The Madison Country Club is asking Madison taxpayers for a $250,000 loan to build a bigger clubhouse. The Madison Country Club, a private organization located outside city limits on the north shore of Lake Herman, generates no direct sales tax or other revenue for the city.
The proper response from the Madison City Commission should be something like this:
We're maxed out on our borrowing capacity. I'm looking to cut, not spend. It would be very difficult for me to find large amounts of cash in our budget. My goal is to cut back... live within our means.
Our bonding is maxed out. We've got obligations. Our revenue sources... are designated for infrastructure repair. I feel their pain, but the city has its obligations... and its constituents it has to address first.
Oh, wait, that's the kind of negative response Madison City Commissioners give when asked to consider using taxpayer dollars to support renovations to our public high school. Here's how commissioners respond when the country club wants to expand its luxuries outside of town:
City Commissioner Dick Ericsson called the project ambitious.
"As a commissioner, I'm glad for your explanation," he said, indicating that he'd like to see some sort of foundation formed that could provide assistance to persons who can't afford a full membership.
"I think it's a wonderful project," Commissioner Karen Lembcke said. "It does need some updating. I think it definitely falls under economic development. Hopefully we can mull it over and give you some help" [Elisa Sand, "Country Club Asks for City Loan," Madison Daily Leader, 2011.11.22].
As various commenters here have pointed out, the city does not offer loan assistance for citizens building mandatory sidewalks. The clubhouse does not directly contribute economic development in the city. Anyone with the scratch can enjoy our our wonderful lakeside golf course regardless of the size of the clubhouse. Our city is being asked to subsidize the creation of a larger facility for schmoozing and boozing outside city limits in a community that already has numerous bars and restaurants within city limits. A fancier clubhouse at Lake Herman could well take business away from facilities in Madison, producing a net reduction in sales tax revenue for the city.
The commission doesn't have the money available to float the quarter-million dollars the country club wants:
City Finance Officer Jeff Heinemeyer said the fund currently has a little less than $200,000 available, and $80,000 of that is committed to the Community Center next year. Two balloon payments are due in 2012 -- one for $160,000 due in January and another for $130,000 due in April. The fund is also used for growth incentive payments to local businesses [Sand, 2011.11.22].
But don't worry: the commission is thinking ahead. As if to ensure they'll have enough spare cash to hand to the country club, the city commission is raising everyone's utility rates. After chatting with the country club delegation, the city commission approved raising electric rates 5%, water rates 11%, and sewer rates more than 12%.
So, to review how things work in Madison: if you are a regular citizen and you ask for city money to serve a public purpose, you get told we don't have the money. But if you belong to the country club crowd, and if you can slap the phrase "economic development" on your private project, you can get the commission's ear and quite possibly taxpayer money for pretty much anything you want.
Please, Michael, don't tell me I'm trying to create a rift where there is none. There is a clear rift here between Madison's leaders and elites and the common taxpayers... not to mention a rift between the city commission and common sense.
Update 10:47 MST: Check out the audio from Monday's meeting on KJAM: Commissioner Karen Lembcke also wants to spend the county's money on the clubhouse. She tells MCC board member Mark Lee to hit up the Lake County Commission for some financial support as well.
Update 10:52 MST: Here's another cause for alarm: Mark Lee says the country club would pay back its loan by increasing its prices on its customers by 3%. Hmmm... if the country club has to raise prices to pay off this loan, doesn't that mean that the country club isn't generating enough revenue right now to pay back a loan? When regular folks go to the bank to ask for a loan, and their current income isn't enough to support that debt burden, doesn't the bank say no?
Update 17:35 MST: The Madison Daily Leader cleverly decouples discussion of the possible country club subsidy from discussion of the utility rate increases by running those stories on separate nights. Quote of the night comes from Commissioner Dick Ericsson:
We're trying to do things and be good stewards of the money and put it back into the infrastructure [Dick Ericsson, quoted in Elisa Sand, "City Hears Utility, Snow Ordinances," Madison Daily Leader, 2011.11.23].
I look forward to Commissioner Ericsson's explanation of how subsidizing a country club clubhouse counts as good stewardship of money and investment in infrastructure.
My jaw dropped when I read the paper last night. I cannot believe that they would even consider this in such tight budget times.
When our schools in town needed updating (Elementary, MMS, MHS), the commission couldn't be bothered. When we asked for new playground equipment in Totland park 7 years ago, we had to fund-raise half of that money, to fix, upgrade, and repair a city owned park. We have infrastructure that is in need of repair. We have city employees that deserve better raises and benefits. We also have an economic need in this town that helps develop more small businesses and caters less to the big corporations in town. Small and large retail development is needed IN TOWN, so we can increase our sales tax revenues that support the city government. We do not need to build a fancy clubhouse outside of city limits that generates no sales tax revenue.
To give a $250,000 dollar loan to an out of town mostly private golf course for "economic development" is insanity. Ms. Lembcke couldn't be more wrong about this issue. What happens if they don't repay? Does the city take ownership of the Madison Country Club? Why can't a successful business go to the local bank or the big money friendly LAIC to ask for the full loan amount? This whole thing sounds like a hand-out, with 0% interest, and no guarantee of full repayment. IF the city gives out this kind of loan, it should be to a business that actually generates sales tax revenues for Madison. They should also charge interest just like a bank.
It is time that we have representatives that don't waste our tax money on pet projects like the failed LAIC Forward Madison program, tax kick-backs on already expanding businesses, and handouts to the rich who want to have a nicer clubhouse. It is time to spend tax money wisely, on projects that can be measured for failure and success and on projects that impact the majority, not the minority.
As for Mr. Ericsson's comment on "he’d like to see some sort of foundation formed that could provide assistance to persons who can’t afford a full membership". REALLY?!?! REALLY!?!?? REALLY MR. ERICSSON?!?!? Are you that out of touch with the 80% in this town that make a lower to middle class income? If they can't afford the $1700.00 membership fee to access and use the golf course, they probably don't own a set of golf clubs. They are probably busy driving to Walmart or Sam's Club every Saturday to stock up on cheap groceries and household items to make it another month, stretching every last penny.
What family is going to go to the golf course and say, "You know I would really like to golf this year, but electric rates went up another 11%, so can I get one of those low-income voucher forms for your golf course? I would hate to miss my weekly golf outing because I can't afford food and electricity. I might be facing a lay-off at work soon, but at least I have my golf clubs. Boy, this sure is a nice clubhouse. I wish I could afford to buy a steak and a beer here too. Do you have vouchers for that? No you don't. Okay, well I will stop by the food pantry on the way home. Hey, at least I got to golf a few rounds."
I MEAN REALLY?!?!?!
I have NEVER been so mad in my life at local elected officials. They are out of touch with reality and what the public wants. Who are these people catering too? Who is controlling these people? Not one person spoke up Monday night to say this is a ridiculous request?!! I mean REALLY!?!?!
If you think that cronyism and hand-outs to the rich and well to do have gone to far... please speak up. On this blog, in the paper, at the local cafe, church, etc. I would tell you to go speak to the City Commission, but my involvement with them over the last year has been unsuccessful. These people are firm in their beliefs and will continue to protect the people that put them in power. They will not listen to the everyday person.
The time has come to vote them out.
Otherwise, the City Commission will "mull it over and give some help" to people who do not need it, to a facility that is not even in city limits, and contributes nothing to our sales tax revenues.
I MEAN REALLY?!?!?!?!?!?!
a foundation to help people afford golf... indeed, that is one of the most out-of-touch statements I've ever heard from a political figure. Embarrassing.
It makes me really sad. I like all of these elected officials on the City Commission. But personal acquaintances are different than political policies. Right now, I cannot understand where any of these commissioners stand politically. I voted for many of them, because I knew them personally and thought they were great people. I figured they would make good decisions because they were good people. Unfortunately, personality does not always equal political correctness. I guess I should have found out where they stand on the issues more before casting my vote. Even at the local level, voting should not be based on name recognition or popularity. Votes should be cast on where candidates stand on the issues. Over the last few years, we have learned where these commissioners stand on the issues and I think we will ask smarter and more in-depth policy questions in the next election. Hopefully, the public will cast votes based on their answers and solutions for the future, not on name recognition or how well they "like" someone. I made that mistake once, never again.
I think we need to review City Ordinance, Chapter 2, ARTICLE VIII. ECONOMIC DEVELOPMENT.
http://cityofmadisonsd.com/vertical/Sites/%7B9C1D8490-A618-44AD-9306-F4F21A6F5FC6%7D/uploads/%7BF9FCDB62-449A-4634-94B7-F66D8577EB1E%7D.PDF
It is clear that the LAIC really cannot do much without the City Commission, and vice versa. Even though we are told that the LAIC is a non-profit economic development corporation, they really are just another arm of the city government. It is amazing all of the "incentives" we have written into our public law.
In this case, the request from the Madison Country Club should follow the proper channels laid out in this ordinance document. And even after the proper procedure is followed, the City Commissioners should vote NO.
They need to add another requirement to the ordinance. Only businesses that pay Madison city sales tax will qualify for economic development loans and incentives.
Well, I've heard it all now!! All the needs that the City of Madison has and we need to help out the private country club!! Be serious!!
Reading this ordinance on Economic Development gives me a headache. For months, I have been trying to promote retail development in Madison. First, I was told the city and the LAIC is not in the business of bringing retail business to town. After many citizens put pressure on the City Commission and the LAIC, they started discussing "future retail options".
However, I do not believe it, and here is why: The city ordinance on Economic Development reads:
"Any industry that is a new start-up or an expanding existing industry creating new and additional jobs which will result in more employment opportunities in the Madison area will be eligible to apply for the use of the local economic development funds. Industry shall be defined as either a business involved directly in the manufacturing processing, fabricating, or compounding of a product, or providing a service to customers and will not be in the retail business."
Retail business does not equal economic development? I guess the Madison Country Club is not a manufacturer either, so we shouldn't be giving them any money.
Keep in mind, this revision was passed on January 21st, 2011 by the current City Commissioners. How do you feel about your elected officials now and their "economic development" plans?
Gee, Janice, you don't think the wealthiest among us need our help? :-)
Ashley, good citation! That ordinance doesn't appear to authorize any zero-interest loans from the city, at least not unless the country club expansion is creating jobs paying more than $30K per year (see Art. VIII 2-152, interest rate schedule, and today's prime rate of 3.25%).
Also note that all of the city's economic development assistance money seems to depend on the business requesting the money creating jobs. Nothing in the Madison Country Club proposal addresses how many new hires it will make to work in its expanded clubhouse. Reading Chapter 2, Article VIII, I get the impression that the city can't give the country club any money, let along a zero-interest loan, unless the country club actually hires more people and pays them a certain amount. A couple more seasonal waitresses hustling for tips doesn't seem likely to qualify.
Our city commission couldn't provide a clearer example of taking from the 99% to boost the 1%. Is it time to Occupy Madison? Submit your opinion along with your 11% higher water and sewer bill.
The issue as i understand it, is that the MCC has had trouble meeting budget/revenue projections for several years now. That doesn't spell well for obtaining a private loan. There has been increasing rift among the membership to keep the club private and the need to provide open access to create more revenue. Golfing can and has been an expensive sport-need to face up to true economics. Raise the fees/memberships to create better revenue. If you can't create the revenue, you have to shut down-not go asking the city for money. My ag teacher back in high school called golf-"pasture pool". You have to pay for the pasture and the pool game when you golf.
Then keep it private and don't ask for no-interest money from the city to renovate a clubhouse that will do nothing for economic development in Madison. Tacking on 3% to all purchases in the projected $500,000 in sales should bring in $15,000 per year. Why try to project sales? Why not use data from the last 5-10 years to determine the possible total?
Make the club open to all, tack on 3% to all sales, squirrel it away for a few years then see what you can get done.
I'm with you, Jim, but we may be headed for a chicken-and-egg argument. You and I say, perfectly reasonably, raise the money first, then build. The country club will probably come back and say that they have to build it first to generate more revenue... since evidently the clubhouse is so awful that it blinds area golfers to the low green fees and the lovely 18 holes where they'll actually be spending most of the afternoon.
But whichever way it happens, the money should be coming from members and private funds, not taxpayers.
Does anyone have data on the revenue the golf course on Lake Madison generates? I'd love to compare.
I am not considering it. Contrary to my fellow members, I don't see how this is economic development. By the standards we impose on others seeking assistance, it most certainly wouldn't qualify. Where are the new jobs? Where is the increased sales tax revenue for the city? Who else would even propose such an open ended, pay as you go loan?
I won't support this loan. In the event that everyone else does, I will try my best to get the term shortened, a definite repayment schedule, and interest. It shouldn't be considered in the first place, and is criminal if it is without those things in writing.
Thank You Nick!
Thank you, Nick! Keep urging your neighbors to call the other commissioners and make their feelings known. Please urge your colleagues to direct our scarce city funds toward more clearly beneficial public purposes. And if they need some alternatives, I can offer my proposal to acquire and renovate the Masonic temple into a community cultural center. Hand me the same $250K no-interest loan the country club wants, and I'll generate more sales tax revenue and jobs for the city than a bigger clubhouse will.
Thank you Nick. If there is a loan provided, the city of madison must have 1st position on a mortgage describing the entire golf course.
When I attended the Madison high school tour a year ago, one of the questions asked was why the city could not fund part of the project if it was indeed supposed to influence potential businesses to locate to Madison, and a commissioner stated that the city didn't have any money either. So, where has the sudden windfall come from that this loan could be approved?
Since I do not live in the city, I guess I don't really have a say in it other than to offer an opinion. But if they come to the Lake County Commission also for money, I WILL have a say in it! If a private entity wants to improve its business, fine; but they should realize that the responsibility for doing so rests with them, not with others who will never be able to or desire to avail themselves of said business.
Thanks for your common sense, Nick. It seems the rest of the city commission is sorely lacking in that regard.
Linda, you and I do have a little say in what the Madison City Commission does. We are taxpayers. The city commission uses our sales tax dollars. If they try to redistribute our sales tax dollars to the country club elites, we can decline to share our sales tax dollars with Madison. Want me to pick you up some groceries in Mitchell?
Say, if the county commission were to approve any subsidy to the country club, could we refer that to a vote?
http://sos.sd.gov/content/html/elections/electvoterpdfs/currentcodeJuly1,2010.pdf
7-18A-15.1. Legislative decision of board subject to referendum - Administrative
decision not subject to referendum.
Any legislative decision of a board of county commissioners is subject to the
referendum process. A legislative decision is one that enacts a permanent law or lays
down a rule of conduct or course of policy for the guidance of citizens or their officers.
Any matter of a permanent or general character is a legislative decision.
No administrative decision of a governing body is subject to the referendum process,
unless specifically authorized by this code. An administrative decision is one that
merely puts into execution a plan already adopted by the governing body itself or by the
Legislature. Supervision of a program is an administrative decision. Hiring, disciplining
and setting the salaries of employees are administrative decisions.
Interesting question, Cory. I found the above in SD Codified Law. Still not sure if that covers this situation. Or whether this would be more administrative than legislative - probably.
That's exactly the statute I was thinking of, Linda. Legislative vs. administrative decisions: that distinction keeps citizen from referring some zoning measures. Would any lawyers or city/county commission experts care to weigh in on whether a loan or grant to a private entity for economic development constitutes a legislative decision?
Karen said it is a key tool for businesses coming in to town. It's a nice feather, but a key tool?
So was the new middle school, then the new elementary school, also the community center, and now the coming new gym/remodeal of the high school. So how many new businesses have come to town in the last few years after these "key tools" for getting new economic devopment?
Good point, Linda! I'll grant those "feathers" are important for quality of life. But the four projects you mention are all public projects, so they don't have to be justified purely in terms of economic development. The country club is a private entity. It thus has all the more obligation to justify a subsidy from the taxpayers in the strict economic development terms dictated by city ordinance. How many jobs will the new clubhouse itself generate? How much tax revenue will the clubhouse itself generate for the city? I suspect those answers alone will not justify handing the country club public dollars for free.
That would legislative. sounds like there are some key tools on that board.