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Shelby to Defer $1.3M in Cherry Creek Rent in Return for Renovations, Lease Extension

Cherry Creek, though operated by Golf Facilities, Inc., is owned by Shelby Township, which receives rent from GFI as a tenant.

Shelby Township has agreed to defer $1.3 million in rent from Cherry Creek Golf Club in exchange for Cherry Creek’s commitment to make a minimum of $1.6 million in capital improvements to the property over the next eight years and extend its current lease until 2062.

The township board voted 5-1 Tuesday to approve these lease amendments, with Trustee Nick Nightingale casting an opposing vote and Trustee Doug Wozniak absent.

Under the amended lease terms, Shelby Township will defer Cherry Creek’s rent for eight years and eliminate the guaranteed monthly rent payments in favor of a quarterly pay schedule. In return, Cherry Creek will invest the monies that would have otherwise been used for rent in a series of renovations. The company has also agreed to extend its lease term to 2062, guaranteeing an additional 17 years of rent for the township.

“It is not an abatement. It is a deferral,” said Mike Bylen, a representative of Cherry Creek. “This is an investment in the property to keep it relevant.”

Proposed renovations include additional outdoor dining options, expansion of the white tees and construction of a new building that will make the existing clubhouse "banquets only."

See a list of renovations planned for the next eight years.

Although Golf Facilities, Inc. operates Cherry Creek, the property and all associated buildings are owned by Shelby Township.

“This is our asset,” said Treasurer Mike Flynn. “They are making an investment in our asset which the taxpayers will own at the end of the day.”

While the rent deferral will mean a $1.3 million loss in township revenue for the next eight years, increased rents throughout the existing lease period are expected to return $1.47 million more than that earned had the deferral not taken place. Taking into account the extended lease, Cherry Creek operators say Shelby can expect an additional $17 million in revenue, too.  

Supervisor Richard Stathakis stressed that “not one penny” of the township’s general fund is being used for this project. While the rent deferral will mean a loss in revenue, Shelby is not adding any expense to its budget.

In lieu of paying rent for eight years, Cherry Creek will reinvest the $1.3 million into capital improvements to the property and, per the terms of the lease, pay higher rents in the years following the deferral.

However, because Shelby has already built the revenue from Cherry Creek’s rent into its 2013 budget, Stathakis said the township will have to divert $125,000 from its capital improvement fund to cover the revenue loss this year. This will not be the case in future as the township will not take revenue from Cherry Creek into account when compiling the next seven years of budgets.

“In the future, we’re not going to realize (those rents) as revenue,” Stathakis said. “It’s going to be deferred and we’ll get the money in eight years.”

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Dana Horton February 21, 2013 at 10:26 PM
Well that just couldn’t be the case here could it? Sorry just joking.
Dana Horton February 21, 2013 at 10:31 PM
Mr Nightingale is a businessman in Shelby. His business provides a valuable service to this township. He is a homeowner and a father raising a family. He is doing his civic duty as a trustee of the township. What’s in your resume sArAh? Why don’t you run for office? I would but I have a full time career and I wouldn’t want to be considered a double dipper.
Dana Horton February 21, 2013 at 10:36 PM
We currently have enough parks and new parks in the works to keep the dpw and parks & rec busy. This is especially true as the township workforce gets thinned out. I also believe that we just plain can’t afford a project of this magnitude. If it was a good venture then Cherry Creek wouldn’t be at the township meeting begging for abatements and other favors from the esteemed board.
Dana Horton February 21, 2013 at 10:38 PM
I hope he also receives punitive damages from some select individuals.
Geoff Hoffman February 24, 2013 at 03:40 AM
I understand that while some board members wanted the deferral shortened to 5 years the response from the bank was that they "preferred an 8 year deferral". So the board caved and agreed to the 8 years. This doesn't make sense. If the bank said they required an 8 year deferral then I might have agreed but they only "preferred an 8 year deferral". It was really Golf Facility Inc. that wanted the 8 year deferral and an extension on the end of the existing lease agreement to make it last at least another 40 years. This will allow existing members of their aging investment group to sell their shares to younger investors. That is why this deal was done.

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