City approves Golf management agreement extension

City Commissioners unanimously approved a contract amendment and second extension of the Golf course management agreement with CourseCo during their Jan. 21 meeting.

Staff recommended the agreement for a term Feb. 1 through Jan. 31, 2030.

The city has been in an agreement with CourseCo since February 2019 for management of the city’s two municipal golf courses, Anaconda Hills and Eagle Falls.

City considering second extension to golf course management agreement

The city golf fund has struggled for years, running a roughly $1 million debt to the general fund.

The golf fund is designed as an enterprise fund, meaning it’s supposed to be self-supporting through user fees. But over the years, golf suffered and the general fund subsidized the program.

In 2019, the city issued a request for proposals for course management in an attempt to make them financially stable and reduce pressure on the general fund.

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The city received two proposals, from CourseCo and the Great Falls Baseball Club.

In their 2019 staff report, Park and Recreation staff wrote that CourseCo has extensive experience managing golf courses and working with municipal governments.

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“CourseCo presented a dynamic and progressive plan for development of the courses as community assets. They have a robust corporate structure and resources including sales, marketing, human resources, finance, customer service, promotions and industry involvement. They provided a proforma that showed they would have a positive impact on the financial success of the courses. They also had a policy and good track record in retaining the majority of existing employees,” staff wrote in 2019, leading them to enter into the management agreement with CourseCo and subsequent extension.

CourseCo has provided cost savings opportunities and generated new revenues for the golf courses, helping reduce the golf fund’s debt to the general fund since 2019.

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Under the agreement extension, this year, the city pays CourseCo a $105,000 management fee and a $29,000 accounting fee. Those fees will be adjusted annually by the consumer price index, but not to exceed 5 percent, through the term of the agreement.

Those fees have increased since the original 2019 agreement, but CourseCo has continued to increase revenue, a portion of which comes back to the city.

During their Jan. 21 work session, Commissioner Susan Wolff asked for the number of users between the two municipal courses.

Michael Sharp, CourseCo’s president, said that they have about 50,000 users, based on roughly 48,000 rounds played last year, but others who use the driving range, visit for community events or the taphouse at Eagle Falls.

It’s the same information Steve Herrig, Park and Recreation director, told commissioners during their December work session when they focused on the golf fund and program.

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In December, Herrig told commissioners that in 2023, there were 47,483 rounds played at the city’s two courses.

During the Jan. 21 work session, Mayor Cory Reeves asked what was the process to pay down the golf fund’s debt, or if that was just an arrangement between Park and Rec and CourseCo.

Herrig explained that the city still owns the golf courses and the golf fund is a city fund and that debt is addressed in the city budget process annually.

The debt and golf fund were also detailed during the commission’s December meeting, and multiple budget meetings.

Commissioner Joe McKenney asked what the $50,000 toward capital improvements mentioned in the new agreement included and who decided those.

Herrig said they work with CourseCo on that and the current plan is replacing golf carts, which he detailed during the December work session, and they’ve replaced about half of the golf carts so far.

Herrig said that once they pay down the golf debt, they’ll work to build a capital plan for the golf courses including a cart replacement cycle.

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Eventually, they’d like to put indoor golf simulators at Eagle Falls, creating year-round golf revenue as well as food and beverage revenue.

Commissioner Rick Tryon said that he no longer golfs, but “you guys have done an outstanding job.”

He asked, out of curiosity, if the city or CourseCo hire for the golf courses.

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CourseCo took over all staffing and hiring for the two city golf courses when the management agreement took effect on Feb. 1, 2019.

Under CourseCo’s management, $1.3 million was brought into the city and $1.2 million went toward the golf debt with some going into the taphouse renovation and course equipment, Herrig said during the December work session.

Herrig told commissioners that staff was looking into a long term agreement with CourseCo and eliminating the rest of the golf debt.

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In December 2018, when commissioners approved the initial CourseCo agreement, city staff said that the golf fund had been operating at a deficit for the 14 years and has required taxpayer subsidies to operate. Golf is an enterprise fund, meaning it should be self-supporting, as are the aquatics and parking funds.

Fast forward to January 2025, that’s an ongoing deficit for 21 years.

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“The debt and ongoing taxpayer subsidies reduces the ability of the city to appropriate funding to other areas of the city’s annual budget including fire, police, and other Parks and Recreation programs,” according to the 2018 staff report.

In 1998 and 1999, the city approved revenue bonds to enhance the golf courses, but during the term of the bonds, covenants were only met twice, because of poor financial performance.

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The debt service was retired in 2016, but the golf fund did not stabilize and continued to accrue operating debt, according to the 2018 staff report.

Commissioner Rick Tryon asked during the December work session if closing a course would help cut costs.

Herrig said that CourseCo officials had told them they share resources between the two courses and closing one wouldn’t significantly reduce expenses but would reduce revenue overall with less opportunity for memberships, rounds and tournaments.

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Herrig said that closing a city course doesn’t mean all of that revenue will come to the other city course and golfers might instead leave for another local golf course.

Anaconda Hills closes in the winter and resources shift to Eagle Falls, he said, and CourseCo has said the two course model works keeping it more affordable and profitable.

Herrig said the city can’t sell Anaconda Hills so if they were to close a course, it would be Eagle Falls, representing a bigger hit to golf revenues.

Tryon said that his question wasn’t about closing a golf course, but whether they were bound to keep both open in the CourseCo agreement.

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Herrig said it’s not in the contract, but CourseCo would prefer to maintain both courses, but if that’s not sustainable, they’d adjust.

He said that CourseCo had shown staff they could sustain the two courses and be profitable.

Mayor Cory Reeves asked when staff projected the golf fund would be debt free.

Melissa Kinzler, city finance director, said during the December meeting that depended on whether the city used a 10-year agreement with CourseCo and if they applied funds from the sale of city land to Pasta Montana toward the golf debt.

She said that when the city sold the Pasta Montana land, they’d talked about putting the funds in the parks special revenue fund, but realized later that according to city records, it was actually golf course land, so that $300,000 is sitting in the golf fund.

Kinzler said that as of December, there was about $678,000 of remaining golf debt to the general fund.

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She said that using the Pasta Montana funds would cut cut the gof debt in half and the new CourseCo agreement will affect how quickly the remaining debt can be paid off.

She said that CourseCo looks at their rolling cash flow and when they have additional revenue, it goes to the city to pay down the golf debt.

“We’ve come a long way,” Kinzler said.

Herrig said the goal was to pay down the golf fund debt in about five years.

Kinzler said there’s still a lot of deferred maintenance at both courses that the city is responsible for.

Herrig said they’ve started the process of replacing golf carts and putting them on a replacement schedule.

He said they’d refurbished some and trying to replace about 20-25 carts at a time.

Under the agreement with CourseCo, the city pays any deficit in the operations, pays a management free, and retains all liability for the golf courses.

Reeves asked in December when was the last time the city had adjusted golf fees.

Herrig said commissioners had approved an increase earlier that year.