Officials seek to make municipal course more profitable, pursue capital improvements
Valleywood Golf Course in Apple Valley could have existing capital and operation debt retired by the city and get a new irrigation system and other improvements if a proposed 10-year business plan is approved.
A task force for the golf course composed of City Council members, golf course staff, Parks and Recreation Advisory Committee members and other city staff drafted a 2022-31 business plan for Valleywood with revenue projections, potential capital improvements and other goals.
The City Council reviewed the document at a July 8 work session. Parks and Recreation Director Eric Carlson said July 13 officials intend to include the plan on the July 22 agenda and ask the City Council to vote on the document and a request to hire a golf course architect. The Parks and Recreation Advisory Committee reviewed the plan in June and supports it.
Apple Valley voters approved the initial investment in purchasing the land and golf course construction with a $1.47 million referendum 1973. The first nine holes opened for play in 1976 and the second nine holes opened in 1977.
Today, the 190-acre golf course also has a 30-station artificial turf mat driving range, 55 battery-operated golf cars, two practice putting greens, golf pro shop, food and beverage service with a full liquor license and banquet space for large outings and receptions.
An estimated 50,000 to 60,000 people visit the course annually and the course averages 30,000 rounds of golf in a typical season. The course is used for golf practice, the driving range, lessons, cross country skiing, dog walking, cross country running and private events. Valleywood is the largest public open space in Apple Valley’s park system, representing about 21% of all city park property, according to the city.
This isn’t the first time the golf course has had a business plan. The first plan was in 2008 and was updated in 2011.
The draft business plan proposes to have the city retire existing capital and operational debt of about $3.75 million with funding sources other than golf course revenues. The debt is related to the construction of the clubhouse and banquet facility in 2012, a parking lot upgrade and sanitary sewer connection.
Finance Director Ron Hedberg said the city took money from its park dedication fund to cover part of the cost to construct the clubhouse and the initial plan was to have the golf course generate enough revenue to cover the remainder, which has not occurred.
The draft business plan states: “past experience has proven that it is unrealistic for us to expect that revenues generated solely by golf activity will be enough to cover the general operating costs and these past capital investments.”
“The amount of revenue potential is capped by the finite number of available tee times multiplied by the market governed rate per round charges. The performance since 2012 has effectively not produced revenues sufficient to retire this capital debt related to clubhouse construction,” the document says.
The city has struggled with the clubhouse operation. The model started with city employees managing all aspects of the food, beverage and banquet business. Hedberg said the biggest issue with this was finding enough people to fill needed positions.
Over the past nine years, the golf course’s actual revenues have come in lower than the budgeted revenues annually; an average of about $169,223 each year.
In 2018, the city hired the owners of the Roasted Pear in Burnsville to operate the clubhouse so city staff could concentrate on golf. The COVID-19 pandemic affected the vendor’s ability to stay in business and the Roasted Pear has closed.
Carlson said the golf course intends to move to a simple food operation that would serve menu items like hot dogs and be complemented by beverages that include full liquor service. The city would also seek vendor agreements with third-party caterers for private functions at the clubhouse. The city would take a certain percentage of the food sales and 100% of the beverage and liquor part of these events.
The draft business plan proposes to replace the irrigation system, which is over 40 years old; install an electronic board monument sign on McAndrews Road and update the monument sign on Pilot Knob Road and reconstruct existing cart paths and extend them where it’s feasible.
The draft plan calls for hiring a golf course architect to study improvements. Carlson said the city is not proposing a “wholesale” change of the golf course because that would be too expensive.
“We’re talking about simple, inexpensive things that we can do to the golf course to help make it more attractive, to make the customer’s experience better, to make sure that the golf driving range is generating some additional dollars,” he said. “Then we can attract and keep more golfers golfing at Valleywood.”
If the business plan and request to hire an architect are approved, Carlson said he anticipates the architect would likely take until late December to put together some plans for staff to review.
The draft plan also asks the city to transfer $150,000 from the liquor fund annually to support capital needs at the golf course. The city currently uses funds generated from its municipal liquor store profits to support other parks and recreation activities and to purchase equipment and vehicles for the police and fire departments.
Council Member Ruth Grendahl raised concerns about the draft business plan’s funding requests, and said she did not plan to support it. She added that the interior design of the clubhouse is flawed and doesn’t allow the operation to be profitable.
“We have a maintenance facility that needs to be paid for. We have a lot of things that are crucial business,” she said, adding that she was not saying the city should get rid of the golf course but that it needs a “shake up.”
Council Member John Bergman, who is one of the Valleywood task force members, said Valleywood’s management should look at how other successful area municipal golf courses operate internally. He supports the funding requests in the draft plan, but more work needs to be done, he said.
“Right now, for all the golf courses that I have played in the last two years, we’re behind the eight ball,” he said. “I believe this is a help. But it’s just the help to get it to where it just runs. After that, (the) fundamentals of it have to be looked at internally.”
Golf is as healthy and fulfilling as other activities offered in the community. There are a lot of city activities that are free but golf is one where the revenues help offset expenses, City Council member Tom Melander said. He believes the course can make more money so the funding requests in the plan are a legitimate use of city dollars, he said.
Mayor Clint Hooppaw also served on the task force. He noted that the city subsidizes other parks and recreation facilities like the Community Center, the Senior Center and ice arena, so it’s not unprecedented for the council to decide what recreational opportunities are worth supporting.
“As we put this together, I think what Eric (Carlson) did was take a fresh look at this and say, ‘We can continue to have the illusion that someday we’re going to catch up.’ Or we can say this is what we need to do and not just kick the can down the road another year and another year and another year, and hope we get there,” he said.
Council Member Tom Goodwin said he sees the choice as a simple one; either the city has a golf course or it doesn’t. He believes the city should keep it because the course was voter-approved. The model of golf has changed so the requests made by the draft plan are necessary, he added.
“We are going to have a golf course that’s run properly, or you’re not going to have a golf course,” he said. “If we pretend there’s other choices to that, all we’re doing is kidding ourselves.”
Patty Dexter can be reached at firstname.lastname@example.org.