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Cottage Grove looks to knock River Oaks Golf Course finances out of the rough

The city is looking at restructuring the finances of River Oaks Golf Course in Cottage Grove to end perennial deficits and pay back a long-term loan while keeping the 4.5-star municipal course open for business.

Despite a high course rating from Golf Digest, River Oaks has for the last several years reported annual operating losses, prompting the city to reevaluate its viability. In an attempt to continue to help the course increase revenues and pay back accruing debt, the city recently discussed changing the funding source from an enterprise fund to a special revenue fund.

The golf course has been financed through an enterprise fund since 1989. After the 2008 recession threatened the future of the business, the city's Economic Development Authority offered an interfund loan. The loan was thought to be a one-time expense, but over several years the EDA doled out nearly $2.1 million to help the struggling course cover its budget shortfalls.

"We're getting to the point where the EDA wants to use that money to help other businesses in the community," Robin Roland, the city's finance director, said. "It's a very highly thought of facility but if you can't attract money, you don't typically stay in business.'

That's not to say the golf course is going out of business, Roland stressed.

In 2012, the golf course made roughly $1.56 million in operating revenue while total expenditures cost $1.57 million. The 2013 plan anticipates revenues exceeding expenses but Roland said it is not enough to start making loan repayments.

During a recent workshop, council member Justin Olsen expressed concern for the proposed fund change and questioned whether the city should keep River Oaks open.

However, Roland said if support for River Oaks is cut off, the EDA has no chance of recovering the $2.1 million it has loaned.

Objectives in the proposed business plan, which is still in development stages, are to report revenues consistently exceeding expenditures, grow tournament bookings and satisfaction rates, and strive to be the first course within the Twin Cities to open and the last course to close. As part of a marketing aspect, the business plan details potential customer retention ideas with newsletters, social media campaigns and Internet advertisements.

"The EDA has always supported the golf course and it's important to the city to be able to offer this venue," Roland said. "I think that the move to the special revenue fund will help the golf course become more independent, at least have more cash in their coffers."

The council would need to approve a change in River Oaks financing.