Cedar Hills is courting buyers for its struggling golf course

CEDAR HILLS -- While no formal offer has been extended, negotiations are under way between Cedar Hills officials and several undisclosed companies interested in buying the struggling Cedar Hills Golf Club.

"I think the mayor and City Council would love to get out of the golf course business," Cedar Hills City Manager Konrad Hildebrandt said on Friday. "But they're looking at all the options right now."

The $6.4 million, 160-acre golf course has been a source of financial difficulty for the city since it opened in August 2003. A shortfall in expected revenue and the last-minute backing out by a company that was to manage the golf course has put the city more than $220,000 in debt.

Debate has been ongoing in the north Utah County bedroom community over what path the city should pursue to keep the golf course from being repossessed by the bank and, in turn, ruining the city's credit and future ability to do business.

In addition to the sale negotiations, the city has been actively discussing the restructuring of its loan with Zions Bank. Of the two options, the city favors selling the course.

At a city meeting this week, developer Rimrock LLC of Salt Lake informed the city of its plans to partner with Kroger Co., owner of the Smith's Food and Drug Stores chain, to develop an 18-acre retail center across from Lone Peak High School.

The planned 66,000-square-foot Smith's store is expected to create nearly 100 full- and part-time jobs while at the same time giving the city much-needed tax revenue.

City officials hope that the retail center will attract other businesses such as restaurants, convenience stores and gas stations, as well.

Some believe the project -- the city's first-ever commercial development -- is an attempt to ease the city's golf course financial woes. But Hildebrandt stressed that the project is motivated more by a desire to create a convenience for the residents of Cedar Hills than to benefit from sales-tax revenue.

"The Smith's project and the golf course are entirely separate issues," he said. "Our residents have wanted a grocery store for quite awhile."

Once Smith's opens, residents won't need to drive to neighboring cities to buy groceries.

An issue that has been mentioned but has received little attention so far is whether the store will be open or be allowed to sell alcohol on Sundays.

Five of the other six Smith's stores in Utah County -- Pleasant Grove, Provo, American Fork and Orem -- are prohibited by city ordinance from selling alcohol on Sundays.

City officials do not expect the Sunday issue to be a major factor in the decision-making process of the commercial project, however.

About half of major retailers in Utah County are open on Sunday.

Nearly 90 percent of Utah County's population are members of The Church of Jesus Christ of Latter-day Saints, which teaches that shopping is not in compliance with proper Sabbath day observance.

The city seeks input via its Web site on the open-on-Sunday issue.

One of the proposed solutions to the city's problems with the golf course included levying an $11-a-month fee to help pay the debt. Since some residents have expressed displeasure with the fee, the city has decided to not move forward with that option for now.

Annual payments of $528,000 are needed for the city to remain current on its golf course loan. In 2007, a balloon payment of $6 million will be due.

City property taxes alone do not generate enough to make the annual payment, government officials have said. Should Cedar Hills default on its loan, the city stands to lose its $800,000 public safety building as well.

Wal-Mart wanted to build in Cedar Hills last year, but the city fought the store's development because -- at 160,000 square feet -- the proposed store was too big for the piece of land that was available.

The Smith's project is a better fit for the land, Hildebrandt said.

Smith's Food and Drug Stores are owned and operated by Kroger Co., the nation's largest grocery retailer, which has been in business since 1883.

Currently, Kroger Co. operates 2,531 stores under different names in 32 states.

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