A state audit said millions in loans to the Lynnwood Municipal Golf Course from the city's utility fund were not permissible. The city is considering closing the struggling golf course.
The city of Lynnwood has loaned millions to its struggling municipal golf course since 2008. Now the state auditor says the loans are not allowed because the golf course can’t afford to pay them back.
The loans, along with management problems pointed out Monday in a state audit, threaten the future of the 21-year-old course. City leaders say they will decide in the next three months whether to keep it open.
Lynnwood’s 18-hole city course is supposed to be financially self-sufficient, but it started falling behind in 2008 and had to take out a loan from the city utility fund.
In response, the golf course drafted a business plan to get back on track by raising greens fees and selling beer. The plan didn’t work, and the golf course continued to lose money. The borrowing increased over time.
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Lynnwood Municipal Golf Course was allowed to borrow $130,000 from the city utility fund in 2008, $550,000 in 2009, $1.4 million in 2010, and nearly $1.3 million in 2011.
In addition, the golf course has owed $137,485 to the city general fund since “at least 1996,” auditors wrote. The course has not paid interest on the loan.
Fewer rounds of golf are being played at the course every year.
In 2002, 59,788 rounds were played. In 2012, it was more like 41,000, said Jeff Clay, a golf pro who works at the course.
“That’s about on par, kind of average for the way the industry’s been going,” he said. “People are spending less money, so they have less money for things like golf.”
Fewer people in the Seattle metropolitan area are playing golf, according to Scarborough Research. In 2002, 17 percent played. In 2012, 11.7 percent did.
The golf-course pro shop is at the adjacent Edmonds Community College, where food options were so poor — vending machines and prepackaged food — that the course averaged 64 cents in food sales per golf round in 2006. By contrast, nearby Walter Hall Golf Course made $3.15 on food per round.
To boost revenue, the Lynnwood golf-course management opened a snack shack that sells beer on the course.
The 2007 business plan described the small course’s strengths: “The Golf Course is aesthetically pleasing, beautifully landscaped and challenging in its own way. The fact the course is not a par 72 championship course provides an advantage … given the fact it only takes 3-4 hours to play 18 holes.”
Despite all that, use of the course has fallen almost every year that it’s been open. Auditors pointed out other management problems possibly contributing to the financial distress — mainly, that the city has provided cash but not oversight.
“The City does not adequately oversee Golf Course operations,” auditors wrote. “The Parks and Recreation Department staff make policy and procedure decisions inconsistent with City systems designed to safeguard resources and provide accountability for public funds.”
Auditors said the course violated state law banning the gifting of public funds when it gave a discount to the Lynnwood Parks and Recreation Foundation, a private nonprofit, for its annual golf tournament. It also allowed Professional Golfers Association (PGA) and Golf Course Superintendents of America members to play for free; advertised private lessons on the city website; and donated gift certificates.
The city told auditors it would decide in the next three months how best to respond to the audit. The options are to find a different way for the city to subsidize the golf course, contract with a private company to run the course, or close the golf course, liquidating its assets.
Seattle Times staff researcher Gene Balk contributed to this report. Emily Heffter: 206-464-8246 or firstname.lastname@example.org. On Twitter @EmilyHeffter.