Grand Jury: Poor Play on Golf Courses

The San Jose City Council signed off Tuesday on a Grand Jury Report detailing how two municipal golf courses have ended up in a $1.9 million sand trap.

Los Lagos and Rancho del Pueblo, two of the three public courses owned by the City of San Jose, have been draining $800,000 per year out of the General Fund because of extensive debt.

In 2007, the city delegated the Santa Clara County Civil Grand Jury to conduct an audit of Los Lagos, an 18-holer located at 2995 Tuers Road in San Jose, along with Rancho del Pueblo, a 9-hole short course at 1649 Hermocilla Way.

Their findings revealed significant budget mismanagement, faulty feasibility reports, shoddy consulting when the course was being built, along with gross under easements of labor costs.

“Its astounding that you could be that far off,” Councilman Sam Liccardo said yesterday. “I was just really troubled on how bad these consultant recommendations were…. This whole thing just seemed to go south at every turn.”

Los Lagos was originally conceived of in 1997, when golf was booming around the country (the “Tiger Woods effect”). Seeing a need for public golf courses, the city council decided to commission the building of a new full-service public golf course.

According to the grand jury report, however, the original feasibility study neglected to take into account that six other golf courses were already being built in the South Bay in the late ‘90s.

When the council decided to approve the master plan of Los Lagos, the feasibility study was already one year old , and the changing economy caused construction estimates to raise from $9.8 million in 1997, to $14.2 million in 2000.

By the time Los Lagos was finally completed in 2002, it had racked up $570,000 more in labor costs than originally outlined. Following its completion, use of the course fell significantly short of expectations.

By 2009, Los Lagos has never been able to support itself, generating $1,432,000 in debt service payments while only making $662,000 in income this year.

The Grand Jury called for more sober decision-making by the city during good times, along with a commitment to frequently updated feasibility studies.

“In 2000,” the report concludes, “a healthy economy allowed the city leaders to make the choice to construct another golf course when in other times prudence would have played a greater role.”

During discussion of the report, Councilmember Judy Chirco said she remembered when Los Lagos was originally being discussed. She said that she had supported the building of the course, and that at the time the city was concerned with providing the public with a facility to play a very in-demand sport.

“To be quite candid, I hate golf,” she said. “But it wasn’t for me that I advocated this.”

Mayor Reed later retorted: “I don’t hate golf. I don’t love golf. But it’s $2 million a year in debt service. That’s what I know.” He then made the motion to accept the Grand Jury report.

2 Comments

  1. While I can understand the city providing parks for residents, and visitors, I do not understand why the city needs to provide golf courses.  Even when “golf was booming”, it still was only played by a very small portion of the population.  It takes to long to learn and get good at, then it costs to much to play often.

    The same goes with the county providing recreational airports for county residents.  There are only 3,400 pilots of all ratings (student, private, air transport, etc.) out of 1,850,000 county residents.  It takes $10,000 and one year of time to get a private pilot license, and then you have to pay at least $100 an hour to rent a plane to occasionally use.  Most people have better things to do with their time and money.

    Golf courses and recreational airports should be private businesses.  If there is a demand they will succeed.  If there is not a demand they will fail.  Let the market decide.