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PenMet, property owners stalled over Madrona Links lease

Two local businessmen who bought a portion of the property on which Madrona Links Golf Course sits sought support for their attempt to lease the facility during a public meeting Tuesday evening at the course’s restaurant, Hackers. Not all of the 30 golfers and neighbors who attended readily jumped on board.

Zach Rosenbloom addresses the crowd Tuesday at Hackers Bar & Grill. Photo by Ed Friedrich

The city of Tacoma, which owned the course’s other 71 acres, entered a 50-year lease with Ken Tyson in 1977 to develop, manage and operate the course. Tyson bought the adjoining 14 acres to create space for an 18-hole layout. The course opened in 1978. Tyson Limited Partnership has held the lease, which expires in 2028, ever since, continuing after PenMet Parks purchased the course from the city in 2008 for $2 million.

ZTM bought 14 acres in December

Tyson and his wife have died. Their adult children, who live out of state, are no longer interested. On Dec. 20, they sold the 14-acre parcel to ZTM Holdings (accountants Zack Rosenbloom and Mark Owen) for $1 million. In January, they appointed ZTM as managing representative, taking over Tyson’s day-to-day responsibilities.

PenMet expressed interest in buying the land and set aside $1 million for that purpose, attorney Mark Roberts said, but the sellers didn’t contact the parks district. Rosenbloom said Tuesday that the Tysons sold the property to him at a discount because he’s a longtime friend and they trust him to continue the family legacy.

Spokesman Ezra Eickmeyer leads a public meeting Tuesday at Hackers Bar & Grill. Photo by Ed Friedrich

During the spring, PenMet commissioned an appraisal that determined the value at $2.5 million. It offered to purchase the property from ZTM at that price, stating the offer wasn’t made under threat of condemnation or imminent domain.

ZTM responded with its own assessment that found the 14 acres to be worth $8.1 million. The wide gap, Rosenbloom claimed Tuesday, was because PenMet “cherry-picked” old and out-of-state comparables while ZTM’s were local and recent. ZTM rejected PenMet’s offer.

Expected to take over lease

Rosenbloom and Owen purchased the property expecting they could take over Tyson’s lease and management of the golf course, leading to a new 40- or 50-year lease, according to ZTM spokesman Ezra Eickmeyer. ZTM asked PenMet to reassign the existing lease to them.

The district responded that it’s legally required to conduct a competitive bidding process, and that Rosenbloom and Owen have failed to provide any qualifications or a specific plan to manage and invest in the course.

“Simply owning the 14-acre parcel does not qualify someone to perform golf course management and operations,” the district states on its website.

Eickmeyer several times Tuesday characterized PenMet as mounting a hostile takeover of Madrona Links and waging a public relations campaign against Rosenbloom and Owen. The flyer handed out at the rally states: “If PenMet Parks is successful in pushing out their partners, they will either have to spend $8M on buying private property or significantly shrink the size of the course. PenMet needs to stop their aggression against the private partners and instead work with them to give the aging facility the attention it needs.”

Zack Rosenbloom, left, and spokesman Ezra Eickmeyer having a pre-rally discussion. Photo by Ed Friedrich

The parks district does have a webpage about the golf course that includes “facts,” frequently asked questions, the lease, slides from a June 13 study session, the appraisal and offer letter to ZTM, and three notices of default to Tyson for not maintaining the course according to the lease. Meeting participants pointed out the site includes nothing derogatory about ZTM, though Rosenbloom said it’s a matter of perception and that PenMet “put their whole website against us.”

Hostile takeover?

PenMet Parks says on its website that it has never stated or implied it would conduct a “hostile takeover” of Madrona Links.

Course neighbor Betty Lilienthal suggested ZTM might be better off taking a positive approach.

“I’d love to work with PenMet,” Rosenbloom said, adding that he’s fine with going through a competitive selection process. “All I’m asking for is a chance, a seat at the table, and PenMet is hell-bent on buying that property and taking it over.”

PenMet does say on its website that it is “making every reasonable effort to purchase the parcel in order to keep Madrona Links Golf Course intact after the lease expires.”

Mark Owen said he just wanted to stop the finger pointing. Photo by Ed Friedrich

Resident Randy Boss asked why not have PenMet pay ZTM the $1 million it spent on the property “and then we could all go home.” That drew applause, revealing feelings among the group.

Little money going back into course

Another guest said people want PenMet to take over and maintain the course because Tyson never did. Though PenMet and Tyson both have pocketed hundreds of thousands of dollars from the course, neither have reinvested much. (PenMet has $500,000 in its capital budget for yet-to-be determined priority improvements.)

The lease doesn’t require them to, Rosenbloom said. Only sub-leaser Stutsman Enterprise, which actually runs the course, is legally obligated to devote 1.5% of greens fees to capital improvements each year.

Matthew Stutsman said in June that he spends eight times that much. Eickmeyer offered a different take.

“He’s the one making all the money right now,” said the spokesman. “For him to do anything, it has been a matter of having to threaten him. He’s pocketing as much of the cash as he can.”

The situation has devolved to the point where the course needs $1.8 to $2.4 million in high-priority investments and three times that much in the long run, according to a recent PenMet study conducted by Richard Singer of the National Golf Foundation. Its unique operating structure with several leases and subleases also flow money away from improvements.

Golfers waiting to tee off at Madrona Links Golf Course. Photo by Ed Friedrich

PenMet has issued three notices of default to Tyson for golf course conditions, including one in November that’s active. If the problems aren’t addressed, the district could terminate the lease, according to its website. Meeting participants asked Rosenbloom why he hasn’t responded to the defaults. He said he has, through attorneys.

“PenMet can’t expect the new owners to put in money to start implementing changes if they’re just going to shove you out,” Eickmeyer said.

Crowd tentative about proposal

No matter how many times Rosenbloom, Owen and Eickmeyer reiterated Tuesday that all they want is to sign a lease to operate the course the way it always has been and work with PenMet on upgrades, people remained suspicious. Rosenbloom tried to calm them, saying he could build 72 houses on the property and rake in millions of dollars, but that’s not what he wants to do.

“I don’t need the money, frankly,” he said. “I want to give back to the community and carry on (the Tysons’) legacy. That family did a big solid for this community.”

PenMet says it won’t shift the lease because ZTM hasn’t shown it is capable. Rosenbloom said the lease only requires that it be transferred to a “responsible” party. He admits he and Owen, who lives beside the 14th hole and is the son of a former lieutenant governor, are not golf course managers.

“We’re both accounting dorks, not golf professionals,” Rosenbloom said. “That’s one of the things PenMet has been after us about from the git-go. But we run businesses, and golf’s a business. There’s really not an argument that we’re not fit to be able to run this golf course. … Accountants run golf courses now and hire golf professionals to operate them.”

A golfer hits some irons at Madrona Links. Photo by Ed Friedrich

What happens in 2028?

Everybody — PenMet, ZTM, golfers and neighbors — wants the course to remain 18 holes. And it will, at least until the lease expires in 2028.

The parks district’s consultant, Singer, looked at what could happen then if the 14 acres becomes unavailable. He said PenMet might have to reduce the course to nine holes or turn it into an executive or par-3 layout. The parks district says it has no desire to operate a golf course. It would consider the study’s recommendations to pursue either a full-service management agreement or a comprehensive golf property lease, according to its website.

Rosenbloom and Owen hope it doesn’t come to that.

“They want to be the families that oversee, manage and bring in private capital to do all the upgrades, repairs and renovations everybody knows need to happen,” said Eickmeyer, the son of former state Rep. Bill Eickmeyer. “All these guys want is for PenMet to transfer the lease to the new owners and take their PR campaign against Rosenbloom off their website.

“They’re asking for de-escalation and recognition that you can’t shove out the private partners without threatening the golf course. The point of tonight is reaching out to the community to say, hey, here’s what’s going on, here’s the reality of the situation, here’s our team’s intentions, to ask for community support to maintain the golf course as a public golf course and as the private-public partnership it’s been since Day 1.”