By Kenneth Lenz
On Feb. 16 – in less than a week – the voters of Orange will be asked to authorize one of the largest land purchases in the town’s history. I am opposed to the Race Brook Country Club purchase-lease back proposal. In my estimation it’s a bad deal for the town and comes with the risk that Orange will repeat the mistake made by the Town of Woodridge in 2009 when it purchased the Woodbridge Country Club, bought a long-term tax increase and ended up having to close it. Here are my reasons why.
The $8.6 million purchase proposal is scheduled to go to a town vote with very little information being provided, with just a last-minute Zoom call in lieu of a town meeting. There is no objective need to rush the purchase. So why is it being rushed? This is a major deal, yet the public has received only an informational letter in which facts are selectively disclosed, and as mentioned below, containing at least one deception. Are the COVID restrictions being used as “cover” to sneak this proposal through?
The purchase proposal is being driven by the false narrative that if the town doesn’t buy the RBCC property it will be sold to developers and be converted into a large number of residences. Steve Pepe, a member of the board of RBCC, stated at a presentation to the Orange Rotary Club recently that the RBCC was considering selling only some excess wooded acreage it owns outside the country club’s 27-hole golf course in order to raise funds to meet a bank balloon loan payment that is approaching. He acknowledged that RBCC has had a good year from a financial point of view with over $4 million in revenues (in line with prior years), adding 30 new members last year, a big increase in golf rounds played and increases in food and beverage sales. Only its major events revenue decreased, but that segment never exceeded 15 percent of overall revenue.
Race Brook’s members, most of whom live outside of Orange, did not intend to sell the entire country club. It was the town’s first selectman who made the proposal to buy the entire country club and then lease it back to the members. Given the “sweetheart” lease offer made by the town, I am not surprised that RBCC jumped at it.
I submit that the members of RBCC – which has had a century-long history as a prestigious country club – would not allow their beloved country club to become a housing development. Pepe acknowledged that if push came to shove with its lender its members would be assessed to pay the balloon payment.
If the town’s proposal is adopted at referendum, the addition of $8.6 million in bonded debt will severely limit or increase the cost of future capital improvements through future bonding. The Orange Board of Education has identified several needs for capital expenditures, and a long-range plan for replacing our aging school buildings, all of which are over 50 years old, which this $8.5 million bonding will make very difficult. Fred Wolfe Park is being developed in slow-motion to avoid adding to bond debt. High Plains Community Center continues to require ongoing repairs and upgrades, in a long series of bond expenditures, and will ultimately need replacement. All of those future capital expenditures and many others would benefit the town’s residents. In comparison, if RBCC is purchased by the town it will not benefit its citizens at all, as there will be no access to RBCC facilities except to its private members. So we have to ask: why are we using Orange tax dollars for the next generation to bail out Race Brook Country Club?
The RBCC property purchase and lease back to its members would create a continuing financial drain that would have to be paid in increased property taxes. The first selectman stated in his letter to the residents that “The Town would own the entire facility as a business investment” and that the cost of the $8.5 million bond over 20 years would be $10.3 million and the return on a 40-year lease would be $10.6 million. The referendum is for $8.6 million, not $8.5 million, but what’s $100,000 to Zeoli?
No mention was made of the loss of real property tax revenues of over $130,000 per year if the town purchases the property. The announced initial lease payment is $250,000 but the first payment is deferred to September 2022. Why? So RBCC can build up its capital. A cashflow analysis of this “business investment” has RBCC making annual lease payments over 19 of the next 20 years of around $5 million, but it would have been relieved of the obligation pay $2.6 million in real estate taxes (plus probable future increases). However, Zeoli estimates the bond would cost the town $10.3 million over 20 years or approximately $515,000 per year.
Factoring in lost tax revenue, that’s an annual loss to the town of $395,000 per year, or $7.9 million in extra taxes levied on us taxpayers over 20 years. Do you know of any business investors who would willingly enter into such a losing business investment?
Orange town residents would have no use of the RBCC or any of the open land surrounding it. There is simply no public benefit. It is a municipality using taxpayer dollars to bail out a private business that really is in no present danger of failure. It creates a very bad policy precedent. Will Orange have to purchase every large parcel of land that is available for sale?
The town will have no voice on Race Brook Country Club’s management. A big risk is that at some time over the next 40 years RBCC will fold, forcing the town to manage the complex. Are we prepared for that eventuality?
Vote no on the Race Brook bailout.
Kenneth Lenz is a former selectman and an attorney at the law offices of Russell Gary Small.