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Cottage Grove erases $900K River Oaks debt

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News Cottage Grove, 55016
SWC Bulletin
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Cottage Grove Minnesota 7584 80th Street South 55016

After nearly a decade of struggling with its finances, the city-owned River Oaks Golf Course was forgiven of one of its two loans, a $900,000 debt to the Cottage Grove Economic Development Authority.

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The loan forgiveness comes along with the City Council’s recent decision to change the golf course from an enterprise fund to a special revenue fund within the city budget.

This past summer, the EDA began discussing whether to change the funding source, which has been financed as an enterprise fund since 2008, in an attempt to assist the golf course in erasing its debt. Over nearly a decade, the business consistently failed to bring in a steady cash flow to pay for both its operating expenses and repay its two loans — a $900,000 interfund loan and $1.2 million EDA trust fund loan.

Robin Roland, city finance director, told the council last week that while the loan forgiveness eliminates $900,000 from the EDA’s coffers, it will help the golf course get a handle on its finances.

“It is currently not the intention (of the golf course) to repay the (interfund) loan nor is there a possibility of repaying the loan,” Roland admitted.

While the council unanimously approved eliminating the interfund loan, the question of transparency was raised.

“I understand the golf course isn’t going to always break even or make money, but I would say that by changing it (to a special revenue fund) is actually less transparent because we’re going to see less of the expenses,” council member Derrick Lehrke said. “I don’t see the benefit to simply washing away the debt.”

Roland said by acknowledging that the golf course may not necessarily make money each year shows transparency and that the city is committed to keeping the amenity available to the community.

“The EDA shows a payment they will not receive and the golf course shows a payment they will not pay,” she explained. “Consequently, by forgiving the loan we will reflect a more accurate balance sheet for both funds.”

Mayor Myron Bailey agreed, saying the golf course will have a “clean slate” and changing it to a special revenue fund allows the city to “see every penny going in and out.”

As a special revenue fund, the city will allot financing for the golf course during its annual budget negotiations. How much the city plans to provide for the course each year is still up for discussion.

“Should we be covering 100 percent with general funds or cover 50 percent?” Roland asked. “What is the acceptable level of coverage? If it’s 50 percent, how much should we raise fees to cover the costs of operations? Those are conversations we will have to have in order to determine an appropriate level of support each year.”

The $1.2 million loan from the EDA Trust Fund is still active and Roland said the golf course will repay the loan over the next 10 years through equal payments of $120,000 with no interest.

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Emily Buss
Emily Buss joined the South Washington County Bulletin in February 2013. She covers local government in Cottage Grove, St. Paul Park and Newport, along with other general assignment reporting. She holds a bachelor's degree in journalism and mass communications from Minnesota State University, Mankato.
(651) 459-4629
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