Who pays?05/14/2014 12:56PM ● By Acl
By Richard L. Gaw
As shared at each London Grove supervisors meeting over the last year, the financial picture coming from the Inniscrone Golf Club seems to project a fast track to continued profitability, and the numbers announced at last Wednesday's meeting were no exception.
Inniscrone saw its revenues climb nine percent during the first four months of the year, compared to the same period of 2013. The course has seen a 23 percent increase in memberships over that same four-month period in 2014, as compared to the same period in 2013. In 2012, however, Inniscrone, which is owned by the township, absorbed a recorded loss of $43,000.
As discussed at the board of supervisors' meeting on May 7, the contract that the township has with the Heathland Hospitality Group for the management of the course does not stipulate which party should take responsibility in the event the course operates at a loss. So who pays for the losses: the owner or the management team?
In a memo to the supervisors, township manager Steve Brown said that after his conversation with the township's solicitor, three potential options were suggested: 1) that Heathland absorbs the loss, in that its actions are directly responsible for the profitability of Inniscrone; 2) that the township absorbs the loss, since it owns Inniscrone and should take ultimate responsibility for it, especially given that the township absorbs 100 percent of the course's profits; or 3) that the township split any loss with Heathland.
Although chairman Mike Pickel and supervisor Robert Hittinger stated that Heathland should take full responsibility for any loss, supervisor David Connors disagreed.
"You have to have flexibility. It's a negotiation," he said. "We can't go into it saying [to Heathland], 'You're going to shoulder 100 percent of the loss.' You can't have a management company like Heathland who pays the debt service, and then say to them, 'Oh by the way, we're going to take the profit when we make a profit, and you're going to absorb all the loss in the event of a loss.'"
Pickel disagreed with Connors. "It should be clear who we represent," he replied, referring to the township's taxpayers. "I don't like to negotiate with other people's money. We're not a group of five investors. Were this private, I would be happy to sit down and split it. But this is their [taxpayer's] money."
Pickel asked Brown to arrange a meeting with Heathland and at least two supervisors, as well the township solicitor, in order to iron out the contract.
This is the latest snafu in a long history of the township's association with Inniscrone, which it purchased for $750,000 in 2009. In a unanimous decision by the board, Heathland was awarded the management contract for Inniscrone on Dec. 1, 2011.
The selection of the Heathland group was made, in large measure, as an attempt to stabilize a rocky history of previous Inniscrone ownership and management. During its first ten years, five owners of the course came and went, each unable to recoup their initial investment. After the township took over ownership, it signed a contract with the management group KTEE & TTEE to operate the course. Soon after its purchase, the course operated at a profit to the township, with KTEE & TTEE turning in a $106,000 profit. In 2010, the course operated at a $60,447 loss.
After it awarded the new management contract of the course to Healthland, the township severed ties with KTEE & TTEE, which opened up nearly two years of legal wrangling between the township and the course's former management team. In May 2012, KTEE & TTEE filed a complaint against the township for the return of approximately 50 items, including golf clubs that belonged to the Van Sickle's children, a golf cart, several tables, a golf bag, signs, a television, a refrigerator, grill, cooler and freezer, various office items and a diamond ring.
In early July 2012, the township filed a 58-page document at the Chester County Justice Center that included a nine-count complaint against KTEE & TTEE, Inc., accusing the former management team of fiduciary mismanagement, fraud, accounting errors, breach of contract and irresponsible conduct, and sought monetary damages in excess of $180,000. After the complaint was amended twice by the attorneys for the township, Judge Robert Shenkin of the Chester County Court of Common Pleas granted KTEE & TTEE, Inc. preliminary objections to the second amended complaint, and dismissed the township's fiduciary mismanagement, fraud, conversion and accounting errors claims.
After more than a year of litigation, two settlements were reached in the suit and counter suit between the township and KTEE & TTEE, Inc. Under the settlements, the township and its insurance carrier paid a total of $41,000 to KTEE & TTEE, Inc., and was required to deliver several items of personal property to the management team that the township had originally refused to allow KTEE & TTEE, Inc. to remove from Inniscrone when their term of management ended at the golf course on Dec. 7, 2011. No payments were made by KTEE & TTEE, Inc. to the township under the settlements.
It was revealed that during the dispute, the township paid $62,062.60 to its legal counsel over a 12-month period beginning in August 2012 and ending in July 2013.
In other township news, the fund balance for the township stood at $300,000 for April, with a revenue of $500,000, of which $167,000 were in Earned Income Tax revenues. On the opposite side of the ledger, the township recorded $200,000 in expenditures for the month.
The supervisors passed Ordinance 184, which prohibits parking vehicles on Meadow Woods Lane in the township during school hours. In addition, the ordinance provides for the posting of no-parking signs, and grants permission to tow vehicles that are parked in violation of the ordinance, at the expense of the owners, as well as levy fines for parking violations.
According to the ordinance, parking is prohibited on Meadow Woods Lane Monday through Friday from 7 a.m. to 3 p.m., while Avon Grove Charter School is in session. Official signs notifying the public that no parking is permitted will be erected at the beginning and the end of each section of road affected. A registered vehicle owner who is found to be in violation of the ordinance will be subject to a fine of $25 for each offense.
The supervisors also passed Ordinance 185, which sets parameters for the use of billboards within the township. The ordinance is intended to to protect property values, regulate the potentially damaging impact of signs within the township, ensure compatibility, and limit the potentially harmful impact of excessive signs throughout the township. The ordinance also will control the size, location and illumination of signage in the township.
The supervisors also voted to reject a price estimate for the second phase of Goddard Park's redevelopment, choosing instead to rework the specifications of the project and rebid the project.