Council votes to take over golf course

County could acquire Compass Pointe in March

Plan to finish holes this summer

Effect on bond rating still concerns officials

Anne Arundel

February 09, 2005|By Childs Walker | Childs Walker,SUN STAFF

Anne Arundel County could issue $26 million in bonds and assume control of the financially troubled Compass Pointe Golf Course as soon as late March now that the County Council has approved a takeover plan, officials said yesterday.

The council voted 6-0 with one abstention late Monday to acquire the course from the Maryland Economic Development Corp., a quasi-public agency that has run into cost overruns in developing and operating the course.

County officials say they must finish the final nine holes of the planned 36-hole course this summer so that Compass Pointe, located about six miles south of the Baltimore City line, can begin to generate profits.

"I'm relieved that we now have the go-ahead to finish the course," said County Executive Janet S. Owens, a Democrat who recommended the takeover. "I'm absolutely convinced that over time, this will be a real money-maker for the county."

Council members said they backed the takeover reluctantly but felt it was the only way to guarantee the project would not become a loosely supervised, money-draining albatross. They said they had no faith that MEDCO could manage the public course effectively. In June, the county provided a $1.1 million loan to the agency to cover operating revenue shortfalls; the project also faces $3 million in construction cost overruns.

"MEDCO, you've got to go," said Councilwoman Cathleen M. Vitale, a Severna Park Republican. "The thought of having to do this year after year is not something I can stomach."

Other MEDCO projects, such as the Rocky Gap Lodge and Golf Resort near Cumberland, have struggled to generate profits as well.

Several council members said they feared, based on advice from several outside consultants, that the county's bond rating could suffer if MEDCO were to default on financial obligations to investors.

"This body would be nuts, and we would be run out of town, if we let the bond rating be jeopardized," said Councilman C. Edward Middlebrooks, a Severn Republican.

Agency officials said yesterday that they welcomed the county takeover.

"My objective all along has been to see a decision made that will allow construction to be completed on the course," said Robert Brennan, executive director of MEDCO. "We're very pleased that the county took the action it did."

Brennan said bad weather is the chief cause of difficulties at Compass Pointe and said he doesn't think MEDCO's reputation will be damaged by the experience. "MEDCO is never called in to do the easy project," he said. "With construction, there are just inherent risks involved."

MEDCO, which uses its tax-free bonding authority to finance development, has projects and assets worth more than $1.5 billion scattered throughout the state. Though most have received little attention, several high-profile deals have run into problems.

The $31.1 million Rocky Gap golf resort has failed to live up to financial projections and has needed millions of dollars in state loans to remain open. The luxury Hyatt Regency Chesapeake Bay Resort, meant to revive Cambridge and Dorchester County, faced cost overruns and legal disputes before its delayed opening in 2002.

At Compass Pointe, wet weather pushed back the course's 2003 opening for months, and construction has cost an estimated $3 million more than expected. MEDCO ran out of construction funds last year, meaning little progress has been made in recent months.

Anne Arundel leaders have debated what to do about the course since they made the $1.1 million loan to MEDCO last year. They said they were frustrated that the county's contract with MEDCO made the loan a virtual obligation, although the county has played little role in supervising the course. Several council members reiterated their frustrations Monday night.

Vitale called the vote an unpopular decision, "because nobody wants to spend $26 million on a project that was supposed to cost us nothing."

Councilwoman Barbara D. Samorajczyk abstained from Monday night's vote to take over the golf course. She said the county and MEDCO officials failed to provide the council with adequate information about the course's problems to allow for an informed vote.

Samorajczyk said her research shows that a county-hired consultant's projections for the course's eventual profits may be wildly optimistic.

"To me, this is premature," said Samorajczyk, a Democrat who is frequently at odds with Owens.

County officials argued that the takeover was the best of several unappealing options. John Hammond, the county budget officer, said the move would be the best way to ensure the course is complete and profitable as soon as possible.

Hammond projects that none of the payments on the $26 million bond issue will have to come from the county's general fund budget because revenues from the course will cover the costs. Officials said it's unclear when the last nine holes will open.

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