PRINEVILLE – Since it was built in 1993 as part of a sewage facility expansion, Prineville’s city-owned Meadow Lakes Golf Course has held its own financially, but its restaurant has hemorrhaged money.

Through the years, the restaurant has been kept afloat with borrowed dollars from the golf course operations or the city-owned railroad.

After funneling another $200,000 in railroad dollars to the restaurant in July, the Prineville City Council commissioned a report from a financial consultant that will take a hard look at the restaurant and the 18-hole golf course’s financial health.

The report, which will take another month to finish, is also supposed to generate a business plan to get the restaurant back in the black.

”I have no intention of sugar coating that we are losing money at the restaurant,” said Mayor Mike Wendel. ”(The $200,000) threw up a red flag to the council.”

Financial audits show that the restaurant has lost anywhere from $22,000 to $287,000 a year since 1993. It is projected to lose another $31,000 in the 2005-2006 fiscal year.

”I don’t think there has been enough talk about why the restaurant has lost money,” Wendel said.

”We have to determine if the golf course is running efficiently and can it produce more money? Or if we (get rid) of the restaurant, how would it affect the golf course?”

Restaurant struggles

Funded by loans and grants, the $11 million Meadow Lakes Golf Course complex was hailed as a cheap and innovative way for the city to dispose of treated wastewater that had been previously dumped into the Crooked River, according to former City Manager Henry Hartley. The city irrigates the golf course with the treated wastewater.

In addition to effluent ponds and an irrigation system, the golf course complex also included an upscale $1.1 million, 7,000-square-foot clubhouse that housed a pro shop, locker rooms and Meadow Lakes Restaurant.

Originally pitched as a snack shop, Meadow Lakes Restaurant ended up being a fine-dining establishment.

”(The council) thought it would enhance the golf course and bring in more golfers and make the whole experience better,” Hartley said.

City officials at the time knew the restaurant would lose money in the beginning, he said.

”We thought it would take three or four years to make money,” Hartley said.

In 1995, the city leased the restaurant in the first of a series of attempts to turn it over to private hands. Each of the ventures backfired, and the city gained control of the restaurant again by 2000.

Hartley said the restaurant may have never found its niche or garnered full public support, which might have hindered its profitability.

The city also made a philosophical decision to downplay the restaurant’s bar, even though it typically bolsters a restaurant’s sales.

Wayne Van Matre, the director of operations at the golf course, said he is trying to improve the restaurant’s faltering reputation over service and food quality.

The restaurant has also had high labor costs. It now employs an average of 12 to 15 part-time employees and a full-time manager, he said.

The restaurant is trying to change its image as a special occasion dining spot to a family-friendly eatery with a more varied menu to attract more diners, he said.

Van Matre said the restaurant still has a place in the golf-course complex.

”The restaurant is an amenity to draw golfers,” Van Matre said. ”It’s part of a full-service operation. We need to have that available to compete.”

Golf course

As part of the report, Andy Parks, the financial consultant, is looking at ways to make the golf course more profitable. He is preparing the report in conjunction with Mark Amberson, the general manager of Awbrey Glen golf course in Bend.

Meadow Lakes Golf Course, itself, has netted between $201,000 and $251,000 in income each year since 2001, according to the city’s financial audits.

Though the golf course saw a spike in rounds in July and August, the annual number of rounds has stayed flat at roughly 25,000, according to Van Matre.

Nationally, the golf industry saw less than a 1 percent increase in rounds from 2003 to 2004, according to the National Golf Foundation in Florida. Central Oregon had a 5 percent increase in that same period among its 24 golf courses, after declines in previous years, according to the Central Oregon Visitors Association.

Feasibility reports prepared for the city when Meadow Lakes was built predicted that the number of rounds would reach 29,000 a year by 1996.

Parks, the financial consultant, said he wants to determine why the golf course hasn’t fared better because it has the capacity for more rounds and has one of the longer playing seasons in the area.

Van Matre said to improve rounds, the golf course has ramped up its advertising and is trying to recruit more corporate business.

”As the community grows, we are going to make a lot more money,” he said.

A package deal

The restaurant may not be able to compete as a stand-alone business, but it does attract people to the links, city officials say.

”I don’t like the fact that the restaurant doesn’t hold its own, but I do see them as a whole,” said City Councilor Bobbi Young.

The golf course and restaurant have to be viewed as a package deal, said City Councilor Betty Roppe.

”I think Meadow Lakes has the potential of being a strong asset to the community, and we need to make it financially feasible,” Roppe said.

But the golf course is not completely self-sufficient.

The city’s public works department contributes $300,000 to $400,000 to the golf course each year as a fee to dispose of the treated wastewater, the financial audits show. The money comes out of fees paid by residents and goes toward maintaining and irrigating the golf course with the treated effluent.

City Councilor Chet Petersen said while the public may view that as a form of subsidy to the golf course, it’s a valid payment.

”Some would say that you’re not making a profit because you’re putting money in there, but we still have to pay that money,” Petersen said. ”We’re mitigating that with the $200,000 profit from the (golf course and restaurant) operations.”

Hartley, the former city manager, said the public works department has to pay disposal fees, whether the treated wastewater goes over the golf course, on bare land or into the river.

”If a round of golf had never been played, it still would have been the least-cost (sewage facility) option,” Hartley said. ”Any dollars generated in revenue playing golf were a bonus.”

The city plans to reduce the amount of public works dollars going to the golf course this year by $150,000, which will be picked up by the golf course, said City Manager Robb Corbett.

The city may ultimately try to make the golf course complex completely self-sufficient, but its first priority is to make it more profitable, according to Corbett.

It is not time to do away with the restaurant, said Petersen, the city councilor, but it is time to staunch its losses.

”One doesn’t have to think long and hard to know that the restaurant, particularly during the week, is a vital component of commerce in Prineville,” Petersen said. ”Still it doesn’t offset the losses.”