The operators of the city-owned Old Avalon Golf Course have filed a breach of contract lawsuit against Warren officials.
The suit was filed Friday in Trumbull County Common Pleas Court.
Warren Law Director Greg Hicks said the city plans to file a lawsuit of its own to recoup $320,000 in back lease payments from the operators, Old Avalon Golf, LLC. He said both sides had been in negotiations until those talks broke off late last week.
This is not the first time the city has been embroiled in a legal battle over the golf course. The previous operators, Avalon South Management, and city officials counter-sued each other over similar issues. The lawsuit was settled out of court, with Old Avalon operators making a $100,000 payment to the city that was owed by ASM.
Avalon South Management operated the course from 1998 to 2005, which Old Avalon Golf operators are saying was a period of mismanagement and neglect during which the course fell into a state of disrepair.
OAG took over operation the course in 2005 and signed an official management agreement with the city on May 15,2006. The agreement was supposed to expire on Jan. 31, 2014.
The lawsuit states that OAG invested $300,000 of its own money on capital improvements and agreed to make the improvements within the first 30 months of operation. The suit states the company spent more than that on capital improvements in less than two years and continued to make improvements through 2012.
The lawsuit states that according to the agreement, if the golf course made a profit, it would give its first $55,000 to the city for course expenses, but nowhere in the agreement did it say the operators would be responsible for payment if no profit was earned.
The lawsuit states that OAG made $784,000 worth of capital improvements and the city has not reimbursed the operators for those improvements, most of which involved upgrades to the course’s drainage and irrigation system. Because of the bad economy and the large amount spent on capital improvements, the course has never turned a profit, the lawsuit states.
After the 2012 golf season, OAG identified at least $100,000 in critical capital improvements that were needed to make the course playable and safe for the 2013 season. Officials with OAG again tried to meet with city officials to discuss past due reimbursements and funding of new improvements, including extensive repairs to a pump house that was needed to irrigate the course, the suit states.
“OAG was assured by city officials that such a meeting would be arranged. Instead, much to OAG’s surprise, on Oct. 10, 2012, the city had its assistant law director send OAG a letter purporting to terminate the OAG agreement effective immediately,” the filing states.
OAG officials said they have never been given a reason for the early contract termination, and because of the city’s actions and its unwillingness to address the financial issues, “the Old Avalon Golf Course is virtually guaranteed no to open for any part of the 2013 golf season,” the lawsuit states.
The operators also claim that if the city had funded the $100,000 in necessary capital improvements and had not wrongfully terminated the contract, it is likely OAG would have made a profit for the first time since taking over the course.
“The course was in far better condition in February 2013 when OAG finally had to vacate the premises than in 2005 when OAG assumed management,” the suit states. It also says the course will continue to deteriorate rapidly and might have to close forever.
OAG is seeking reimbursement for capital improvements beyond its original $300,000 investment, as well as lost profits from the 2013 golf season.
Two weeks ago, Warren officials heard from three people interested in taking over the Old Avalon Golf Course because some city council members want to sell the course.
Anthony Natale told officials one of the biggest weaknesses of Old Avalon is it requires a $250,000 capital investment to bring it back to viability. He said he wants to manage the course, but has no interest in buying it.
He suggested turning the golf course into a city park and hiring two full-time city employees to run it. He said profits could be split, with 90 percent going toward an untouchable permanent improvement fund used solely for Old Avalon Golf Course and other city parks, and 10 percent going to the executive director.
Scott Karabin, a PGA professional, was not willing to share many details of his proposal at the time.
Last week, council tabled legislation that would have given the administration the authority to sell Old Avalon Golf Course.