Thursday, December 14, 2006

Golf course could cost Cape up to $40 million

By Don Ruane
The News Press

Buying The Golf Club and turning it into a city-owned golf course or park could cost Cape Coral between $23 million and $40 million, a new city study revealed Wednesday.

The course and buildings need a major overhaul, according to the report, which can be viewed on Restoration accounts for $8 million to $10 million of the estimated costs.

The course, which closed in July, and its infrastructure are in "extremely poor condition" and have "virtually zero value as a golf course," according to a report from the city's economic development office attached to the study.

A review by the Coral Oaks Golf Course staff said restoring the course and facilities will require replacing the grass on fairways and greens, new maintenance equipment and golf- course supplies such as flagsticks and golf carts. Computers, office furniture, kitchen equipment, golf carts and even tables and chairs are needed for the buildings.

Two appraisals are being conducted for the city to determine the land's value should it be used for residential development or for a golf course. The appraisals should be ready in about 90 days.

Previous appraisals listed the 175-acre property's value at between $28 million and $30 million.

The report could be scheduled for discussion as soon as the Jan. 8 city council workshop, Mayor Eric Feichthaler said.

The discussion figures to draw a crowd based on past events and because of all the homes surrounding the course.

Residents turned back the Lee County School District's attempt to buy the property for $26 million earlier this year. The district wanted to build five schools there, but residents wanted to keep their golf- course views and property values intact.

"They are still very emotional. I hear from them daily," said Mary Neilson, who organized neighbors and created her own Web site — — once the school district's offer became known.

She expects many of them to turn out again when the report is scheduled for discussion.

"We're in season now. We'll probably have 20 percent more people who can attend. They'll be there," Neilson said. "I'm pleased they're moving forward on the issue."

Feichthaler said he hopes the land can become a city-operated golf course and that a private developer might be able to add an attractive resort in the present clubhouse area. He would fight attempts to convert the land to residences, Feichthaler said.

Councilman Tom Hair, who adopted the course as his major project after he was appointed in September to fill the seat of the late Councilman Jim Jeffers, said he wants to create a central park to serve all the residents, not just those who golf.

"We'll never be presented with this opportunity again," Hair said. "It comes down to serving the most people."

City staff who prepared the report ruled out a golf course if the new appraisals reflect the previous ones.

"If the appraisal indicates a value of $25 million to $28 million, not including costs to restore the property, staff believes the expense might be too high to use the land as a golf course, assuming approximately 20,000 golfing residents and 60,000 rounds of golf per year," the report said. "Instead, staff believes the land could better serve the entire public if it were developed as a public park. In order to be financially acceptable as a golf course, staff would consider a price of $12 million to $14 million."

It's premature to talk about price, said Scott Siler, a partner in the course.

"Until the appraisals are done everything is speculative," Siler said.

No other offers for the course are on the table at this point, Siler said.

Wednesday, December 13, 2006

Letter to the Editor from Tom Hair

Dear News-Press Editor,

I am pleased with the thoroughness of the Golf Club Feasibility Study. City staff has done an excellent job of addressing each of the scenarios I brought forward to City Council back in October. After reviewing the document only two possibilities stand out in my mind.

The first is that we buy the Golf Club outright and turn it into the Central Park of Cape Coral for all time. We will never again be presented with a situation to buy 175 acres of parkland located near the population center of gravity of Cape Coral at a price commensurate with parkland use. Council just increased, by a factor of four, the amount of parkland required per 1000 residents. Add to this our ever-growing population and we have a clearly defined need for additional recreation facilities. You might ask why not a golf course, and the simple answer jumps right out of the report; a golf course may serve around 20,000 residents while a central park will serve all 165,000 of us. It is simply a case of doing the most good for the most people.

The second is that we provide incentives, possibly through a land use change, to allow a private resort company to buy and operate the Golf Club as a golf and mixed-use resort. The previous owners could not turn a profit as currently zoned, so we have no alternative but to provide an avenue by which a new owner can. This is the most straightforward solution and has little financial impact on the city, but at the loss of being able to write our own community destiny for the land.

One final comment concerning the last line of exhibit one; annual operating profit and loss is a bit of a misnomer when considering investment in parks and recreation. The city has a duty to provide recreational facilities to all its residents and is budgeted accordingly. Any monies spent or debt incurred is an investment in this obligation… parks and recreation is not a profit center for the city. Additionally, I do not suggest that if we buy the Golf Club that we spend beyond our current parks and recreation budget, where possible, but to redirect that budget to attain this long-range goal of a Central Park of Cape Coral that would instantly become the centerpiece of our city parks system.


Thomas W. Hair
Councilmember, District One

Tuesday, December 12, 2006

Family Time

Good Evening,

I have posted the Golf Club Feasibility Study prepared by city staff on our web site This report was prepared at request of the mayor and council. Councilman Tom Hair will ask that The Golf Club be placed on the agenda for discussion possibly as early as the Monday, January 8th meeting. Check the web site again after the 1st of the year. I will post the date and time of the meeting you will need to attend.

Please respect the mayor and councils family time during their Christmas break. Thank you.

Merry Christmas & Happy New Year,
Best Wishes,

City of Cape Coral - Golf Club Feasibility Study

(Click on Link above for a printable pdf version)

City of Cape Coral

Golf Club Feasibility Study

December 12, 2006

Executive Summary

The City Council directed staff to prepare a report on the feasibility of three scenarios for the Golf Club:

1) City purchase the entire property and operate it as a park or a golf course;

2) City sell surplus lands to help in financing purchase of the entire property;

3) Public-private partnership in which the private sector would develop a hotel-resort, and the city would own and operate the golf course.

In addition to these scenarios, in this report staff is presenting information on a fourth scenario:

4) A fully private-sector solution, in which a developer would purchase the property and operate both the golf course and a resort development.

The following table summarizes the impact of the four scenarios.

Exhibit 1



100% City



100% City,

Surplus Lands


Pvt. Resort/

City Golf

# 4

100% Private Investor/

City Incentives

Tax Revenue





Facility Type

Golf Course or Park

Golf Course or Park

Major Resort or Golf Course

Major Resort & Golf Course

Number of Residents Served

Golf Course: 20,000+

Park: 160,000

Golf Course: 20,000+

Park: 160,000

Golf course: 20,000+

Tourists and Local Events


Tourists and Local Events

Cost to City

$15-30 million for acquisition;

$8-10 million for restoration

$15-30 million for acquisition, minus profit on land sales;

$8-10 million restoration

Some govt. incentives

(to be negotiated);

discounted land cost

Government incentives

(to be negotiated)

Non-tax Economic Impact





City Image





Annual Operating profit/(loss)





Golf Club History & Status

The Golf Club is an historic facility in Cape Coral. While it is often presented as a Cape Coral landmark, and while it was most recently open to the public, it is owned solely by private-sector investors and received no city government funds.

The properties surrounding the Golf Club and the adjoining residential condominiums known as Banyan Trace enjoy the tranquil golf course environment and may have higher property appraisals due to this amenity, but they do not have an equity or ownership interest in the golf course property.

In recent years, the Golf Club and the parking lot immediately west of it were acquired by Mr. Scott Siler and partners. They made some capital improvements and operated the course for several years. While the clubhouse provided a retail shop, a cocktail lounge and luncheon meal-service, the larger gathering rooms and food-service on the second floor were neither renovated nor opened for business due to code considerations. A portion of the office space on the main floor is occupied by the sales office of the Banyan Trace condominium development.

Early in 2006, the Siler investor group announced that it was losing money operating the golf course and began searching for buyers. One of their first prospects was the Lee County Public Schools, which withdrew its offer to purchase in the face of public opposition. Mr. Siler reports two other potential buyers withdrew their offers because of concern about the time and uncertainty associated with changing the future land-use and/or zoning so as to allow larger resort development.

As of December, 2006, the golf course, closed for many months, has deteriorated to a point beyond rehabilitation. The investors have sold off the irrigation heads, all hardware, golf carts, etc. associated with golf course operations; and have also divested the restaurant and bar fixtures and equipment. The investors have maintained a small business office on the property.

For details on the current conditions and on issues related to refurbishing the course for golf, please refer to Appendix 2, “Coral Oaks Staff Report.”

Scenario One

City purchases entire property outright and operates golf course.

City staff reviewed the two appraisals commissioned by the School Board of Lee County last year. The two assessments were completed on April 29, 2005 and May 10, 2005. The land was appraised as a residential use as its highest and best use and was valued at $28,030,000 and $30,655,000. Additionally, another appraisal was completed on July 21, 2006 for Mr. Siler. The value was again determined to be $28,030,000. Mr. Siler has said that he believes the highest and best use to be residential development.

Pursuant to the City Council’s direction, the Real Estate Division has ordered two appraisals. The assumption of one appraisal will be that the highest and best use is residential. The other appraisal will assume the highest and best use is as golf course/park land. We anticipate the appraisals will both be completed in about 90 days.

If the appraisal indicates a value of $25-million to $28-million, not including costs to restore the property, staff believes the expense might be too high to use the land as a golf club, assuming approximately 20,000 golfing residents and 60,000 rounds of golf per year. Instead, staff believes the land could better serve the entire public if it were developed as a public park. In order to be financially acceptable as a golf course, staff would consider a price of $12-million to $14-million.


To illustrate the potential for financing costs for purchase by the city, the Financial Services Department completed a review and determined that a $15.8-million dollar loan would cost about $25-million dollars over the course of a 20 year loan ($1.26-million per year). A $30-million dollar, 20 year loan would cost about $47-million (about $2.3-million per year).

Once a final purchase price is determined, the Financial Services Department can make recommendations to the Council on financing options.

Costs to City

A major factor when considering this scenario is the tax ramifications if the property is taken off the tax roll. Below is a table which lists the taxes levied both in 2005 and 2006:

Exhibit 2



Ad Valorem Taxes

Market Assessed Value



Total Tax Amount



City of Cape Coral

Solid Waste-MSTU



City of Cape Coral

General Funds



City of Cape Coral

Debt Service



Non Ad Valorem Taxes

City of Cape Coral

Stormwater Annual



This scenario creates an estimated net operating loss, excluding debt service. Please refer to Appendix 1, “City Golf Course Operating Cost Analysis.”

Scenario Two

Sell surplus city lands in other locations, including land slated for future park use, to offset the cost of purchasing the Golf Club property.

Currently the City owns numerous parcels which have not been developed. While they are vacant, most of these parcels are deed restricted or have already been determined to have a “public use.” Some “public uses” include parcels needed for lift stations, park land, and other uses. For this report, the full list of these owned parcels has not been examined, but further detailed investigation is possible.

Upon speaking with the Real Estate Division, Parks and Recreation Department, and the Public Works Department, it was determined that the only surplus land currently available, and not determined to have a public use, is located in phase 4 of Festival Park. The City owns 44 properties: 13 parcels are vacant waterfront, 29 parcels are vacant off-water, and two are improved properties off-water. This land might not be necessary for parks use if the Zemel pre annexation agreement is fully implemented. If other properties in Festival Park were sold as surplus (in phases, 1, 2, or 3) then this might negatively impact condemnation proceedings currently underway (primarily in phase 3).

This scenario creates an estimated net operating loss, excluding debt service. Please refer to Appendix 1, “City Golf Course Operating Cost Analysis.”

Scenario Three

Change future land use/zoning to allow development of a resort condominium/hotel project, in exchange for selling the remaining golf course to the City at a reduced price.

This option would develop the property into a destination location which could include retail, hotel, and restaurant opportunities, but also maintain the golf course as a public facility. This scenario could create private sector jobs and a new private-sector tourism asset.

In the event the Council chose this option without further consideration of other options, the Economic Development Office could be the point for marketing the property and finding investors to develop the resort project. It is possible that even with the golf course available as a resort amenity at no expense to the developer, some city financial incentives might be required to make the project feasible.

This public-private partnership could yield a prime asset with a spa, meeting space, a high-class championship golf course and some resort retail. In this scenario, the developer would sell the golf course land to the City, which would restore and operate the facility.

This scenario creates an estimated net operating loss, excluding debt service. Please refer to Appendix 1, “City Golf Course Operating Cost Analysis.”

Scenario Four

Private sector investors purchase the entire property, develop a resort facility, perhaps with city incentives, and operate the golf course without any further city involvement.

The forth scenario is similar to Scenario three, but assumes that a developer will purchase and develop the property, build a hotel, spa, and/or conference center and operate the golf operations. This option would likely require economic development incentives, which can also provide the council with leverage to assure the size, style and completion of the resort property development.

In this scenario the city’s investment would be limited to incentives. In addition, since it would be privately owned, the entire property would be fully taxable. It could create a major tourism asset including top-quality golf, equal to the best in southwest Florida, and preserve the amenity the surrounding residents currently enjoy.

The Economic Development Office is in a position to discuss this scenario with investors and to design an incentive package for the Council’s consideration.


In preparation of this report, the Economic Development Office and Parks and Recreation Department have toured the facility and carefully evaluated its condition and its prospects for development under any scenario. Appended are:

1) City Golf Course Operating Cost Analysis;

2) Coral Oaks Staff Report;

3) Economic Development Office Report.

Appendix 1

City Golf Course Operating Cost Analysis

Operational revenues would vary as compared to Coral Oaks due to the difference in the way the course would most likely be structured. Coral Oaks was built as a reasonably priced golf facility which offered limited amenities, a small club house, small locker room facilities, and limited food offerings (hot dogs, chicken fingers, sandwiches, small bar.) The Golf Club could be managed as a more upscale golf facility which would assume more amenities including a full restaurant with a bar, luxury locker rooms, and the new or restored club house with possible adjoining hotel and retail.

Club passes would also affect revenues. Some multi-course cities charge separate rates for each course while others charge one rate. For this revenue estimate, it is assumed that one pass would enable the user to golf at both courses. This assumption, if changed or altered, would impact the revenues. Total annual revenues are estimated to be between $1.6 million and $1.75 million.

Expenses would be similar to Coral Oaks. There would be economies of scale if the City would operate both golf courses. Some savings could be realized by purchasing fertilizer and other consumables at a higher volume. The major costs would be labor. It should be assumed that both golf courses would be directed by one Golf Course General Manager and one Greens Superintendent (currently employed by the City.) Additional management positions would be: one Assistant Golf Professional, one Assistant Superintendent for the Golf Club (Coral Oaks currently has one of each, already), along with a full staff.

When comparing acreage, the Golf Club is approximately 50% larger in mowable land (120 acres versus 80 acres at Coral Oaks.) In total acreage, the Golf Club is 178 and Coral Oaks is 128. This increase in acreage might equate into higher staff costs and subsequent equipment costs.

Another major factor is the interfund service payment. This transfer is a significant portion of the expenses and changes each year.

Assuming the interfund payment stays consistent, the annual total operating expense would approximate $2-million.

These numbers indicate that the second golf course would operate at a loss of $250,000 to $400,000 a year.

Appendix 2

Coral Oaks Staff Report

Allen Manguson, Golf Professional Manager and Jim Foster, Golf Course Superintendent, inspected the Golf Club property and buildings. In their combined opinion, the Golf Club is in need of complete re-grassing of all greens, tees, roughs and fairways, and new sand in bunkers. The existing vegetation is comprised of a variety of weeds including broadleaf, woody ornamentals and goose grass. Bermuda turf currently exists on about 40 percent of the property. If the city wishes to pursue purchasing the property, it is recommended that a site visit be conducted by USGA Greens agronomists to further evaluate the Golf Club’s condition.

The golf course is in need of irrigation upgrades and repairs. Mr. Siler reported that the golf course was completely renovated in 2001 by Chip Powell, Golf Course Architect, with the construction completed by Highlands Golf Construction. Mr. Siler also stated that the renovation included all new underground irrigation and irrigation heads.

The irrigation is a hydraulic system. It was found that the hydraulic system irrigation control boxes were recently removed and all lines to those controllers were cut at ground level. If the Golf Club is purchased, the irrigation system should be upgraded to an electrical system. This would improve the maintenance operations. The irrigation pump station was not part of the renovation process and its age cannot be determined. The pump’s ability to function is in question and could not be tested because of missing controllers and sprinkler heads. Finally, some additional irrigation equipment may be needed to ensure that new turf would flourish in all extreme weather conditions.

The golf course maintenance building and compound are antiquated and debilitated. Even if the facility were to pass inspection, it might not be usable. There are gasoline pumps and tanks on site but staff could not confirm if they are in working order.

The building has been stripped of all merchandise displays, kitchen equipment, computers, dining room furniture and office furniture. Mr. Siler reported the upstairs portion of the building has not been opened; they did not meet code standards. The second floor of the building offers beautiful views of the golf course and is divided into four sections: two meeting and/or dining areas, a large kitchen area and large storage area. The upstairs kitchen equipment has not been utilized since the reopening in 2001.

To reopen the Golf Club to full scale golf operations, significant resources would be required. Golf course maintenance would need an equipment pallet, fertilizers, fungicides and all chemicals. All golf course supplies would be needed, including flags, flagsticks, cups, coolers, benches, rakes, tee signs and tee markers. The administrative area would need computers and office furniture. The golf shop would need merchandise and displays, computers, point of sale stations with RecTrac, furniture, office supplies, scorecards and golf carts. The food and beverage operation would need all new kitchen equipment, and operating equipment, such as point of sale stations, utensils, dishes and tables and chairs.

In total, the City could expect to spend between $8-million and $10-million dollars for total restoration, if costs do not escalate as in the past few years. If trends persist, staff would expect an increase each year to be approximately 15%.

By way of illustration, New Smyrna Beach, Florida is currently completing renovation of its municipal golf course at a cost of $2.8-million. It is scheduled to reopen on December 15, 2006. They began their renovation project on April 17, under the direction of Bobby Weed design in Jacksonville Florida. The design expense is $220,000 and the construction is being completed by Southern Golf from Tifton, Georgia at a cost of $2-million. The City is using its departmental resources to complete renovations to the clubhouse, landscaping and signage at a cost of $550,000.

As further illustration, the City of Plantation, Florida purchased a golf course in 1999 that was 50 years old and had been shut down by a private owner in 1997. The golf course was completely renovated, and the existing building was torn down and replaced. The entire project was approximately $10-million. This price does not include the cost of the property which was approximately $7.3-million.

Appendix 3

Economic Development Office Report

Economic Development Director Mike Jackson toured the Golf Club facility for about 90 minutes on November 1, 2006. In his opinion, the course and its infrastructure (greens, irrigation, structures, parking lots, etc.) are all in extremely poor condition and that the course and its buildings, as they are today, have virtually zero value as a golf course with ancillary amenities. He believes this may be positive for private sector developers, particularly if they envision major large-scale development. Such a project would likely require a larger footprint than now exists for hotel/restaurant/retail uses, which would mean reconfiguration of the property. These developers would contemplate pricing to be at a “salvage” rate.

The major concern for an investor is return on investment.

In Mr. Jackson’s opinion, unless the price of the property drops very significantly, there is no likelihood that an investor could achieve acceptable returns without a partnership with the city through an incentive package that will both facilitate the development and – through “clawbacks” – ensure its completion.

At this time the underlying future land use is recreation. This land use category does not provide for residential components, including even condos, hotels, etc. The current zoning – R3 – is not consistent with the land use. The parking lot area west of the golf club property carries a future land use and a zoning category of multi-family. Therefore, without modifications of either the land use or the zoning, development as a resort would be virtually impossible.

To facilitate development, the city could initiate land use or zoning changes. The benefit would be that the property would be more quickly developable, reducing developer risk. The downside is that the property with entitlements might increase its market value, causing higher project costs. If the city initiated these entitlement changes, it would be of greatest benefit to investors if the changes provide maximum flexibility throughout the property. If the changes were not sufficient, or were too restrictive, the property might be rendered undevelopable.

Many questions will be asked by interested investors and developers including:

  • Is there sufficient area for building, parking, and/or a structure that can house a conference center and/or a large hotel?
  • What issues must be resolved in order to achieve neighborhood support?
  • What certainty can be created around permitting issues?
  • Are additional incentives available from other government units, including the Lee County Tourism Development Authority.