Shorewood Hills village trustees decided Tuesday to get taxpayers’ input on whether to help Blackhawk Country Club out of a financial bind.
Village Board members are considering a proposed 25 percent reduction in annual rent paid by the private club for use of village-owned land overlooking Lake Mendota. In addition to cutting lease payments to about $100,000 a year, the village would spend up to $150,000 repairing the club’s parking lot.
Board members voted unanimously Tuesday to place an advisory referendum on the April 7 ballot. The referendum is necessary before the lease could be changed.
Country club and village leaders say the changes will benefit everyone, but some residents are resisting the idea that taxpayers should take responsibility for fixing the club’s financial problems.
“To me it smacks of corporate welfare,” said John Aeschlimann.
Over the years there has been friction over the lease and residents’ access to the club’s golf course, including a 2005 incident when a club official ordered a village trustee and other golf class members off the front nine.
The proposed lease has a base rate of $100,000 annually with a $300 increase for each new member who joins through 2024, and at least 1.5 percent increases for the following 10 years. Blackhawk could exercise an option for another 10 years at a higher rate.
Village president Mark Sundquist said Monday that most board members favor a new lease, possibly with some small changes, but it’s possible that a decision could be delayed for a year.
“There are people who feel we are not getting as good a deal as we should,” Sundquist said.
Golf and meal access
He said the proposed lease would provide residents with more access to the club’s dining facilities and golf course, and give the village access to land for a storage facility.
Residents could golf four times a year, instead of three as allowed under the current lease, and could eat in the restaurant twice a month from November through April instead of January through March. Residents who use the facility pay greens fees and meal tabs. Typically only the club’s 399 members can play golf and dine in the restaurant.
The club said it owed $1.5 million to a bank, but had reduced that to about $800,000, said village administrator Karl Frantz.
Like other golf clubs, Blackhawk has reduced fees to maintain membership numbers, Sundquist said. “My feeling is if the golf demographic changes and makes the club untenable, I figure that’s life, but that’s different from the village taking active steps that would cause the club’s demise,” he said.
Blackhawk Country Club president Ben Dickey said the recession and increasing competition from a growing number of area golf courses has reduced membership revenue and forced greater reliance on income from food, beverage and banquet services that have smaller profit margins. The proposed lease recognizes that change as well as lower costs some competitors are paying in land-related costs, Dickey said.
The agreement would initially lower rent paid, but it would benefit the village over the long run by setting a minimum annual payment and establishing some minimum increases, he said.
The lease in place since 1986 requires payment based on 3.97 percent of gross revenues. The average annual payment was $124,000 over the last 17 years, Frantz said.
Under the existing agreement, Blackhawk handled all repairs and improvements. The proposed lease calls for the country club to make $150,000 in improvements over five years. Dickey said he believes the village’s cost for the parking lot wouldn’t exceed $100,000.
In 2012, the country club formed a lease committee that was in informal talks with the village for much of 2013 before the municipality formed its public negotiating panel last year, he said.
Meanwhile, one trustee who was instrumental in negotiating the proposed lease may have run afoul of the village’s conflict of interest ordinance, officials said. On Tuesday board members discussed a possible violation of the village ethics code by Trustee Tim Rikkers, but took no action.
The ethics ordinance forbids trustees from taking official actions related to the country club if they or their immediate family members belong to the club.
Rikkers ended his club membership a few years ago, but his wife was a member until recently.
Rikkers said he recognized his membership could be a conflict of interest when he began working with lease negotiations and resigned from the club.
“At no point did I do anything that wasn’t transparent,” Rikkers said.
Sundquist said he appointed Rikkers to the committee because of his experience as a commercial real estate leasing agent.
State Journal reporter Abigail Becker contributed to this report.