Former Utah lawmaker plans to build a luxury golf course in the desert, and locals are not pleased

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If you build a world-class destination golf course in the southern Utah desert, will they come?

That’s the $10 million bet the Kane County Water Conservancy District is hoping to place with other people’s money.

Run by retired Republican lawmaker Mike Noel, the water district plans to build a luxury course outside Kanab — where few locals appear to be interested in dropping $100 or more on a round of golf — as a way to draw even more tourists to Kane County.

Earlier this summer, Noel convinced Utah’s Community Impact Board, or CIB, to authorize a low-interest $10 million loan to finance his golf dreams, but the proposal has many hurdles to clear. Before that money is released and the project can move forward, Noel has to secure partnerships with Kane County to run the golf course and with the state, which owns half the 200 acres Noel has proposed for the project.

Now the Kane County water district is in competition for this land with at least two other development proposals, submitted last month to the Utah School and Institutional Trust Land Administration, or SITLA.

But such uncertainties aren’t stopping the small rural water district from breaking into the luxury golf business. Last year it paid $75,000 to world-renown golf-course architect David McLay Kidd to develop preliminary plans for a course on the shores of the district’s Jackson Flat Reservoir. This is money well spent, according to Noel.

Noel retired from the Utah Legislature in 2019 after serving 16 years in the House, where he wielded great influence over public lands issues, pushed hard for the transfer of these lands and associated roads to the state, championed the proposed Lake Powell Pipeline and spearheaded opposition to national monument designations.

A one-time Bureau of Land Management staffer, he operates a ranch in Johnson Canyon, where the controversial pipeline would offload 4,000 acre-feet of water.

“We are transitioning all throughout southern Utah to a tourism community. That’s what we’re doing, whether we like it or not,” Noel told the CIB at its July 1 meeting. “So we’re trying to get ahead of the curve on this project.”

The rare profitable golf course?

While most public golf courses require substantial subsidies, Noel contends his would pay for itself by luring thousands of high-end discerning golfers to stay in Kanab for a few days. So even if the green fees don’t cover all of the operating expenses, these big spenders will leave enough cash in Kanab — a tourist economy town in the heart of southern Utah’s national parks — to make the investment worthwhile.

That’s a lot of wishful thinking, say critics, who argue that the golf course represents a misuse of public money and resources.

“It is imprudent to spend over $10 million of our public revenue to build infrastructure that few people in our community will use,” said Kanab resident Sky Chaney, who heads a local taxpayers association. “Building this project will prevent other projects from being built that will be of greater benefit to the residents of our community.”

Chaney also doubts Noel’s golf course would attract enough golfers to pay for itself. Not only is Kanab hard to get to compared with other destinations close to St. George, he noted, but its summers are hot and its winters cold.

“Most serious golfers are careful to choose courses where the access is not difficult and the weather is good for golfing,” Chaney said. “Kanab is not an ideal place for either of these two requirements.”

In a survey of county residents commissioned by the taxpayers association, 93% of respondents said they oppose the use of public money and local water to be used on a luxury golf course.

An island of green in a red desert

Critics are also unhappy with the planting of water-intensive greens and fairways in a desert at a time when Utah’s water resources are drying up in the face of unrelenting drought. But Noel says the course would be irrigated with 319 acre-feet of water that would otherwise go on alfalfa fields.

“None of this water is culinary water. The point of diversion is on the Kanab Creek. It’s below the area where any water from the city is taken,” Noel said. “This is not only a golf course. It’s also a very, very sophisticated design course to conserve water to the greatest extent.”

Utah’s CIB doles out millions in grants and loans from a revolving fund seeded with federal mineral revenues. By law, this money is to be spent on projects in the communities where these revenues are generated on projects intended to mitigate impacts associated with mineral extraction.

Impact board staff cautioned the board that Noel’s loan application did not square with the CIB’s mission but the board approved it after hearing Noel’s pitch.

“It seems to be a project that is far outside of a water development mission. In fact. I’m not so sure that this is the appropriate entity to apply for a golf course,” CIB staffer Candace Powers told the board. “Golf courses are not necessarily revenue-generating and in fact, are very expensive to maintain.”

Impact dollars typically fund bread-and-butter facilities and infrastructure, such as road upgrades, public safety equipment, sewers and jail construction. The CIB has branched into economic development ventures in recent years, resulting in controversy and at least one lawsuit.

The CIB has funded four golf courses in the past, including a now-defunct one in Kanab, according to Christina Davis, spokeswoman for the CIB’s parent agency Department of Workforce Services.

Betting on a surge of tourists

At the July meeting, the CIB unanimously agreed to extend the water district a 30-year $10 million loan at 1% interest. Noel said the pay back money would be tied to Kane County’s transient room tax (TRT) revenue, so if the golf course’s revenues aren’t enough to service the loan, the district could fall back on this robust revenue stream arising from hotel stays.

In other words, money from federal sources finances the project and a tax on tourists pays it back. Under this plan, Kane County taxpayers and water ratepayers are not affected. Unless, of course, golfers don’t show up to play in sufficient numbers and the county has to bail out the golf course.

That won’t be a concern, Noel assured the CIB. The district’s consultant, Z. Gordon Davidson, conducted a market analysis that predicts the course would host 18,000 rounds its first year and level off at 25,000 rounds in its fourth year. At $100 a round, the net operating income at that level of play would be $802,000.

Noel told the CIB that Kane County is on board with the project as a partner and the County Commission has approved the use of TRT revenue to the tune of $350,000 a year to pay down the loan. That’s the amount the district would need to pay to service a $10 million loan at 1% interest, he said.

Noel also claimed that the district’s lawyer, Rob Van Dyke, who happens to also serve as the elected Kane County attorney, drafted an interlocal agreement concerning governance of the golf course.

“In the agreement, there would be a board. The board would be made up of members of the [Kanab] City Council, the [Kane] County Commission,” Noel told the CIB. “The County Commission wants that. That’s what they told us. They want to be the driver on this as far as the recreational portion of it.”

All this came as news to the Kane County Commission, which posted a letter to the public clarifying where it currently stands.

Kane County is still on the fence

In a recent interview, Commissioner Brent Chamberlain said Kane County has only just begun to conduct its due diligence and is nowhere close to committing TRT revenue to the golf course or even participating as a partner. He also said he has seen no draft interlocal agreement, nor does he expect to until after the county completes an independent analysis.

“There is no agreement between the county and the water district at this time,” he said. “It’s a bit premature. In fact, it’s way premature to say it’s a done deal and the county is going to support this. If everything comes back and indicates this is a worthwhile thing to do, we may do it, but that hasn’t happened.”

He cautioned that the water district’s market analysis “paints a pretty rosy picture” and the county needs to conduct a separate study. His hope is that the course would not require a nickel of TRT money to pay back the CIB loan, much less the full $350,000 a year Noel is seeking.

“It would be nice if it would support itself,” Chamberlain said. “Part of the equation is would it be economically viable? Would it be able to stand on its own two feet? Would it get to that point, hopefully fairly soon, where it wouldn’t require those kinds of payments from the county?”

All these questions will be moot if school trust lands officials decide to partner with someone else to develop the land. These officials are required by law to seek the maximum financial returns on the 3.4 million acres they oversee, which in this case may not be a golf course.

After Noel sought to lease the 100-acre parcel, SITLA went hunting for better offers, according to Kyle Pasley, a real estate manager with SITLA’s St. George office. Two proposals were submitted before the Sept. 1 deadline and are currently being studied.

“We vet them through our board and real estate committee,” Pasley said. “A decision will be made based on what’s in the best financial interest of the [school] trust.”

SITLA’s board is expected to select a winner at its Nov. 18 meeting.

Update, Sept. 20, 2021 • This story has been updated to include information regarding the number of golf courses that the Utah Community Impact Board (CIB) has funded in the past.