Cash-strapped Tuross Head Country Club faces closure if Eurobodalla Shire Council ramps up its lease renewal to a “market-based rental” that could shoot its annual rent from $4700 last year to potentially over $40,000 in just five years.
Desperate club officials warned this week that after 13 months of trying to negotiate a new lease starting well before its previous 20-year agreement ended on May 30, it has yet been unable to finalise a new one because council had proven to be very slow to deal with.
Country club chairman Fred Vezif and chief executive Craig Norman are angry that, despite first approaching the council in July last year and believing it had a suitable although somewhat more costly agreement in January, this had proven not to be the case.
The businessmen said the club had sent six official letters or emails since January asking the council to provide them with its draft lease document to examine following the agreement and to sign off on.
But the draft arrived just two weeks ago and went beyond the January agreement by including a “nasty” surprise – the council wants to push the club into a much more costly market-based rental.
“It would kill the club,” Mr Vezif said. “We just could not sign such an agreement.”
The chairman believed there had been an initial agreement with council back in January for a rental formula with the rent rising from $7200 (first year) to $12,500 by its fourth year.
“We felt this was high but we could financially deal with it so we reluctantly agreed,” Mr Vezif said.
In the council draft document received on August 3, the club had not expected the market-based rental that was included from the end of the fifth year would see the rent potentially exceed $40,000.
He said it came across as a council attempt to “gouge rent”. The draft was also known to be incomplete because the council foreshadowed further changes.
Mr Vezif said the club has been losing money for the previous eight years, culminating in a $90,000 loss during the 2010-2011 financial year.
However, with Mr Norman coming on board as the new CEO, Mr Vezif said measures had been taken that were successfully bringing more people to the club.
He said the club was on track to return to the black within a couple of years but this would not happen if council sought rents that were way too high.
The chairman said if the council pursued its agenda in the draft and set the new lease as market based rental by the end of the fifth year then the likely costs would be between $37,000 and $47,000 per annum.
Mr Vezif said under the current council draft it would make the Tuross club unviable financially.
“The draft has a number of very unsatisfactory features the most severe of which was a reversion to market based rental after five years. This is not consistent with what was agreed in January,” he said.
“We had agreed to the land being revalued after each five year period and the rental being adjusted commensurately. But we had not agreed to the adoption of the market based rental approach.
“The work of the Tuross community and the club would go out the window. Our investment in the course has been in excess of $1.5 million over the last 10 years.”
The new lease will be discussed at a council meeting this Tuesday.