ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, April 12, 1996 TAG: 9604120026
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: AARON SMITH
SALEM City Council is considering the construction of a municipal (city-owned and operated) golf course. Because municipal golf courses in Virginia have been such poor public investments, the fate of any municipal golf course proposed by council must be decided directly by Salem's voters through referendum.
I have used Virginia's Freedom of Information Act to analyze the cash flows generated by the municipal golf course owned by the town of Blacksburg. Blacksburg's municipal golf course is a nine-hole facility on 55 acres with a Virginia State Golf Association difficulty rating of 35.6. The course is open year-round, weather permitting.
Golf course cash revenues mostly include the collection of greens fees, rental of carts and clubs, and sale of golf-related merchandise. The golf course cash expenses mostly include administration, personal services, course maintenance, and capital-assets acquisition and construction.
The Blacksburg municipal golf course was purchased in 1971 for $376,947. For the 24 years from 1972 through 1995, the course generated total profits of $53,189. There was a cash profit in 15 years and a cash loss in nine years. The greatest cash profit was $29,430 in 1991, and the greatest cash loss was $23,421 in 1984.
The average annual cash profit for the 24 years of Blacksburg municipal golf course operation is $2,216. Comparing this average cash profit to the $376,947 purchase price through the use of capital budgeting techniques reveals a rate of return that is less than 1 percent. Excluding the effects of inflation, it will take another 146 years for the course to pay for itself!
I am disturbed that Salem is moving to increase even more the amount of money it takes out of my billfold for yet another project of questionable economic merit. Through my employer, I take part in a self-directed 401(k) savings plan where my annual rate of return has averaged 12.40 percent (not including my employer's matching contributions). I am not at all happy that Salem would like to take more of my hard-earned dollars to build a golf course with a rate of return less than 1 percent when I can make 12.40 percent on these same dollars to save for my future needs.
Dr. Walter R. Franke is chairman of the committee appointed by Salem City Council to study the construction of a municipal golf course. I challenge Dr. Franke to do two things.
Identify a Virginia locality with an acceptable rate of return from its municipal golf course.
Allow me to analyze the economic data accumulated by Salem's golf course committee.
Most of Salem's citizens either do not want to play golf, are not physically able to play golf, or cannot afford to play golf. Furthermore, Virginia municipal golf courses are poor public investments. For these reasons, no municipal golf course proposed by Salem City Council should be built unless approved by the voters through referendum.
Aaron Smith is treasurer of the Salem Taxpayers Association in Salem.
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