City revisits idea of selling Berkley Hills Golf Course

JOHNSTOWN ? The sale of the Berkley Hills Golf Course has resurfaced as a topic of Johnstown City Council discussion.

The city is leaving ? at a minimum ? $50,000 per year on the table at its Berkley Hills course.

That figure represents the difference between the lease terms and what could be earned if the course were sold and the proceeds invested in a 4 percent bond.

City Finance Director Carlos Gunby took council members through a financial rundown Wednesday, discussing the course, poor property tax collections and money-saving ideas such as LED?lighting.

The city is making $28,000 per year by leasing Berkley Hills to operator David Gehlman, Gunby said.

But, questioned Thursday by The Tribune-Democrat, Gunby readily acknowledged the return on equity for the golf course ? which he said could sell for $3 million ? is less than 1 percent: 0.93 percent per year.

Even with a conservative course value of $2 million, the $28,000 represents a return of just 1.4 percent a year.

Selling the course for $2 million and earning 4 percent on a bond, a rate Gunby said is doable today, would net the cash-strapped city $80,000 a year ? $52,000 more than the lease terms.

Officials were quick to pounce Wednesday, reigniting a decade-long debate over whether the city should sell the course. None spoke up for keeping Berkley.

City Manager Kristen Denne questioned the links by saying, ?Is this a service delivery? Are our residents benefiting from having that golf course??

Councilman Bill Gentile said, ?Why is it when someone else runs it that they make money, but when we (the city) run it we lose money?? He suggested someone might have had his fingers in the till.

Gunby told council, ?We don?t need a golf course. It?s not one of our core competencies. We need to reduce long-term debt.?

Gunby said Thursday he would ?definitely recommend that an evaluation be done on its current asset value to the city.?

His best guess is that the prime Upper Yoder Township real estate would be sold to a developer, rather than someone interested in running Berkley Hills as a golf course.

And extra annual profit to the city could top $100,000 if, as Gunby estimated, the course sells for as much as $3.5 million, That sum, times 4 percent interest, is $140,000 per year.

Minus the $28,000 profit currently earned, that leaves an added profit of $112,000 annually.

While Gehlman?s lease runs through 2014, council members noted that the course could be sold with the stipulation that the lease terms remain.

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Source: http://tribune-democrat.com/local/x471599358/City-revisits-idea-of-selling-Berkley-Hills-Golf-Course

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