Golf courses not profitable for governments

Hannah Grover
Gordon Miller putts during a round on Friday at the Pinon Hills Golf Course in Farmington. Like other courses in San Juan County, Pinon Hills does not take in enough revenue to cover its operating costs.

FARMINGTON – As the Aztec City Commission weighs whether to continue managing the Hidden Valley Golf Course, the idea of whether it should be treated as a business or as a park has become the center of debate.

The difference centers on whether the city should expect the course to generate a profit. Currently, the course is classified by the city an enterprise fund, like utilities. Those funds are generally expected to break even or show a profit. However, the course has yet to make it into the black, and the city has had to transfer funds from the electric utility to pay for it.

When then-owner George Riley shuttered the golf course in early 2015, the city signed a two-year lease that gave it management of the facility after the City Commission voted unanimously to approve that arrangement. At the end of 2015, Hidden Valley was being operated at a $95,000 deficit, and the city transferred money from the electric utility fund to help pay for its continued operation.

Based on numbers from the first year of operation, the city estimates it will lose approximately $65,000 next year.

“The original numbers that we were given is that we would have a modest $8,000 gain at the end of one year,” Commissioner Katee McClure said during a community meeting Feb. 17. “Those were the numbers we voted on. That’s the reason (the) commission voted to take over the golf course. We knew it wasn’t going to be a huge money maker and, honestly, when we did the vote, we were just praying we would break even.”

The city of Farmington faced similar issues a few years ago with the Piñon Hills Golf Course. In 2014, the city moved the course from an enterprise fund to the general fund because the course was operating at a deficit. In 2013, the course's expenditures exceeded its revenue by more than $183,000.

Mike Hannigan tees off during a round on Friday at the Pinon Hills Golf Course in Farmington.

Piñon Hills Golf Course is one of three public golf courses in San Juan County in addition to the Hidden Valley Golf Course. The city of Farmington manages Piñon Hills, as well as the Civitan Golf Course, while San Juan County manages the Riverview Golf Course in Kirtland. The Civitan, Riverview and Piñon Hills golf courses are all operated with subsidies from general funds.

“Golf revenue is actually above the projected budget,” Farmington City Manager Rob Mayes said in a text message. “But we actually budget with a planned general fund subsidy. Our golf courses are not ‘enterprise' or business venture funds with any expectation they will pay for themselves. Any more than a swimming pool or a community center does. All our basic services except the utility funds are subsidized for the benefit of our citizens and visitors who pay taxes to enjoy a high quality of life.”

San Juan County Executive Officer Kim Carpenter said the Riverview Golf Course's expenditures are greater than its revenues. The fiscal year 2015 budget included a built-in transfer of approximately $330,000 to the golf course.

“Very, very few courses nationwide operate in the black,” he said.

Carpenter said the county views the golf course like it views McGee Park — as something it offers residents as a quality-of-life asset. But the county is also looking at ways to bring in more revenue from the course.

“We’ve gotten pretty aggressive about diversification of the golf course,” Carpenter said.

He said the course has added foot golf and is working to develop walking trails and fishing.

Bob Ley chips on to the green during a round on Frida at the Pinon Hills Golf Course in Farmington.

While the course does not generate a profit, Carpenter said it is a valuable asset because of the service it provides, including serving as a place for young people involved in the First Tee Program to play golf. The First Tee Program brings about 8,000 young people to the golf course each year to learn the game and, at the same time, learn life skills, such as setting goals.

Aztec's Hidden Valley Golf Course is also used in the First Tee Program.

"(The First Tee Program) does reach a lot of kids in the Aztec and Bloomfield area," Aztec Commissioner Sheri Rogers said during the community meeting.

Hannah Grover covers Aztec and Bloomfield, as well as general news, for The Daily Times. She can be reached at 505-564-4652.