Tuesday, June 2, 2009 • Golf course loan expected to be paid off by 2011

Publisher’s note: This story originally appeared in the Tuesday, June 2, 2009, edition of the Lassen County Times.

Susanville Mayor Kurt Bonham said the city is expecting to payoff the loan it took out to purchase the Diamond Mountain Golf Course by 2011.

The council approved a new loan that Plumas Bank extended at its May 6 regular meeting. Bonham explained that this is done every year, as the terms of the loan are set on an annual basis.

According to the staff report submitted by City Administrator Rob Hill, he said that not only are the terms of the loan set annually, but the current loan is set to mature on June 30 of this year.

Back in March of 2008, the council approved a settlement agreement with Plumas Bank, who acted as the lender that financed the expansion of the golf course from nine to 18 holes.

According to a staff report regarding the agreement in March 2008, the city borrowed $450,000 “to fund the settlement, pay related expenses and provide working capital to begin operating the golf course. The loan is secured by golf course assets and will be repaid with future revenues from the golf course.”

It was said at the time that Plumas Bank would receive $350,000 when the loan closes, leaving the city with $100,000 to operate the golf course.

Bonham explained the loan agreement the city has with Plumas Bank is only good until 2011, but it will be paid off on time.

The new loan amount calculated at the meeting estimated the payoff of the loan at $382,893 through June 30. The estimated title and legal expenses was roughly $1,735. The estimated interest reserve from July, 2009 to June 30, 2010 is $25,397, bringing the total amount to roughly $410,025. The loan itself is only paid through interest reserve, and is now due on June 30, 2010.

At the council’s May 6 regular meeting, it approved a renegotiation of the existing three-year lease with the Diamond Mountain Golf Course.

Under the new agreement, the city determined that the sale of select parcels around the course would be the best way to retire the settlement loan between the golf course and Plumas Bank.

While city staff is still formulating the plan and strategy for the parcels, Hill did say the most valuable piece of surplus land is the area surrounding and including the old clubhouse on Wingfield Road. In return for the parcels, the annual rent of the course based on a percentage of the green fees will be waived.

City staff estimated that this would set back the city approximately $9,600 in annual rent, but that loss would be offset by the sale of the selected parcels.

According to a city staff report from March 2008, “Plumas Bank had previously acquired all rights to the lease and property from Sickles Golf Associates. It also explained, “SGA was not a party to this agreement and did not negotiate with or receive any compensation from the city.”

Controversy regarding the city-owned 18-hole golf course operated by SGA erupted in October 2006 when stakeholder Frank Cady asked the city council to renegotiate the lease for the facility to help the financially strapped company make a profit.