Terre Haute's financial consultant on Thursday lauded the City Council and Mayor Duke Bennett for their efforts in reducing budget deficits and building cash reserves over the past four years.
But despite the improving complexion, the city still has a pair of warts to reckon with in the near future, said Paige Sansone, a partner with the Indianapolis-based Baker Tilly accounting firm.
Hulman Links and Rea Park golf courses are projected to have a combined cash fund deficit of $5.7 million by the end of 2019. Sansone figures that deficit will grow to over $7.2 million by the end of 2023.
That, reasonably, only leaves the city with three options, she said: raise golf fees and risk not being competitive for the market, sell the golf courses outright, or close them and work to pay off the deficits.
"I do realize how much of a burden this is putting on the city, but we can only provide the options and then you would need to decide what's the best course of action," Sansone said.
"Those are all pretty bad options," said Councilman Todd Nation, D-4.
"I'm sorry I don't have better options," Sansone said.
Not only are those bad options, Bennett said, but at present none are viable.
The city doesn't own either course and surrendering them back to Rose-Hulman Institute of Technology and the Hulman Family would leave the city with a $5 million debt and no revenue stream with which to pay it back, Bennett said.
"If we close down the golf operations at Rea Park the property reverts back to Rose-Hulman. If we closed Hulman Links, it would go back to the Hulman family," Bennett said. "It wouldn't do us any good to close them up because we'd still be stuck with the deficits in those two funds and not have any way to ever deal with them."
But each year the courses continue to operate the city is projected to incur more than $400,000 in additional debt, according to Sansone's analysis. And while the mayor says operating disbursements for the courses are being lessened each year, the best the city can hope for is breaking even.
"Each year we've reduced our losses, but the goal is to break even," Bennett said. "That's the ultimate goal and we'll continue to work on that."
Bennett said the idea of leasing the courses to professional management firms has been explored in great detail in the past few years, but added the right deal has yet to come along.
"When we looked at outsourcing the management of the courses they wanted a guaranteed stipend from the city," Bennett said. "So if we paid that out to them, and they were able to turn them around and make them profitable, we'd still be out $200,000 a year."
"We just didn't feel comfortable with that at the time even though we're not ruling it out permanently."
The magic pill, Bennett said, is an outside revenue source that would cover the city's losses.
"One of those options would be to partner with the proposed casino," Bennett said. "If we could partner with the casino, where they would pay us a fee to be able to access the golf courses and market them as an amenity they offer patrons or hotel guests, that would take care of the losses and we'd be breaking even.
"That's my targeted goal right now. If the voters make it happen then I'd like to carve a piece out of the local agreement for the casino to utilize the courses and pay us for that."
Reporter Alex Modesitt can be reached at 812-231-4232 or at email@example.com. Follow him on Twitter @TribStarAlex.