Aurora Country Club

Dear Fellow Residents of Aurora:
Re: City’s proposed purchase of the former Aurora Country Club (“ACC”) Property

The following points were made in a recent e-mail that is being spread among Aurora residents.  Unfortunately it is based on incorrect information, poor assumptions and the unfounded fears of a few residents that are a very small minority trying to have a large voice.  It is our experience that the negatives voiced by a few are never aggressively countered by the common sense majority based on the theory that the minority is so small that it cannot win.  Our fear is that people will be as misinformed as the author(s) or will be too shortsighted for the long term benefit of this great community.

As the e-mail states “As citizens of Aurora, we have many questions and concerns regarding the purchase of this property.”  Those questions and concerns are repeated below along with the actual facts/issues presented in the italics below each of the 8 points mentioned and the conclusion.

1)   The city does not appear to have a written business plan, detailed budget or defined20written strategy for operating the 226 acre ACC property.  Council’s and the Mayor’s comments were vague and were stated as a “giving it a shot” approach to operating the golf course.  There is no apparent recognition of the costs to maintain the 12 buildings, swimming pool, or golf course (the course alone costs nearly $450,000 per year to maintain).  These costs are readily available from the former ACC treasurer and we would like to see them factored into the city’s equation for maintaining the overall property, as a golf course or simply as green space.  There is no clarity regarding what the city would operate and what a third-party firm would operate, nor who that firm might be.  Twinsburg and Solon and other municipalities have purchased golf clubs and they have had to subsidize operating losses each year…and those properties are FAR simpler to maintain than ACC.

The former ACC Treasurer (who failed to pay the City and State Taxes on his watch) fails to point out that The City put forth an opportunity to bid to at least three, and as many as five, Golf Course Management Companies.  After reviewing the proposals the city began negotiations on a lease.  Currently there is a preliminary contract negotiated that puts the budgeting responsibility on the tenant, which is to be a golf course management company (it obviously cannot be finalized until the City owns the course).  If the Property cannot make it as a course then the City will control its ultimate use.

a)     If it doesn’t work and someone else owns it then it has the chance of becoming anything.  While it is currently zoned for 80 houses, if the City declines to take the opportunity presented to create “green space”, then a=2 0developer would have good precedent based on adjacent parcels being rezoned to obtain zoning for close to 300 homes.
b)     If the course is successful (if the city supports this great golf course it will be successful), then the city will benefit economically from taxes and profits.  According to EOS, the proposed management company, the course will be profitable (largely because there is no debt to the lender) which is evidenced by the fact that EOS is willing to bet $300,000 in working capital.  The naysayers of course are betting nothing.

The concept that city courses need subsidies is an incorrect conclusion.  Ownership typically does not dictate whether a course needs subsidy or not, it is the quality of the course and it’s business model.  This course should not be compared to lesser quality20city courses but to higher quality public play courses such as Stonewater (less land recently sold for more than $4,000,000), Little Mountain, and Red Tail.
According to EOS, Aurora Cou ntry Club is a great course that will be utilizing a business model similar to these other high quality courses that divorced themselves from the country club model and became profitable.  Business rounds will be deductible (where country club dues were not) and busy families can pay as they play (compared to monthly dues that are charged).  In addition, Aurora Country Club has the added revenue opportunities of pool passes, sledding passes, meeting halls, reception areas, weddings, etc.

2)  The purchase price City government has agreed to is $3.1 million plus $200,000 in added costs.  In a marketplace of rapidly declining real estate values a Council member stated it was a good deal as it stands and that Council had the authority to go ahead with the purchase regardless of public opinion.  The purchase price has not been negotiated. We would like to know why Mr. Banbury’s initial offer was accepted without negotiation.

The assumption that declining real estate values make this asset worth less is fictitious.  Aurora property values have lost only a small percentage of their value.  The demand in the community remains strong.  Only those who must sell are selling at a steep discount.  Additionally, the 226 contiguous acres of this beauty along with the existing clubhouse won’t come along again.  Less demand for an asset only means that motivated sellers might take less for that asset.  The fact that this asset was purchased by an investment group (Aurora Recreation LLC) indicates that it was purchased with the intent to profit and that it can withstand the economic conditions for its profit interest.  It also means that their perceptio n of value must be much higher than “concerned citizens.”

Mr. Banbury is a real estate developer who happens to be an Aurora Resident.  He has stated that his first priority was to preserve the land for the City; however, he has also stated that their company would make more money developing the land.  There is no debt/mortgage on the property; this is does not appear to be a distressed sale.

The 17,000 sq. ft .. clubhouse alone would cost over $2,000,000 to replace not to mention the several hundred thousand dollars of equipment and fixtures.  If you deduct the value of the improvements the land is being acquired for less than $5,000 an acre.  This is an outstanding deal.

3) The Mayor stated in his proposal that funding would come from the Aurora Land Fund.  (Voters approved in 2001 the creation of a Green Space Fund of $6.5 million financed by the sale of Aurora municipal bonds and so far has purchased 1550 acres of land). In his report, he did not mention the fact that there is less than $80,000 left in this fund.  This fact came out later, only as a result of a question to Council from a resident.

The Mayor and the Council have stated that they are going to sell certain, currently owned, parcels to pay off this new debt.  The fact that the City is borrowing the money at what is most likely less than 2% interest shows us that our government is smart enough to use cheap money now in order to secure a higher sales price in the future.  If the Council waits for prices to come back up, this 226 acre parcel in the heart of our city with a large commercial pool, the 2nd largest meeting areas in Aurora, and contiguous to other current green space will not be available, or will only be available for millions more.

4) Several Council members said that if the golf course operation fails, they would be satisfied to have it as green space.  It would appear that the city’s true interest is buying the property as “green space”. Yet, there are no funds available to do so, nor is there voter authorization to do so, given that the Land Fund is virtually exhausted.  Only after further resident questioning did city officials state the y would have to  issue $3.3 million of new bonds/notes to fund the purchase and then pay off the debt with the sale of currently owned green space land (which for some reason in now expendable).  When? That time is unknown.  To Whom…that is also unknown. Is this is a classic case of “buy high and sell low”  In t erms of beautiful green space…if the golf course were abandoned, within a year the former course areas: tees, fairways and greens, would look like eyesores, not attractive natural areas.

This is not a classic case of “buy high and sell low.”  It is a case of taking advantage of an opportunity and preventing a problem.  The premise of a Land Fund is to protect and to control development.  “Trading” good land for better land is a good idea. Furthermore, the improvements made to this land make it truly unique to anyone with a creative mind.  T he clubhouse and cart paths alone make this incomparable to other assets in the Land Fund.  Redeployment of unused acres provides countless opportunities (cross country skiing, snowmobiling, pool, camp, walking trails, ball fields….).
Additionally the equipment being acquired can be employed to maintain the course with no additional capital costs.  Mowing and maintenance, if not as golf course but simply green space, would be a fraction of the costs described by “concerned citizens.”
As stated above the City’s low cost of capital and ability to take advantage of this opportunity in fact makes this acquisition the perfect “Buy low sell High” scenario.

5) City authorities have apparently refused to obtain a current app raisal for the property.  The existing appraisal is over 2 years old and was completed under the assumption of a going golf course operation with several hundred equity members owning the club and paying predictable monthly dues and fees in a good economic environment. (And, it still failed as an entity). As we all know, economically things have gone downhill radically since then.  But yet, No appraisal, and No negotiation of the purchase price. Our question is…why not?

The City has been negotiating the purchase of this property for 8 months.  The City persuaded Aurora Recreation to maintain the course in the fall and winter and to incur substantial costs associated with getting the Property properly clean of all encumbrances and lia bilities.
A current appraisal is meaningless in the current economic times if the intent is to hold the asset long term.  However, the Court Appointed Receiver did perform an appraisal.  Both the current and two year old appraisals confirm that the land is worth in excess of $5 million dollars and that the highest and best use for the land (for the owner) is as a residential development.
The reason that it failed as a private club is that successful private clubs are dying based on the lifestyle of today’s family.  Residents expect more from the community and tax laws have killed the cou ntry club.  Public play, country club caliber courses w ith country club amenities are now more successful because they offer the country club experience to families that could not afford or were willing to pay for that experience for a “few times a month.”

6) According to a former board member of ACC, the ACC members attempted to sell the club directly to the city a few years ago for $2.5 million…that offer was refused.  We do not understand why this lower offer price was refused and why this higher offer is acceptable in a far worse marketplace for property and golf course operations.

The above information is incorrect.  According to the f ormer President of ACC the City offered to buy the Property for 3.5 million plus certain liabilities.  The members rejected the offer and wanted 3.8 million plus certain costs.  The City has gotten a better deal, clean title, and no liabilities from Aurora Recreation.

7) A few Counci l members have stated that it is necessary to buy this property to cut off a developer who has expressed interest in purchasing the land and then building 500 homes, which would put excessive stress on the city’s infrastructure. The maximum number of homes that the property could support per current zoning (which Council, of course, fully controls) would be 84 units.  So, this justification/rationale would perhaps appear to be another scare tactic by the city’s government to push through an emergency measure to complete this purchase NOW.  Even if Council did for some reason, rezone this property to higher density…the EPA and a raft of other issues would likely limit building sites severely, and current ingress/egress would not support the traffic generated by 500 homes.  Nonetheless, has the city’s government considered the added tax revenue that could be generated versus anyrequired infrastructure enhancements?  We don’t believe so. Is it the case that spending more of our tax dollars, stressing the city’s budget and putting each resident further in debt is more acceptable in this case than looking at the creation of new tax base opportunities?

It would be a hard argument to sell that this property shouldn’t be rezoned for additional housing, especially if it is true that the property cannot make it as a golf course.  This property sets up very well for development (maybe or maybe not for 500 homes but at what number does it beco me a negative for the city?  Most residents would prefer to protect against any additional growth when possible—be it 84 homes, 200 homes or 500 homes).  This property is so vast and beautiful that many business models could work here for developers.  The=2 0Fact that Mr. Banbury’s group, who are themselves developers, bought the Property implies it is developable.

Unfortunately, from a City’s perspective, residences are the least beneficial and most expensive on a tax base.  This is why cities without industry (such as Shaker) have such high taxes.  It is why Hudson recognized that they had to limit resident growth and why Aurora is trying to do so now.

Furthermore, where is the discussion of the jobs created and taxes collected if it maintains itself as a golf course and community center?  It would provide meeting, wedding and banquet space that are currently not available within the community.  According to the Advocate, area golf courses employ 40 plus people (not including recreation amenities such as a pool, catering, restaurant, wedding hall etc).  C2These jobs are significant in a town the size of Aurora; do we want to lose these jobs in today’s market?
As for the current homeowners living adjacent to the Property, their home values will crash should the course be developed.  Are “concerned citizens” looking out for them too?  Do any of them live on or very near the course?

8) Regarding the Ohio EPA and Federal EPA, because of the use, over many years, of chemicals /pesticides / herbicides on the operating golf course, all of the streams and lakes on this property are on the EPA “Watch List” for environmental pollution.  Should the property lose its golf course operating status, has city government investigated the possibility of or potential liability from an EPA cleanup order? Have they conducted any environmental impact studies?  Could this be a ticking time bomb?  Additionally, because of the golf course “pollution”, the property is NOT considered “Green Space” for purposes of conservation fund assistance.  Therefore, financial or operating aid would likely be unavailable from any of the conservation funds.

We are betting that the previous lenders and the most recent, Aurora Recreation LLC, were20comfortable with the environmental studies conducted and have more knowledge of the environmental status of the property than “concerned citizens.0  They would not have lent on an environmentally polluted piece of property.  This is just ranting and fear mongering.

These are only a few of the questions that need to be asked.  Action needs to be taken by Council and the Mayor to conduct proper due diligence and to provide adequate studies, answers and documentation prior to purchasing this property at any price.  As Concerned Citizens of Aurora, we implore every resident to voice your opinion on this matter.

And remember while everyone argues over the positives20and negatives of this acquisition that the investment group will most likely get tired, impatient and move quickly to achieve its profit motive.  Under the current arrangement the course will open as a golf course within weeks. The pool will be open this summer.  A restaurant and rec center are in the works as well.  If the course is not acquired by the City, the investment group could cease maintaining it as a golf course and then it will have only one option which is to develop it into something the residents don’t really want.

It is our understanding that the investment group, at its own expense, paid to maintain the course in its championship condition even though it was shut down with the city and the residents in=2 0mind.  Its preference was to do something good for the community at a less profit than to maximize profit at the detriment of the citizens (due to the ties that Aurora Recreation has with the community)

Mr. Banbury has also stated that two other national builders are interested i n the property and that he will move forward in that direction should the City decline their offer to sell it to them first.

If we don’t attend the meeting on March 9th, we could very well be $3.3 million dollars more in debt by the end of March. That, plus the $6.5 million for the existing land purchases in the Land Fund, added annual operating and carrying costs for the ACC property, and loss of the current ACC tax revenue could easily amount to a debt/tax burden of $3500 or more for each and every homeowner in Aurora.

Most importantly the City will have acquired property with value in excess of $5 million dollars.  We will take $3500 of debt (at a very low interest rate) for $5000 dollars of assets. However, as stated by the Mayor, the City intends to sell less desirable land to reduce this debt and, worse case, it can eliminate the operating and carrying costs by converting the property to green space. So we citizens will have less debt and more assets—seems like a good deal.

Best case the city will economically benefit from the property and will have its own golf course for its residents that is comparable to other high end courses fr om a design, layout and maintenance prospective.

The positive options are many and hard to quantify.   A great course that every resident can enjoy at a discounted rate, a junior golf program, league play and an exercise facility are good for the community.  The ability to drive non-aurora residents to our community will be good fo r all aurora businesses.  If the course is public, numerous outings will be marketed and sold.  Aurora will have the opportunity to make itself a recreational destination for NEO.

Also, as announced today, with the jobless rate in Portage County hitting 10.2%, up 57% from a year ago and now the highest in the region; and the City’s tax base and tax revenue heading downward, now is not the time to be creating more debt and diverting operating revenue to buy and support  the significant carrying costs for 226 acres of  added green space…

If the property is maintained as a golf course it will add jobs and collect taxes.  Otherwise we are going to be adding to the jobless rate.

Most importantly we are at a crossroads for the City.  This is the largest, most beautiful, centralized piece of land in our community.  We can choose to control it, always selling later if necessary, or we can abdicate control to Aurora Recreation or other potential Buyers.  Would we not rather have this land than 80 acres on the outskirts of town?    Would we not rather have this recreation center than buying time or space in other communities?  Would we not rather have hiking, biking, golfing, skiing trails now than having to create and spend more later?  This is a once in a lifetime opportunity for the city.  It has been privately owned for almost 100 years.  It will not be available again.  Don’t let the naysayers and doomsday folks bargain away our future in fears of the present.  Stand up and be counted.

Aurora friends and neighbors attend this very important meeting on the 9th.
Best Regards,
Concerned Citizens of Aurora

Counterpoint Provided by:

Citizens of Aurora with Facts and Vision