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Norwalk Council members indicate willingness to forgive Oak Hills debt despite Hamilton’s objections

Finance Director Thomas Hamilton
Finance Director Thomas Hamilton, left, praises the vision of the Oak Hills Park Master Plan but damns its financial assumptions as OHPA leaders Ernie DesRochers and Clyde Mount listen at Thursday’s Finance Committee meeting.

NORWALK, Conn. – Serious reservations, with “yellow caution flags,” about the financial aspects of the Oak Hills Park Master Plan were expressed by the Norwalk’s financial team Thursday, followed by suggestions from Common Council members that the city might be willing to forgive at least part of the Oak Hills Park Authority’s debt.

While Finance Director Thomas Hamilton asserted that OHPA has a legal obligation to pay its debt to the city, Council President Doug Hempstead (R-At Large) and Finance Committee Chairman Bruce Kimmel (D-At Large) said they are open to considering to let it go, in the same way that the city forgave the $30 million debt owed by the Maritime Aquarium.

The financial figures in the master plan assume that the city would forgive $1 million in debt related to the building of the restaurant there in 2005, Hamilton said.

“The city, in addition to forgiving the $1 million debt, would issue new debt of $2,950,000 to finish the full Master Plan. The issue for me is how certain are we that that issue is going to be paid for by golfers and not end up being repaid by Norwalk taxpayers?” Hamilton asked.

The “new debt” is years away, as Oak Hills is first expecting $1.5 million from the state to make improvements to the park. Hamilton said there have been some issues with that, as the state expected that Norwalk would be funding the rest of the improvements to the tune of $3 million. Hamilton said he told the state that was a non-starter.

“That issue has not been buttoned up in a way that is completely satisfactory but I am confident that we can get there,” Hamilton said.

State Rep. Larry Cafero (R-142) secured the $1.5 grant from the state Bond Commission without consulting city officials or other members of Norwalk’s state delegation.

Hamilton said that the future $3 million request would have to go through the capital budget process and compete with requests from other departments, including the Board of Education, because he is not confident the driving range would pay for itself and would therefore be paid for out of tax dollars.

“We have some concerns about some of the assumptions (in the Master Plan) and would want to dig into them deeper and to spend more time understanding them and testing their sensibility,” Hamilton said.

The estimation of the number of people who would use the 36-bay driving range “looks aggressive,” he said. The projected revenues are in the upper range, he said.

“I am certainly not at a stage yet where I can say I am confident there is no risk to the city that we are going to end up being responsible to assume that debt,” Hamilton said. “I mean, the amount of the debt is significant but it’s not astronomical. So some of it becomes a policy issue of how important is golfing to the community and do you think golfing ought to be supported over other projects that may be in competition with these projects.”

OHPA Ad Hoc Driving Range Committee Chairman Ernie DesRochers defended the proposal to forgive $1 million in debt.

“The original Master Plan, that was never approved, envisioned approximately $1 million to a less grand restaurant, and about a $1.2 million or so going to the construction of a driving range that was never built,” he began.

He then referred to his decades in the commercial real estate business and said, “The financing that was put together by the city, from what I can tell … it was one of the grandest pieces of junk paper that I have ever seen in my life.”

The goal would be to have the rent from the restaurant more than cover the debt payments, he said. It does not meet half of the payments, he said. Instead, the revenue from the golf carts was pledged to pay the bonds, he said.

“They took away the revenue from potential driving range and they took away the revenue from carts and it created a financial leverage situation at Oak Hills that made it difficult for the park to meet its debt service when the bottom of the business fell out approximately three years ago,” he said.  “… That is the financial burden that the park has to bear today. When I suggested we drop the debt by $1 million, I recognized the amortization of the debt of the restaurant so far and I basically looked at what the borrowing rate was for the city and what the $75,000 of rent that we are collecting would support and that’s what the math of that was.”

The numbers of users projected for a driving range came from a study that Oak Hills paid for, he said. “Oak Hills happened to be in the epicenter of a very strong demographic with regard to the towns that surround it,” he said, asserting that Norwalk’s numbers are better than Stamford’s. Statistics show that 78 percent of the golfers that come to a course will use its driving range, and 88 percent of those will come back just to use the driving range, he said.

Hempstead asked Hamilton to research the history of the authority. Norwalk has put much capital money into Oak Hills, he said.

“The city has some obligation because they purchased the land. So to say, it’s nice to talk about not putting taxpayers’ money into it but when we bought it we put taxpayer money into it,” he said.

The money spent on the restaurant may not have been a good idea, he said.

“I am just trying to say from a logical point,” Hempstead said. “Forget politics, forget the emotions, what happened at the time, that the reality of this is there is no way we can project now or 10 years from now that the revenue from the restaurant is ever going to pay for the debt service to build that facility in its present use. It’s just not realistic and we should address it just like we addressed the Maritime Center. They were never going to pay that back. The city kept paying. Maybe it is time to … credit that debt for something else because it is not real.”

“It was a legal obligation that was entered into by the Oak Hills Park Authority,” Hamilton said.

Director of Management and Budgets Bob Barron said OHPA is making its payments, including on the $150,000 loan issued two years ago to get it through the winter and on the $150,000 in capital issued at the same time. “We have brand new carts and a break-even operation so it’s not maybe as dire as some people have thought,” he said.

Majority Leader Jerry Petrini (R-District D) said that in his businessman’s estimation, “We are just a rainy season or a hurricane away from ‘they’re going to come back to us again.’ We need a plan that we kind of get them back on their feet because I have heard talk about cutting it down to nine holes. I’m not saying that’s good or not, but what do we do with the rest?”

If the golf course went away, Recreation and Parks would have the expense of dealing with the park, he said. “These guys are looking for a way to get this thing profitable,” asserting that the tough times were not over and capital improvements have to be made. “That restaurant has just been drowning them,” he said.

Councilwoman Shannon O’Toole Giandurco (R-District D) reminded everyone that she was on the Oak Hills Park Authority for three years before getting elected to the Council. “We were in a lot of trouble and we weren’t making payroll,” she said, reminiscing about her early days with the authority.

“For me the discussion is this debt service because I think if we really look at it,if we look at the budget and we take away the debt service, Oak Hills is a profitable business,” Giandurco said. “That’s what gets lost in the mix here.  It is a profitable, profitable business in the city and I think because of the debt service, because of 911 calls to the BET and ‘come save us,’ that gets lost. So if we can start o have a discussion of  ‘Oh, here’s what we’re at and it’s not working. But here’s where we need to go.’”

Hempstead requested a third-party analysis of the plan, saying the city should be open-minded to the expense. DesRochers said he’d look into that.

As the discussion wound down, Hempstead said, “Bruce, I appreciate that you are going to take this on over time because we are not going to grind this out by a long shot. I think at least everybody is getting a sense of what we are trying to work our way through. I want this golf course and this authority to be healthy and not the overall burden to the city of Norwalk.”

“This has been great,” Kimmel said to DesRochers and OHPA Chairman Clyde Mount. “You see our side, we see your side, we understand where we have been, how far we have come, we understand we are fortunate we are having the discussion now, not on the eve of when you want to like to implement Phase 2, so we are way ahead of the curve here.”

Kimmel said he is sympathetic to Hempstead’s suggestion that some of the loans could be forgiven.

“It’s part of Norwalk, it’s a beautiful city park. We have taken similar steps regarding other authorities and other situations. It’s something that we need to look at and that relates to the debt service.”

Comments

15 responses to “Norwalk Council members indicate willingness to forgive Oak Hills debt despite Hamilton’s objections”

  1. John Hamlin

    It is very frustrating to watch the Common Council operate — it’s like watching a train wreck in arduous slow motion. Time for charter reform and a strong city manager.

  2. Oldtimer

    The golf course right now seems to be profitable. The restaurant is not and servicing it’s debt is coming out of the course’s income. It is not clear why these two are considered as one business nor why the restaurant is not profitable.

    If the restaurant was under the right management and marketed as not only a convenient place for golfers to eat, but also a nice place for special events, parties, wedding receptions, etc. is there a chance it could be a profitable stand-alone business ? Could it reasonably ever be expected to draw an evening dining crowd, with the right menu and some entertainment ?

    The original restaurant there featured a regular entertainer named Guitar who drew an evening crowd, but was in a too small old building.

  3. DeerMooo

    > “If the restaurant was … marketed as … a nice place for special events”

    The inconvenient truth from today’s Hour: “According to Hamilton’s department, OHPA has met its debt repayment obligations over the last two years…”

    In other words, even while burdened with the debt from the misguided restaurant project, golf is working at Oaks Hills.

    The OHPA’s biggest problem (restaurant debt service) started with the notion that a municipal golf course could support a fine dining establishment that fails to cater to the course’s core clientele. As you may recall, a vocal minority of neighbors freaked out at the idea of replacing the old bar/grill-with-music-at-night. “The noise,” “the traffic,” “the rowdy crowds of drunken golfers.” etc. (sound familiar)?

    So in response to their demands, we ended up with a large-scale fine-dining establishment that lacks a proper golf course bar/grill and lacks nightlife attraction. The neighbors got what they wanted but apparently very few of them patronize the restaurant. Because if they did we probably wouldn’t be discussing the debt from the project.

    So keep this in mind as the “neighbors” yet again tell you they know what is best for Oak Hills. The aim of the most vocal minority (Cantor+) is to shut down golf operations regardless of the facts. Just remember that he has nothing against golf, right?

  4. piberman

    Kudos to NON for solid reporting that should be read by all citizens concerned with the quality of Norwalk’s governance and financial oversight. Here one sees Finance Dept. Hamilton demonstrating the abilities of a well qualified financial professional and expressing well thought out skepticism. And sadly, too, the lack of financial abilities of the Council members adrift in their discussions and unable to demonstrate an understanding of either the financial projections secured by the OHA or their implications. The Council’s Finance Committee is a a “Finance Committee” solely in name. None of our surrounding towns would appoint a “finance committee” composed of non-finance people. Citizens may disagree with the utility or desirability of the Oak Hills Driving Range. But somewhere in the discussion ought to be an agreement by well qualified finance professionals on the City’s future obligations from the driving range that benefits a relatively small portion of the City’s population. That seems to be too big a hurdle for both Council President Hempstead and Finance Chair Kimmel. Bringing up the Maritime Center obfuscates the issue inasmuch as everyone involved in the beginning knew that City financing was required to bring it to life. And its certainly been a powerful and well recognized success for a City that’s oft been denigrated for its lack of basic governance acumen. Council members ought to listen carefully to Finance Head Hamilton. Seems he’s the only finance professional in the room in what involves a major financial obligation to the City.

  5. Suzanne

    “But somewhere in the discussion ought to be an agreement by well qualified finance professionals on the City’s future obligations from the driving range that benefits a relatively small portion of the City’s population.” And that’s it in a nutshell, Piberman. That the non-qualified Counsel/Committee would disregard Mr. Hamilton’s role and expertise makes me want to vote out these people that much faster. They are hurting our town.

  6. Yvonne Lopaur

    @DeerMooo
    The quaint stone restaurant that used to be in Oak Hills Park served the needs of most golfers. But the OHPA wanted something bigger and that is what they got. Now they say it was a mistake. Exactly the same thing will happen if they get the 36 bay driving range. Down the road when the Authority will default on the loan and say it was a mistake to build it. All we really needed they will say was a practice range such as the one they have at Longshore. Apparently you along with the OHPA are unwilling to face up to reality. There has been a decrease in the demand to play 18 holes of golf and a large commercial driving range is not going to solve that problem. And the manner in which the current authority scapegoats the former pro, Vinny Grillo, is positively offensive. Vinny was a class act as Mr. Cantor has frequently pointed out. So Mr. Cantor clearly doesn’t hate golfers or the game of golf. Yet you hide behind a pseudonym to make personal attacks on him. That too is offensive.

  7. Joe P.

    Norwalk is a joke, after reading this I am truly embarrassed to say I live here. The Council should just eliminate Mr. Hamilton’s position and save the salary to give it to Oak Hills. The only person in the room who is qualified enough to talk about the subject but they know better.

  8. Kevin Di Mauro

    Commercial business activity does not belong in a residential zone. Having a large commercial restaurant at Oak Hills Park was WRONG and having a large commercial driving range will also be WRONG. Two wrongs don’t make a right.

  9. RU4REEL

    Please stop the nonsense councilmembers, you CANNOT compare forgiving the loan of the Maritime Center and forgiving the loan of Oak Hills, the center brings in millions of visitors. ARE YOU KIDDING ME!! Just say no, taxpayers are NOT giving you anymore money for ANYTHING, period. Lets cut our losses and move on.

  10. John Hamlin

    Maintaining the golf course is one thing. It’s an asset worth maintaining. But sinking millions of dollars more into it — really? If Oak Hills can’t handle the upkeep, perhaps it’s time for the City to simply take it back.

  11. Piberman

    Lets encourage our illustrious Council to undertake a City wide referendum or poll on giving million dollar gifts to our golfer residents. If Councilmen Hempstead/Kimmel really believe City residents want to bestow such a gift to the golfers paid for by City residents why would they object to a referendum or poll ? And at the same time let’s ask City residents whether they believe Councilmen Hempstead/Kimmel have a better handle on Oak Hills financials than Finance ahead Hamilton. In Norwalk we have Democrats, Republicans, Independents and now Golfers raiding the public treasury. Lucky us !

  12. Charles Brennan

    Let’s see we gave 2 million dollars to the mosque to keep the people around the area happy and that was okay. I didn’t see any call for a town referendum on that.

  13. Suzanne

    Mr. Brennan, So off topic as not to be applicable at all.

  14. Charles Brennan

    I don’t think so. If Piberman is talking about a referendum on the golf course debt where was the one on the Aquarium or the mosque if we are giving away money or forgiving debts.

  15. Suzanne

    Mr. Brennan, just caught your reply. There are SO many differences. Imagine you are paying rent on a property, say your apartment, and do not keep up the payments. How long should the landlord wait before you are evicted?

    The OHPA is bound to the city by CHARTER to maintain their payments and debts through golfing fees. The management to do this has not existed since Vinnie Grillo.

    How is this different than the mosque: a purchased property by a religious group through a Zoning Department guided process that turned out to be unwelcome to the community and an inappropriate design. Not a forgiven debt. A legal debt incurred by the mosque community plus compensation for ownership of land they assumed they could build on due to Zoning direction. Not a charter commitment. Not a lease. A complete misunderstanding due to poor Zoning regulations – not at all like the OHP.

    The Aquarium: a completely different financial structure not at all like the Charter requirements of the OHP and the OHPA management. Further, as an asset to the Norwalk community, a much greater and wider attendance appealing to everyone not just a few golfers.

    Golfers are the minority here. They have regulations to live by in playing that gorgeous piece of property, a privilege since most people in Norwalk don’t get to access this land. The OHPA has not abided by the financial arrangement yet they are indeed responsible for it.

    They have been boasting about how great the greens look (true) and how many more people are playing (which would translate into income in greater fees.) Why, then, are they not paying down their debt? Why should they be forgiven for it since they are only planning to ask for more in developing in driving range?

    If they cannot manage the income they receive now, success will not occur by throwing more money at it. Budgeting and paying to debt responsibility is what we all have to do with our bills. So does the OHPA (for a public recreational facility that is essentially private to the minority of the population that plays golf.)

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