Desert Hawk management board teeing up plan to address golf course debt
A board that manages Desert Hawk Golf Course in Pueblo West is wrestling with how to handle recent profits in light of a nearly $3 million negative reserve balance.
The Desert Hawk Management Board met Wednesday to discuss how to handle about $529,000 in combined profits over the past three years in light of the negative reserve balance, which includes $1.279 million owed to the Pueblo West Metro District for unpaid water bills.
Pueblo County Finance Director Ashley Huggins told the board that profits from 2020 through 2022 have “in essence been put into reserves,” but at the end of 2021 the reserve fund was carrying a negative balance of nearly $3 million.
“Even though we do have negative reserves, we do have positive returns,” she explained, stating the financial picture is complex.
Desert Hawk is owned by Pueblo County and the metro district as part of an 2000 intergovernmental agreement designed to save the failing golf course that had previously been operated by a string of private owners. The agreement calls for repayment of the purchase lease as a first priority.
As part of the lease repayment, about $600,000 is split between the county and the metro district each year. That lease will be paid off next year and Desert Hawk will be “debt free by the end of 2024,” said Michael Zaremba, the independent contractor who manages the golf course.
Zaremba also said in the first two months of this year the golf course reported just more than $54,000 in profits.
From 2000 to 2019 the golf course was unprofitable because revenues were not covering expenses. Two things that have helped turn that situation around are the COVID-19 pandemic and a rise in green fees and golf cart rental rates.
"We have attracted more golfers because people started during COVID when there was nothing else to do and they have stuck with it,” Zaremba explained.
He said about 25,000 rounds of golf were played in 2019, and that went up to 33,000 in 2020 and 35,000 in 2021.
More Desert Hawk news:Desert Hawk Golf Course owes $1 million in old water debt. Will Pueblo West collect?
Maintenance projects vs. paying old debt
Zaremba outlined four maintenance and equipment projects he would like to get done this year totaling about $41,000. He also stressed the 60-year-old sprinkler system needs to be replaced at a cost of $2 million to 3 million and also indicated a new mower should be purchased soon.
“There is a lot of pressure on Pueblo West to get that legacy water bill addressed,” said Karl Kumli, attorney for the metro district.
Kumli asked Huggins if she could compile a list of other entities waiting for payment so the management board can work through a plan to address the debt. Those entities account for the remaining $1.8 million negative reserve balance.
Pueblo West Metro Board Member Nick Madero, who also sits on the golf course management board, said in his opinion, if the course has profits it "should pay the water bill for Pueblo West."
“We have to answer to Pueblo West constituents, and we’ve been getting a lot of feedback on the water bill,” said Jami Baker Orr, a metro board member who also sits on the golf course management board. “The community of Pueblo West has made it very clear to me and Nick (Madero) that we are owed money for water and we need to collect it.”
The golf course has paid its water bill in recent years. Consumption dropped from 150 million gallons in 2000 to between 100 and 110 million gallons in recent years, Zaremba said.
He estimates the course could save “every bit of $50,000 a year on water,” if the sprinkler system is replaced and water loss from breaks in the lines are eliminated.
The golf course management board, which includes Pueblo County Commissioners Eppie Griego and Zach Swearingen, will strive to come up with a financial plan during a special meeting set for 2 p.m., April 6, on Zoom.
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Chieftain reporter Tracy Harmon covers business news. She can be reached by email at firstname.lastname@example.org or via Twitter at twitter.com/tracywumps.
This article originally appeared on The Pueblo Chieftain: Pueblo West golf course weighing options to address outstanding debt