Horse center lease terms are revealed

$12,000 a year rent

$50,000 annually in capital expenditures

January 17, 2001|By Laura Vozzella | Laura Vozzella,SUN STAFF

The Columbia Association is charging $12,000 a year to rent its troubled horse center and is requiring the tenant to spend $50,000 a year on capital improvements, according to terms of a new lease.

The arrangement will not end the association's losses from the horse center, because the homeowners' group remains responsible for debt incurred for the facility.

Six-figure annual losses are projected for the next three years, and annual losses in the tens of thousands of dollars are expected to continue for more than a decade.

Those figures do not include the cost of major structural repairs, for which the association is still responsible.

But association officials say the lease - a five-year deal with Burtonsville horseman Mike Smith, with options for two additional five-year terms - is a step in the right direction for a facility that has lost more than $600,000 in the past two years.

"It ensures positive cash flow from operations, it ensures that equestrian programs will continue to be offered to the Columbia community at discounted rates for residents, and it ensures that CA's property and assets will be well-cared for," said Rob Goldman, director of the association's sport and fitness division.

"Critics of the horse center will say, `Well, it's still losing lots of money.' But the fact is, the lease ensures that it will lose less and less money any way you look at it," he said. "No additional money will go into the horse center that wouldn't have gone into it anyway."

The center, on 88 acres off Gorman Road, has been the target of sharp public criticism in recent years because of its financial losses and low usage by town residents.

Less than 1 percent of Columbia's 87,000 residents use the center, which is expected to lose $353,000 in the fiscal year that ends April 30. It lost $290,000 in the last fiscal year.

Nearly all of the association's facilities are subsidized, but most have higher usage.

The Columbia Council decided last fall to seek someone to lease the facility after association staff members acknowledged that they did not have the expertise to run it.

Last month, the council approved a lease with Smith, who has operated Woodland Horse Center in Silver Spring for 27 years.

Terms of the deal were not disclosed until late last week.

Under the lease, Smith will pay $12,000 a year to rent the facility for the first five years.

The annual rent would rise to $13,500 for the next five years, and $15,500 for the last five.

Smith, who assumed control of the facility Jan. 1, also must spend $50,000 of his own money on capital improvements annually.

"I could have demanded a lot more rent and not the $50,000 a year in capital," Goldman said. "But our experience in the past was when there was no requirement in capital, when CA got the facility back ... the facility was not in good condition. It was in worse shape than when we turned it over."

Columbia Association projections show the facility will cost it $129,700 in the fiscal year that begins in May, and more than $100,000 for the two following years.

The annual loss is projected to be $33,300 in fiscal year 2016, the last year of the lease.

"The only reason we will continue to spend is to pay the interest and depreciation on equipment and improvements that already have been made," Goldman said. "If we just close the place, we still would have the interest and depreciation on the assets."

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