Bali Hai Golf Club to Close

Bombn Bombn ClubWRX Posts: 594 ✭✭
edited Aug 2, 2010 in Southwest #1
Another Las Vegas course to bite the dust.
Link --> [url="http://www.lvrj.com/news/money-losing-golf-club-may-become-industrial-park-99744004.html"]Another course bites the dust.[/url]




The cries of golfers yelling "fore!" at Bali Hai Golf Club could be replaced with a different warning sound: the beeps of delivery trucks backing into loading docks.



Lush green fairways could give way to parking lots, warehouses and stores on the south Strip, across from the "Welcome to Fabulous Las Vegas" sign.



The Walters Group wants to scrap its money-losing, 18-hole golf course near McCarran International Airport and build a 2 million-square-foot commercial complex on the county-owned land.



The group's partners would pay a piece of their profits to Clark County under a deal that received preliminary County Commission approval in July. They paid no rent to the airport during the 10 years the golf course has operated because the lease payments were based on profits that never materialized.



Most county commissioners think the proposed lease deal is too good to pass up because it could bring millions of dollars to the county's coffers each year.



But one commissioner and others who have dealt with the company's founder, Bill Walters, worry that it could be another agreement that enriches Walters while offering questionable benefits to the public.



Critics question whether the county should let Walters convert the failed venture to a commercial complex instead of giving other developers a chance to compete for the lease on that land.



The industrial park that Walters proposes would house diverse vendors who would supply hotels and casinos with goods needed to run their operations, such as uniforms, beverages, soaps and paper products.



A 365,000-square-foot shopping center would be built on the edge of the property facing Las Vegas Boulevard. Walters hopes to break ground in 2012.



On July 20, commissioners approved changing the 99-year lease to allow Walters to redevelop the 155 acres off Las Vegas Boulevard and Russell Road. They asked the airport staff to review and fine-tune the lease before they give the final OK to sign it.



The owners would split net revenues 50/50 with the airport and possibly pay the county a flat leasing fee. The airport now gets 40 percent of the golf course's net revenue.



The big difference is the airport and the county would profit from the new venture, rather than being tied to a golf course that is bleeding money, said Mike Luce, president of the Walters Group.



"We're trying to figure out something that will work," Luce said. "There's no opportunity for the county to receive any money from the golf course."



Bali Hai, which opened in 2000, is $49 million in the hole because of operating losses, unpaid debt and construction costs that were never recouped, Luce said. The county, in fact, has never made a dime on the course.



County Aviation Director Randall Walker said there is nothing in the current lease agreement that allowed the deal to be renegotiated if the golf course made no money.



He expects to bring a final draft of the new lease to the commission by September.



WHAT THE CRITICS SAY



Commissioner Chris Giunchigliani cast the lone vote against amending the lease with the Walters Group.



She said she has no problem with a golf course morphing into a commercial complex. However, this is a sweeping change that requires the lease to be re-bid rather than simply revised, she said.



Giunchigliani said a 2005 state law that she, as an assemblywoman, helped draft calls for a public auction when certain land agreements are revamped. If Walters has the best project, let him prove it by beating out competing developers, she said.



The county counsel agreed that the most proper legal course would be putting the lease up for bid, yet the other commissioners chose to stick with Walters, she said.



"No money has ever been paid to the airport or the public," Giunchigliani said. "What's the benefit to the public? It's about transparency."



The stricter legislation was in response to the airport's controversial land deals, she said, referring to the uproar six years ago over developers buying airport parcels at a discount and reselling them for heftier prices, with little public scrutiny.



Lisa Mayo-DeRiso, a business consultant, shared Giunchigliani's concerns.



Walters failed to deliver revenue on the golf course, and now six out of seven commissioners are rubber-stamping the land-use change without letting other developers offer what could be a better deal for the county, she said.



"The county didn't blink an eye, and they didn't say, 'Billy, you had your shot. Let's see who else is out there,'&thinsp" Mayo-DeRiso said. "The question is: Is this really the best use for that property?"



Elected leaders' tendency to kow-tow to Walters isn't entirely surprising, given that he's a wealthy, politically savvy man who can donate generously to election campaigns, she said.



"He's like Oz behind the curtain," Mayo-DeRiso said. "Everybody votes in his favor."



WALTERS BLAMES slump



Walters, however, said the slumping golf industry is to blame for the lack of profits, not the group's management.



"I don't think you're going to find many people that are going to say that we aren't good golf course operators," Walters said. "We've done everything we can do out there. It just isn't working."



Walters said he sank $38 million of his own cash into Bali Hai when lenders weren't financing golf courses. And his group is willing to put more than $100 million into the industrial-park project, he said.



If the course is converted to a commercial complex, the airport could earn $110.5 million in the first 10 years, Luce said, citing a forecast from a consultant the group hired.



Walters said he might offer to pay a leasing fee on top of revenue-sharing. The rent would be bumped up yearly according to inflation, he said.



A commercial site also would generate about $4 million more in yearly property tax revenue for the county than the golf course, Walters estimated.



Last year, the county collected $88,000 in property taxes from Bali Hai, said Assessor Mark Schofield, explaining that Nevada golf courses have yielded low tax revenue ever since 2005 legislation classified them as open space.



Walters pushed for the change in the tax law, according to a county official who asked not to be named.



Aside from Bali Hai, Walters owns Royal Links and Desert Pines golf courses as well as an 18-hole course in east Texas. The group bought three golf courses at Stallion Mountain and sold them several years ago.



Walters, who made his name and much of his fortune as a sports bettor, said starting a business and developing land are gambles.



"I'm a professional risk-taker," he said.



Walters said the county has little to lose and much to gain by turning the Bali Hai Golf Club into a commercial park.



The complex will create about 2,350 construction jobs while it's being built and more than 950 permanent jobs after it opens, according to a consultant.



"You're going to make a lot in taxes, you're going to save a lot of water and you're going to employ a lot of construction people," he said.



WALTERS' HISTORY



Walters has come out well on past land deals with local governments.



Twelve years ago, Walters beat out several others vying to lease the Bali Hai site.



One developer wanted to build a Formula One racetrack. Two companies working in tandem sought to build a golf course and tennis courts, a project backed by tennis great Andre Agassi.



In 2002, the County Commission agreed to rezone 64 acres Walters was leasing at Warm Springs Road and Durango Drive to build a golf course so he could build a shopping center and medical offices.



That decision stirred an outcry from neighbors as well as developers who accused the county of giving Walters an unfair edge by supplying him with low-cost, government-owned land.



The commission later scaled down the commercial site to 40 acres. Walters built a shopping complex and scrapped plans for the golf course.



In 2004, Walters made a swap with the city of Henderson. Partnering with a Greenspun-owned company, he traded the Wildhorse Golf Club for 126 acres of prime city-owned land worth $40.2 million.



Walters said at the time that Wildhorse had been appraised at almost $34.4 million and tossed in $5.8 million to even the trade. The county assessor had put the golf course's value closer to $9 million.



MARKET CALLED WEAK



One analyst expressed skepticism about building a project of this scope in the weak real estate market.



"Developing industrial space would not be prudent at this time," said Jeremy Aguero, a principal at Applied Analysis, a Las Vegas firm that tracks economic trends in Nevada.



Industrial space has a vacancy rate of 16 percent in the region and 17 percent around the airport, Aguero said, noting that 5 percent is the ideal.



The proposed site would have to offer rates and a location so appealing that vendors would want to move their operations there, Aguero said.



Luce said the location is top-notch for a distribution hub, noting that it's near the airport, a railroad spur and two major freeways. More importantly, the hub would be close to the casinos that would order the merchandise, saving time, fuel and labor costs, Luce said.



Bali Hai opened in an era when golf courses were proliferating, he said.



Many developers added golf courses to their subdivisions with the aim of attracting home buyers who would pay more for the backyard amenity, Luce said, noting that 400 new golf courses came on line yearly in the late '90s.



Back then, Walters said he would create a public golf course with modest fees that the average Joe could afford. Instead, Bali Hai catered to a more upscale crowd. User fees run from $75 during the summer to as high as $295 in the spring and fall.



The fees were higher until the oversupply of golf courses in the Las Vegas area drove them down by 17 percent in the past two years, Luce said.



Revenue fell to $9 million last year from $12 million in 2006, he said. Meanwhile, watering the grassy expanse has become costly, Luce said, arguing that a commercial center would use a fraction of the water.



Last year, Bali Hai used 209.2 million gallons of water and racked up a $675,000 bill, according to the Las Vegas Valley Water District.



The recession has compounded problems in the slumping golf industry, Luce said. "Nobody in the industry would've expected it to go down that much."

Comments

  • Hateto3PuttHateto3Putt Smoking Makes You Look Cool! Members Posts: 6,288 ✭✭
    Not suprised. That land is far to valuable to be a golf course.



    They were well overpriced for a mediocre facility. I don't know too many people who played there more than once.

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  • Jetlv25Jetlv25 Members Posts: 286
    What a shame, it's a beautiful course. Walters has had county commissioners in his back pocket for many years so I guess I can't say i'm surprised.
  • GolfinnovaGolfinnova Paiute Wolf Members Posts: 1,017
    edited Aug 5, 2010 #4


    They were well overpriced for a mediocre facility. I don't know too many people who played there more than once.






    I'm in that camp. Played it 3 years ago as a birthday present from my wife, overpriced then and way overpriced now. Funny thing is I got a link yesterday on my Facebook page from Walters offering to play Bali Hai, Desert Pines and Royal Links for "only" $449 image/cheesy.gif' class='bbc_emoticon' alt=':cheesy:' />



    Won't be surprised at all if Royal Links takes a dive next year. Desert Pines is ok but certainly not $150 ok, I'll drive the hour north to Wolf Creek before I drive 20 minutes to Desert Pines.
  • birdieboy52birdieboy52 Banned Posts: 570




    Last year, Bali Hai used 209.2 million gallons of water






    What a terrible waste of a precious resource
  • lvphil702lvphil702 Bad Golfer Members Posts: 347
    No great loss unless you like smelling Jack in the Box, planes flying low overhead and I-15 being out of bounds.
  • dbloom136dbloom136 Members Posts: 353
    Yeah ive lived here over 3 years and never once thought about playing this course, Im young dont have a lot of money and anything over $100 to golf is just way too much for me. As far as comercial space the poing about vacancy rate being high is dead on. Drive around Las Vegas spcifically the new Southwest area and there are empty comercial properties on every corner, and if it were up to me the last place i would want to go shopping would be close to the strip and airport... as a local those are two places i try and avoid at all cost. The way the economy is in Las Vegas i do not understand new contruction, i know it creates some jobs but what about all the unfinished and empty projects, and thats everything from comercial to homes and apartment complexes. Though i wish they would have built the course on warm springs and durango, b/c that is right where i live and that would be another option to rhodes ranch, but not if it was 250 a round. In the end its sad though, all the money spent to build and upkept a green area like that and its all gonna get paved over.
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  • vegas005vegas005 Banned Posts: 485
    Played it and loved it. Great service, great greens and a really nice round of golf. RIP.
  • stage1350stage1350 If you stand for nothing, you'll fall for anything. Members Posts: 10,238 ✭✭
    Have they ceased operations yet? I wouldn't mind getting in one last round when I get out there in Feb.
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    They can keep erasing this. They simply prove my point... censors.
  • dbloom136dbloom136 Members Posts: 353
    stage1350 wrote:


    Have they ceased operations yet? I wouldn't mind getting in one last round when I get out there in Feb.




    No it is still open...
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  • garytgaryt Members Posts: 274 ✭✭
    Just saw this. Was thinking of playing it in October.
  • huskiehuskie Members Posts: 517 ✭✭
    when does it close?
  • bradskibradski Members Posts: 2,337 ✭✭
    this is from 2011
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