Updated, April 12, PDF of financial analysis added
NORWALK, Conn. – If the city isn’t willing to finance a golf learning school – a driving range – at Oak Hills Park, the Oak Hills Park Authority will go to a bank for financing, provided the restaurant debt is “taken care of,” Ad Hoc Driving Range Committee Chairman Ernie DesRochers said Thursday.
DesRochers’ verbal pitch in favor of a driving range was a follow-up to a 48-page financial analysis of Oak Hills he sent to the mayor and Council members last week, much of it damning decisions made regarding the restaurant’s construction and claiming those choices set up the park to fail.
It was all part of what Common Council Finance Committee Chairman Bruce Kimmel (D-At Large) called an “open discussion” to resolve a problem that has been “lingering” a long time, with the premise that the Council might be willing to absolve the debt the Authority incurred during the administration of former Mayor Alex Knopp.
In January 2005, the Authority went $2.2 million in debt to Norwalk at a 4.5 percent interest rate, while pledging cart revenues to the payments unbeknownst to the public, DesRochers’ analysis states. This debt has been amended three times, with the latest restructuring in 2012, and the outstanding restaurant debt is about $1.9 million, it states.
“Unfortunately, I was not on the Authority when the debt was restructured or it wouldn’t have been restructured that way. We would have had this discussion two years ago,” DesRochers said.
The Authority took out a $100,000 line of credit last fall; $80,000 of that has been spent due to the unusually tough weather, DesRochers said, with $20,000 taken out in February and $60,000 taken out in March
DesRochers’ called the hoped-for driving range the “800-pound gorilla in the room.” It would make $500,000 a year – $375,000 before the debt is paid – he said. It would make Oak Hills an “incredibly competitive facility,” he said.
“If we can figure out a way where we can build it, we pay the city the debt service, hell, we’ll even make you our partner,” DesRochers said. “We’ll figure out some sort of waterfall where we pay the debt service and then we get some money to add to our working capital and over that we’ll split cash flow from the thing and you can take that and use it to pay the bonds down. We are willing to do something creative here, it’s just a matter of we really believe for the viability of park over the long haul you need to have a first class practice facility in there. If the city doesn’t want to do it so be it. We’ll try to get it financed somewhere else.”
Kimmel asked DesRochers if the Authority would be able to build a driving range without incurring more debt. “It’s impossible, because the budget to build it is roughly $3 million,” DesRochers said.
Kimmel asked how the golf school (driving range) would be financed if the restaurant debt were forgiven. “I would go to a bank… if you look at our bottom line it would look pretty good,” DesRochers said.
Kimmel asked if there was a way to restructure the restaurant debt to allow the Authority to build a golf school. DesRochers said no.
“Even back then they said Oak Hills couldn’t support a restaurant,” DesRochers said.
The restaurant was a bad idea, he said. Instead of building it on flat land behind the practice green it was built on the hill, where there is a great view but the cost of construction was high.
“They had to come back and restructure the contract because the contractor went broke,” DesRochers said. “While it was on budget they blew through all the contingencies, which were 20 percent. They located it in the worst possible spot, because of the ledge.”
Not blaming anyone, but it was never going to work, he said.
“If you read all the politics around it, politics got in the way and it got in the way because certain people wanted to make certain neighbors happy because of elections and everything else,” DesRochers said. “You never would have built it.”
“It is so important when you have an authority that the people who are on the Authority are there for the right reasons, not to kowtow to a politician, not to agree to do something that they know in their heart is wrong,” DesRochers said.
DesRochers advocated for the city to spend $15,000 on a study by the National Golf Foundation to see if a golf school would be as profitable as expected.
“There are a couple of ways we can do this,” DesRochers said. “You can take over the restaurant debt and we’ll give you the rental income from the restaurant. So there isn’t any fight over we’re keeping money you should have and then we’ll go out and try to privately finance it. Stamford did it that way.”
Councilman John Igneri (D-District E) asked how long it would take to build a driving range if the Authority could go out tomorrow and get financing.
DesRochers said this was government work, so add nine months to what you think it would take. But, “If we were just going out and do it we would be in the ground in October, I think,” he said.
The city made an investment that it shouldn’t have made, the same as with the Maritime Aquarium, Majority Leader Doug Hempstead (R-At Large) said. “It is what it is,” he said, and if the city is going to spend $600,000 to $700,000 getting a trail (Norwalk River Vally Trail), it should be willing to invest $1.5 million in a facility that will produce revenue.
“To me, invest now or own it later kind of thing and I think we need to look at it realistically as a business deal,” Hempstead said. “Take all of the emotions out of it, take it out all the stuff, and look at it as a straight out business deal, what would you do if it was your property?”
The park’s lease gave the Authority the right to build a driving range and a restaurant, DesRochers said. “That right was taken away from us by politicians. We had $2.5 million in bond set aside, they put it in the restaurant,” he said.
“Regardless of what everybody wants to do, it is a political year and it is what it is,” DesRochers said. “Personally, you know what, I care about Oak Hills. … We are here as business people telling you what we think you should do.”
If not, he will gladly walk into the Finance Department and hand over the keys, he said.
Council President Jerry Petrini (R-District D) spoke strongly.
“I don’t care if it’s an election year or not,” Petrini said. “Contrary to what I have been told tonight, I am making a political decision, people don’t know me that well, I am looking for the benefit of what is best for the city. Oak Hills is part of that city. I went back and I looked at your whole analysis and whoever let this go through in the very beginning, just like you said, you guys were destined to fail. I am surprised you guys lasted this long. … I think we all got it at this point.”
“We get it, so rather than rehash or talk about the past anymore I think we need to do what is recent,” Hempstead said. “Looking back the last three years, what is the history, what the results have been financially, what the drag is and go from there and let’s not talk ever again about how we got here.”
“Let’s keep this discussion going,” Kimmel said. “It will be resolved, believe me. One way or the other irrespective of the fact that we will be moving into the early summer and close to the election. I don’t think anyone here is going to be concerned with that.”
The city will be able to present its perspective on the issue at the next Finance Committee meeting, in May, and the mayor will be invited, Kimmel said. “Then in June nothing or something will be decided,” he said.
The process is backward, Finance Director Thomas Hamilton said. The mayor should be leading negotiations with the Authority, not the Committee.
“If there is going to be modification to the lease agreement or consideration to any sort of appropriations there need to be those discussions up front and then presented to the Council as any other proposal would be presented,” Hamilton said. “… I have expressed that to the mayor, he has indicated to me that he agrees that’s the process he believes should be followed.”
The Finance Committee gets a financial update every month, which is affected by this issue, Kimmel said.
“I decided I want to have it come to a head instead of having it linger and linger and continue to linger so we initiated a broad discussion,” Kimmel said. “… I don’t see any reason why the Council for any particular issue, if it feels strong about it, shouldn’t take the initiative.”
It’s going to be a collaboration, Kimmel said.
Hamilton said he is not against a driving range and, as a former employee of the city of Stamford, he saw what a “cash cow” it was for the city’s golf course.
“Whether it would be successful here I don’t know, I am not an expert at golf,” Hamilton said. Spending $15,000 on a study is “probably a wise use of money before we consider investing potential several million dollars into a driving range,” he said.
But, “In order for any action to be taken ,the mayor has to agree to sign documents,” Hamilton said. “The Council has to authorize the mayor to sign documents; if the mayor hasn’t been involved in any of the negotiations I am not sure how he would become comfortable to sign documents that he hasn’t been party to negotiating.”
“I don’t want this to hang out there forever because, as (DesRochers) said, it’s not good way to run a business. I think we all agree to that,” Kimmel said. “… My feeling is the mayor will have the final say, after the consultation with your department, but right now we are having what I think is always healthy, an open discussion, in full public view, of a problem that has been bandied about for many years.”
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