The quasi-state agency developing the public Compass Pointe Golf Course in Pasadena has asked Anne Arundel County for $1.1 million to cover a shortfall in operating revenue for the current fiscal year, which agency officials blame on a late opening because of bad weather.
The request by the Maryland Economic Development Corp. - which county officials had been expecting - was delivered in a letter dated Feb. 18 to the county executive and budget officer. Financial documents attached to the letter show that the economic development corporation also is facing about $1 million in unpaid construction expenses on the project, though the request does not address that shortfall.
The request to the county was required under MEDCO's agreement with its bondholders, said Hans F. Mayer, executive director of the agency. That agreement includes a formula, which based on current budget projections produced the $1.1 million figure, Mayer said. He said that number may or may not reflect the project's actual operating shortfall.
Mayer said the course lost about 7,200 rounds of golf, at $55 to $65 a round, because of wet weather. But he predicted the project would be highly successful in the long run.
"We've had a great reception to the first 18 holes we opened," he said.
He has also said current financial figures are misleading because the agency has been relying on revenue from those 18 holes to pay for the operation of a 36-hole course. The second 18 holes are expected to be ready this summer.
According to the county's contract with MEDCO, the request must be included in the county executive's proposed budget for fiscal 2005, though county officials said the sum may change.
"For now, it's not set in stone," said county Budget Officer John R. Hammond. "We'll look over what they sent us and verify everything over the next few weeks."
Though MEDCO's request will appear in the proposed budget, the County Council may decline it. Council members have said that with the county facing a multimillion-dollar deficit, they would be reluctant to spend money on the golf course.
"It's really going to be a tough sell and a long shot," said Councilman Ronald C. Dillon Jr., a Republican whose district includes Compass Pointe. "I think it will be very difficult for us to consider giving $1 million or more to something like a golf course when the budget for areas like public safety and education is going to be so tight."
But Mayer said County Council members should consider the course's positive impact on the Pasadena area when weighing the request.
"I think they should look at the surrounding neighborhoods and the value this is creating and they should also look at the golf course we've created, which they will own without having made a financial input," he said.
Mayer said he has backup plans if the council rejects the requests but declined to offer details. He also declined to discuss how the economic development agency will pay off the $1 million in outstanding construction expenses.
The shortfalls at the $17 million Compass Pointe project are the latest problem the agency has faced at that course and other developments. Last year, the county briefly shut down construction at Compass Pointe because sediment was running into nearby streams. And the agency's Rocky Gap Lodge and Golf Resort in Cumberland reported $18 million in losses for its first four years.
Hammond said county officials do not see the current shortfall as a sign of long-term problems with MEDCO's management of the course. "The late opening appears to be the culprit here," he said.
The financial documents delivered to the county project the course will operate at a smaller cash-flow deficit - about $208,000 - in fiscal 2005 and achieve an operating surplus in fiscal 2006.
The county bought land for a golf course in Pasadena in the 1980s and later persuaded developers to donate more land. But its decision to have the agency develop the course prompted legal threats from private developers, who said the nonprofit group was designed to promote projects in economically depressed areas, not in thriving markets.
State legislators then expanded the corporation's charge and allowed it to move forward on Compass Pointe.