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Cedar Hills in a hole over golf course

Wait on ‘lynching,’ find a solution, angry city residents are told

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CEDAR HILLS — Get a rope.

That seemed to be the call of the rowdy Cedar Hills crowd that growled this week at the prospect of paying more taxes to support a failing golf course they say they didn't want.

But now is not the time for a public lynching, say city officials.

"That will be at another place and time," said Cedar Hills Councilman Jim Perry. "Anger isn't helpful. Right now, we have a problem to solve."

The problem: How to make the annual payments on the $6.4 million loan taken out on the 160-acre Cedar Hills Golf Club.

The course, which has been open for just a year, only took in about half of the revenue projected by the group that did the original feasibility study that has since proven to be faulty.

That left the city to pay a $223,780 shortfall, including $110,000 in one-time start-up costs incurred when a company that was going to lease and operate the course failed to get its funding and pulled out.

It's expected that next year the shortfall will be higher because interest on the debt escalates each year. And Cedar Hills doesn't generate enough tax revenue to cover the payments.

Perry said there are several ways to address the situation, which was created when previous city leaders and voters approved the purchase of the golf course in 2001.

The city can sell the course but it hasn't had any offers.

A year of operation doesn't provide a track record to show a potential buyer.

City officials could impose a fee of about $11 per household per month until the situation improves or raise property taxes to cover the payments.

It's also possible to default on the loan — something several residents in the audience and Councilman Rob Fotheringham appeared to support — but Mayor Mike McGee and others on the council cautioned against such a drastic measure.

Perry said the city's public-safety building is part of the collateral held by Zion's Bank for the loan, and it would paralyze the city to lose the building.

Defaulting would also be a political and financial nightmare that could bring about legal consequences, as well as tremendous negative publicity.

Resident Dean Wilson said he lived in Orange City, Orange County, Calif., when that community defaulted on a municipal bond and he wouldn't recommend following suit.

"Avoid default and bankruptcy at all costs," he said.

John P. Musto, who lives in Cedar Hills, is asking for support from residents in calling for lawsuits against those responsible, including the previous mayor and council.

Ken Cromar, a former city councilman who opposed the purchase and led a petition drive four years ago to put the purchase on the ballot, said the income of the golf course was grossly overestimated.

Cromar thinks residents should file a lawsuit against the firm that conducted the feasibility study and another against Zion's Bank for agreeing to make the loan. He also thinks Utah County Attorney Kay Bryson should investigate the transaction.

McGee said bank officials have indicated they'll work with the city to make the loan agreement more palatable.

He also said he does not consider defaulting as an honorable option.

Perry said walking away from the loan would impact the city's ability to bond in the future and hurt home values.

Filing for damages would take money and years and in the meantime, someone must pay the loan, he said.

E-mail: haddoc@desnews.com