I've got a couple of lottery tickets to trade for the 16th.
That fits your business model, right?
Posted on 05/28/2010 6:55:05 AM PDT by Darnright
Unable to make a July payment on the $9.2 million Buena Vista borrowed to build the Vista Links golf course, the city could lose its municipal building, its police station -- and its golf course.
BUENA VISTA -- Gamblers who bet the house and lose end up with their furniture on the lawn and no place to live. The city of Buena Vista has bet the house -- its city hall, actually -- and is now in danger of losing it as payment for a multimillion-dollar debt.
Residents looking to fight city hall could suddenly have nowhere to fight.
If the city doesn't make a debt payment of more than $660,000 by July 15, a Maryland-based insurer could seize the city's municipal building, its golf course and its police station, all of which were put up as collateral when the city borrowed $9.2 million to build the golf course, said city officials.
The loss of a city hall to pay off debt -- possibly unprecedented in recent state history -- would force the city manager, zoning officials, tax collectors, building inspectors, registrar of voters and several judges, among others, to look for someplace else to conduct city business.
Buena Vista City Council -- which last week decided the city can't afford to make the July payment -- has tried to renegotiate the city's debt payments, but has had no luck getting insurer ACA Financial Guaranty Corp. to go along.
"I guess they want their money," summed up Vice Mayor Samuel Mays.
The root cause of Buena Vista's financial woes is the Vista Links municipal golf course. The city council agreed to build it in 2003, opened it in 2004 and issued $9.2 million in "lease revenue" bonds to finance it in 2005. The bonds were insured with ACA Financial, leaving the company on the hook to pay off bond buyers if the city defaulted.
Confident that the golf course could fatten the city's purse by more than $500,000 per year, the city put up the golf course as collateral, along with the police station at 306 Park Ave. and the city municipal building at 2039 Sycamore Ave.
But since it opened, the golf course has lost money. In fiscal year 2009, for instance, expenses exceeded revenues by almost $250,000. The losses are significant for a small city like Buena Vista (population about 6,500), which has an annual budget of between $11 million and $12 million. Meanwhile, the city has bled jobs in the weak economy and seen large cuts in the money it receives from the state, Mays said. "When things were going good, it was a good idea," he said of the golf course. "But when they went bad, they went bad in a hurry."
Unwilling to make dramatic cuts in services or raise taxes to continue paying for the golf course, the city council decided to renege on the debt. City Attorney Brian Kearney said he has had lengthy discussions with the lawyer representing ACA Financial to try to restructure the financing, but to no avail.
"There's been no willingness to negotiate," Kearney said.
The lawyer for ACA Financial, Bonnie France of the McGuire Woods law firm in Richmond, said "it's a little too early to speculate on what's going to happen" if the city doesn't keep up with its payments. But if it doesn't, she added, the city will be operating in terra incognita.
"I've never seen, in Virginia, where there was a failure to pay a debt service," said France, noting that she has been in the business 30 years. "It's a relatively unique set of circumstances."
Kearney said the city believes it may be difficult for ACA Financial to take possession of city hall because the city's courts are in the building. Under Virginia law, judges have complete control of the portions of buildings where they hold court. However, according to the agreement with ACA Financial, the city must "use its best efforts" to find a new place "acceptable to the judges."
The golf course's estimated value is $950,000, while the police station is worth $1 million, said Mays. City hall is worth more than $900,000, a sum low enough to make it not worth selling for ACA Financial, he said. "They could foreclose on it like you would a house and lease it back to us. We wouldn't have any problem with that."
How about cutting pay/benefits/pensions of city workers???
So the borrowed 9.2 mil to build a golf course worht 950k.
Uh huh. I bet if you follow the money you’ll find some interesting leaks.
That would make too much sense...I hope they lose the properties.
Gub’mint logic - no need for economic sense.
I’m sure a lot of “connected” architects, contractors and developers made a nice payday.
I've got a couple of lottery tickets to trade for the 16th.
That fits your business model, right?
Mmmmmm, huh?
Clearly it is too big to fail, so the democrat criminal enterprise running the federal oligarchy should bail them out. ... I would bet a ham sandwich that the democrat party controls the town.
But since it opened, the golf course has lost money. In fiscal year 2009, for instance, expenses exceeded revenues by almost $250,000.
The losses are significant for a small city like Buena Vista (population about 6,500),
which has an annual budget of between $11 million and $12 million.
Every single PERSON in town must already pay $2,000 a year to support this tiny berg?
+ State, property, local, sales, fed, heath and more more taxes?
So a family of five pays $5,000 a year for Buena Vista????????????????
and they spent how much on this gold course?
I grew up in Buena Vista. I love the place but everything they try seems to backfire. As far as cutting the salaries of the city workers, there aren’t that many of them. Go to the city website and see the small number which would gain them almost nothing if salaries were to be cut.
The idea of a city owning and operating a golf course is insane. If it’s going to be a profitable operation, then private companies would be eager to own and operate it, and it would generate tax revenue for the city. And it it’s not going to be a profitable operation, then there’s obviously no reason for the city to be involved.
“there’s no reason for the city to be involved”
I would normaly agree that government shouldn’t own businesses. Buena Vista has lost most of the industry they have had in recent years and has lost a lot of their tax base. Many cities own municipal golf courses. They built this to draw people to Buena Vista and help their economy. It a beautiful 18 hole course. Unfortunately, the downturn in the economy and perhaps lack of promotion has been their downfall.
BV is pretty small. I don’t think there are that many city workers from which to cut.
Its size makes this dilemma even more ridiculous.
Those wacky politicians are such a hoot.
How about selling the darn golf course and letting someone build a hotel next to it?
The State of Alabama has a ‘Robert Trent Jones series of golf courses which are funding the Alabama Teacher’s retirement program. Great courses in/near many Alabama cities.
The State of Alabama has a ‘Robert Trent Jones’ series of golf courses which are funding the Alabama Teacher’s retirement program. Great courses in/near many Alabama cities.
If they can’t lure a private investor there to buy and run the golf course, even with a guarantee of several years of tax abatement to jump-start profitability, then it’s not going to fly as a money-making enterprise. And if they’d approached it that way, they would have found out without spending any money that it wasn’t a viable business plan. But I suspect that the posters who suspected corruption were on the right track. I think this had more to do with kickbacks, bribes, etc, among developers and city officials, that anyone seriously believing the enterprise would be profitable for the city.
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