City answers questions about Pinewood Golf Course

by Joni Astrup

Associate Editor

A standing-room-only crowd upset about the closing of Pinewood Golf Course turned out Monday night to hear from the Elk River City Council.

A sign at the entrance to Pinewood Golf Course announced that it is closed for the 2014 season. Star News file photo

A sign at the entrance to Pinewood Golf Course announced that it is closed for the 2014 season. Star News file photo

Peter Kimball had requested the meeting on behalf of people concerned about the closure of the nine-hole municipal golf course at 18150 Waco St., which the city has operated since 2006. Kimball told the council that many people share the group’s concern.

“This golf course is not yours. It’s ours,” he told the council.

In advance of the meeting, Kimball had submitted 19 questions to the city on behalf of Pinewood Golf Course supporters. City officials answered those questions and fielded additional ones during the 90-minute meeting, held in a conference room at Elk River City Hall.

The City Council had decided in March to not open the course this spring, on the advice of attorney Tom Scott. Scott is representing the city in litigation involving the course, which the city agreed to purchase from Paul and Pamela Krause in 2006. Scott had recommended that the course be closed while the lawsuit is pending.

Scott and City Administrator Cal Portner explained to the audience how the city got to this point.

In April 2013, the city proposed to the Krauses an amendment to the contract for deed that would have reduced the final balloon payment for Pinewood from $1.5 million to $800,000. The city cited the following reasons for seeking to reduce the payment:

•taxpayer financial losses for course operations (the course has lost an average of $82,000 a year)

•substantial property value decrease from the economic recession

•loss of the primary revenue stream from park dedication fees to purchase the course

•market changes that have made operating many golf courses financially unsustainable

“Instead of negotiating, the Krauses sued the city to compel the full payment,” Scott said.

A judge agreed with the city’s position that if the city chose to not make the final $1.5 million payment, the Krauses’ remedy was to take back the property, Scott said.

But that wasn’t the entire case; Scott said the Krauses still have a claim outstanding for damages. The city has asked that the judge dismiss that claim which is scheduled for trial in September.

And in a more recent wrinkle, the Krauses have also asked the court to allow them to amend the lawsuit to have the city pay a golf course rental fee of $90,000 for 2013 and 2014, Scott said.

At this point the final balloon payment has not been made. What ultimately happens to the golf course has not yet been determined.

“Once the lawsuit is over, the city can then make a final decision on the future of the golf course,” Scott said.

Portner said it was the city’s original intention to renegotiate the final payment with the Krauses and to continue to operate the golf course.

“There was not an intention to not pay the bill,” he said of the balloon payment. “The intention was to renegotiate that final bill.”

Meanwhile, when the city cut the deal for Pinewood in 2006, the plan was to pay for it in part with money from park dedication fees. Those fees dried up when development came to a halt during the recession, but even without park dedication fees, city officials said the city has the money to make the balloon payment.

“The council can tax as much as they need to get the money, for one. Or we could take money from other funds,” Portner said. “Can we pay for this? Yes we can. The question is what is the ripple effect throughout the rest of the system, the rest of the city needs.”

To date, about $1 million has been paid to the Krauses.

“Doesn’t that seem like a lot of money to just kind of let go?” a man in the audience asked the council.

“Yes, you could say that, but there’s a lot more money to be paid and invested,” Mayor John Dietz replied.

One woman pointed out that even when the economy was bad, the city sold 14,000 rounds of golf at Pinewood — only 4,000 rounds short of the course breaking even.

She believes there are things that could be done to raise money to improve the course’s financial position.

“We’re doers. We’d be there to help you out. You just have to ask,” she said.

Some suggested the city pay the Krauses what was originally agreed to and settle the lawsuit.

One man told them: “I think if you pay your bills … there wouldn’t be any litigation.”

Another man asked if Dietz had a personal vendetta to prove his point that the city paid too much for the course, noting that Dietz had voted against the purchase of Pinewood in 2006 when he was a council member.

Dietz said he has no personal vendetta. He said he voted against buying the course because he felt the city was paying four times what it was worth. A consultant had said at the time that the course was valued at $500,000. The city paid $1.8 million, plus interest.

For his part, Council Member Paul Motin said he has been the most vocal about paying Krause and keeping the course, but feels it was a good thing to try to renegotiate the balloon payment. He said the council has a duty to be good stewards of the city’s finances.

Motin said he isn’t in favor of closing Pinewood permanently.

“The decision has not been made to close the golf course. Period. It’s temporarily closed because of the litigation at the request of the attorney,” he said.

Toward the end of the meeting, a boy sitting in the front row told the council that he started golfing at Pinewood with his grandma.

“We would just ask that you would pay your bill because it’s the right thing to do. You can afford it. We just want you to reopen it because we all enjoy it,” he said as the audience applauded.

To see all 19 questions and the city’s answers, go to www.elkrivermn.gov.

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