PENDLETON — A State Board of Accounts report on Pendleton revealed the town-owned golf course is more than $290,000 in the red.
The report, part of a regular audit inquiry done every two years, found the Fall Creek Golf Course's cash balance was overdrawn by $297,686 in 2012.
Town Council President Don Henderson said the reason for the debt is the way the town purchased the golf course.
Henderson said Pendleton took ownership of the golf course about five years ago with the intention of incorporating it into the park system. But, because the town wanted to add more land from Indiana's Department of Corrections, they decided to wait on handing the course over to the parks department to facilitate the transfer of land.
He said the golf course was close to $300,000 in debt when the town decided to purchase it with a revenue bond.
The town put the bond on the course, which meant all revenue generated by the golf course went toward paying the bond instead of addressing the debt. Henderson said the town has also improved the course with better greens and new fairways and added a driving range, which cost additional dollars.
"The debt looks worse than it is," Henderson said. "Because of all the revenue going toward the bond."
The town's deputy treasurer Linda Kreigh said the debt is not owed to any person or entity. It is simply the town spending more money out of the golf course account then it had. Henderson said other funds have been used to absorb some of the difference.
Pendleton will sign the course over to the parks department by the end of the year, and a new way of addressing the debt will be implemented.
Henderson said the park will use a general obligation bond, which will be paid with money raised from taxes, not from revenue. That means the money the course brings in will go toward paying off the debt instead of paying off the bond.
Henderson added the tax money will come from Pendleton and Fall Creek Township.
"That will bring down the debt," Henderson said. "So now is the time to transfer the land."
In addition to the course, there is land attached to the course that the parks department plans on turning into walking trails and possibly campsites.
Despite the large amount of debt, Henderson said the auditors from the board of accounts were satisfied with the town's plan for the course going forward.
"The board of accounts is very comfortable with what we are doing," Henderson said.
The report specifically mentioned the new driving range as a new source of income to help raise revenue.
Pendleton clerk/treasurer Tim Ryan said it would be very difficult to predict how fast the debt would go away once the parks department took over, but said there will be an improvement.
Henderson said the golf course might look at raising green fees because of the upgrades that were made.
"I would envision some adjustment in green fees," he said. "That will be adjusted as they (course owners) determine what needs to be generated for revenue."
The report also showed an overdrawn balance for the town's fire truck debt. The total there was $3,645 for 2012. The report said this was because of insufficient property tax collection. The town officials told the auditors money would be taken from the general fund to address the debt.
Follow Zach Osowski on Twitter @Osowski_THB or call him at 640-4847.