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If you build a world class golf course in the southern Utah desert, will they come?
That’s the $ 10 million bet that the Kane County Water Conservation District is hoping to place with other people’s money.
Led by retired Republican lawmaker Mike Noel, the Water District plans to build a luxury course outside of Kanab – where few residents seem interested in losing $ 100 or more on a round of golf – to attract even more tourists to Kane County.
Earlier this summer, Noel convinced the Utah Community Impact Board, or CIB, to authorize a low-interest $ 10 million loan to fund his golfing dreams, but the proposal has many obstacles. to cross. Before that money is released and the project can move forward, Noel must partner with Kane County to manage the golf course and with the state, which owns half of the 200 acres that Noel has. proposed for the project.
Now, the Kane County River Basin District is competing for this land with at least two other development proposals, submitted last month to the Utah School and Institutional Trust Land Administration, or SITLA.
But such uncertainties do not prevent the small rural hydraulic district from embarking on luxury golf. Last year, she paid world-renowned golf course architect David McLay Kidd $ 75,000 to develop preliminary plans for a course on the shores of the district’s Jackson Flat Reservoir. It’s money well spent, according to Noel.
Noel retired from the Utah legislature in 2019 after spending 16 years in the House, where he was a major influence on public land issues, lobbied for the transfer of these lands and associated roads to the state, defended the Lake Powell pipeline project, and led opposition to national monument designations.
A former member of the Bureau of Land Management, he operates a ranch in Johnson Canyon, where the controversial pipeline is said to discharge 4,000 acre-feet of water.
“We are in the process of making the transition across southern Utah to a tourist community. This is what we do, whether we like it or not, ”Noel told CIB at its July 1 meeting. “So we are trying to be one step ahead of this project.
The rare profitable golf course?
While most public golf courses require substantial grants, Noel argues his would pay for itself by attracting thousands of discerning high-end golfers to stay in Kanab for a few days. So even if the green fees don’t cover all operating expenses, these big spenders will leave enough money in Kanab – a tourist economy town in the heart of southern Utah’s national parks – for the investment. worth it.
That’s a lot of wishful thinking, critics say, who argue that the golf course represents a misuse of public money and resources.
“It is unwise to spend more than $ 10 million of our public revenue to build infrastructure that few people in our community will use,” said Sky Chaney, a Kanab resident, who heads a local taxpayer association. “The construction of this project will prevent the construction of other projects that will further benefit the residents of our community. “
Chaney also doubts Noel’s golf course attracts enough golfers to afford it. Not only is Kanab difficult to access compared to other destinations near St. George, he noted, but its summers are hot and winters cold.
“Most serious golfers are careful to choose courses where access is not difficult and the weather is good for golfing,” said Chaney. “Kanab is not an ideal place for either of these two requirements.”
In a survey of county residents commissioned by the Taxpayers Association, 93% of those polled said they oppose the use of public money and local water to be used on a course. luxury golf.
A green island in a red desert
Critics are also unhappy with the planting of water-guzzling greens and fairways in a desert at a time when Utah’s water resources are drying up in the face of an unrelenting drought. But Noel says the course would be irrigated with 319 acre-feet of water that would otherwise go onto the alfalfa fields.
“None of these waters is culinary water. The diversion point is on Kanab Creek. It’s below the area where the city’s water is taken, ”Noel said. “It’s not just a golf course. It’s also a very, very sophisticated design course to save water as much as possible.
The Utah CIB distributes millions in grants and loans from a revolving fund funded by federal mining revenues. By law, this money must be spent on projects in the communities where these revenues are generated on projects intended to mitigate the impacts associated with mining.
Impact board staff warned the board that Noel’s loan request did not match CIB’s mission, but the board approved it after hearing Noel’s speech.
“It seems to be a project that is well outside a water development mission. In reality. I’m not sure this is the right entity to apply for a golf course, ”CIB staff member Candace Powers told the board. “Golf courses don’t necessarily generate income and, in fact, are very expensive to maintain. “
Impact dollars typically fund basic facilities and infrastructure, such as upgrading roads, public safety equipment, sewers, and building prisons. CIB has embarked on economic development projects in recent years, which has resulted in controversy and at least one lawsuit.
CIB has funded four golf courses in the past, including one now defunct in Kanab, according to Christina Davis, spokesperson for CIB’s parent agency, Department of Workforce Services.
Focus on an influx of tourists
At the July meeting, CIB unanimously agreed to grant the water district a loan of $ 10 million over 30 years at an interest rate of 1%. Noel said the repayment money would be tied to Kane County’s Transitional Room Tax (TRT) revenues, so if the golf course’s revenues aren’t enough to pay off the loan, the district could fall back on this solid revenue stream from hotel stays.
In other words, federal money funds the project and a tourist tax reimburses it. Under this plan, Kane County taxpayers and water taxpayers are not affected. Unless, of course, golfers don’t show up to play in sufficient numbers and the county has to bail out the golf course.
That won’t be a problem, Noël assured CIB. District consultant Z. Gordon Davidson conducted a market analysis that predicts the price will host 18,000 turns in the first year and stabilize at 25,000 turns in the fourth year. At $ 100 per spin, the net operating income at this level of play would be $ 802,000.
Noel told CIB that Kane County was participating in the project as a partner and that the county commission had approved the use of TRT’s income to the tune of $ 350,000 per year to repay the loan. This is the amount the district would have to pay to repay a $ 10 million loan at 1% interest, he said.
Noel also claimed that district attorney Rob Van Dyke, who is also the elected attorney for Kane County, drafted an interlocal agreement regarding the governance of the golf course.
“In the agreement, there would be a council. The board of directors would be composed of members of the [Kanab] City Council, the [Kane] County Commission, ”Noel told CIB. “The departmental commission wants it. That’s what they told us. They want to be the engine of the recreational part. “
All of this came as news to the Kane County Commission, which issued a letter to the public clarifying its current situation.
County Kane is still on the fence
In a recent interview, Commissioner Brent Chamberlain said Kane County had only just started doing due diligence and was nowhere near committing TRT revenue for the golf course or even participating in the golf course. as a partner. He also said he had not seen any draft interlocal agreements and did not expect the county to complete an independent analysis.
“There is no agreement between the county and the water district at the moment,” he said. “It’s a bit premature. In fact, it is premature to say that it is done and that the riding will support it. If it all comes back and says it’s a worthwhile thing to do, we can do it, but it hasn’t happened.
He warned that the water district’s market analysis “paints a pretty rosy picture” and the county needs to conduct a separate study. His hope is that the course doesn’t require a cent of TRT money to pay off the CIB loan, let alone the $ 350,000 per year that Noel is looking for.
“It would be nice if he could support himself,” Chamberlain said. “Is part of the equation economically viable? Would he be able to stand on his own feet? Would he get to that point, hopefully soon enough, where he wouldn’t demand those kinds of payments from the county? “
All of these questions will be moot if the school trust land managers decide to partner with someone else to develop the land. These officials are required by law to seek the maximum financial return on the 3.4 million acres they oversee, which in this case may not be a golf course.
After Noel looked to lease the 100-acre parcel, SITLA went looking for better deals, according to Kyle Pasley, a property manager at SITLA’s St. George office. Two proposals were submitted by the September 1 deadline and are currently under review.
“We review them through our board of directors and our real estate committee,” Pasley said. “A decision will be made based on what is in the best financial interest of the [school] confidence.”
SITLA’s board is expected to select a winner at its November 18 meeting.
Update, September 20, 2021 • This story has been updated to include information regarding the number of golf courses that the Utah Community Impact Board (CIB) has funded in the past.