Dear Friends and Media,
Tatiana Favela kindly released to me the full financial balance sheet for the Butterfield Trail Golf Course, which opened in 2007. I have added in red the total annual losses, year by year, from FY 2008 through FY 2019.
As of September 1, 2019, the Butterfield Trail Golf Course has lost a total of $19,434,988, and with the additional losses this fiscal year, the total loss generated by the project has exceeded $20 million!
The average annual loss from from FY 2008 through FY 2019 has been $1,619,582. That is less than the $2 million/year that I had estimated in my previous email (below), since the City’s FY 2020 budget book makes no mention of the food and beverage revenue produced by the club, which seems to be conflated with the overall food and beverage revenue of the airport. The airport manages the golf course. The media continues to cite the $1 million/year figure but fails to take into account depreciation, which is an operating expense.
To put the average annual loss in perspective, $1,619,582 per year is more than enough to pay the annual salaries of the City Manager and all five Deputy City Managers. It is much more than the $1 million/year that the City spends in “Arena” litigation. It is more than three times the salary cut that will be imposed upon more than 6,000 City employees starting May 24.
CITY HAILED ECONOMIC DEVELOPMENT POTENTIAL OF GOLF COURSE WHEN IT OPENED IN 2007
On December 17, 2007, shortly after the golf club opened, the Mike Mrkvicka of the Oligarchy Gazette interviewed Pat Abeln, the municipal director of aviation, who stated: “To us, it really accelerates all of our economic development plans. We have built this golf course to be a first-class golf course. But we also built it to be a magnet for future economic development. Obviously, a resort hotel is our first target.” The project has been hemorrhaging taxpayer money since the day it opened, and 12 years later there is no resort hotel.
DOES THIS STORY SOUND FAMILIAR?
The City told us the same thing about the streetcar project, which was the least profitable undertaking in terms of operational costs in the history of El Paso. The Ballpark is 84% subsidized, and now it will require more than $1 million of general fund support because of the pandemic. The Quality of Life bond projects are more than $100 million over budget, based upon information from the Bond Overview Advisory Committee (the most ignored committee of the City) and statements from the Mayor.
CITY AUDIT CITED PROBLEM
One interesting tidbit that has so far gone unnoticed is the City’s 2019 internal audit of Kemper Sports Management, charged with running the gold club since its 2007 opening. (attached) The audit faulted the Airport for conducting only 5 of the required 12 inspections during the previous fiscal year, in violation of Section 3.08 of the Golf Course Management Agreement and of Golf Course Operations and Maintenance Standards.
It will be up to City Manager Gonzalez and CFO Cortinas to guide us out of the current financial crisis and I have no doubt they can do it if they make a strong and clear case for deep budget cuts.
Have a great day,
Max