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Golfin' Fools

There's something about Houston's municipal golf courses that brings out the worst in the city's public officials. Less than two years ago, the Lanier administration tried to orchestrate the giveaway of the Sharpstown and Brock courses to a private operator, despite numerous internal reports warning that the deal was a loser for the city. Various other privatization attempts have been marred by scandal, and the track records of the private operators who have managed to get their hands on city courses have been mixed at best.

All that was supposed to have changed with the creation of the Houston Municipal Golf Association Committee, a group of community golf enthusiasts and city employees appointed by Mayor Bob Lanier. The committee was to explore the possibility of establishing a nonprofit corporation to run the city's courses, similar to a model developed in Baltimore that has exceeded all expectations since its creation more than a decade ago.

That's what the committee did, issuing a report in September that recommended a long-term strategy for the city's courses. The nonprofit Houston Municipal Golf Association would run the three courses currently managed by the city -- Memorial, Sharpstown and Brock -- and would evaluate the contracts of the four privately managed courses as they expired. Presumably, if the corporation proved a success, those courses would also be brought under its wing. The private operators, who have profited nicely from their deals over the years, would move on to other ventures.

At last the city seemed poised to accomplish what political wrangling and insider trading had prevented for years -- Houston's golf courses would be united by a single vision designed to maximize the return to the public.

That notion lasted about a week.
With virtually no public discussion or input, the Parks and Recreation Department presented a proposal to the City Council on September 23 that would leave Hermann Park Golf Course in the hands of the current private operator, BSL Golf Corporation, for the next 20 years. In exchange for the unprecedented 20-year pact, BSL would pump $3.6 million into the course, up front, and pay the city a minimum annual rent that would start at $100,000 and increase a bit each year.

Those pushing the BSL deal say there's simply no time to carefully weigh the pluses and minuses of tying up one of the city's courses well into the next century -- a refrain that's become familiar for significant projects sprung upon the Council with little advance warning (see Cotswold). "Time is of the essence," warns a summary of the proposal prepared by the Friends of Hermann Park.

Whether or not the clock is ticking toward some real or artificial deadline (see Drayton McLane and the new downtown ballpark), time certainly wouldn't be so essential if the proposal had been aired when it first came to the city's attention more than a year and a half ago. Unfortunately, the person who learned the details was Parks and Recreation director Bill Smith, who apparently decided that an open discussion of the issue would be too bothersome.

You'd think Smith would have learned his lesson. This is the second golfing fiasco enveloping the Parks and Recreation Department director, the mention of whose name draws derisive scorn around City Hall. It was Smith who rejected the findings of his own staff in the Sharpstown and Brock debacle in favor of a weak proposal from Lopez Management Group, which eventually imploded when it was exposed by the Press.

At the time, Smith was criticized for keeping the details secret from the City Council. Likewise, Smith failed to notify the Council's parks committee of the Hermann proposal -- even though he had been in the middle of the negotiations with BSL since the spring of 1996.

"The parks committee would like to have that kind of information before it goes to Council," says committee member Martha Wong, who only learned of the proposal several days before it came up for approval.

As always, Smith refused to comment. He did have his proxy, department spokeswoman Susan Christian, craft answers to a few questions submitted by the Press in writing. Asked why he didn't bring up the issue at a parks committee meeting, Christian wrote that Smith did in fact mention the deal to committee chairman John Kelley, though she didn't say when.

The decision to recommend the 20-year contract with BSL apparently rested with Smith, at least according to mayoral aides Dan Jones and John Baldwin. They say Smith presented them with the plan as pretty much a done deal, and asked them to review it to ensure the city's position was protected. Exploring options wasn't on the agenda.

Options, of course, do exist. The city could have entertained proposals from any qualified bidder who wanted to run the course and chosen the one that offered the greatest return. But Lanier told the Chronicle that an outside consultant had reviewed the proposed BSL contract and determined that bidding out the deal wasn't in the city's best interest.

 

That consultant, Economic Research Associates of Los Angeles, did indeed review the BSL proposal, but the company's two reports -- the second of which was dated September 22, the day before the contract came before Council for approval -- said absolutely nothing about competitive bidding.

The other option would be to consider folding Hermann into the proposed Houston Municipal Golf Association. But while the committee that drew up the association blueprint plugged Memorial, Sharpstown and Brock into the model and came up with projected revenues, savings, greens fees and other details, the group failed to do the same with Hermann to see whether the city might do better than under the BSL plan. Bill Smith is a member of the committee.

The omission was likely intentional. Under the nonprofit scenario, all the money generated by the courses gets plowed back into them. The private operator pockets the profit. And while a private company may be able to operate more efficiently than the nonprofit, its tax bill would likely offset any savings (the nonprofit would be tax-exempt). Even Andy Schatte, who owns BSL along with partner Richard Bischoff, acknowledges that the difference is minimal, if any.

The city's projections show BSL netting at least $3.2 million over the life of the contract. That's $3.2 million the nonprofit could use to improve and maintain the course, or invest in new courses, or otherwise improve the city's municipal golf operation.

The whole point of the Baltimore concept, in fact, is that it offers the public the best possible return for its money. "The math is real, real simple here," says Lynnie Cook, the executive director of the Baltimore Municipal Golf Corporation.

In addition, Baltimore has kept its greens fees exceptionally low. At its two premier courses, which are numbered among the nation's best public links by various golf publications, the basic weekday rate is $11 per player. On weekends, it jumps to $12. By contrast, BSL proposes to raise weekday greens fees from the current $13 to $19.13. The weekend rate will increase from $16.24 to $27.20, an almost 70 percent hike.

Dan Jones correctly points out that the Houston Municipal Golf Association is still in the formative stage, and it's premature to assume that Houston's version of the Baltimore plan will be as successful as the original. "There's a certain element of a bird in the hand with the BSL proposal," Jones says.

But the city just renewed BSL's existing contract last March for two years, and has another two-year option at the end of that term. That's plenty of time to get the nonprofit up to speed and evaluated.

But rather than give it a chance, Bill Smith took it upon himself to give Hermann up for 20 years.

Of course, it wasn't really Smith's doing. As usual, he was acting as gofer for someone else, in this case the Friends of Hermann Park, a tight-knit nonprofit that includes Elyse Lanier, her close friend Barbara Hurwitz, the Laniers' blind-trust manager Kenny Friedman and other insiders.

The group has been working with BSL on the golf proposal as part of its master plan for two years, and envisions a higher-class course along the lines of Memorial. The Friends hired Economic Research Associates to review BSL's idea. And it was the Friends of Hermann Park who negotiated the terms with BSL and Bill Smith and got him to run it through the system to the Council table. (As part of the deal, BSL will give the Friends $250,000 to spend as they please on other park projects.)

Just who deeded the city's public golf course to the Friends of Hermann Park is unclear, since the last time anyone checked, it still belonged to the citizens.

BSL's proposal looks okay on paper. In fact, of all the private operators running city courses, BSL is widely acknowledged to have done the best job. But signing away the course for 20 years without measuring the deal against the nonprofit option seems odd, especially since the administration has been bubbling about the Baltimore plan's potential. Among others, Bill Smith says he's a believer.

Perhaps Smith isn't as big a booster as he claims. Adopting the Baltimore idea was actually suggested two years ago by staff members in the Parks and Recreation Department as an alternative to privatization. But Smith suppressed the concept in favor of the Sharpstown and Brock giveaway that eventually unraveled.

 

A few Council members have balked at the unprecedented length of the deal. Others have expressed vague reservations about the plan and wonder how it will fit with the nonprofit concept. But at press time, the majority seemed to be on board, including Councilman Jew Don Boney, in whose district Hermann lies. Boney believes the BSL deal and its $3.6 million for immediate course improvements is good for the city, though not all his constituents may agree. As the public course closest to the inner city, Hermann draws from various low- and moderate-income neighborhoods.

Boney says he didn't see the consultant's report, which noted that a number of Hermann's players would be unwilling to pay a lot more to play. "Based on the proposed greens fee structure," the report says, "BSL anticipates a decrease in play by approximately 10 percent."

That figure was based on a 40 percent increase in fees. Since that analysis, the proposed fee increase has soared, and though the consultant was not asked to predict additional losses, it's likely that more average golfers will have to travel farther to tee off at one of the city's lesser courses.

Some of Houston's avid golfers have tried to drum up opposition to the BSL proposal. Lee Gordon, a gadfly whose tirades against the Sharpstown and Brock giveaway helped embarrass the administration into killing it, says he can't understand the logic behind the city's latest golfing saga.

"Why does the city have to give this property to someone else," he asks, "when we can make the same money off it by managing it ourselves?"

Maybe Bill Smith can explain.


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