Article Courtesy of The Daytona Beach News-Journal

By Eileen Zaffiro-Kean

Published January 22, 2017

DAYTONA BEACH - The city is going to detach itself from the two LPGA International golf courses it has owned for 40 years, a move that city leaders say will help taxpayers dodge a multimillion dollar drag on city coffers.

   
At their meeting Wednesday night, city commissioners decided on a 6-1 vote to sell the two 18-hole courses on the city's west side to Indigo International. Although the courses and clubhouse have lost $15 million over the past few decades and are in need of more than $1 million in upgrades, the commissioner who cast the lone no vote made an impassioned plea to hold out for much more than the $2.2 million the city will get in the deal.

   
"Are we crazy?" implored City Commissioner Ruth Trager. "Goodness. They want to offer us close to what we'd get (in rent) if we just held on to it. I think Daytona Beach is getting screwed."

For a while at Wednesday's meeting, the arguments for and against the sale proposal volleyed between Trager and City Commissioner Rob Gilliland, who maintained keeping the courses would mean a property tax increase.

"It's not something I'm willing to tolerate," Gilliland said. "Golf courses are on the downswing. More courses are closing each year than being built. The city needs an exit strategy."

Trager, who called the sale price "downright pitiful," also got into a back and forth debate with local resident Carol Killian while she was at the podium saying she supported the deal.

"Why do you want the city to lose money?" Trager challenged, interrupting Killian during her 2½ minutes to comment.
"I beg to differ with you," Killian said, and went on to defend her support.

After a 90-minute discussion, the decision was made to go with the deal to sell the pair of courses to the company that has been leasing them for 40 years.

Indigo International, a subsidiary of Consolidated-Tomoka Land Co., will buy the 657 acres spread across the two courses for $1.5 million. The deal also calls for Indigo International to pay the city at least $70,000 every year from a $1 surcharge on every round of golf, which will run until the city has received $700,000.

The deal also promises that if Consolidated-Tomoka sells the golf course within the next six years, the city will receive 10 percent of any profits in excess of a $4 million sale price.

In addition to those payments, the city will also receive a little over 14 acres near Municipal Stadium owned by Indigo International. City leaders say the 14.28 acres, which are valued at around $500,000 and split in three parcels around the stadium, are badly needed for extra parking and flood mitigation.

 
Local appraiser Carl Velie said the courses and clubhouse are currently valued at $2.6 million, and in six years he estimated they'll be worth $3.7 million.

  
Trager argued that the golf course land would be very attractive to a homebuilder, and Indigo International could sell it for much more than the city is getting. But Velie, city leaders and Consolidated-Tomoka officials said a deed restriction and the legal land use assigned to the courses would make that virtually impossible.

  
Even if it was possible, Gilliland argues that the disjointed and narrow swaths of golf course land don't have enough space to build roads and homes. And getting rid of the courses would be economic suicide for the upscale area that attracts high-end home buyers who want to golf somewhere nearby, he said.

   
If the lease between the city and Indigo International had reached its end in 2022, the city would have taken on an operation that's been losing between $800,000 and $1.5 million annually since 2011, according to Consolidated-Tomoka records.

  
"It's always been a large loser," said John Albright, president and CEO of Consolidated-Tomoka.

   
"If the golf courses went to the city, we'd lose $15 million in 10 years," Gilliland said.

     
Walking away, he said, will leave the city with about $10 million from the course rent and taxes collected over the years as well as the new sale revenue.

  
Located west of Interstate 95, LPGA International consists of two 18-hole golf courses, a clubhouse, restaurant and fitness center. Since the late 1970s, the city has owned both courses and has been leasing them along with its 20 percent portion of the clubhouse to Consolidated-Tomoka.

   
The courses lured the Ladies Professional Golf Association to relocate to the west Daytona Beach courses in 1989. The hope was the LPGA would attract large, lucrative tournaments and a new hotel and scores of new homes would be built near the courses.

   
But the explosive growth never came, and now two aging courses and a clubhouse need upgrades. Owning the courses now is incentive for Consolidated-Tomoka to try to make the venture profitable in the long run, Albright said.