The city of Dearborn is planning to resume ownership of the Camp Dearborn-attached golf course, Mystic Creek, after learning that current owner Total Golf Inc. has fallen $142,000 behind in lease payments—and doesn't want to pay them until 2015.
According to city officials, CEO Jim Dewling made a request to the city asking for a three-year suspension of his lease payments, at which point he would resume payment of previous rent, as well as ongoing payments.
Dearborn City Council this week voted to move forward with a counter-proposal which would require Total Golf to turn over the golf course and all assets to the city on Nov. 1 for a sum of $900,000.
Money Troubles for Mystic Creek
The city indicated that financial troubles with the course and its ownership have been apparent. In addition to falling behind on lease payments, Dewling through Total Golf had taken out a $5 million loan from Fifth-Third Bank—and then sold that loan to an investor, Midwest Capital Advisors.
"He's paying our rent with money from Fifth-Third," Mayor Jack O'Reilly said to council at a meeting earlier this month on the topic. "We're not looking at a realistic business model here."
O'Reilly added that Dewling, in September, vowed to walk away from the course if he didn't receive assistance from the city.
"If he did what he threatened to do ... if we wanted to try to get anything back, we'd have to sue," O'Reilly added.
Cost and Benefits
As part of the new agreement, the $900,000 paid to MCA by the city would be less anything Dewling owes. The city would also assume payments on new maintenance equipment and golf carts recently purchased for the course.
That fee would be used to pay past due real estate and personal property taxes "to the extent necessary," according to the agreement.
However, city officials agreed that the immediate costs were outweighed by the long-term benefits—including the assumption of all previously booked events at the facility, furniture, equipment, staff, liquor license, and business contacts.
"We’re basically getting a 27-hole championship course … for $900,000," Council President Tom Tafelski said Tuesday. "We’re rewarding bad behavior in some respects, but if we’re going to spend money on attorneys fees and we know he’s not collectable.
"I think it’s probably a good move."
Councilman Brian O'Donnell also expressed concern that while the golf course is a valuable asset, it's not the direction the city is looking to go.
"The alternative is going to be a bad scene, but at the end of the day, I don’t want to be stuck running a golf course," he said. "That’s not our mission."
Corporation Counsel Debra Walling advised that repossession of the property is the best move, given the circumstances. "The smooth transition at whatever price you agree to would be preferable to the hostile takeover," she said.
According to Finance Director Jim O'Connor, the city can expect to turn a profit with the course within six years, when calculating the payback on property taxes and lease payments.