River Bend Golf Course operators will no longer have to repay a $1.5 million loan from the City of Red Deer for a clubhouse expansion.
City council took the first step towards forgiving this 25-year loan on Monday, after hearing there was no chance the non-profit group that runs the city-owned course could ever afford to repay it, while also making necessary course improvements.
Only $130,000 of this loan has been repaid since 2007, leaving $1.54 still owing.
Chief Financial officer Ray MacIntosh told councillors that the loan sprang out of a highly unusual arrangement. Since River Bend has always been a city-owned asset operated by a non-profit society “this was actually a loan to ourselves,” he said.
Deloitte accountants went over the society’s books and found some opportunities for streamlining and revenue generation. But they also found it was not possible for the society to make loan repayments while also making golf course improvements, as its agreement with the city required.
Coun. Vesna Higham, council representative on the River Bend Society board, put it another way. She compared the situation to the owner of a rental property loaning money to his tenant to do roof repairs — and then expecting the tenant to repay him the full amount.
“The loan is not a liability on our books because the city owns the asset,” she added.
Coun. Victor Doerksen was in the minority in opposing the motion to forgive the loan.
Doerksen said he wasn’t against this on principle, but would first have liked to see what agreement will be struck between the city and the society regarding profit sharing, license feed and property taxes, etc.
But Sarah Tittemore, general manager of community services for the city, responded the point is there’s no ability for the operator to repay. She told council she would like to set the operating society up for success as there are plans to improve the golf facility. But the non-profit cannot repay the loan as well as make these needed investments.
Since the loaned money came out of city reserves in the first place, there is no interest paid on it, she added.
River Bend Golf Course had gone through some tough years with the pandemic and then road repairs decreasing revenues. But things are looking brighter with more women and young people starting to play golf, so Tittemore hopes revenues will pick up in future.
lmichelin@reddeeradvocate.com
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