Golf association wants waiver of lease

After a year of big expenditures, the Kalispell Golf Association wants the city of Kalispell to waive a $16,780 annual lease payment for its 240-acre golf course.

The golf association wants Kalispell to consider contributions it has made to maintain the golf course as full and adequate payment and will make its case for the waiver at a Kalispell City Council work session Tuesday.

“We made in excess of $550,000 of capital expenditures in 2011,” said Steve Dunfee, the general manager of Buffalo Hill Golf Course.

That includes borrowing to build a new driving range and pay for irrigation and asphalt improvements.

The golf association also spent nearly $100,000 for engineering and erosion repairs along the Stillwater River, Dunfee said. “That alone we’re hoping will be recognized.”

But the waiver request comes as Kalispell looks for an estimated $46,000 to fulfill its $79,000 local match for a Stillwater River bank stabilization project that earlier this spring shored up 650 feet of eroded river bank split among six sites.

The golf association’s lease payment is targeted to help plug that gap after the rest of the match was covered with in-kind services.

City officials said the stabilization project became necessary after spring 2011 flooding that threatened to start a new river channel through the golf course if stretches of eroded bank were breached.

Kalispell got the Federal Emergency Management Agency to pay for 75 percent of the $428,000 project. The state of Montana also is pitching in $28,000 for the work.

THE GOLF course lease contains a mechanism for the association to apply for lease credits.

If the association pays for infrastructure improvements that are identified in a capital protection program and otherwise scheduled to be paid for by the city, it can request to credit those costs against its future lease payments.

The only problem: A capital protection program has not been put together.

A 20-year golf course lease entered in November 2009 called for the golf association and the city’s public works and parks departments to meet and draft a capital protection program by the end of that year.

It remains a work in progress.

According to the lease, the program should identify items of deferred maintenance and “any other assets suffering or threatened with damage or devaluation.”

The program is supposed to include cost estimates, revenue sources and maintenance priorities to preserve city assets through the life of the lease and make it clear what the city will pay for and when.

CAPITAL improvement expenditures at Buffalo Hill could average several hundred thousand dollars a year over the next two decades, Dunfee said.

There’s also a question of whether Kalispell and the golf association want to try and prepare to deal with the next round of flooding and erosion problems in the Stillwater corridor.

“Those issues will continue to arise,” Dunfee predicted.

With a clubhouse, outbuildings and parking lots generally recognized as city assets, what if any capital improvement costs could fall on Kalispell over the next 20 years remains uncertain with no capital protection program in place.

Estimates for the amount of deferred maintenance in those city facilities have been considered but nothing has been fully accepted, said Charlie Harball, city attorney and interim city manager.

“In the next couple months we’ll sit down and say, ‘Where were we before we got off track with the Stillwater River project?’” Harball said.

Dunfee agreed that both parties are working to draft a capital protection program.

“We can’t in good faith or in good terms look at the landlord and say we’ve got it all covered,” Dunfee said.

“The rivers, the bridges, the thousands of square feet of asphalt and paving, the buildings ... There’s a tremendous amount of infrastructure. We do the best we can and we’ll continue to hammer away, but there’s definitely limitations.”

THE GOLF association’s annual lease payment — calculated as 2 or 2 1/2 percent of a three-year rolling average of gross receipts from membership dues, green fees and driving-range ball rentals — is Kalispell’s only revenue from the city-owned golf course.

Harball predicted the golf association’s waiver request will be a hard sell for the Kalispell City Council.

“I’d be really surprised if the city forgave it based on what we’re pouring in with the FEMA grant and in-kind services,” Harball said.

“The council will probably smile and say, ‘No, thank you.’”

Assuming the golf association’s lease payment is plugged into the stabilization project, the remaining $30,000 needed to fulfill the city’s local match likely would come out of the general fund, Harball said.

The general fund also would be the likely source for other golf course related capital improvement expenditures going forward.

“We were fortunate to get that FEMA grant,” Harball said.

“We never would have been able to do that with how long it would take us to put together $400,000 for a single asset.”

Tuesday’s council work session begins at 7 p.m. at Kalispell City Hall.

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.