Boca Raton, Fla — Yesterday, May 8, 2017, there was a public hearing to discuss the $24 million purchase of the old Ocean Breeze golf course in Boca Raton, Florida. There was a large room to accommodate a large number of people; however, it was standing room only even after staff brought out all the chairs they had available. Well over 300 members of the public attended the joint meeting of the Boca Raton City Council and elected members of the Greater Boca Raton Beach & Park District.
The Ocean Breeze golf course closed over a year ago as the Arnold Palmer Golf Management company could not make money with the course and the property fell into foreclosure with Wells Fargo and was transferred to a Wells Fargo subsidiary. Lennar Homes came in and purchased an option on the property with the supposed desire to build homes on the 214-acre property. Oddly, Lennar knew or should have known that the property was locked in a deed restriction that the property would always be a golf course and had no development rights.
Meanwhile, residents in Boca Teeca, where the golf course intertwines, are upset because many of their condos look onto an unmaintained golf course. They miss the greens the golf course offered them when they looked out their window.
Enter the Beach & Park District suggestion that they purchase the golf course with plans to renovate it, put a hotel on it while adding a pro shop and golf learning center. The deal on the table with Lennar is a $24 million purchase price and the need for an additional $10 million to make the necessary improvements to the property. Which is where the City of Boca Raton comes into play. The Beach & Park District doesn’t have $34 million laying around, nor the ability to borrow it, so it is proposing to get the money from the City. The City may lend the money to the Beach & Park District and yesterday, the City Council unanimously (though City Council Member Jeremy Rodgers was not present) decided to move forward with said proposal.
Much still needs to happen before a deal is complete as the City Council needs to go through more public hearings on the issue. The Council needs to decide whether to issue a bond offering or lend the money outright to the Beach & Park District.
Most in attendance at yesterday’s public hearing spoke in favor of the project with a minority voicing their displeasure with the cost. The Beach & Park District presentation feels it would make money in the long run due to the near $2 million net operating profit they propose they will make each year from the property. This lofty figure was calculated with $3.75 million coming from golf fees, $100,000 from merchandise sales, and $300,000 from a hotel ground lease. Although talk of a restaurant and “drinks” was mentioned by a Beach & Park District representative, no mention of those sales were in the Pro-forma financial presentation. There was no mention of other costs such as financing costs in the financial presentation to the public, only operational costs.
Richard Siemens, a well-respected local real estate developer, spoke in favor of the project though found the purchase price to be “outrageous.” Siemens said, “I have a little trouble digesting” the purchase price. He added, “It’s not apples to apples, it’s apple and berries as the property has no development rights.” Siemens was referring to a presentation by the Beach & Park District that was using financial valuations of “comparable” properties that did have development rights, thereby increasing the value of the property. Ocean Breeze has no development rights and thereby must only remain a golf course. Siemens felt $5.75 million would be the highest the Beach & Park District should pay for the property and he is also supportive of the use of eminent domain to acquire the property.
Using Siemens’ “apples to berries” analogy, the Beach & Park District suggested they could have 300 rounds played each day at $50 per round. While Ocean Breeze was doing approximately 300 rounds each day, that was mostly at $20 a round, not $50, so the $3.75 million the District proposed it would generate from golf is inaccurate. Additionally, the Beach & Park District never offered Pro-forma financials with regard to financing costs and left it open that it may need to come back to the City Council for additional money.
Karl Dickey of the Libertarian Party of Palm Beach County, which represents over 350 Boca Raton residents and over 3,000 Palm Beach County residents, spoke against the project noting the overall cost to taxpayers will exceed $34 million. He also said, “governments have a horrible track record owning golf courses. The golf course you own now loses $500,000 a year,” he told the City Council. In 2016, the city’s municipal golf course lost $478,016 and under the Beach & Park District’s presentation, they felt they could make a $1.95 million profit at Ocean Breeze. Mr. Dickey, in a blog post this morning, noted that making a profit “is hard enough to do with a private sector golf course, which is why this course was closed. Even the famed Arnold Palmer Golf Managment company couldn’t make it work, but apparently, those on City Council and Beach & Park District know better or are willing to roll the dice.”