Maple Valley city officials never planned to get into the business of running a golf course, but in November 2006 the City Council approved the purchase of Lake Wilderness Golf Course. The contract with Premier Golf, which operates the facility, expires in December and for city officials the time has come to evaluate the next step.

THE PAST

Lake Wilderness Golf Course was owned and operated by American Golf before the city purchased it in 2006. The course is just over 100 acres and the city paid about $4 million for the property.

City officials point out while the property is used as a golf course, the city currently has no plans to do anything other than continue to operate it as a golf course.

Still, the way the deal happened has left a sour taste in the mouths of those who were involved at the time.

There are three members who remain on the City Council who voted on the purchase in 2006 when Maple Valley was approached by YarrowBay and American Golf – Mayor Noel Gerken, Councilwoman Linda Johnson and Deputy Mayor Victoria Laise Jonas.

The Kirkland-based developer had a deal in place with the previous owner to purchase the course, explained Chief Entitlement Officer Colin Lund. YarrowBay approached the city at the end of October 2006 with an offer to purchase the course and told city officials they needed a decision by the end of November.

Representatives from YarrowBay told Maple Valley officials it decided to offer the city the chance to buy the course when it decided not to go ahead with the purchase, Lund said. YarrowBay offered the site with the idea the city would want to preserve it rather than see houses built.

“We just opted not to go forward and rather than just saying no, we thought it would be a good thing, frankly if the city had an opportunity to purchase it,” Lund said.

It made sense, Lund said, to offer it to the city because the developer knew another company would likely come along, buy it and develop it.

“To us it was, ‘We have this opportunity to let (the city) buy it or let the free market work,’ ” Lund said.

Homeowners who lived on the course weren’t keen on the idea of homes being built and asked the council to buy the course.

When the council approved the purchase, it was a 5-2 vote, with Gerken and Jonas voting against it.

“I strongly disagreed with the purchase of the golf course,” Jonas said in an e-mail interview. “As I recall, YarrowBay gave the city only 30 days in which to decide whether to purchase the golf course or not. Due to this unrealistic and what appeared to be a non-negotiable time line, the City Council did not conduct responsible nor thorough due diligence. The purchase of a golf course was not on our radar screen.”

Jonas said the purchase was not a goal for the city, it wasn’t part of the comprehensive plan “and most importantly it was not identified as a priority from our residents.”

Jonas noted the city used about $4 million that had been set aside to build parks, specifically the Summit Park, south of Four Corners, which could cost more than $18 million to build over three phases.

The short time frame was also a stopping point for Gerken, who felt the 30 day window to buy was too short, and from his point of view in the quick analysis he did “I figured that only about 5 percent (of residents) would use that course.”

Gerken said, “The other thing was I thought we were being worked by YarrowBay. Remember that was the peak of the real estate market and we ended up paying too much for that property. There were all these dynamics and they all happened at once. There was also a political aspect. We had 200 homes and residents who were all up in arms.”

Johnson, who voted to approve the purchase, said she didn’t view it at the time as buying a golf course, but rather “the intention as I understood it was to preserve open space.”

Johnson said, “The fact that the golf course was there and we considered it to be integral to Maple Valley was part of the decision. We’ve got the lake, the lodge and the golf course and those are important in defining Maple Valley. At the time, we didn’t want to lose that open space.”

It is not a fair comparison, Johnson said, to look at what the city paid for the course and what it would be appraised for in its current use, but rather to consider it open space.

Johnson said that it was not a perfect process and the city has learned some valuable lessons from it.

“I think there were some mistakes made,” she said. “I think that the staff could have done a better job in reviewing the situation. YarrowBay’s position was ‘Take it or we’ll buy it and develop it.’ There was not a threat, but there was definitely an underlying edge. Had we known then what we know now we might have negotiated differently.”

THE PRESENT

Following the purchase, American Golf ran the course as a contractor until May 2007, when Premier took over operations.

During the past three years the golf course has made a small profit, while Lake Wilderness Grill has operated in the red, and the extra cash made from the course does not offset the deficit created by the restaurant.

As a result, explained City Manager David Johnston, money from Maple Valley’s general fund has been used to subsidize the operation at about $100,000 a year on average.

“A (city owned) golf course requires a public subsidy,” Johnston said. “The public subsidy about three years ago was $120,000 of general fund money. Last year it was down to $39,000. This year it may be back up to the $100,000 mark because of the wet weather in May and because of the economy.”

Greg Brown, the city’s parks and recreation director, said there have been some changes in fees “but it’s not been across the board.”

Currently the rates for 18 holes of golf on a weekday are $25 and $30 on the weekends.

According to numbers provided by Premier to the city, Brown said, there has been a small but steady increase in the number of rounds played at Lake Wilderness since May 2007.

From May 2007 to April 2008, there were 29,238 rounds played at Lake Wilderness. During the next 12 months it rose slightly to 30,397 and from May 2009 to April of this year there were 34,088 rounds played.

As a result of the increase in rounds played the revenue stream has also steadily increased from collection of greens fees, cart fees and annual memberships Brown said.

In 2007, greens fees were $487,859, the next year it was $497,260 and in 2009 $521,148 were collected.

In addition cart rentals generated more than $100,000 each of the past three years while pro shop sales have brought in more than $50,000 during the past three years. Revenue in both of those categories have also grown.

Overall the net profit for the golf course was $116,703 in 2007, dipped to $33,066 in 2008 then rose back over $100,000 in 2009.

“Revenue is dropping on the food and beverage side,” Brown said. “People are penny pinching. But, they still golf.”

They just aren’t eating and drinking as much at the restaurant and the banquet facility has seen a significant decrease in business, with revenues dropping by more than 50 percent since 2007 to $9,046 in 2009.

THE FUTURE

The reality is the city owns Lake Wilderness Golf Course. There is no hopping in the time machine to go back and change that.

And with the expiration of the contract with Premier looming, Johnston said, it is critical to accept the city owns the course and it must evaluate what to do when the contract expires.

As a result, Johnston urged the City Council to form a task force to help set the direction for the course with the contract expiration opening the door for Maple Valley to investigate its future role in the city.

The golf course task force is a diverse group with eight members.

“We have a good mix of people who use the golf course and don’t use the golf course, people who live on the golf course and people who don’t live on the golf course, people who live in the city and use the course and people who use the course and drive in,” Johnston said. “We have different perspectives.”

There are four at-large members who don’t live on the course, two members who do and members who don’t live in Maple Valley but play at Lake Wilderness.

There is also an ad hoc advisory committee that is working with Johnston.

It is important to focus on moving forward, Johnston explained.

“One of the things we said in the onset of the first meeting (was), ‘We’re not going to be dwelling very much in the past,” Johnston said. “The city bought a golf course. Now what do we do with it?”

It is important to understand, Johnston explained, the Lake Wilderness Golf Course is viewed as a community asset.

“We don’t necessarily view it as a golf course,” he said. “We view it was a community asset with value.”

Johnston said he feels the task force, which was formed in June and began meeting in mid-July, has participated in an open process.

Thus far, the meetings have been about providing the members of the task force information to help them make recommendations to the City Council.

“The issue is, we own it today, what do we do with it, what’s the best way to deal with a community asset of value,” Johnston said. “That’s what the task force is chewing on and hopefully in September they’ll forward us the next steps.”

There are two neighborhoods on the golf course, one which has a homeowner’s association and one which does not.

John Sheppard, a member of the task force, lives on the course and is a member of the board of directors for the homeowner’s association. He has lived on the course for about four years and in the Maple Valley area since 1996.

“The city requested that a member of the board be on the task force and I had a desire to do that because I wanted to get first hand information as to what the options are that the city is looking at,” Sheppard said. “They’re primarily giving us background and data not only from an expectation point of view but from a financials point of view. For someone who is not on the task force it may look to them it’s not accomplishing anything. To me, we’re accomplishing a lot through gathering information. Without that information we would not be able to make an intelligent recommendation to the City Council.”

Over the course of weekly meetings, the task force has learned about everything its members would want to know about the golf course and restaurant. Topics have ranged from a proposed limited improvement district, to the role of course and restaurant in the city, to its business model particularly compared to other similar facilities run by other cities.

When the group meets Aug. 12, Sheppard said, it will discuss potential recommendations for the City Council.

“Then we will be, as individuals on the task force, at least this is the way I see it, we will be formulating in our minds what our recommendations will be,” he said. “I have some things in my mind that I feel are directions that we should take and they will be presented at the meeting and they will be discussed by the group. Depending on how the others feel, we will come up with solid recommendations that will be presented to the City Council.”

Johnston said the plan is to make the presentation in September, though a specific date has not been set in stone.

Sheppard said thus far the work the task force is doing “is going along as well as can be expected.”

There are some concerns the association Sheppard represents has regarding the course.

First, there is the limited improvement district or LID, which the city has considered using to recoup some of the money it spent on the course.

“Since this is a publicly owned golf course owned by the city … we don’t feel as homeowners we should be assessed any more than the general populace of Maple Valley,” Sheppard said.

And there is the question of the legal strength of a potential LID, Sheppard said, as well as the possibility it would not get sufficient support from those living on the golf course.

Sheppard doesn’t think a LID is a viable option.

“There are other options that we can pursue that would help them recoup some of the monies they put out for the golf course,” he said.

The other concern members of the association have, Sheppard explained, is the conservation easement the city is looking at placing on the property.

“They are proposing a conservation easement to maintain this property as open space,” he said. “They aren’t guaranteeing us that it will remain a golf course, only that it will remain open space… that’s another issue with the LID. It’s not a good investment (to agree to a LID) because if it was open space and allowed to grow into weeds, it would take away from our property value.”

As Gerken, Johnson and Jonas ponder the future of a major purchase they were a part of nearly four years ago, they are all hopeful something good can come out of it.

Johnson said she is in support of putting conservation easements on the course the property is on in order to preserve is as open space.

“We need to come up with something that continues its life as an asset to the city,” Johnson said. “I don’t have a big love to run a golf course. If we could sell the golf course to somebody that wanted to own and operate it as a golf course, I wouldn’t have a problem with that.”

Gerken said selling it is one possibility.

“It is an option, either as a golf course, or only so it can be used as open space,” he said. “That’s an option, probably not really popular. If we can just fix the restaurant end of it we could probably keep it for a while. I would like to explore a public-private partnership. We need to think way outside the box with the restaurant.”

Jonas said she is pleased the issue of what to do with Lake Wilderness Golf Course is being addressed.

“The city has many options,” Jonas said. “I am pleased with the recent formation of the Golf Course and Restaurant Task Force. Our city manager, David Johnston, has put together an admirable group of citizens as well as two City Council members (Dana Parnello and Layne Barnes) to review all of our options, including options that we may not have even thought of.”

The next step is crucial and Jonas is glad the city is taking a thorough approach.

“I look forward to (the task force’s) presentation and I strongly support a community-wide public process in determining the right course of action to take, based upon the task force’s recommendation,” she said. “This time engaging our community in making the best decision on what to do with these businesses.”

Sheppard said the task force is working hard to ensure this will happen.

“All of the task members are keeping an open mind,” he said. “We’re going to be very diligent about the recommendations that we present to the City Council.”

The Golf Course Task Force meets at 6:30 p.m. every Thursday in the Banquet Room at Lake Wilderness. The public is welcome to attend.