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Course official pledges to play on

Tax liens, hot weather last summer put Old English Golf Course in vulnerable position

February 16, 2011
The hand-printed sign on the door of the Old English Golf Course last week announced that the business was "closed for repairs — open soon". But some in the area are concerned that the golf course may have a difficult time regaining its footing.

The golf course, which opened in 2002, has had its share of problems but has also earned a reputation as a good course to play and has encouraged many in the area who never played golf to give it a try. Those local golfers have been the backbone of the business since its opening. The course also became involved with local youth, giving many of them the opportunity to learn the sport and to participate in competitions at the course. The clubhouse included a restaurant that attracted a large lunch and dinner crowd and offered a menu that kept many regulars coming back for a good meal and a round of golf.

A sign on the door of the Old English Golf Course indicates the business is temporarily closed. But, even as the business has experienced weather-related and tax problems, officials insist they are on solid ground and expect to be open regularly after this past weekend. Photo by Lee Cable
But the business has encountered some setbacks recently when the Internal Revenue Service put a tax lien on the business and the hot weather conditions during the summer last year kept many golfers at home, cutting revenue for the golf course. That, along with problems with the course greens, put the business in a vulnerable position.

"It's been a miserable winter," said Mark Megenity, a principal shareholder in the business. "With the weather we've had, it's been difficult just to cover payroll. And coming off a really hot summer when business was already down, it's made things extremely difficult for us.

"Just a couple of years ago, in 2008, we were in the black and made a profit of about $50,000. We actually took in about $700,000 that year. Then, in 2009, we did OK. But they watered the greens almost every night that summer and the roots just didn't grow the way they would have if we had watered less, making the roots grow longer in search of water. That would have made the grass much hardier," he continued.

"Then, in 2010, we got hammered with the hot weather and the greens just couldn't keep up. That knocks playing down a lot and hurts revenue."

The day-to-day business of the course was managed by Cary Hammond, one of the original developers and a stockholder, since its opening.

"I haven't been involved in the operation of the course for about six months," Hammond said. "I bought a golf course in New Albany, and Mark Megenity and Forrest Lucas said they didn't want me around anymore. And there have been some problems there. I lost the greens, I'm the first to admit that. The hot weather and the fact that we had a situation of hydrophobics, where the greens wouldn't absorb water, allowed the greens to deteriorate. And it was so hot that no one wanted to play golf.

"Just two short years ago, the place made enough money to build an addition and a new deck. But 2010 was a bad year for golf courses all over the country."

The business' problems with the IRS has been ongoing.

"In 2004, I found out that we owed $14,000 in withholding taxes," Megenity said. "When I told the board of directors about it, they were furious. They passed a resolution to pay withholding taxes as we go and not allow them to accumulate, and to pay the $14,000 as soon as possible. After that, every board member, one by one, left. The taxes kept accumulating. By 2009 and 2010, I'll have to give Cary credit, he always worked hard and he set up the withholding taxes on an auto-pay system. And that's one of the reasons the IRS will work with us now and try to set up a way to pay what we owe and keep the business going."

Late last year, the IRS attached at least two tax liens on the business, one for $557,527.89 and another for $225,199.82. But, according to both Megenity and Hammond, a major part of those liens included interest and penalties, and golf course officials, including Megenity, Hammond and Lucas, were able to negotiate a deal with the IRS that allowed them to present a partial payment, which has been made, and to pay off the debt during the next five years.

"I met with the IRS about five or six times," Hammond said. "That was the last thing I did back in May; I met with them and, with Forrest Lucas, submitted an offer of compromise and made a down payment on the taxes. The local agent in Louisville thought it was a good resolution and supported it."

(A representative of Lucas directed inquiries to Lucas Oil's chief financial officer. However, efforts to reach the CFO were unsuccessful.)

Megenity said the tax debt is now about $135,000, an amount that is manageable for the business and that, as soon as weather permits, the course will be open again.

"We've done some work in the clubhouse, and we've improved our golf carts," Megenity said. "The hard winter set us back, but we're ready for another season when the weather breaks, and we will be open."

Hammond agreed with Megenity that this coming summer will be a good one for the golf course.

"Money alone does not solve every problem," Hammond said. "But we've had a great partner in Lucas Oil, and it's my goal to get involved again at the English course. I have a nine-hole course in New Albany, and I try to funnel golfers to the Old English course anytime I can. I think it will be a great summer for the course — if I have anything to do with it — and I'd love to sit down with Lucas and put a plan together to build on what we have in the area — Marengo Cave, Patoka Lake and other places — to encourage people to participate in local businesses, which will help all of us.

"I believe our tax agreement is good; although it can take up to a year to be approved, I believe it will be accepted and approved. We made the first payment in a five-year plan and everything looks good. But taxes were not the reason it closed this winter," he added.

"The weather situation knocked Old English on its back. Our taxes were paid for 2007, 2008 and 2009. That's the reason the IRS agreed to work with us. There needs to be a new manager hired and everyone needs to help him, and we need to build a good website to help pull in business. But I plan to be involved in some capacity. I'll help as much as I can."

Megenity said the course has more than 170 small investors, and he is the principal stockholder. He and Hammond own about 21 percent of the business.

"We're not going to fence it off and turn it into a pasture," Megenity added. "It will remain a golf course. We had good weather and opened last weekend, and had a decent crowd. We even hosted a valentine's dinner Saturday night. We're not out of business, and we're looking forward to a great summer."

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