A big 'no' to golf course bailout
Special assessment plan abandoned 

COURTESY : The Florida Times-Union
Published August 13, 2003 
By R. Michael Anderson 

About 300 people crowded into Fleming Island United Methodist Church Thursday, but not to worship.

Most were there to protest a proposed increase in special assessments on every Eagle Harbor homeowner and merchant to help bail out the upscale community's financially ailing golf course. 

By the time a public hearing ended nearly 2 1/2 hours after it began, the golf-fee proposal had been abandoned by The Crossings at Fleming Island Community Development District -- a quasi-governmental entity responsible for the operation and maintenance of swimming pools, tennis courts, drainage and other infrastructure in Eagle Harbor.

The assessment property owners pay varies from neighborhood to neighborhood within the Eagle Harbor development. But everybody's tax bill would have increased $124 a year to support the golf course if the district board's original proposal had passed.

In the end, after numerous speakers paraded to a microphone and expressed their dislike for the idea, the five board members voted to increase the general assessment $24 a year, none of which will be earmarked for the golf course.

The board also adopted a recommendation from its legal counsel, John Kopelousos, to hire a golf course consultant to review the management of the course and recommend ways to improve efficiency, reduce debt and increase revenue in the coming year.

Kopelousos said the district has the financial means to keep the golf course solvent and operating for one more year, including the payment of $650,000 in two payments to reduce bonded indebtedness. But beyond that, he could not guarantee anything.

"We can make it a year," he said. "After that, we have got to to either increase revenues or reduce the debt."

In pursuit of the latter solution, Kopelousos said attempts will be made to restructure the debt and obtain a lower interest rate on bonds that were sold in 1999 to buy the golf course for $6.5 million from East-West Partners Inc., developers of Eagle Harbor.

Kopelousos and Community Development District board members agreed that the purchase of the golf course, while seemingly a good deal at the time, has turned out disastrously.

"The golf course business is in the hole everywhere, not just in Eagle Harbor," Kopelousos said. "I told many of you in this room [four years ago] that the golf course would pay for itself. At that time, I truly thought it would."

He said the purchase price was based on an independent appraisal done by a national real estate firm with no corporate ties to East-West Partners Inc. However, in the past few years revenue has steadily declined and the real value of the course has plummeted, he said.

If a new appraisal were done today, Kopelousos said, the golf course might fetch a figure of $3.5 million to $4 million, partly because projected revenues are far lower today than they were four years ago.

In response to suggestions that the district should just default on the bonds and get out of the golf course business altogether, board member Tom Platt said that has been discussed off and on for the past two years.

However, while some residents favor "bulldozing it under," Platt said, many others view the golf course as an attractive amenity that's well worth keeping.

Bob Lang of Country Walk Drive told the board he views the golf course as "a tremendous asset," and that if the district had not paid too much money for it the course would be "doing fine today."

The issue came down to one question: Should the district dump the golf course before it goes even further into debt, or keep it and try to make it more profitable by reducing debt, cutting costs and boosting revenue?

Advocates on both sides of the issue drew scattered applause, but there clearly were more people present who opposed any assessment to help fund the course and quite a few suggested the district should go ahead and default on the bonds.

"We say dump the thing," said Doug Jones of Heron Bay, whose comment drew mixed reaction of applause and boos.

Kelly Morgan, of Salt Marsh Lane, questioned the wisdom in continuing to fund a financially failing golf course that keeps sinking deeper into debt, saying the decision is "throwing good money after bad."

Kopelousos said if the district were to default on the bonds, ownership of the golf course would not change. The only security the bondholders have, he said, is "the right to take over the operation of the golf course."

Because they wouldn't want to do that, he said, bondholders may be willing to renegotiate the bond issue on more favorable terms to the district.


 
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