Arundel considers takeover of Compass Pointe golf course

Operator of facility short of funds to finish job

September 26, 2004|By Childs Walker | Childs Walker,SUN STAFF

Anne Arundel County leaders are considering an early takeover of the financially troubled Compass Pointe Golf Course in Pasadena, saying they are not confident a quasi-public state agency can complete the project with existing revenues.

The county gave the Maryland Economic Development Corporation a $1.1 million bailout loan this year. Also, officials recently learned that MEDCO does not have enough money on hand to finish paying for construction of the 36-hole course, originally projected to cost $17 million.

County Executive Janet S. Owens met last week with County Council members and budget officer John Hammond to discuss options for the course. Though the meeting produced no conclusion, council Chairman C. Edward Middlebrooks said of a takeover, "We're heavily leaning in that direction."

Council members are scheduled to meet with Robert Brennan, executive director of MEDCO, on Tuesday morning.

Awaiting feedback

Hammond agreed a takeover is a strong possibility. He said Owens awaits feedback from the council before moving in that direction but said the administration will probably make a decision soon to avoid delaying construction on the course's nine unfinished holes.

He said a takeover would allow the county to refinance bonds issued by MEDCO and possibly gain greater profits from Compass Pointe. Under its agreement with MEDCO, the county is supposed to take over the golf course when MEDCO's bonds are paid off in 25 to 30 years.

"If the local government wants to take over [now], that's not a problem with us," Brennan said. "But we also don't have a problem with staying in there."

Brennan said MEDCO needs another $3 million to finish construction and open the course's last nine holes. He said he hopes the entire course will be ready next spring.

County Council members have expressed dissatisfaction over Compass Pointe since MEDCO first asked for the $1.1 million loan this past spring. Though the council approved the loan by a 6-0 vote, members said the bailout was the best of an array of bad options. Several said they felt that the Owens administration had implied the county would never foot any of the bill for the golf course. The course, off Fort Smallwood Road, opened in October, and 27 holes are open to play.

County Councilwoman Barbara D. Samorajczyk of Annapolis has spent the past few months reviewing the project with county auditor Teresa Sutherland. Sutherland said last week that the county had failed to follow proper procedure in paying MEDCO $380,000 for road improvements.

Samorajczyk, a frequent Owens critic, said she was shocked to find that the county had contributed more than $3 million to the project.

Middlebrooks said he had been content to leave the project under MEDCO control when he believed this year's bailout request would be a one-time occurrence. "But now it appears they could be back to us next year with another request, and that's different," he said.

Middlebrooks said he wants to see an audit of the Compass Pointe project to determine when and how the financial problems started.

The county bought land for a golf course in Pasadena in the 1980s and later persuaded developers to donate more land. But its decision to have MEDCO develop the course prompted legal threats from private developers, who said the nonprofit group was designed to promote projects in economically depressed areas, not in thriving markets.

State legislators then expanded the corporation's charge and allowed it to move forward on Compass Pointe in 2001.

MEDCO officials have blamed the operating shortfall on a delayed opening caused by persistent wet weather last year.

The agency's original budget called for the course to be self-sufficient by now. "I believe this course can support itself, but all the holes need to be open," Brennan said.

MEDCO officials have said the course lost about 7,200 rounds of golf, at $55 to $65 a round, because of wet weather that also delayed construction of the second 18 holes.

In addition, Landscapes Unlimited LLC, the Nebraska company that built Compass Pointe, accused MEDCO of failing to pay more than $2 million in construction costs. Brennan said MEDCO has reached a compromise with the contractor on how much is owed but said MEDCO does not have enough money to pay Landscapes Unlimited. That payment is part of the $3 million Brennan said MEDCO would need to finish the course.

Other MEDCO woes

The shortfalls at Compass Pointe are only the latest problem for MEDCO. Its Rocky Gap Lodge and Golf Resort in Cumberland reported $18 million in losses between 1999 and last year. MEDCO is a quasi-state agency that uses state bonding authority to finance economic development projects that counties might not fund themselves.

It's unclear how a county takeover at Compass Pointe would work. Hammond and Middlebrooks said the county executive would probably submit legislation that would authorize a takeover and permit the county to refinance the project with its own bonds. That could mean taking on almost $20 million in debt.

Middlebrooks said he hopes the course could immediately generate enough revenue to cover its operating expenses. He and Hammond said it's too early to say what role the county would play in day-to-day operations at the course.

Both said golfers have generally raved about the course and expressed confidence that the project will make money for the county in the long run.

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