Monona Golf Course, Madison

Madison's four city-owned golf courses sustained large financial losses in 2018.

Two overarching realities are likely to be top of mind for a Madison task force charged with figuring out what to do with the city’s financially struggling golf courses.

First, the golf program’s financial structure is unique among all other Parks Division programs. Second, it’s entirely within the City Council’s power to plug the program’s shortfall with tax dollars.

Parks Division Superintendent Eric Knepp recently penned an ominous memo alerting the mayor, seven council members and the Park Board that after a flood-shortened playing season and amid a long-term waning in golf’s popularity, the city’s four courses ended 2018 with a $863,320 loss. Revenues dropped to about $2.4 million last year, while costs rose to about $3.1 million.

Barring a dramatic increase in the number of rounds played, Mayor Satya Rhodes-Conway and the City Council could be faced with whether to save city golf in its current incarnation — and thus find some way to fix its finances — or start selling off holes.

Knepp notes that while golf, on a per-acre basis, is probably the most expensive of any park use, it’s also among the top revenue generators in the Madison parks system.

“It’s really a perspective issue,” he said.

Among the Parks Division’s many offerings — including dog parks, softball diamonds, playgrounds, a pool, hiking trails and open fields for soccer or ultimate — golf is also the only one whose finances are set aside in a separate “enterprise fund” subjected to Governmental Accounting Standards Board accounting methods.

The fund is expected to cover golf’s operational expenses and capital costs, such as new or upgraded golf facilities. And it’s responsible for something akin to a property tax bill — a yearly payment in lieu of taxes, or PILOT, which last year totaled $198,015. Madison also collects PILOT payments from some city tax-exempt properties, including Oakwood Village and Attic Angel assisted-living facilities and Madison’s Ho-Chunk casino.

In short, “golf is a user fee-supported activity that meets accounting standards to be treated as a business-type enterprise,” Madison Finance Director David Schmiedicke said.

By contrast, other common park amenities and uses are “highly subsidized” with taxpayer dollars, Knepp said. Those dollars aren’t called “subsidies,” though, Knepp said, they’re called “spending,” in part because the Parks Division isn’t in the business of charging people fees to, say, jog through or teach a child to ride a bicycle in a neighborhood park.

No detailed analysis has been conducted of what the finances of other park recreational programs would look like if subjected to the same requirements as the golf program. Anecdotally, user fees for disc golf and dog parks cover those programs’ costs, Knepp said, but the programs aren’t responsible for a PILOT and don’t have to account for depreciation of their assets, which is a part of the golf program’s balance sheet. Softball, he said, is “probably an operational loser.”

What others do

Of 13 other cities or counties in southern Wisconsin that own golf courses and responded to a Wisconsin State Journal request for information on how they fund the sport, seven reported that course operations and capital costs are covered by user fees.

The other six subsidized operations, capital costs or both at their courses, although there was often a desire on the part of municipal officials that their golf programs be self-sustaining.

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“Generally speaking, our expectation is that the golf course will break even on operating expenses,” said David Carlson, administrator in the Grant County city of Lancaster, which owns one 18-hole course.

The village is close to that mark, he said, but he noted that golf’s predicament nationally is one of not enough players and too many courses.

“I don’t think it’s a Madison issue,” he said.

Fitchburg currently provides $30,000 in taxpayer dollars to keep its nine-hole Nine Springs Golf Course solvent. Beloit provides about $50,000 a year for its 18-hole Krueger-Haskell Golf Course, “but we are working on ways to make it self-sustaining,” said Beloit City Manager Lori Luther.

Kenosha County, which owns two courses, uses no tax dollars to fund golf operations but will use county bonding to pay for large capital expenses at the courses, according to Ray Arbet, county public works director, who was not familiar with the concept of PILOTs.

In Janesville, “operationally, the courses are at about a break-even point,” city parks director Cullen Slapak said. The two courses have a third-party manager, KemperSports, but the city pays for capital projects and about $15,000 a year to cover insurance and other administrative costs related to the courses, he said. He said the hope is that the city’s golf fund will reach the level necessary to cover capital costs.

Precedent set

A subsidy for Madison’s golf program wouldn’t be the first for a city agency organized under a similar, quasi-private framework.

The city’s bus system, Metro Transit, and its convention center, Monona Terrace, “are enterprise units of the city,” Schmiedicke said. Metro Transit receives a general fund subsidy, and Monona Terrace receives a room tax subsidy.

“In these cases, it has been determined that a subsidy to sustain these activities is in the public interest and of a sufficient priority relative to other programs,” he said.

Prior to losing his bid for re-election last month, longtime Mayor Paul Soglin made clear he was opposed to boosting the city’s golf courses with any taxpayer funding. Rhodes-Conway, however, has drawn no such lines in the sand, saying all options are on the table.

“It’s a policy choice,” said Knepp.

State Journal reporter Dean Mosiman contributed to this report.

Among the Madison Parks Division’s many offerings, golf is the only one whose finances are set aside in a separate “enterprise fund” subjected to Governmental Accounting Standards Board accounting methods.

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