Papago operator, Phoenix officials in legal joust
Monday, November 15, 2010
Phoenix has begun legal proceedings to remove an affiliate of the Arizona Golf Association from day-to-day management of municipally owned Papago Golf Course.
Meanwhile, AGA Management, the affiliatecreated to run the 18-hole layout, has filed for Chapter 11 bankruptcy protection and is seeking alternative funding.
The legal proceeding aren’t expected to affect operations at Papago, which hosted the 1971 U.S. Amateur Public Links and a 2009 LPGA event. Two years after AGAM secured nearly $10 million in funding for a course upgrade, fairways and greens are being maintained, and the golf shop in the temporary clubhouse remains open.
But according to the Phoenix Parks and Recreation Department, that temporary facility is part of the problem. As a condition of securing the publicly bid contract to operate Papago, AGAM promised a new clubhouse. AGAM officials blame the downturn in the local golf economy for their failure to build. That has reduced play, critics say, because golfers have full-service options elsewhere.
Joe Hume, a founder of a group called Save Papago Golf that opposed the arrangement with the AGAM, said “the deal should never have happened in the first place. The economy was already in full meltdown when the AGAM got the contract on the basis of totally unrealistic expectations. The whole economic model was absurd, and they never should have torn down the old clubhouse. Industry experts warned them and they ignored the warnings.”
AGAM is obligated to pay $780,000 annually to Compass Bank for the loan that financed the renovation. The loan was secured against collateral from future course revenues, not the course itself, so there is no prospect of the bank foreclosing on Papago.
AGAM and Compass Bank officials declined to comment.
However, Jack Hebert, AGAM’s attorney,said, “The reason for filing the reorganization plan was to preserve our rights under the 25-year management contract. We intend to go forward.”