January 5, 2004

Letter to Windsor City Council
Dear Sir/Madam: January 4, 2004

Why is it no surprise that the City of Windsor continues to repeat, instead of learn from the mistakes of the past? I strongly urge you to read and consider the arguments set out in the opinion column, “Roseland, Playing with tax dollars”, which I have enclosed. As a taxpayer and business owner, it is clear to me that an investment of $2.5 million to renovate and improve Roseland and Little River golf courses is unjustifiable. If the City of Windsor wants to operate in line with the private sector, in terms of its operational and fiscal processes and responsibilities, then it should start to think like one.

Firstly, the constituents who bear the day to day risks and returns in any company are the shareholders and debt holders. If the business does well, the constituents stand to profit; but if it fails, they must cover the losses. For the City of Windsor and it so-called businesses, the City taxpayers are the “constituents” and therefore, we have an important voice in the business decisions that are made.

It is envisioned that the improvements would be paid out of Roseland’s profits of $400,000 year (before debt costs). Any competent business owner would first determine how much of these profits are required to pay interest and principal on existing debt ($2.4 million pro shop and snack bar) and then how much is reinvested in the business to sustain the on going operations, otherwise known as “working capital”. Even without the detailed knowledge of its finances, on a best case scenario, there is not likely to be much left over to pay for additional interest and principal costs on new debt. Consider the table below, a $2.5 million loan at a conservative interest rate of 5% paid out over 20 years, will incur interest costs of more than $1.4 million, almost doubling the original cost. Its annual principal and interest payments alone will approximate $197,000, that’s using a 20 year amortization! Its simple math and it doesn’t work. How can you sustain existing debt and new debt levels with only $400,000 in profits?

Table 1 Assumes payments start June 1, 2004

Fiscal Year End
Number Payments in Period
Total Scheduled Payments
Total Interest
Principal Reduction

2004
6
$98,467.80
$60,976.25
$37,491.55

2005
12
196,935.60
119,152.08
77,783.52

2006
12
196,935.60
115,262.89
81,672.71

2007
12
196,935.60
111,179.26
85,756.34

> 07
198
3,249,435.51
1,022,139.63
2,227,295.88

Totals
$3,938,710.11
$1,428,710.11
$2,510,000.00

Further, a competent business owner would look at past track record to see whether the return on the capital investment was worth it. Has the Roseland Board or City councilors inquired whether the golf course is earning a positive return on its prior $2.4 million investment. After all, if the City and golf course is to be fiscally responsible, it must ensure that the monetary returns to its constituents are positive. And don’t forget, that with any new capital investment comes an annual cost of maintenance and repair. Has the golf course considered what the on going costs will be? If the alternative to fund the initial investment and then ongoing maintenance costs is to increase golfer fees, then by how much and how do you justify this increase to the golfer and more importantly, how do you stay competitive with the other golf courses in town?

Similar to Roseland and Little River, the Cleary was intended to be self-sustaining; however, the taxpayers are fully aware that its year over year losses are covered by tax revenues from other sources, namely property taxes. It is clear that any and all sources of income the City generates is pooled and then distributed according to need. So why aren’t the profits from these so-called self sustaining golf courses pooled to pay for much needed roads and sewer construction, if not required for the day to day operations?

The most poignant argument from the opinion column is that the City of Windsor competes against the private sector, taking away valuable market share and revenues and yet it expects the same private sector to pay for its improvements and cover its losses. If the City continues to compete to the detriment of its citizens, whether its the construction of the $27 million “Welfare Tower”, the leasing of the Canderel building or the operation of golf courses and the Cleary banquet hall, it will continue to repeat the mistakes of the past. Have we not learned anything?

Federica Nazzani