from the city so to develop lots so we can sell lots and make them into a development so we can pay down the debt service on the golf course and make it profitable.”
Bonham asked, “You want us to give lots that belong to the citizens of Susanville for you to sell so you can pay off your debt?”
“We want to maintain the golf course,” answered Vial.
“That is not the question,” countered Bonham. “The question is you want me to vote to give you real property that belongs to the city of Susanville so you can sell it and pay down the debt of SGA?”
“And, to purchase equipment to keep it operating,” Vial said.
Bonham said there is no doubt the city needs the open space and needs a golf course. He said, though he has been on the council for a short time, Wednesday night was the first time the word lawsuit was mentioned and the first time he has heard that there will be a bad outcome if the city decides to sue or break the lease agreement with SGA.
He said the best-case scenario is for the current investors to complete the lease agreement.
Mayor Pro Tem Rocky Joy said city staff has talked about how to help SGA and a real estate play was one option but never to help pay the private debt service. He said it is not the city’s position to finance a private enterprise. Joy said as long as there was no gift of public funds to help with the debt he was willing to talk about helping with such things as maintenance of the asset, which is the land.
Mayor Lino Callegari agreed and told the investors he had to work an extra 15 years when a business venture of his failed.
“No one bailed me out. No one is going to pick up your slack,” said Callegari.
He also said he would like to see SGA succeed and he does not want the course back but will take it back if need be.
Callegari said the public has made it clear that it does not want general fund money to bail out the golf course. He said he is willing to talk to SGA about ways to help the corporation cut its losses such as advertising to sell out the lease.
Cady said under the current lease any money given would be a gift of public funds. He said a new lease would allow the city to help SGA financially. He also said doing nothing is an option but asked what the golf course would look like in two years.
Cady said SGA should have kept a closer eye on the operation so not to lose money but now it is at a point that it cannot put more money into the golf course. He also blamed the city for not keeping an eye on operations.
Callegari directed City Attorney Kathleen Lazard and City Administrator Luann Rainey to see if anything came of the discussion and what the city can legally do to help SGA keep the golf course lease.
Bonham said the discussion did not need to get to the point that there was animosity between the city and SGA. He also suggested SGA put in writing what it wants from the city council so that the five members did not have to think abstractly and guess what was on the investors’ minds.
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