A sputtering economy has left Pierce County’s Chambers Bay Golf Course with a deficit of more than $700,000 through the first half of the year, and county officials say it could finish 2009 in the red.
Though the upscale University Place course is generating enough money to cover its operations, it might not earn enough to cover an $800,000 debt payment due in December.
If that happens, the county could tap its general fund at a time when the county has reduced staff and office hours in some departments as it struggles to balance its budget. It also could sell public land near the course to cover the debt payment.
County officials hope a strong third quarter will offset at least some losses Chambers Bay saw early in year. But unless things improve, the deficit could get worse.
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“There’s a chance we’ll make up some of it,” said Tony Tipton, the county’s Chambers Bay project manager. “But there’s an equal chance the (deficit) will grow prior to the end of the year.”
Chambers Bay has been a sensation in the golf world since it opened in June 2007. It has received rave reviews and appeared on numerous “best new course” lists. And it landed the 2015 U.S. Open and 2010 U.S. Amateur championships.
The county charges a premium price for its Links style course. County resident pay up to $109 a round. Nonresidents pay up to $169.
Despite its renown, Chambers Bay has struggled to meet budget. It finished 2008 with a surplus of just $45,202 on revenue of just more than $6 million.
Like other courses, Chambers Bay expects to lose money early in the year and make up for it in busy summer months. But the course’s latest financial report shows a deficit of $710,729 through June – about $450,000 more than the deficit it had budgeted for.
That’s in part because golfers played about 3,000 fewer rounds than budgeted in the first half of the year. And many who did play took advantage of discount rates offered late in the day. The average greens fee for the second quarter was just $88 per round; the county expected to average $107.
Also troubling: Food and beverage sales – a bright spot last year – were lower than budgeted.
July’s budget numbers aren’t in yet. But rounds played were 20 percent below budget last month.
Tipton said the county has cut spending in response to slower business. Fewer food and merchandise sales mean the county is buying less of those items. And while the county has not resorted to layoffs, seasonal employees are getting fewer hours.
The county is not scaling back course maintenance as it prepares for the U.S. Amateur championship next August, Tipton said.
He attributed this year’s slump to a recession that has hobbled the hospitality industry.
He stressed that Chambers Bay is making enough money to cover its operating expenses. But he said it might not make enough money to cover its December debt payment.
That could put Pierce County in a bind.
The county borrowed $20.7 million to build Chambers Bay and pledged golf course, sewer and general fund revenue to repay it.
The move was controversial. Many taxpayers and sewer customers said they didn’t want to pay for an elite course that few county residents could afford to play.
To date, course revenue has been sufficient to pay the debt, and no tax money has been used to subsidize the golf course.
But that could change if Chambers Bay doesn’t generate enough revenue to cover the next bond payment.
Deputy County Executive Kevin Phelps said the golf course could borrow from the county’s general fund or sewer fund to make the payment. He said the money could be repaid with interest from revenue expected from the U.S. Open.
But that might not fly with the County Council. To protect the general fund, the council has stipulated the county would sell or lease property at the 932-acre Chambers Creek properties to cover debt if necessary.
Former County Executive John Ladenburg – whose vision for Chambers Bay led the county to build it – vowed the course would pay for itself and the county would not have to sell land to cover the golf course debt.
Council Chairman Roger Bush, R-Graham, said he thinks “the council would look askance” at borrowing from the general fund for this purpose. He called the option of selling property a “firewall” for taxpayers.
“The county taxpayers are really not in jeopardy on this,” Bush said.
Councilman Terry Lee, R-Gig Harbor, said selling property is possible to cover the debt. But he said he’d want to weigh all of the options first.
“I don’t think there’s anything that’s off the table,” Lee said.
Phelps called the Chambers Creek property a “gigantic community asset” and said selling it would not benefit the public in the long run.
County officials agree on this much: They hope course revenues recover enough to pay the debt.
“We’re hopeful that the economy will pick up and consumers will start to feel better ... and that will free up some additional spending out at the golf course,” Tipton said.
David Wickert: 253-274-7341