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Oak Hills Authority ends fiscal year with $107K deficit

Norwalk Oak Hills 010213 034
Golf continues year round a Oak Hills Park in Norwalk, weather permitting. (File photo.)

NORWALK, Conn. – There is “substantial doubt for the (Oak Hills Park Authority) to continue as a going concern” given that it ended its last fiscal year with a $107,672 deficit, an independent auditor said.

That line is highlighted in yellow by city officials in the audit conducted by Walter (Wally) Englert, a certified public accountant who works for the Authority, and included as part of the packet for Monday’s Board of Estimate and Taxation meeting. Also highlighted are lines from the monthly financial statement that outline the discrepancies between what was budgeted and what is actual, not a favorable difference.

The Authority’s finances will be discussed by the BET at its Monday meeting.

Englert’s audit, which is attached below, states, “Oak Hills Park Authority incurred a deficit of $107,672 for the year ended June 30, 2014, which raises substantial doubt about its ability to continue as a going concern.”

While the revenue for Fiscal Year 14, which ended June 30, was $106,977 more than what was made in Fiscal Year 13, it was $55,450 less than what was budgeted, primarily because of cart revenues were $20,000 less than budgeted and rental incomes were $34,000 less than budgeted, Englert wrote.

Total revenue for FY14 was $1,529,094, while operating expenses were $1,527,627, the audit states.

The operating expenses for FY14 were $116,133 higher than in FY13 and $59,549 more than budgeted for FY14. Englert attributed that to “more than expected personnel, administrative and park maintenance expense.”

The financial report says that the revenues for November are 1.8 percent less than budgeted, and the revenues for the year to date are 2.6 percent less than budgeted. Operational expenses are less than they were budgeted for November but are up for the year to date, the report states.

The Authority budgeted $84,465 for November but the actual figure is $78,245. Operational expenses for the year to date were budgeted at $592,456 but were $626,645.

On Oct. 17, the Authority entered into a loan and security agreement with a bank for $100,000 with advances expiring after a year, Englert’s audit states. “The Authority is required to repay the loan in full for a period of 30 consecutive days in each year. The loan is payable on demand and bears interest at the Wall Street Journal Prime Rate, with a minimum interest rate of 5 percent,” Englert states.

OHPA Chairman Clyde Mount in an email declined to say what bank the agreement is with. None of the money has been spent from the line of credit, and there is no collateral offered, per state statute, he said, although Englert’s audit states, “The loan is secured by all of the Authority’s present and future right, title and interest in and to any and all of the personal property of the Authority.”

Oak Hills was awarded a $1.5 million grant by the State Bond Commission this summer. Authority members have said the money will not go to build the controversial driving range that has been designed, also referred to the a “golf learning center,” but Englert’s audit states, “The project will  include the construction of a new golf learning center, a new nature learning center and other  facility improvements.”

The state has not yet approved the distribution of the grant to Norwalk, Mount said.  “It should be approved this month.  It was the language around the scope of work and the states proposed obligation of the city that we all wanted removed,” he said.

As to why the Authority ended FY14 at a deficit, Mount said, “Expenses outpaced revenues. … We need other revenue streams with the burden of the debt we currently have. The debt is crushing us with a restaurant rent amount that loses over $60,000 a year at the expense of the golfers.”

OHPA officials have said recently the restaurant is current with its rent payments.

The recently approved Oak Hills Park master plan calls for the city to forgive $1 million of the debt incurred by OHPA to the city, much of which went to finance the construction of the restaurant. Finance Committee members, at their November meeting, indicated a willingness to forgive the $1 million in much the same way the Maritime Authority’s $30 million debt to the city was recently dropped.

“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,” Councilwoman Shannon O’Toole Giandurco (R-District D), a former OHPA member, said at the November meeting.

Finance Committee Chairman Bruce Kimmel said Sunday that he is still willing to talk about it, even given the gloominess of Englert’s audit.

“I am still willing to discuss (stress: discuss) the possibility of forgiving some or all of the debt on the restaurant. That would first require a detailed discussion of the park’s finances, current and going forward, including the long-term impact of forgiving the debt (how much difference would it really make?) as well as the impact of a driving range,” Kimmel said in an email.

Principal paid on debt is $136,941, Englert’s audit states. Interest paid to the city is $109,293.

Mount said the outlook is not that gloomy.

“All I can say is we continue to move forward,” Mount wrote. “We have raised some pricing already for 2015 and will push very hard on expenses.  Our rounds continue to grow and once we hit 40,000 rounds, no one will be talking about Oak Hills any longer, other than as we start to build the range, 40,000 rounds are just a a bit higher than 10 percent more than we are tracking today, a very attainable number with all the improvements coming to the park in 2015.”

Mayor Harry Rilling did not respond to an email requesting comment.

OHPA audit 6-30-14003

Comments

22 responses to “Oak Hills Authority ends fiscal year with $107K deficit”

  1. Paul Persius

    Why doesn’t the authority use some of the Citys Parks and Rec personnel in the winter months to help ease some personnel costs and also to get some of the maintenance work done in the off months.

  2. Kevin Di Mauro

    Putting a large commercial restaurant in a residential neighborhood was a mistake. Asking the tax payers of Norwalk to forgive the debt owed by OHPA would be an even bigger mistake.

    Adding a large commercial driving range/learning center would also be a mistake. Some people describe insanity as making the same mistakes and expecting a different result.

  3. srb

    Gross difference btw erasing debt to the Maritime Center, an education facility that draws in loads of outsiders to SONO everyday-and especially rain days versus a golf course. The latter is just a subsidy to golfers who provide little if any positive externalities. If loads of golfers were coming to Norwalk to play and spending their well earned $ outside of the golf course that’d make sense but my guess is that 90%+ of the golfers are townspeople.

  4. Paul Cantor

    It has been well known for some time now that the OHPA cannot cover its operating and capital costs without an outside source of revenue.

    This is not surprising for two reasons: First, there has been a well-documented dramatic decrease in the demand to play golf nationwide. Second, the entity charged with managing the 18-hole golf course in Oak Hills is an autonomous body whose members have no special expertise in running a golf course. Yet special interest politics is enabling that entity, the Oak Hills Park Authority, to continue to survive (see for example https://www.nancyonnorwalk.com/2014/10/the-mosque-the-driving-range-and-pogo and https://www.nancyonnorwalk.com/2013/08/letter-keep-west-norwalk-jewel-ignore-special-interest-minority).

    Furthermore, cost/benefit analysis from the point of view of taxpayers as a whole would paint an even more dismal picture than the audit referred to in this story. The audit referred to, for example, does not take into account the cost of all the time city officials whose salaries are paid by taxpayers spend trying to find ways to help the OHPA survive financially. Nor does it take into account the cost to taxpayers who do not play golf of allocating virtually all the land in Oak Hills Park to golfers. But that isn’t even the heart of the matter.

    The heart of the matter becomes evident when one asks: “Costs and benefits to whom?” In other words, from whose point of view do we want to look at the costs and benefits of the 18-hole golf course in Oak Hills Park? Do we want to look at the costs and benefits from the point of view of the minority of taxpayers in Norwalk who play golf? Or from the point of view of golfers in the wealthier surrounding communities of New Canaan, Wilton, Darien, and Westport? Or from the point of view of all the residents of Norwalk, most of who do not play golf.

    One argument the OHPA likes to make is: if you reduce the size of the golf course to nine holes or eliminate it altogether then taxpayers will have to foot the bill for the upkeep of the park. That is true, of course, but the benefits will accrue to all of them not just a tiny minority of golfers. And the cost of maintaining a multi-use public park is a fraction of the cost of maintaining an 18-hole golf course.

    You can empathize with those who love the game of golf but find it too expensive. I love to ski and would appreciate it if the taxpayers of Norwalk would pay for my ski vacations but I don’t think it fair to ask them to do so. Of course golfers will cry “foul.” “Our user fees cover the cost of the golf course,” they claim. “O.K. we may have had a few bad years but things are going to pick up. And we have been working with a marketing firm to attract golfers from surrounding communities to play Oak Hills. And if we have to we’ll raise the fees. And the problem is the restaurant debt. And….”

    Let’s start with the restaurant debt. It was the OHPA that wanted the restaurant and lobbied to take on the debt to construct it. But membership in the OHPA changes over the years. Hence, it is today’s members who are blaming yesterday’s members for their financial problem. Kind of like the pot calling the kettle black.

    Will raising user fees solve OHPA’s financial problems? Not likely. The response to increased fees will be a decrease in the number of rounds played. That is what the law of demand tells us. Hence, it is possible that revenues will fall rather than rise if the fees are raised.

    What about the argument that “golf will recover” to the point where user fees will cover the operating and maintenance costs of the golf course? That is a chimera. The Authority has been having a difficult time just covering its operating costs. And its maintenance costs are high and increasing.

    Bottom line: it is time to reduce the size of the golf course to nine holes or less or eliminate it all together and turn Oak Hills Park back over to the people who own it: the taxpayers of Norwalk.

  5. Debora

    Given that the restaurant is such a burden and that it is a violation of the state’s grant restrictions that the park be used for open space purposes ONLY, maybe it’s time to take the restaurant off OHPA’s hands.

  6. cc-rider

    Rounds were up significantly in 2014 so the argument about declining interest in golf does not apply here.

  7. Kevin Di Mauro

    Rounds were up but why?

    Compliments of the Norwalk taxpayer.

    Where are the profits?

  8. Paul Cantor

    cc-rider

    You write “Rounds were up significantly in 2014 so the argument about declining interest in golf does not apply here.”

    Do you have new information about resident rounds?

    Oak Hills Park belongs to the citizens of Norwalk. If resident rounds are down, as they are, then that is an indication that there is a decline in the desire to play golf among the people who live in Norwalk. Hence the need for a “marketing strategy.”

    But we’ve been through this before. See my posts at https://www.nancyonnorwalk.com/2014/12/oak-hills-authority-faces-tight-winter-financial-scrutiny/

    There you will find the following:

    According to the OHPA’s Master Plan, the number of rounds played at Oak Hills in recent years were:

    Year—-Rounds
    2008—–45,475
    2009—–42,413
    2010—–40,176
    2011—–34,159
    2012—–32,953
    2013—–34,219

    Now the Authority expects the total number of rounds played in 2014 will come to 38,000, a 4,223 round increase over the average of the last three years but 7,475 fewer rounds than were played in 2008.

    Furthermore, the current Oak Hills Authority’s Master Plan states on pages 4 that “It became obvious that with the decline in rounds over the previous few years a more aggressive approach to marketing and management was needed…” and on page 26, The National Golf Foundation (NFG) indicates that the average number of rounds played per 18-hole golf course has declined from a peak of 30 million round in 2005 to 25.3 million round in 2012.”

    So even the OHPA disagrees with you. And the declining interest in golf is the reason it needs to market the course in Oak Hills Park to golfers in the wealthier surrounding communities.

  9. Avid Golfer

    Does anyone besides Mr. Cantor get it? The OHPA has had a number of years now to right this ship and have failed. The members of the OHPA are politicians appointed by politicians. I’m sure they are very qualified to do whatever it is they do for a living but operating a municipal golf course is not one of them. How many articles were written this year about how great everything was going on this year at OH and about how busy OH was when the truth from the financials shows just the opposite. Did the OHPA really believe they were doing well and this is just a big surprise to them now or were they lying all summer long to create the illusion that everything was great to fool the taxpayers, Board of Estimate, Common Council, Bob Barron and Tom Hamton?

    @CC are you serious? The golf course, as I have said in previous posts, is obviously priced incorrectly as they have lost money that’s why they have done more rounds of golf. If I owned a deli and sold sandwiches for $2, I’m sure I would be the busiest deli in Fairfield county. Wouldn’t it be better to do less rounds and make more money? I would assume it is less wear and tear on the facility also.

    Enough is enough, but now I’m sure the politicians will now find a way to waste more taxpayer money and deal out more funds to OH or forgive the debt they owe to All of us who live in Norwalk.

  10. Yvonne Lopaur

    Among the costs not taken into account by the audit are the costs to:
    1. the environment and water supply of all the hazardous chemicals the OHPA uses to maintain the golf course.
    2. the magnificent Oak Hills Park landscape when the OHPA cuts down scores of trees because it deems them in the way of golfers.
    3. joggers, walkers and other outdoor enthusiasts who are denied access to the park.

  11. Suzanne

    Unforgivable to forgive. The incompetence is only rivaled by the smoke screens blown in our faces to make us believe the OHPA is running a successful course.

    Somehow, this group reminiscent of the Marx Brothers (although not at all funny) in their various sleight of hand routines to fool town government, should have blown their wad a LONG time ago through all of these antics.

    And yet, and yet, what a great success! The rounds are up! The “learning center” will bounce off the great successes to monetize the course even further!

    At this point, I’d rather see Holsteins grazing out on those greens – at least they have the potential to become future vegetables with their byproduct. It seems the profitability of Oak Hills continues to be well below the potential of cow dung.

  12. cc-rider

    Are non residents allowed at Calf Pasture beach?

  13. TomReynolds

    No comment. You cannot arue with illogical people.

  14. Avid Golfer

    @cc

    Yes they are and your point is? Even with all the non residents the OHPA is trying to attract to play because there are not enough Norwalk customers they still can’t pay the bills.

    By the way, my foursome had a great time playing and paying Fairchild Wheeler golf course yesterday because there is still no carts at OH. What is wrong with this picture?

  15. cc-rider

    Point is that residents and non residents pay in same US currency. What difference does it make to the cash register? The problem here is the amount of revenue generated and not lack of demand.

    Google “dynamic pricing for golf” to see a really bright idea as to how to not give away greens fees for nothing. Many industries successfully use this pricing model.

  16. Bill

    Golf is dead, turn it into a public park, save taxpayers money, and move on.

  17. Charles Brennan

    I am not sure how you save the taxpayers money when there is no line item in the city budget for Oak Hills. If this becomes a public park the taxpayers pay every year and then this will be another park that most people will not use just like Cranbury or Vet’s park or Taylor Farm.

  18. Paul Cantor

    Mr. Brennan,

    The issue is one of cost/benefit analysis.

    From the point of view of all taxpayers the benefits of maintaining Oak Hills as a public park are substantial and the cost minimal while the benefits of maintaining the 18-hole golf course are minimal and the costs substantial.

    Yes, the OHPA likes to point out as you point out that there is no line item in the budget for the golf course — the implication being that the golf course does not cost taxpayers anything.

    But that argument ignores the fact that the OHPA has received millions of dollars in taxpayer-subsidized loans that it has had to restructure.

    And it also ignores the fact that the cost of the golf course to taxpayers who do not play golf (i.e. the vast majority) may be measured in terms of the value to them of all the other activities they are prevented from enjoying in Oak Hills Park because of the golf course.

    Bottom line:

    The benefits to golfers (10% of the residents of Norwalk) of the taxpayer subsidized golf course clearly outweigh the cost.

    The cost to non-golfers of the golf course (90% of the residents of Norwalk) greatly outweigh the benefits.

    But the benefits to all the residents of Norwalk (golfers and non-golfers alike) of maintaining Oak Hills Park as a multi-use public park greatly outweigh the cost.

  19. Debora

    @Paul Persius

    To answer your question: Why doesn’t the authority use some of the Citys Parks and Rec personnel in the winter months to help ease some personnel costs and also to get some of the maintenance work done in the off months.

    The point of creating an “authority” in 1998 or so was that the park was to be self-funded (included repayment of its debt), and completely removed from the City’s balance sheet. To that end, the OHPA lease with the city requires that OHPA reimburse the City for any services provided by the City, so using parks and rec personnel in the off-season would not help OHPA with its financial problems.

  20. Avid Golfer

    Is the OHPA oficially Bakrupt as of today or do they still have funds in the bank?

    The article talks about a $100k line of credit a bank gave them, what crazy bank did that after looking at their financial or did the city of Norwalk guarantee the line which would mean the taxpayers are on the hook.

    So let’s get this straight…they have no money, draw on the line of credit to hopefully milk them through the winter and meet payroll and then start the season even deeper in the hole then they are now. Great plan, maybe they should get a bunch of credit cards and max those out too.

  21. WHAT!!!

    Any council member who votes to forgive ANY debt for these folks is a fool and should be kicked out of town.

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