Council in talks with SG Management for golf course lease

The Devine City Council voted to continue discussions with Scott Grego on a potential deal to allow him to lease and privately run the Municipal Golf Course under the SG Management banner after reviewing his proposal during a Special meeting held on September 12.
Grego’s proposal asked for the City to pay the course’s expenses for the first six months of operations, reimburse the cost of making bathrooms ADA-compliant, and reimburse the cost of bringing the clubhouse up to operational standards, which he estimated at between $175,000 and $200,000.
Other concessions included City-provided signage on highways around Devine, as well as the approval of beer, wine, and liquor licenses for the clubhouse and golf course.

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In return, Grego pledged to keep the course 18 holes, improve its condition, provide marketing for a membership drive, host school events, retain current employees who chose to stay, support local businesses, and provide proof of insurance and quarterly tax reports to the City.
Additionally, the proposal stated that if the course or clubhouse was out of operation for 60 days, it would revert to the City.
The proposal did not include specifics on the length or cost of leasing the course.
According to an open letter to the community that was included with his proposal, Grego has a turf grass management degree from Michigan State University and is a former Superintendent of San Antonio’s Dominion Country Club.
“As you can tell, this is my passion,” Grego said. “And I’ve always joked with my wife, ‘If I ever win the Lotto, I’m going to buy a golf course.’ And that’s been a dream since I’ve been 14 or 15 years old. And now I feel that this opportunity is in front of me to live out my dream.”
Using the city’s most recent proposed fiscal year 2019-2020 budget, which pared the golf course budget down to $547,000 from an initial $638,000, Grego estimated the City would spend $905,000 over the next year. That figure included the approximately $330,000 that the City has currently approved for clubhouse renovation, as well as an additional $75,000 to $100,000 in clubhouse kitchen renovation.
The number didn’t include the cost of hiring employees to staff the clubhouse.
On the other hand, Grego estimated that the City would spend just $339,400 on the course in the next year under his management. Included in that figure was clubhouse renovation reimbursement up to $200,000, $80,400 in salaries, $41,000 on two equipment leases, and $18,000 on the electric bill.
Grego’s proposal did not call for any long-term support from the City.
A number of Devine residents and property owners voiced their thoughts at the meeting, including Angela Pitchardo, who was concerned about the prospect of the course being privately run.
“We would have memberships, but it would stay open to the public,” Grego said. “Somebody that wants to golf ten times a year doesn’t have to pay the normal price that somebody that wants to play once a month.”
Grego’s proposal listed Social, Golf, and VIP memberships, but did not include prices.
Ernest Munoz said the City shouldn’t give away the lease because of the approximately $1.3 million it has spent on the course.
“For the City to not get any return on their investment, I think would be foolish, especially when you’re going to lease it out to somebody for profit,” Munoz said.
The City leased golf course property to the non-profit Devine Golf Association for $1.00 a year prior to taking over in July 2018 after that organization’s insolvency.
Misty Houston asked how much the City spent on the day-to-day expenses of running the course.
“The amended budget is $770,564.02,” Thompson replied.
“So we’ve spent $770,000 the first year to run it, and now we’re saying it’s going to run around $500,000 the next year around,” Houston said. “So in my opinion, if he leases it for a dollar, the City is making $499,000 a year.”
Kiel Boehme said he didn’t care if Grego became a millionaire running the course.
“It’s fine with me, as long as we have an asset to the City,” Boehme said. “Everything he makes, I’m sure it’s going to be subject to sales taxes and stuff like that. It’s bringing money into the City, and the City’s not putting out money, so I wish him the best of luck and I hope he makes it big.”
Tom Scott said that if the course charges $20.00 for a round of golf, it would take at least 60 golfers a day to break even.
“There haven’t been sixty people out there in a day in a long time,” Scott said. “So whatever this man can do to get it up there, it ain’t going to happen in six months, it ain’t going to happen in a year. It could take two to three years to slowly get the turtle over the hill.”
Munoz expressed concern about leasing the course to a third party.
Grego’s proposal named Devine residents Dale and Christy Williams as financial backers through DC Properties LLC, and he named his father as another investor.
Munoz asked City Attorney Tom Cate if the assets needed to in the entity, in this case SG Management.
“You’re going through a vetting process,” Munoz said. “Aren’t you going to want to make sure you’re leasing it out to an entity that has assets in it?”
“I think that the Council, they need to look at that, they need to make sure that’s a viable option for the City,” Cate replied.
“When you have an entity that doesn’t have any assets in it, that would be a concern to me,” Munoz said. “It’d be wishful thinking because you’re probably going to have to draw up a contract, and that contract is going to probably be contingent on a lot of different things than what the normal citizen based on emotion wants, versus the reality of it.”
Parks Board member Mary Allison suggested that Grego get bonded through an insurance company.
“That would be a way to protect the City,” Allison said. “Just like the banking, you have to have assets to back up the bond.”
Julie Campsey Key, an insurance agent, said getting bonded would be a simple process that involved providing financial information to underwriters.
“It’s not that expensive to do, or hard,” Key said. “Any other city requires that of people in your position.”
District 4 Councilwoman Jennifer Schott asked how the City would be in a worse financial position if Grego failed.
“As technical owners of the land, everything falls back on you guys at the end of the day,” Key said. “We just have to protect ourselves and the City. Any contractor going into any city to do any work, you have to have a bond, insurance.”
Munoz added that if Grego failed, the City would have to take over without having budgeted for it, which would require amending the budget of that particular fiscal year.
“We’ve done it before,” Schott said. “We did it for about a million dollars last year.”
“So you have to prepare for that,” Munoz said. “If there are any leases out there, kind of like you took over the leases from the old Association, so any debts or anything like that, that’s going to fall back on you. So you’re in another hole.”

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District 3 Councilman David Espinosa thanked Grego for bringing his proposal, as well as residents for attending the meeting and sharing their thoughts.
“That’s what we need,” Espinosa said. “We need some kind of sense of direction. I’ve got issue going forward with this. I know there are a lot of legalities that need to be looked into and what have you, but I would like to see it go forward. We just have to make sure all the I’s are dotted and T’s are crossed before we go forward.”
Espinosa asked if Council thought it would be advisable to get a committee together to make sure the lines of communication stayed open.
“I’m not opposed to having a board, but I’m not going to say I’m going to listen,” Grego said.
Mayor Cory Thompson asked what Espinosa wanted a golf committee to be tasked with.
“At this particular time is just to do the research and what we want to accomplish at this point to move forward,” Espinosa said. “Of course they’ve got to get with Tom and Dora [Rodriguez, Interim City Administrator], whatever legalities that we’re going to encounter, that we get through those as we go through them and come out to the final result on that. For everybody’s purpose, for the purpose of the community. I just don’t want this thing to fall back and nothing starts happening again.”
Thompson pointed out that it took two months to get the Parks Advisory Board together after it was initially proposed during a Council meeting, and Munoz asked if the Parks Board could handle what Espinosa was asking for.
“I’d take it in a heartbeat,” Parks Board Chairman Debbie Randall said.
“Debbie will do a great job,” Espinosa said. “She’s going to go forward with it, I know she will.”
A Schott-Espinosa motion to continue discussion with Grego and to allow the Parks Board to give Council recommendations about the course passed 3-0 with District 2 Councilman Steve Lopez’s support.
District 1 Councilman David Valdez was absent, while the vacant District 5 seat was set to be addressed again at the Regular meeting scheduled for press night on Tuesday, Sept. 17.
The golf course was also on the agenda for that meeting, Specifics to be discussed included advertising with Golf Insider magazine and local newspapers, as well as new daily greens fees.
By Marly Davis
Staff Writer