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'Greens fees, lift tickets, courtesy of taxpayers'



Last modified: Sunday, September 30, 2012
Why are taxpayers in Concord and Manchester paying for people to golf? Officials in both cities recently approved tax dollars to shore up the accounts at city-owned Beaver Meadow Golf Course and Derryfield Country Club.

The New Hampshire Sunday News cracked open the books at Derryfield. Reporter Dave Solomon found the club was generating enough revenue to meet its operational costs but that debt service payments on its recent clubhouse improvements put Derryfield in the red. After turning a healthy profit from 1995 to 2006, Solomon writes that Manchester taxpayers are on the hook for $1.1 million in loans since 2007.

The financial hit at Beaver Meadow is much smaller for Concord taxpayers. The Concord Monitor's Ben Leubsdorf reports the city-owned course expects to lose $141,000 this fiscal year, following several profitable years.

Even if both golf courses were to turn a nominal profit, it would still not capture the total subsidy that taxpayers are providing to their golfing neighbors. Leaving such valuable real estate in the city's hands reduces property tax revenue that a private golf course would pay. This opportunity cost has to be added to the direct subsidy that taxpayers give the golf course in lean years and subtracted from the profits it produces in good times.

There are other local models of publicly owned recreation areas, too.

When the Air Force closed down Pease Air Force Base in 1991, New Hampshire set up the Pease Development Authority to manage the property. Air Force planners are known to map out fairways before they build runways, so Pease came with a golf course. It has been run as a self-sufficient subset of the PDA ever since.

PDA Executive Director Irving Canner and Pease Golf Course General Manager David Mullen took the annual profits that the golf course generated and put them into a reserve fund. When they decided to finally fix up the rundown clubhouse and improve the lower nine, they didn't have to borrow anything to fund the project. As a result, Pease Golf Course doesn't carry the debt load that burdens Derryfield and actually ended Fiscal Year 2012 with $329,000 in retained earnings in the bank.

Manchester has already reduced its role in running outdoor recreation areas. The city handed the keys to McIntyre Ski Area to a private group in 2009, much as the state leased out operations at Mount Sunapee in the 1990s.

The highly successful Sunapee deal

not only revitalized a mountain that was languishing under state control but has generated $5.8 million that lawmakers have poured into Cannon Mountain. The second state-owned ski area is run through the Parks Division of the Department of Resources and Economic Development.

Cannon General Manager John DeVivo touts Cannon's turnaround over the past five years. In Fiscal Year 2006, Cannon lost more than $1 million on just $2.7 million in revenue. From 2000 to 2010, Cannon ski operations lost $2.5 million.

DeVivo has re-opened the Mittersill Ski Area, increased revenue and greatly improved the resort's operations. In 2011, Cannon actually turned an operational profit of over $1.3 million, transferring $800,000 to the parks budget.

Like most New England ski areas, Cannon slumped in 2012, losing about a quarter-million dollars, according to DRED's preliminary unaudited figures. But we shouldn't blame Cannon's management for a mild winter in a lousy economy.

Cannon's apparent turnaround was financed by profits at Mount Sunapee. Those lease payments have generated $5.8 million to pay for Cannon's capital improvements. If we add this subsidy to the money Cannon has lost over the years, it's in the hole for $7.75 million. In fact, 2011 is the only year in which Cannon's profits were greater than its Sunapee subsidies.

If Cannon can return to profitability, lawmakers may want to consider letting Cannon Mountain stand on its own by paying for its own capital budget. The Sunapee lease payments could then be redirected to support smaller parks around the state.

I'll be digging deeper into the finances of Pease Golf Course, Mount Sunapee and Cannon Mountain this week at NH Watchdog, our investigative news site.

The three publicly owned facilities offer different lessons on how to manage public assets in a competitive marketplace.

(Grant Bosse is vice president for media for the Josiah Bartlett Center for Public Policy, a free market think tank based in Concord.)