News for the Tahquitz Creek

Public Record, The, Feb 21, 1997 by Hercules, Neil

PALM SPRINGS--In its second year of operation (since February of 1995) the $14 million Tahquitz Creek Resort Golf Course, which encountered all kinds of problems during its start-up, had some good news to report.

(1) The city did not have tap the wastewater treatment plant fund to make its annual million dollar bond payment.

(2) Gross Income was up 21 percent during the first six months of the current fiscal year (which extends from July 1 to June 30).

(3) Bond payments over their 32-year life have been reduced by $400,000 through a new issue, which combines two city bond issues.

(4) Tom Kanaar, director of finance and treasurer, has projected that the golf course will make $439,526, increasing its gross business by 26.9 percent for the current fiscal year.

Despite some cause for optimism, it does not appear that the course will produce nearly enough income two enable the city to make its $1 million plus bond issue payments yearly.

In order to make the bond issue payments for the past fiscal year, the city had to use a combination of income from the bond issue's reserve fund, lease payments from the Palmer Management Group to the city for the Legends course, and city loans.

The good news about the Legends course is not only is it owned free and clear by the city, but the city receives an annual lease payment beginning next year of $170,000 from the Palmer Golf Management Co.

While Palmer Management does not have to release figures on its income from the Legends course, it is generally believed that play is up this year on that city-owned links.

The Palmer Group has completed a massive remodeling of the clubhouse which is shared by both courses in the Tahquitz Creek golf complex.

Under terms of its lease agreement with the city, Palmer was obligated to spend $677,000 on improvements. Last year the Palmer Group redid the fairways and built 41 sand bunkers on the 18-hole traditional Legends course.

The firm just recently completed a remodeling program for the clubhouse, pro shop and restaurant, installing an outdoor patio snack and dining area, shielded from the elements by nine canvas "bubbles."

The city has maintained that the new golf course was essential to keep pace with the need of hotels to provide "package deals" to their guests; one of the largest sources of income for the city is the hotel room tax.

The golf course got off to an unsteady beginning, first being forced to take over the construction management, then being faced with some extensive flooding which helped to contribute to a one year delay in opening.

After losing a year of income, the city had to $1.6 million from its sewer fund and $2 million from the general fund.

Seeking ways to reduce the debt burden, the city turned to some creative bond financing, combining the $9 million co-generation plant and police bond issues with its own needs and coming up with a $24,135,000 bond issue which was sold in October of 1995.

The new bond issue earned a AAA rating and will save the city $400,000 over the long haul.