High-end houses could rise around Pierce County's planned world-class golf course if the project falls short of expectations and fails to make money.
Although no formal proposal exists, County Council members are discussing selling or leasing golf course property or county-owned land around the site if the golf course runs into financial trouble.
A report presented to the council last week shows that selling the 250-acre, waterfront golf course property for housing would net the county $90 million.
The idea to sell some of the county-owned land at Chambers Creek Properties in University Place is to avoid this worst-case scenario: The golf course flops, forcing the county to dip into its general fund, which pays for sheriff's deputies and other core public services, to pay off the mounting debt.
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"We're moving toward adding more assurances to provide a safety net so the taxpayers can be assured their rates or fees won't go up, " said Council Chairman Shawn Bunney (R-Lake Tapps). "I want to figure out how to use a piece of that land out there as a mortgage against the bond."
"It's a familiar concept, " added Councilman Terry Lee (R-Gig Harbor). "A lot of golf courses make their money on housing."
The discussion is under way as the council moves closer to blessing County Executive John Ladenburg's proposal to build Chambers Bay, a 250-acre, 18-hole Scottish links-style golf course.
On Sept. 6, the council's Rules and Operations Committee, which gives early review to budget issues, will hold a study session on the project. On Sept. 13, the full council is expected to vote on whether to approve the ordinance that would issue bonds to finance construction of the golf course.
In the early 1990s, the county used its Sewer Utility Fund to buy the former gravel mine that is Chambers Creek Properties.
The golf course, which is being designed by architect Robert Trent Jones II, is intended to rejuvenate the scarred landscape, enable expansion of the county's wastewater treatment facilities, generate revenues to build other parkland and open space projects envisioned in a master plan for the area, and pump up the local economy.
Lee said the council wants to avoid raising sewer fees or property taxes if the golf course loses money.
"We feel this golf course will pay for itself, " he said. "If it doesn't, then we'll start shaving off some of the premium land to guarantee that citizens don't carry the burden."
And that premium land would fetch a big price, according to information requested by council members and presented to last week by public works officials.
If Pierce County sold 1,000 housing lots at four lots per acre on 250 acres, then it would net $90 million, according to the report. The selling price of an average lot is $225,000.
Those numbers reflect certain assumptions, including that the property would be successfully rezoned to allow housing, that 75 percent of the lots would have a view of the water and that all of the lots would have some kind of access to the waterfront.
Lee said he doesn't want to sell any part of the golf course if financial problems occur but would support selling land near the course.
For example, he said, selling roughly 30 acres north of the site for housing would "easily" net the county $20 million.
Bunney said putting the entire golf course up for sale for development "is an option, but I do agree that it can be done in a much less all-or-nothing way as (Councilman Lee) described."
Councilman Calvin Goings (D-Puyallup) said he prefers leasing some of the county-owned land to buy down the debt of the golf course.
"We're not going to sell off part of a 900-acre gem, " he said. "What is more likely is to take 50 acres of 900 acres and we would lease where the restaurant and where some condos might go."
Ladenburg is asking the council to approve an ordinance that would issue 30-year bonds and pledge golf course and sewer revenues to pay off the debt. The county would commit property and sales tax revenues as well, if the course and sewer revenues aren't enough.
The county would borrow $18.7 million to build the course and pay an estimated $35.9 million in principal and interest over 30 years.
While he doesn't mind council members adopting a land-sale contingency plan, Ladenburg said, it won't be needed because the golf course will never threaten to siphon the county's sales and property tax revenues.
Ladenburg said he included a pledge of general taxes in his proposal to finance construction of the golf course because it will fetch the best interest rate.
"You always pledge all revenue funds to get the best interest rate, " he said, noting the county has made similar pledges when borrowing money to build other sewer, park and road projects.