The drag of Iron Eagle Golf Course’s accumulated losses on North Platte city coffers is “at a point where it needs to be fixed,” a representative of the city’s auditing firm told City Council members Tuesday night.
Marcy Luth, a member of the Grand Island accounting firm of Almquist, Maltzahn, Galloway & Luth, made the statement as she responded to council members’ questions about the city’s annual audit for 2017-18.
She urged the council to push for “new revenue sources” to rebuild a general-fund reserve that has been essentially zero for at least the last five years.
Possible options include a restaurant tax, a higher city sales tax or utility-fund transfers when those funds are doing well, Luth said.
Her firm’s audit report pegged the Iron Eagle fund’s net deficit at $2.94 million when the last fiscal year ended on Sept. 30, 2018. Red ink and periodic South Platte River floodwaters have plagued the 18-hole course since it opened in 1994.
The city’s $1.97 million balance in its general fund as of the end of the fiscal year was 9.6 percent higher than in 2016-17, according to the audit report. Property and sales taxes finance the bulk of that fund.
But once again, Luth said, the city lacks a true “unassigned cash reserve” available for unexpected needs. Her firm recommends that cities have a 25 percent reserve in their general fund.
“Golf has depleted a lot of that (general fund cash) over the years,” Luth said. “That’s why you need to build that back up.”
Though the city has paid off its existing golf course bonds, she said, it has had to transfer money internally among various funds to cover Iron Eagle’s deficit.
Chief among those sources has been the city’s Quality Growth Fund, which was owed $3.66 million by the Iron Eagle fund as of Sept. 30.
“The city plans to transfer funds from the General and Keno Funds over the next several years to eliminate this deficit fund balance,” the audit report says.
QGF money comes from a portion of city sales taxes set aside for economic development projects. Keno funds also have been regularly used to cover the golf course’s shortfall.
When questioned by council members, Luth said the Iron Eagle fund’s debt to the QGF fund doesn’t leave the city unable to fund future QGF applications.
That’s because the general fund still maintains a positive cash balance, she said. But should QGF applications accelerate, the city would have to tap that balance, “and the general fund doesn’t have a lot of cash.”
Councilman Andrew Lee asked Luth what the city might have to do if the Iron Eagle deficit in time should grow larger than the QGF’s total balance.
“You’ll have to figure out what to prioritize to eliminate that golf course deficit,” Luth said.
Council members reviewed the 2017-18 audit during an hourlong work session before their regular meeting, which took only 10 minutes to complete.
During the regular session, the council:
» Granted a license to the planned Good Life on the Bricks restaurant to fence off part of the city’s Fourth and Jeffers parking lot so it can operate a barbecue smoker. The restaurant plans to open soon in the former Mallory’s location at East Fourth and Dewey streets.
» Approved a maintenance plan for new stretches of the West State Farm Road hiking-biking trail in order to facilitate a hoped-for Nebraska Game and Parks Commission grant. The project would connect several existing trail sections.
» Agreed to buy two refurbished street sweepers for a combined $150,000 to replace three sweepers being traded in by the Public Service Department. A fourth sweeper would remain in service.
» Renewed for another year the city’s interlocal fuel agreement with Lincoln County. It calls for the county to pay 1 cent per gallon over the city’s delivered fuel cost for the county’s fuel needs.