Cape Coral will move forward with outsourcing management of the Coral Oaks Golf Course.

Cape Coral will move forward with seeking outside management with Troon Golf, an Arizona-based golf management company, for the city-owned Coral Oaks Golf Course as a majority of the city council agrees that the operations need a drastic change.

City Manager Michael Ilczyszyn said contract negotiations with Troon Golf will start soon.

Coral Oaks Golf Course, located in northwest Cape Coral, opened its doors in 1988, and the deed was transferred to the city in 1979. The deed limits the city’s ability to use the property for any purpose other than a golf course; otherwise, the property would revert to its original owner.

The golf course has been losing money for the city. Over the past four years, revenues from the golf course have not been able to keep up with expenditures.

According to city documents, the city needed an additional $428,611 to cover expenses in fiscal year 2022, and a year prior, needed an additional $100,000.

The other entities that put in a proposal to manage the golf course were Paradigm Golf Management Inc., Bobby Jones Links, and SSS Down to Earth OPCO LLC.

Timeline

In January, the city council agreed to request proposals for the golf course.

Proposals were issued and received during the summer, and an evaluation committee was established and ranked them in September.

Financial Director Mark Mason said all of the organizations have the ability to operate the golf course with their own staff but differ on monetary approach.

Several proposals included different forms of management or contracts:

• Full management: Revenues and expenditures would remain with the city, and the city would pay a management fee but would have a profit share agreement.

• Licensing: The licensee would retain all revenues and expenses, and share net profit/set aside a percentage of revenue dedicated toward facility improvements.

• Lease agreement: Lessee holds exclusive responsibility for all operations and retains both revenue and expenditures while paying the city a lease fee and sharing the profit. This would be similar to existing lease agreements the city approved for Sun Splash Family Waterpark and the Boathouse Tiki Bar & Grill restaurant.

Staff scored Troon Golf as the highest of the proposals and recommended a five-year initial contract for full management that would operate with an annual budget, marketing, and operation plan approved by the city council.

A monthly management fee of $10,000, which includes accounting services and a 2.5% consumer price index increase each year, will be paid to the company.

The terms to the company also include a reimbursement of up to $6,000 for travel expenditures annually and an incentive fee of a 10% annual increase in earnings or a 7.5% annual increase in total revenue from prior revenue - whichever the city prefers.

Councilmembers discussion

Councilmember Tom Hayden who was staunchly against outsourcing the course in the past said he changed his mind after witnessing Hurricane Ian and the continued deterioration of the golf course.

"This particular amenity is something very important to me," Hayden said. "I started to shift my position that maybe we weren't the right people to manage this golf course."

Hayden sees the golf course desperately in need of maintenance.

"A couple of years ago when all this started, I saw what was happening in there that it needed a new irrigation system," Hayden said.

Hayden estimates it would cost $1 million for a new irrigation system and require additional work.

"It needs a complete green rebuild if you are going to do that," Hayden added.

He favored Troon Golf.

"As we see growth in the next big part of our city, in the north, more people are going to want to utilize that facility, and I believe this particular company puts us in the best position to move forward with our growth.

He also wants to see current activities, like golf tournaments, leagues, and children's programs, continue as is, as well as the current employees staying on with their current salaries.

Mason said Troon will keep the 14 employees working at Coral Oaks employed.

"If the city council determines to outsource the management of the golf course, then by any of the methods, the city manager is committed to replacing the full-time employees in equivalent roles in the organization," Mason said.

Mayor John Gunter agreed with Hayden and said the city shouldn't be managing amenities like water parks or golf courses.

"We can do a better job providing a better amenity to the community, very similar to a program like we did with Sunsplash," Gunter said.

Hunter said the city previously managed Sunsplash at a loss but saw a turnaround and profit of over $350,000 once the council leased the park to Proparks Attractions Group.

"Normally we were paying more than that to keep it afloat," Gunter said.

Councilmember Cummings wanted to see a similar lease deal with Troon Golf.

Mason said the management option is the most taken route for golf courses, but said the lease option would be explored and negotiated with the company.

Councilmember Robert Welsh was the sole voice on the council who wanted to keep management in-house.

"We've opened this can of worms every single year I've been sitting on this council, and I don't think my decision has changed," Welsh said. "We decided to put money into it, we are making it better, and I think we need to stay the course we've been staying and try to fix something that's not broken."

"Sunsplash was broken, and I don't think we are at the point with the golf course where we need to make this kind of drastic move," Welsh said.

A committee of the whole meeting will take place in the future to discuss a negotiated agreement.

Once the contract is agreed to, it will take three months for it to take effect, possibly by January 2024.

Luis Zambrano is a Watchdog/Cape Coral reporter for The News-Press and the Naples Daily News. You can reach Luis at Lzambrano@gannett.com. Follow him on Twitter @Lz2official.

This article originally appeared on Fort Myers News-Press: Cape Coral seeks outside management for Coral Oaks Golf Course