Cedar Hills may default on a loan

CEDAR HILLS — If Cedar Hills defaults on its loan for the city's $7 million golf course, it would be the first Utah city since the Great Depression to do so.

Yet many of the some 70 residents at a meeting Tuesday night were urging the city to walk away from financial responsibility. They said taxpayers shouldn't have to pay for a golf course that is losing money. And they resent being asked to bail out a failing venture that was built based on figures that have since been proven faulty.

Cedar Hills Mayor Mike McGee said he feels paying the city's obligation to Zions Bank is a matter of honor.

Councilman Rob Fotheringham disagreed, saying the bond issued to pay for the course is a lease revenue bond based on money the golf course was supposed to generate.

It is not a general obligation bond that calls for citizens to be responsible for pay-off.

Councilman Darrin Lowder warned residents that if Cedar Hills chooses to default on the loan, it will likely make national news. He said the consequences could be dire.

It would be difficult to lure new residents and businesses if Cedar Hills were perceived to be on the verge of bankruptcy, he said.

"We won't be bankrupt. We may default," said Councilman Jim Perry.

Perry also said the city has some options, including restructuring the bank loan to avoid default.

McGee said he has assurances from bank officials that a new payback structure could make it possible for the city to pay its debt strictly from golf course revenues.

The course was built in 2003 and has operated for one year at a loss of $223,000.

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