NORWALK, Conn. – When it comes to a driving range, there is more at stake than trees at Oak Hills Park.
The reason the Oak Hills Park Authority is even considering a driving range is money. The OHPA wants to open a new revenue stream, and a driving range is seen as the way to go. After all, there is a natural, symbiotic relationship between the golf course and the driving range.
When the OHPA put out a request for proposals for the range, only two serious bidders jumped in: King Enterprises and Total Driving Range Solutions (TDRS). King has been in the business of building golf courses since 2004. TDRS is the new kid on the block, in business for a year.
King’s proposal put the range in the woods, well away from the course. The proposal ignited a strong reaction from non-golfers who enjoy walking through the woods at the park.
TDRS put the range behind the restaurant, abutting the course, a proposal some golfers don’t like, citing noise and visual intrusion on golfers on nearby tees and greens.
The Ad Hoc Driving Range Committee settled on the TDRS proposal, and recently presented it to the full OHPA.
The proposal called for TDRS to pay OHPA $1,000 a month lease starting in the second year, which would be the first full year of operation given the six-month construction period. The lease payments would continue at the same rate — $12,000 a year – through the fifth year, when it would increase by 10 percent, to $1,100 a month or $$13,200 per year for the next five years. There are additional 10 percent hikes planned for years 10-15 and 16-20.
In addition, Norwalk would receive 10 percent after gross sales of $500,000 per year or more has been accomplished for five years. The 10 percent would be based on the total gross. TDRS projects to hit the $500,000 gross point by the third year, or second full year of operation. The total lease payment over the 20 years would be $266,460.
King’s proposal included no lease fee for the first year, but 10 percent of the net profit. Starting in the second year, King offered $1,200 a year in lease fees, escalating every two years — $1,800, $2,400, $3,000, $3,600, $4,200 – topping out at $4,800 in years 14 and 15, after which ownership would revert to the OHPA. King projected topping $500,000 gross the first year, with a net of $95,500. The percentage of the net would increase to 15 percent after five years and 20 percent for the final five years. The total lease payment over 15 years would be $42,000. The TDRS 15-year lease payment would be $186,600.
And while King would pay a percentage of the net from the first year, TDRS would likely, based on income projections, not begin paying a percentage until year six. However, TDRS percentages are based on the gross and King on net. In year six, based on King’s income projection, the company would pay $20,332, while TDRS would pay Norwalk $60,172. In fact, for the first six years, Norwalk’s total percentage based on King’s assumptions would total $75,961. In year seven, based on King’s projection of a $613,759 gross and $144,027 net, Norwalk would receive $21,604 from King, $61,375 from TDRS, in addition to lease fees.
The TDRS proposal would cost $2.5 million, half a million more than the King proposal.
The King proposal would be funded with a loan from Titan Capital with a 15-year, 8 percent loan, the proposal summary said. It also said that “the loan would be contingent that in the unlikely event of a default, the city would step in and cover the loan.”
There was no loan guarantee mentioned in the TDRS proposal.
Norwalk Mayor Harry Rilling said during his campaign that he would not be in favor of any proposal that would put Norwalk taxpayers’ money at risk.
The Authority is currently negotiating with TDRS over the terms of the deal. The final figures could change, and the deal is subject to a vote of the full Authority.