The city of Johnstown’s plans for Berkley Hills Golf Course might be discussed by City Council during executive session prior to the board’s regular monthly meeting on Wednesday, according to City Manager George Hayfield.
Hayfield did not provide further details, other than to say, “When it comes to dealing with assets or movement of city assets that’s something that’s always done confidentially until a time at which it’s advertised, if it is advertised.”
He said if the property, which is leased to Royal Berkshire, were going to be advertised for sale, the announcement would likely occur within the next two weeks.
“That’s a big ‘if’ though,” Hayfield emphasized.
He added: “At this point, I don’t know whether it’s going to be sold. I don’t know whether it’s going to be leased again or leased under different terms.
“It could be any of those. It’s a number of different options.”
Johnstown has recently been considering selling assets, including the golf course in Upper Yoder Township, with hopes of raising money to help eliminate debt in preparation for exiting Pennsylvania’s Act 47 program for distressed municipalities, no later than October 2021.
“Basically, it states in our exit plan, any sale of any assets is pretty much required to go towards reduction of debt,” Hayfield said. “That debt could be pension debt. It could be any amount of debt the city has. The city actually still owes about $6 million on the Point Stadium, for instance. There is about $25 million in pension debt.
“Anything we get from a sale would go toward reduction of that debt.”
Berkley Hills has, in recent years, been revenue-neutral at best for the city, which must pay taxes on it to Upper Yoder Township and Westmont Hilltop School District, according to Hayfield.
Royal Berkshire has operated the 81-year-old, nine-hole course since 2015.
City Council approved the arrangement in late 2014, when three current members – Mayor Frank Janakovic, Marie Mock and David Vitovich – were on the board.
At the time, an offer made by David Gehlman – which included $30,000 per year from 2015-17 and $32,000 for 2018-19, or a flat rate of $18,000 per year if the city put out a request for proposal – was rejected. Gehlman ran the course for 10 years before his agreement was terminated for not providing council with an audit report on the golf course operations, as required.
In 2014, Gehlman told The Tribune-Democrat, “They wanted to put them into the (request for proposals). I was not going to put my numbers out for the general public to bid against me.”
In Gehlman’s proposal, he described the course as being “maintained very well” with “above average conditions under my watch.”
An original five-year agreement between the city and Royal Berkshire expires at the end of 2019. But the company already provided written notification to the city that it plans to exercise the first of three possible three-year extensions, taking the deal to at least 2022.
“Our intent is just to honor the agreement that was agreed upon,” Royal Berkshire President Derek Hayes said. “We plan to be there as long as possible.”
The company pays $30,000 per year for the lease, minus deductions and credits for doing work such as making repairs, quarterly aerification and dead tree removal, along with snow removal, mold removal or crabgrass applications.
“The only reason that clause was put in was because, when we took over, we identified with the city manager at the time several key problems with the golf course that existed before we took over,” Hayes said. “And the plan was either the city would pay to have them fixed or, since the city is distressed and maybe doesn’t have the cash flow on hand, we would fix up some of these assets for them, and, in return, we could then just deduct that off our lease payment.”
Hayes said Royal Berkshire has done work such as rewiring an electric system at the pavilion and fixing the roof on the cart barn. He estimates his operation has paid slightly under $90,000 of the $120,000 maximum due to the city, while the rest was covered by repairs and maintenance.
“I know through the first three years we didn’t deduct really anything, just because with this constant switch in city managers, we were just kind of biding our time, seeing what was going to happen,” Hayes said, referencing the fact that Johnstown has had five full-time or acting city managers since 2015. “It got to the point in year four, which would have been last year, where there were just some things that absolutely could not wait any more. You can’t have a cart barn with electric carts getting charged every night and every time it rains, water coming pouring inside the building. It just becomes a safety hazard.”
Royal Berkshire has also been making financial decisions – for example, acquiring new golf carts – with the anticipation of operating the course for years to come, according to Hayes.
“That’s the plan, and that’s kind of what we had been running our operations based off the assumption of,” Hayes said.
Hayes is not certain what the city plans to do with the course.
“One way or another, we’d like to be involved in the golf course for as long as possible, so I’m hoping that something can be worked out, whether it’s the city just choosing to abide by the agreement that’s in place or if they want to sell it,” Hayes said. “The main thing is we would hate to see it just get sold and the golf course get taken away.”