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Golf in the Hole 

Will the city turn over our golf courses to the very people who are making them lose money?

Wednesday, May 9 2007
During the past couple months, staffers in Mayor Gavin Newsom's Department of Recreation and Park have been telling anyone who'll listen that the city is so inept at managing golf courses that it must get rid of the best ones it owns.

"The city has clearly shown it doesn't have the expertise to manage golf," said Sean Elsbernd, who carries water on the Board of Supervisors for Mayor Gavin Newsom. "Just look at the numbers."

Elsbernd is referring to the Board of Supervisors' recent demand that Park employees figure out a way for the city to stop paying $1.5 million per year to subsidize municipal golf courses.

Last Thursday, Park accountant Dawn Kamalanathan announced a new proposal by which the city might stop this money-letting by leasing for 20 to 30 years to a nonprofit corporation San Francisco's two best municipal golf courses, Harding Park Golf Course on Lake Merced, and Lincoln Golf Course, overlooking Golden Gate Bridge.

This proposal was the latest incarnation of a scheme, generated by Palo Alto lawyer Sandy Tatum, recommending that the city hand over control of its golf courses to a 501c3 corporation Tatum created last fall for this purpose. Tatum and former city attorney Louise Renne are this nonprofit corporation's sole directors.

For reasons I can't explain, park staffers seem desperate to sell Tatum's plan.

To this end, they have proffered a misleading narrative about how city employees are vaguely incompetent and ignorant, and must thus be relieved of the task of handing out golf carts, selling golf caps, and preparing lunch for duffers at the city's marquee courses.

Yet the reality behind the city's money losses associated with golf is exactly the opposite of supposed wasteful spending by government officials. It's private, not public, mismanagement that's strained the finances of S.F. municipal golf.

The losses can be traced to an expensive sweetheart deal cut in 2003 with a private golf management firm, a deal that apparently involved at least peripherally Tatum and Renne.

In 2003, after a bidding process reviewed by a committee that included Renne, Kemper Sports Management was given the concession to manage the Sandy Tatum Clubhouse, Harding Park Golf Course, and at the nine-hole Fleming Golf Course abutting Harding. Somehow, the contract between the city and Kemper was written in such a way as to allow extravagant expense associated with this task. According to a document titled "Kemper Sports' Harding Park Team" included as part of a 1999 bid proposal, Tatum is listed as part of Kemper's "Golf Dimensions Construction Management Project Administration."

Tatum said that the fact his name is on a 1999 Kemper organization chart is "news to me," and that "I have no association with Kemper."

The spend-what-you-want language in the Kemper contract created the equivalent of a city credit card. And Kemper pushed the card to the maximum.

During the current fiscal year, Kemper will accrue $3.6 million in expenses, under a contract that offers no incentive whatsoever to be frugal with the city's money.

"There's no cost containment at all," said Justin Hetsler, a private accounting consultant knowledgeable about golf who helped me review more than 1,000 pages of bidding documents, contracts, invoices, and receipts related to Kemper Sports Management's agreement to manage Harding Park.

"The way this contract is written, and the haphazard way their expenses are documented, they might as well write a single annual operating expense number, leave it at that, and never do any accounting for the rest of the year," Hetsler said. "This contract doesn't give anyone whomsoever an incentive to manage the Harding Park operation, in the terms of what the word "manage" means. It just gives an incentive to be there and spend money." (Kemper's Harding Park General Manager Steve Argo did not return a request for comment by my deadline.)

In 2005 the company's controller submitted invoices, reimbursing himself thousands of dollars to cover expenses such as driving hundreds of miles to Mountain View, Daly City, and elsewhere to shop for groceries and office supplies.

Such direct requests for reimbursements, by a company controller, for the type of expenses a controller exists specifically to independently review "is in violation of the most basic principles of accounting controls," Hetsler said.

Kemper racked up thousands of dollars in charges to the city for employing itself as a consultant — the kind of conflict of interest that would seem to violate prudent management principles.

The city golf accounting division overseeing the Kemper contract, meanwhile, included in a budget proposal $13,500 in consulting fees to Sean Sweeney, a city employee who directs maintenance of golf courses.

"I never saw it," Sweeney told me.

Why is the mayor's Park director peddling a misleading narrative to explain away San Francisco's golf budget woes when the real problem is simply a spendthrift city contractor? The answer can be found in the mysterious sway octogenarian duffer Tatum seems to hold over city parks policy. Tatum is a former president of the U.S. Golf Association. He is also reportedly a pal of financier Charles Schwab, who backs the Committee On Jobs soft-money operation that helped elect Newsom as mayor. But none of this begins to explain for me how Tatum has managed to employ city officials in seeking to have San Francisco public assets passed his way.

As I noted in an earlier column, Tatum five years ago masterminded a scheme to loot a state fund destined to build playgrounds for low-income city kids in order to pay for an overhaul of Harding Park Golf Course. The idea was to make money for the city by attracting a PGA tour event, and the money from it would then fund other city programs. Tatum in 2004 set up a nonprofit corporation to receive $500,000 in tournament proceeds on behalf of the First Tee golf training program.

Instead of making money, the Harding Park renovation and management plan became a money sieve.

Now, the Board of Supervisors is demanding that the city figure out a way to stop paying $1.5 million per year to subsidize golf operations.

Yet, somehow, city officials are enlisting as a savior the very culprit who caused the problem in the first place.

Tatum's latest S.F. city golf scheme began taking shape last fall when he and Renne set up the aforementioned nonprofit corporation. The corporation requested and paid for a "study" conducted by a golf-industry trade association called the National Golf Foundation. The "study" Tatum bought recommended the city would turn over to Tatum's new corporation several publicly owned golf courses, which occupy land worth hundreds of millions of dollars.

Bizarrely, city officials under Newsom's control have ever since been touting this absurd giveaway as a great way to save tax money for San Francisco.

"The Public Utilities Commission has done pretty well with its golf courses, in getting pretty good returns managing those courses. That kind of public-private partnership has been pretty beneficial to the public," said Dawn Kamalanathan, to whom Newsom's Park department has given the task of selling the Tatum giveaway plan.

It's funny she should mention the Public Utilities Commission as an example of great public-private golf partnerships.

That agency is actually an example of how private partnerships can allow well-connected individuals and private corporations to gain unfair access to city assets, just as the Tatum-led proposal threatens to do.

Ten years ago, Willie Brown ensured that newly appointed members of his PUC would give to Crystal Springs Golf Partners — a company founded by the man who had served as Brown's chief administrative officer in the Assembly — the right to the PUC-owned golf course on the shores of Crystal Springs reservoir near Burlingame. Brown's commissioners chose the bid backed by his former employee, despite superior proposals offered by other companies. A few years later, the company petitioned the city to fatten the company's profits by lowering its concession rent by a third. The PUC obliged. And Brown crony Tom Isaak parlayed revenue from this instance of S.F. political cronyism into a regional golf-and-real-estate investing firm.

In the case of the attempt to hand over Harding Park and Lincoln Park golf courses to a corporation controlled by Tatum, city officials have strangely gone about throwing their hands in the air pretending city officials themselves are not competent to narrow the stream of money flowing through city golf operations.

Kamalanathan on Thursday proposed raising fees at Harding Park — which happens to be the one city golf course that's currently priced at market rate, $155 per round on weekends for out-of-towners. But she didn't note that prices might be raised at other city courses, which happen to be priced very cheaply for the area. She raised the possibility of closing Sharp Park golf course, near Pacifica. She didn't mention, however, that closing Sharp Park would cost more money than keeping it open, because the golf fees that currently help maintain the Sharp Park open space would no longer be available, according to Sweeney, the city golf manager.

Kamalanathan claimed that allowing a nonprofit corporation, presumably Tatum and Renne's, to take over Harding Park and Lincoln golf courses, would mean city golf operations would run a surplus in five or so years. This would require a $10 million infusion for capital improvements, she speculated, without saying where that money would come from.

"With nonprofits involved, you can get charitable contributions," Recreation and Park Director Yomi Agunbiade offered, imaginatively.

This is fantasy.

Reality is that the popular Golden Gate Golf Course run by the city produces a round of golf for $13.46. Thanks to the mammoth expense reports submitted by Kemper Sports every month, it costs $71.11 to produce a round of golf across town at Harding Park.

If the Board of Supervisors wishes to reduce the subsidy it spends on golf, it should not be distracted by a shell game that obscures the real source of excessive municipal golf expenses. The city's not overspending on golf because it's failed to hand over city assets to an ally of the mayor. It's overspending on golf because a private vendor is exploiting a contract designed to promote overspending on golf.

A recent superficial controller's audit pointed out that Kemper Sports was sloppy in management of Harding Park. The next step should be a more thorough audit conducted by Board of Supervisors' budget analyst Harvey Rose, with an aim to finding out whether or not this vendor mishandled its right to spend city money. The city should do everything it can to get out of its contract with Kemper Sports.

Then it should find a new way to manage Harding Park and Fleming golf courses that have absolutely nothing to do with Sandy Tatum.

"Who knows if it really requires $3.6 million to operate Harding Park? Who knows? That's just the amount they spend every year," said Hetsler, the accounting consultant. "When they say that's how much it's going to cost, the city just pays it, carte blanche, without any oversight."

San Francisco Recreation and Park Director Yomi Agunbiade, Sean Elsbernd, and other officials connected to the mayor need to quit telling fables about how the city needs to save money on golf by handing over our finest courses to a scheming Palo Alto lawyer. They need to stick to the task they were hired for, which is to find ways to ensure that private contractors don't go crazy with the public till.

About The Author

Matt Smith


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