The resolution to set a public hearing concerning bonding for the Superior National Golf Course renovation project was put on hold at Tuesday’s Cook County Board of Commissioners meeting. The postponement, which will allow further discussion and consideration of alternative funding methods, is due in part to a letter from Commissioner Sue Hakes.
Hakes was unable to attend the meeting, but had submitted a letter to Jay Kieft, county administrator, expressing her reservations regarding the $2.2 million bonding proposal.
The proposal as now written obtains the funds through a tax abatement general obligation bond rather than through the originally stated revenue bond backed by projected golf course revenues. Hakes cites this as a significant change which entails the assumption of considerable risk by county taxpayers.
While it is acknowledged that the general obligation bond offers a lower interest rate and a considerable savings over the 20-year term of the bond, this is only possible because the county, rather than the bond holder, assumes the greater risk.
With a tax abatement general obligation bond as proposed, the debt would be secured by abated property taxes on 58 properties expected to benefit from planned improvements at the golf course. If future course revenues are not sufficient to make debt payments, the county, through the abated tax revenues, would be liable.
In her letter, Hakes proposed two alternatives for consideration – reduce the scope of the renovation project to avoid the need for bonding, or secure the bonding debt with the existing 2% lodging tax from Lutsen/Schroeder/Tofte townships.
She also points to a lesson to be learned from the City of Grand Marais. In that case, through a general obligation bond, the city became liable for the debt of the Cedar Grove Business Park when income from the projected sale of business lots failed to materialize. Having apparently learned from that experience, the city declined to even consider a general obligation bond when funding for the district heat project has been discussed.
Representatives of the Grand Marais/Cook County EDA and Superior National indicated they would take other options under consideration and return to the board at a future date.