By Ramona Giwargis
The city of San Jose, CA, weighs closing a golf course to stem financial losses.
SAN JOSE — San Jose’s two newest golf courses are likely to remain money-losers for years to come, according to a new city audit that cited their high debt costs and the game’s fading popularity and suggested selling all or part of one or turning some links into soccer, softball or baseball fields.
San Jose built the two courses, Rancho del Pueblo and Los Lagos, early last decade amid bullish predictions about the sport’s growth. But they’ve never earned enough to cover operating and debt costs, draining more than $2 million from the city each year to subsidize them.
The audit, which the City Council will consider next month, is renewing cries at City Hall to explore other options.
“We have these courses open, but very few people play in them and we can’t be subsidizing them forever,” said Councilman Tam Nguyen, whose district includes the money-losing Los Lagos course, which opened in 2002.
But the city’s golf courses also have their defenders who argue they provide affordable access to the sport.
Longtime golfer Bill Hubka, 76, said losing some of the city’s links would drive golfers to play out of town and will hurt numerous local tournament groups.
“I think that is a real loss for the city and a tremendous step backward,” Hubka said. “Golf was very popular many years ago; now it’s not as popular, but it doesn’t mean it won’t be popular again.”
The audit shows the city subsidized its golf courses with $2.2 million last
year, to cover operating losses and debt. That number is expected to reach $2.6 million this year. The city owns three courses: Los Lagos, Rancho del Pueblo and San Jose Municipal Golf Course. But only San Jose Muni, which opened in 1968 and has no remaining debt costs, is making money — about $400,000 a year — for the city.
The other two have seen revenues drop dramatically as golf play decreased by 28 percent at the 180-acre, 18-hole Los Lagos, and 42 percent for Rancho del Pueblo, which has nine holes spanning 31 acres.
Both golf courses are losing about $300,000 a year, and face a mountain of debt — $18.3 million for Los Lagos and $4.5 million for Rancho del Pueblo.
That means City Hall is going to have to make some tough decisions about the future of its public golf courses. The auditor’s report outlines a few choices: The city could sell a portion of the golf course lands to
pay off their debt, reconfigure the land for a soccer, softball or baseball fields, or keep all three courses open and try to reduce annual losses by boosting usage.
But Los Lagos would need to grow usage by 60 percent and Rancho by 140 percent to fully cover operating losses and debt service, the report said.
That seems unlikely given the competition from at least 23 other golf courses within 25 miles of downtown San Jose and a nationwide decline in golf play, the auditor said.
That’s why Councilman Nguyen supports eliminating one. He said converting part of the land into a soccer, softball or baseball field satisfies a growing need for more sports fields, though the report says it would
require one-time conversion costs.
“We must make good use of the land to accommodate more people,” Nguyen said. “It’s better to have more people benefit from the land instead of so few people.”
Councilman Donald Rocha, whose children are involved with softball, soccer and other youth sports, said there’s a shortage of fields and complexes for games. But he’s not convinced the embattled golf courses are the right spots. He said Rancho del Pueblo would be “my last choice” for field conversion.
What would you do?
Here are the sources about the golf courses:
San Jose weighs closing a golf course to stem financial losses – San Jose Mercury News
Golf Courses – Loss of Customers and Revenues Requires A New Strategy
San Jose Financial Sand Trap: 2008-2009 SANTA CLARA COUNTY CIVIL GRAND JURY REPORT