Salt Lake City to the Federal Aviation Administration: Let's make a deal.
The municipality wants to negotiate with the feds over what constitutes reasonable rent for the Wingpointe Golf Course at Salt Lake City International Airport.
What's at stake are possible increases in green fees at Wingpointe and across the city's eight-course system or even closure of the airport links.
If Wingpointe does remain open, the city may evaluate rezoning the 270-acre parcel in five years for "aeronautical use."
According to an FAA directive after an audit released earlier this year, the airport must charge "fair market value" for the land it leases to the city for the golf course. Since the links opened in 1991, Salt Lake City has paid the airport $1 a year in rent.
Wingpointe is worth $2.2 million, according to an appraisal this spring by Free and Associates Inc. A lease rate based on fair market value would cost the city $155,000 per year, according to the appraisal.
If Salt Lake City pays more than $1 a year for its lease on Wingpointe, fees likely would go up at the airport golf course and perhaps at the municipality's seven other courses, said Rick Graham, director of public services.
Salt Lake City's golf courses are operated as an enterprise fund that is separate from the municipality's budget. The golf system is self-supporting and receives no subsidy from taxpayers, Graham said. It operates on a break-even basis.
The international airport also is owned by Salt Lake City. In a financial structure similar to the golf courses, the airport is independent from the municipality's budget.
In essence, the FAA is mandating that one Salt Lake City entity pay more in lease money to another Salt Lake City entity.
If the lease on Wingpointe goes up "the logical solution for us would be to look at adjustments [in green fees] at Wingpointe or system wide," Graham said.
But raising green fees can be detrimental to overall income because there are so many courses along the Wasatch Front that charge reasonable green fees, Graham said. If fees are bumped too much, golfers will go elsewhere, he said.
Currently, 18 holes of play at Wingpointe costs $33.
In a letter sent earlier this month to Randall S. Fiertz, FAA's director of airport compliance and management, Salt Lake City officials offered to pay the airport $55,000 per year for Wingpointe $100,000 less than the appraisal suggests.
"The city's self-supporting Golf Enterprise Fund â¦ faces likely budget deficits over the foreseeable future," the letter states.
"Over the next two years, Wingpointe is projected to lose $80,000," the letter says. "In this fiscal environment, changing the terms of the Wingpointe [lease] to require immediate payment of $155,000 may push the city to close the golf course."
The letter also says if the FAA accepts the $55,000 rate, Salt Lake City would evaluate the land for rezoning to "aeronautical use" by Dec. 31, 2017. If the airport does not need the acreage by that date, Salt Lake City can extend its Wingpointe lease for another five years, according to the proposal.
The FAA has not yet responded to Salt Lake City's offer, said David Everitt, chief of staff to Mayor Ralph Becker.
However, in May, Becker and airport Executive Director Maureen Riley met with FAA officials in Washington, D.C., Everitt said. That meeting may have laid the groundwork for a successful negotiation, he said.
Until the negotiations are complete, "it's business as usual" at Wingpointe, Graham said. He said he is hopeful that Wingpointe will continue to operate for years to come.
58,300 • Average number of nine-hole rounds played per year for fiscal years 2009-11
$1.2 million • Average annual income based on fiscal years 2009-11
$141,020 • Costs exceeding revenues in fiscal year 2011