Layoffs for three Superior National at Lutsen staffers

Facing financial challenges, the Cook County - Grand Marais Economic Development Authority (EDA) took a hard look at its budget on Tuesday, December 10, 2013 and decided layoffs were in order for Superior National at Lutsen (SNL) over the winter months.

The discussion followed the presentation of a draft 2014 budget by SNL General Manager Bob Fenwick.

Fenwick said he estimated 16,500 rounds (less than the 25,000 rounds in 2013) and extrapolated revenue from that. Fenwick said that he is estimating revenue of $935,180. After expenses he estimates a net of $141,430 for 2014.

Fenwick and the EDA board went through the budget, discussing line items. Fenwick said there are costs for grounds that were not included, such as seeding on the renovated part of the course. Fenwick said that should be part of construction costs and should be covered by the 1 percent sales tax allocated to Superior National.

Fenwick said he and EDA Treasurer Scott Harrison had been working with Bruce Kimmel of Ehlers and Associates both on paying off the existing golf course revenue bonds and on new bonds for the new construction. They noted that $141,430 net revenue will not be enough to cover the golf course’s debt service, so paying off the current bonds and getting a good rate on the new bonding is very important. Harrison said the new bonds would be for approximately $1.9 million. The payment on the new bonds should be about $155,000, less than the current bond payment of $182,000, so the golf course should see a savings of $27,000.

The men said savings on the bonds will help the golf course’s financial status, but Harrison said he is concerned that there is no mechanism in place for the golf course to repay its $175,000 loan to the EDA, so in turn there is no way for the EDA to repay its loan to the county for that amount.

Harrison said that the golf course is looking at three “tough” years. He said not just the first year of construction with only 18 holes in service, but the following years as construction continues. Fenwick said, “I’m not discounting that it will be tough for two years, but it is important to have a vision of what the golf course will be.”

EDA Chair Mark Sandbo asked if there is anything the EDA can do now to alleviate the current financial situation. He said the EDA should consider layoffs at the golf course. The only people on staff at this time are Golf Course Manager Fenwick, Golf Pro Greg Leland, Grounds Superintendent Mike Davies, and Equipment Maintenance Specialist Jim Zunker. Harrison said he would like to consider layoffs of three individuals—Fenwick, Leland and Davies. He said Zunker needs to remain on staff to keep the equipment going.

Harrison said the layoffs would reduce the EDA budget by $60,000 - $70,000. He also said, “It sends a signal to those watching over us and to ourselves that we need to find a way to make some significant reductions.”

As Golf Course Manager Fenwick waited, there was discussion of when the layoff would be in effect and when people would be hired back on. May 1 was contemplated, but EDA Board Member Bob Spry asked if that would be soon enough. It was agreed to keep the layoffs on the EDA agenda, to be considered each month so the individuals could be brought back on staff as needed.  A unanimous motion passed, with EDA Board Member Heidi Doo-Kirk absent, to layoff those three individuals effective January 1, 2014.

EDA Board Member Hal Greenwood said, “It’s a tough decision, but we owe money and we have to pay it back. We have to show that we are prudent commissioners and not popular commissioners.”

Greenwood asked who would handle the bonding process. Scott Harrison said Bob Tofte will be handling the bonding work. Fenwick said, “Construction is an ongoing thing. There will be some questions and discussions regarding construction costs and what can be manipulated. There will be things that I’ll just have to handle.”

Fenwick left the EDA meeting then, telling the board, “Let me know if there is anything you need from me before the first of the year then.”

Later in the meeting, the board discussed what it should do for the day-to-day questions at SNL. Chair Sandbo asked Treasurer Scott Harrison if he could be the contact person for the golf course. Harrison said yes, it would probably be good to appoint him interim manager. A motion passed, with Harrison abstaining, to assign the SNL general manager duties to Harrison during the period of the layoffs.

“With zero compensation,” stressed Greenwood.