Local Governments in California Lost $20 Million Running Public Golf Courses in 2020

Reason Foundation recently identified 221 local governments across the country that reported running public golf courses in their 2020 financial reports. Of those 221 local governments, 155 lost money operating golf courses in the 2020 fiscal year. In the aggregate, these 155 local governments lost $61 million of taxpayers’ money managing golf courses in 2020.

Amongst the 221 entities, 27 are local governments in California. And of those 27 local governments, 24 lost money operating municipal golf courses in 2020. These 24 local governments lost a combined $20 million of taxpayers’ money on their golf-related operations.

The largest operating loss, over $4 million, was recorded by the Indian Wells Golf Resort, owned by the city of Indian Wells. The course earned $11 million in revenue but had $15 million in expenses. The other California golf courses showing financial losses greater than $2 million in 2020 were in the cities of Carlsbad and Dinuba. Carlsbad’s facility, The Crossings Golf Course, roughly breaks even on a cash flow basis but does not cover its depreciation expenses. Dinuba’s Ridge Creek Golf Club also reported revenues largely offsetting cash operating expenses but not covering depreciation.

There were three local governments—Mission Viejo, Pacific Grove, and Seaside—that turned an operating profit, making a combined $300,000 operating public golf courses in fiscal 2020.

There are many other government-run golf courses that could not be included in this examination due to the way some governments report this information. Los Angeles, for example, owns 13 golf courses but the city does not separately report the courses’ financial results. Instead, financial information about Los Angeles’ golf courses is included in the larger bucket of the city’s larger parks and recreation fund.

Based on the national and state data showing so many local governments losing money, it is clearly time to sell these municipal golf courses or partner with the private sector to run them.

Antioch, California, for example, contracts out the operation of its municipal golf course to a private company. Antioch Public Golf Course, Inc. has been operating the city’s Lone Tree Golf Course since 1982 and has the concessions contract through 2033. It is not subsidized by the city and its operating results are not reflected in the city’s financial statements.

As Reason Foundation Vice President Adrian Moore put it, “Government-owned golf courses are a real head-scratcher. They serve no public interest that is not already served well by the private sector. Indeed, they are most often a nice subsidy for relatively wealthy golfers, paid for by all the non-golfing taxpayers.”

Ideally, local governments should be looking to sell this valuable real estate they are sitting on to pay down unfunded public pension liabilities, fund needed infrastructure repairs and expansions, and maximize the value for taxpayers rather than losing money on golf. Between home builders, companies looking for large swaths of land, and professional golf course management companies, many of California’s municipal golf courses would generate significant money in sales.

Some state legislators are eyeing these money-losing public golf courses as a way to help reduce the state’s housing crisis.

California Assemblymember Cristina Garcia, D-Bell Gardens, recently proposed a measure, Assembly Bill 1910, that would give local governments an incentive to convert their public golf courses into a mixture of housing and public open space. Under the proposal, state redevelopment grants would be provided only for projects that make at least 25% of new residential units affordable units limit non-residential units to one-third of the development’s square footage. While some of the restrictions are onerous and ideally would not be in the final bill, they are imposed as a condition for unlocking state grant support and may be necessary to build the coalition of Democratic support needed to advance the policy.

There are important debates to be had about how to best proceed with these golf courses and properties, but, ultimately, it’s clear that governments should not own and operate golf courses, especially when they are losing millions of taxpayer dollars.

Originally published by Reason Foundation. Republished with permission.

A version of this column first appeared in the Orange County Register.