Mon Feb 08 2010
by Eric Marotta
Editor
Macedonia -- The city will alter the terms of a 20-year lease it has with a short-range golf course operating in Longwood Park, after one Councilor had a change of heart.
The lease change, approved by Council 3-2 after its re-vote, will set the business' monthly lease payment at 12 percent of its overall profits, as compared to the current lease formula, which combines a monthly set fee plus a smaller percentage of the profit.
"I think it's a good thing for 2-Club and a good thing for the city," Mayor Don Kuchta told the News Leader. "If this thing would not have happened and (2-Club partner) Larry Saulino went out of business, then it would be up to the administration to figure out what to do with the place."
Councilman Shane Barker, who voted last month against the proposal by 2-Club to modify its lease agreement, changed his mind at Council's Oct. 9 work session.
"If that guy folds up shop, the buildings go vacant and the city may let them get run down like the Manor House -- I don't know if we have enough money to run it," he told the News Leader.
Saulino said his operation isn't in financial difficulty, but it faces cash flow problems at times as business is much slower in the winter than during the rest of the year.
"It's a seasonal business," he said, adding the business has been growing and should eventually bring the city more money than it would have earned under the old contract.
2-Club's original lease called for a set $5,000-per-month payment, plus a small percentage of profit in various categories, such as green fees and concessions. That formula netted the city about $63,000 in 2007, said Finance Director Steve Brunot.
While Brunot has said the new payment formula could ultimately land the city more revenue than the original agreement, Shane said another factor helped change his vote.
Barker said Brunot explained to Council Oct. 9 that state officials would likely exempt 2-Club from having to pay the county about $67,000 in past-due property taxes, as well as future property taxes, because the land on which it operates is owned by the city.
Barker, along with some other Councilors who voted against the lease change last month, said they wanted 2-Club to assure the city it would pay the back taxes, if ordered by the state, so that the city would not be held liable for them.
However, Saulino had told the city he would not create an escrow account to make that assurance, and Council initially voted 4-1 against the lease change.
Brunot said he's confident the back taxes will not be an issue.
"Everything we have is an indication that 2-Club will be approved for tax-exempt status," Brunot later told the News Leader Oct. 16.
Brunot previously said the finance department had accidentally neglected to apply for the exemption after 2-Club opened for business in 2006.
Brunot said that athough "there is no guarantee," the city could start making more money from 2-Club's profits once they reach $500,000 per year within "a couple years."
"Their revenue is trending up at this point," Brunot said. "Their original business plan has them making well over %500,000 per year. They're plan was saying that within five years they would be at $750,000."
Barker's vote came under a provision of the city charter that gives a Councilor who has voted against a resolution the right to bring the matter up again for a second vote.
At the Sept. 24 meeting, where the measure was voted down, Barker had joined Councilors Peggy Spraggins, Nick Molnar and David Engle in opposing the amended contract. Councilor Jan Tulley was the lone vote in favor. Councilor Ken Martin was absent.
At the Oct. 9 meeting, Martin, Tulley and Barker voted in favor of the measure. This time, Spraggins was absent, leaving Molnar and Engle with the two dissenting votes.
Had there been a tie vote on Oct. 9, Kuchta said he would have cast his ballot in favor of 2-Club.
Saulino said the new contract will give 2-Club more money to pay off his 10-year bank mortgage, while bringing the city more money in the long run as business improves.
Saulino also said the city will not have to take over 2-Club's operations.
"I've got a lot of personal assets at stake here. I'm not going anywhere," he said.
E-mail: emarotta@recordpub.com
Phone: 330-688-0088 ext. 3171
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