City Council weighing options on Iron Eagle

This chart shows the growth in Iron Eagle Golf Course’s cumulative deficit within the city of North Platte budget over the last 10 completed fiscal years, as reported in the annual city audits by the Almquist, Maltzahn, Galloway & Luth accounting firm of Grand Island. The city’s fiscal year runs from Oct. 1 to Sept. 30, meaning the deficit figure at upper right was the total as of Sept. 30, 2018.

Over 25 years of periodic floods, lost business and lost momentum, Iron Eagle Golf Course has cost the city of North Platte some $3 million more than the course has generated.

City fiscal records and audits say as much. But how has the city covered those losses?

Until a year ago, the answer from the city’s auditors hadn’t changed in at least a decade: The city tapped its general fund, where most of its property-tax and sales-tax dollars are held.

That answer still hasn’t changed, two key city officials say, even though the 2017-18 audit report said Iron Eagle owed more than $3.66 million as of last fall not to the general fund but to the separate Quality Growth Fund.

A specific city decision to tap QGF — a voter-approved fund supporting economic development projects with a portion of city sales taxes — would violate state law, said two members of the city’s QGF Citizens Review Board.

“Best practices say this (QGF) fund needs to be a separate account, separate from the general fund or other city funds,” said board member Brock Wurl, a North Platte lawyer.

“If it wasn’t separated, it’s the city giving incentives” to the golf course from economic development funds, added board member Pat Keenan. “And that’s wrong.”

But no one in city government made any such decision, said City Administrator Jim Hawks and City Finance Director Dawn Miller.

They traced the apparent Iron Eagle-QGF relationship to a new accounting software program, adopted in April 2018, which has balanced the city’s books by evening out surpluses and deficits among most of the city’s funds.

Like its predecessor, Miller said, the new “Munis” program groups city funds within one of two “pooled funds.” One pool links the funds of Municipal Light & Water, while the other links the general fund with the city’s “special revenue funds” — including Iron Eagle and QGF.

Both the old and new software, Miller said, showed Iron Eagle as owing the general fund. But to account for general-fund support of the golf course, the new program looked to QGF — which had a $3.83 million net balance last fall — and declared that $3.66 million of it represents a general-fund “debt” to the special fund.

Iron Eagle’s net 2017-18 deficit was somewhat lower — about $2.94 million — when the golf course’s own revenues were added in, according to the Grand Island accounting firm of Almquist, Maltzahn, Galloway & Luth.

The firm’s 2017-18 report, however, omitted the general fund’s connection to both Iron Eagle and QGF. That made it appear city officials had acted to transfer QGF money to the golf course when they had not, Miller and Hawks said.

Such a transfer would be forbidden by state law governing sales taxes dedicated by voters to economic development. It says: “The city shall not transfer or remove funds from the economic development fund other than for the purposes prescribed ... and the money in the economic development fund shall not be commingled with any other city funds.”

The confusion should be eliminated, Miller said, by an upgrade to the new accounting program. She said it will simply present the deficit or surplus of each city fund — without declaring that a fund with a deficit “owes” a particular fund showing a surplus.

City Council members cleared the way for that upgrade Tuesday night when they approved a technical resolution adjusting the city’s underlying accounting statements to enable it, she said.

The technical resolution was separate from one the council tabled to put Iron Eagle permanently under the general fund and retire its debt with a $3.25 million transfer from surplus ML&W electric fees.

Hawks said that resolution incorporated several recommendations made by the auditing firm, which has regularly called on the city to resolve Iron Eagle’s deficit and adopt a formal general fund cash reserve.

But even had the tabled resolution been adopted Tuesday night, he said, the council still would have had to amend its 2018-19 budget — after sufficient public notice and a public hearing — to actually move the electric funds.

Council members now will debate both Iron Eagle’s past debts and future status as it crafts North Platte’s 2019-20 budget. That document must be adopted by Sept. 20, 10 days before the 2019-20 fiscal year begins.

The electric fees could be transferred to wipe out Iron Eagle’s debt in the next budget, Hawks said. “But we felt in order to take care of the issues reflected in the 2018 audit, it would be nice to get that straightened out.”

Council members Tuesday also tabled an unrelated resolution that would have repaid the general fund $800,000 from the Community Development Block Grant fund.

Hawks said that proposal would have reimbursed funds the city had advanced for CDBG projects when federal and state funds for them were slow to arrive.

Wurl and Keenan said they don’t oppose the idea of retiring Iron Eagle’s deficit with electric fees. But both urged city leaders to craft a final solution carefully so North Platte taxpayers are reassured their funds are being used legally and wisely.

Keenan said he doesn’t perceive “any intent to defraud” among city officials in dealing with Iron Eagle. But confidence in city leaders has been shaken by “their inability to recognize the poor performance of the golf course.”

Longtime North Platte businessmen Alan Erickson and Eric Seacrest also called on the city to settle the fate of Iron Eagle, which required expensive repairs after South Platte River floods in 1995, 1997, 2013 and 2015.

“Local people care a great deal about city parks, playgrounds, the (North Platte) Recreation Center, Cody Park swimming pool, trails and recreation programs,” said Seacrest, executive director of the Mid-Nebraska Community Foundation. “The city has been deferring renovations and fixes (for those facilities) for years.”

Erickson, a former golf course manager, called attention to the near-tripling of Iron Eagle’s net deficit since 2009, one of several recaps of the golf course’s fiscal performance he publicized last summer.

“I don’t think the (city) management is doing anything differently than they have for years,” said Erickson, who also believes the city shouldn’t be competing with private golf courses. “It’s just that losing money for 20 years catches up to one. ...

“The bottom line is the council has two choices. They should either put out a plan to stop the bleeding and close the course, or they should put it to a vote of the people and let them decide.”

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