Short Stroking - Proposed Contract Changes For Sherrill Park Golf Course

The Sherrill Park Golf course has been very good in some ways but because of the current extremely lucrative management contract with RGI, Inc. , coupled with losses from operations it is a drain on the taxpayer funded General Fund.

Rather than looking at the city staff’s presentation of “TOTAL revenue” from the golf course which is City revenue from green fees, currently 10 percent paid by RGI, INC.  to the City for carts, pro shop, liquor, and food, and the very substantial current gross revenues  accruing to RGI, INC. under the current contract,  the City does not disclose  total golf course revenue.  City leadership seems to be approaching the problem in a very backward manner. It seems that to the detriment of everything else, the top priority is to keep Ronny Glanton at the helm of the golf course, regardless of what his company removes from course total revenue. The proposed new agreement will continue to  provide him with his personal current expenses  – travel,  entertainment, donations, PGA tournament entry fees, personal automobile costs, medical insurance payments,  payment for retirement - all that from revenues earned from the course, rather than paid from Mr. Glanton’s salary, as such expenses should be.    It is also very curious why the council’s seemingly top priority is to keep Glanton as course manager regardless of the losses his management is directly responsible for.

Each time Mr. Glanton appears before the Council, most members of the Council and city staff praises him effusively.    Could it be they are not aware of the direct link between his management operations mistakes that have created over a million dollars in losses?  Yes, he has been there for twenty eight years, he’s ingratiated himself with city management and Council, but personal relationships should not matter when negotiating a business contract, which Glanton has.      

At the council meeting last Monday, city staff (primarily David Morgan ), made a presentation about some of the proposed changes to the golf course. As always happens, everyone praised and fawned over Glanton again. But there were some more interesting things presented.  A copy of the handout can be downloaded from the city website at http://www.cor.net/modules/showdocument.aspx?documentid=5517

The first item in the presentation was titled “Guiding Goals of the Review”. The first item under this section was “Eliminate the need for ongoing transfer/operation subsidy into the Gold Fund”. For years now Golf fund losses have been siphoning up taxpayers money. Thid type of behavior wold not last for long in the corporate world.  Executives of private companies would need to maintain positive, or at the very least, a neutral cash flow position. If there were not enough income they would need to either ensure fewer losses by improving the efficiency of their business with quality products, better pricesor in some way reduce expenses. Private companies need to make money to stay in business.   If private companies executives fail to perform as above, their board fires them.  Such does not seem to be the case with the Sherrill Park Golf Course. When the golf fund, an enterprise/business type fund has experienced the massive losses it has over the last four years, what has happened?  The city leadership ignores the losses and just bails out the golf course with money from the general fund.

Further, the management of the City of Richardson has decided to make a new plan. Their new plan, according to the “Guiding Goals of the Review”, as mentioned earlier,  is to “Retain Ronny Glanton as the Head Golf Professional”. In the process, that means keeping RGI as the primary contractor who runs the golf course. It is a mystery why they would continue to do this. Under his leadership the golf fund has gone from being self-supporting to needing more and more taxpayer money to keep it going.

So, if Glanton is so good, why has the city transferred almost a million dollars out of the general fund to support a shortage of funds in the golf course? Part of the reason probably is because of how much money RGI makes from various operations at the golf course estimated to several million dollars estimated to be about $4.3 million for the past 4 years. See http://graphics.dc-tm.com/SherrillParkGolfCourseAnalysis.pdf for a previous financial analyses of the Golf Course Fund.

Records have been requested many times over the years by many people to find confirm what Glanton’s take is from the golf course and associated activities and have been met with iron walls. It seems none of that information will ever be produced. Even records for the non-profit are hidden. Just this week Glanton refused to open the book to the non-profit and told the person the finances of were none of their business. Under most circumstance the books of a non-profit are required to be produced if a person asks for the information. This lack of openness makes it seem there are things they really do not want people to know.

A few years ago it was discovered that Asst. City Manager David Morgan sat on the board of this non-profit as did the city attorney, Pete Smith, who billed the City for that non-profit’s incorporation papers.    Very shortly after their membership was disclosed, both resigned from the board of the non-profit.

Things must be done at the golf course in a more transparent manner.

Several months ago the city staff gave another presentation to the council about the golf course, http://graphics.dc-tm.com/SherrillPark-20120712.pdf . Debt service payments totaling about $6 million for the  Richardson Sherrill Park Golf Fund, was ALWAYS SET UP TO BE PAID FROM  GOLF FUND REVENUES.  The annual figure for that debt service is $500 to $600 thousand annually.  A significant amount, but one the Golf Fund paid, despite the drain on course revenues caused by the excessive contract terms of Glanton’s management contract.   Staff showed examples of other cities that paid for debt service on their golf courses through their cities’ general fund.  BUT THOSE CITIES ALWAYS SET IT UP TO PAY SUCH DEBT FROM THE GENERAL FUNDS, unlike Richardson. Sherrill Park Golf Corse was setup to be self-sufficient and pay its own way. Annual transfer into Sherrill Park are making it look worse and worse as the years go by.  

 However, city staff the other night recommended the entire golf fund debt payment for the amended budget year of 2012-13 be paid by the general fund.   For the remaining eight years of debt service, the Golf Fund will pay HALF and the General Fund will pay half.    How does one go from saying “we want to eliminate ongoing transfers and subsidies”  but use  general Funds for Golf Fund debt service, which is the exact same thing as using it to pay for losses. This is where the shell game begins. It is obvious in each CAFR that there are “Transfers-In” to the golf fund each of the past several years.  Those transfers were to cover operational losses.    The first premise of the Sherrill Park Course Review was to “ELIMINATE THE NEED FOR ONGOING TRANSFERS/OPERATION SUBSIDY INTO THE GOLF FUND”   So what does staff do?  Instead of losses covered by the General Fund, they cover Golf Course debt from the General Fund.

Interestingly enough, another one of the “Guiding Goals of the Review” will be to “Increase Operational Transparency” of the golf course financials. This will be a welcome event. For many years citizens have complained about the total lack of transparency when it comes to the golf course. To this day we have no public documentation on the complete financial picture at the golf course.

In the “Operating Structure” section of the presentation, it is proposed that Glanton’s company, RGI, be guaranteed a NET Profit of $200,000 a year. If things go well, the net profit may rise to $225,000 a year.  This is very unique contract and quite unlike any normal contract the city enters into.   But for some reason, Mr. Glanton’s company is NOT a normal contract.

Normally, the city takes bids for contracts and then awards the contract to the lower qualified bidder. The city make no guarantee of what any company will net in any other contract I know of.

How does the city’s new proposal of the golf course contract stack up with the charter? There seem to be three items in the charter that will conflict with the city staff recommendations for the new contract.

Section 21.01 of the Richardson City Charter states: “No officer or employee of the city shall have a financial interest, direct or indirect, in any contract with the city, or be financially interested, directly or indirectly, in the sale to the city of any land, materials, supplies or services, except on behalf of the city and any officer or employee guilty thereof shall thereby forfeit such person's office or position. Any violation of this section, with the knowledge, expressed or implied, of the person or corporation contracting with the city council shall render the contract involved voidable by the city manager or the city council.

Ronney Glanton get paid $1,000 a month by the City of Richardson, on top of his contract. That $1,000 a month would seem to qualify him as a city employee of some sort. That would also seem to make it a violation of the charter for the City of Richardson to sign a contract with his company, RGI, Inc.

Section 21.02 of the City Charter states: “… All contracts, of whatever character, pertaining to public improvements, or the maintenance of public property of said city, involving an outlay of as much as ten thousand dollars ($10,000.00) shall be based upon plans and specifications to be prepared and submitted to and approved by the city council, and said plans and specifications shall disclose clearly each item constituting a material element entering into the cost of the subject matter of the contract; and after approval by the city council, advertisements for the proposed work or matters embraced in said proposed contract shall be made, inviting competitive bids for the work proposed to be done, which said advertisement shall be published in a local newspaper at least once.”

Section 21.02 seems to indicate that there must be competitive bids before the signing of ANY contract. Such does not seem to be case with the current proposal by the city staff on the proposed RGI, Inc. contract. Quite the opposite, the city leadership seems to have determined they do not want to attempt any attempt to find any other company to run the golf course. This seems to be in direct contradiction with what the city charter demands in order to beter protect the citizens from questionable city management and council actions.

Section 21.03 goes on to define the procedures of how to acquire competitive bids.

Why should the golf fund be handled in any different manner than all of the other enterprise/business funds? The unique handling of the Golf Fund once again indicates that the taxpayers will be stuck with the shaft, while the contractor once again walks away with the gold.

Some of the proposed changes will be welcomed and very long overdue such as more transparency, but there is so much more the city council could do for the citizens of Richardson, the golf course and its financial stability.

Now the question becomes, will the city leadership and the city council members step up and do the right thing for the citizens of Richardson.