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Harbor Links Golf Course audit cites poor budgeting, nepotism

Auditors hired by the town of North Hempstead

Auditors hired by the town of North Hempstead criticized operations of the Harbor Links Golf Course in Port Washington, shown on Oct. 8, 2013. Photo Credit: Barry Sloan

An audit of North Hempstead’s Harbor Links Golf Course, which missed revenue projections in recent years by hundreds of thousands of dollars, criticized officials for “overly optimistic expectations” based on an early 2000’s outlook of the now-struggling golf industry.

The auditors cited spending and hiring practices at the Port Washington course, from buying too much merchandise for the pro shop even as profits dropped and nepotism, with six sets of relatives on the course’s payroll.

Town Supervisor Judi Bosworth announced the audit last year after the town posted a $650,000 revenue shortfall for 2014, her first year in office.

“We want our budget to accurately reflect what we believe the expectations will be,” Bosworth said in an interview Wednesday. “We weren’t meeting the projection.”

The town has owned Harbor Links, a luxury public course with a catering hall for weddings and a clubhouse, since 1998. The course, maintained by Dallas-based Arnold Palmer Golf Management, is the second-largest revenue source for the town’s roughly $66 million general fund.

“Profits declined considerably, yet budgets continued to be produced projecting unreasonable income figures,” auditors from Rochester-based EFPR Group LLP wrote.

North Hempstead paid the firm $19,500 for the audit of fiscal years 2011 through 2014. The audit mostly covered the tenure of former Supervisor Jon Kaiman, who was in office from 2004 until September 2013.

Projections were missed by more than $440,000 in 2013, $124,000 in 2012, and $26,000 in 2011.

“The prior management of Harbor Links and the Town of North Hempstead had overly optimistic expectations,” auditors wrote, adding “it appears that they were still budgeting based on the performance achieved back in the early 2000s.”

Kaiman said in an interview he hoped the golf industry would bounce back. “It’s a good idea to do an audit,” Kaiman said. “This helps the course get back on track.”

Town officials say they have already adopted some of the recommendations. The town has added Harbor Links into the town’s insurance plan, saving $20,000. Town officials will approve the spending of a $10,000 fee from Pepsi, which is to be used for promotional items at the course.

Auditors wrote that budgeted net income “was consistently short by hundreds of thousands of dollars each year.” At the same time, costs rose for golf operations and maintenance payrolls.

Auditors also criticized officials for recording figures on a “cash basis,” which “overstates revenues.” For example, Harbor Links had collected deposits of about $150,000 for future events and held close to $50,000 in unexpired gifts cards at the end of 2014. Instead, auditors wrote, the funds should have been labeled “deferred revenue.”

The audit notes that Harbor Links should consider a nepotism policy given that there are siblings and cousins working together at the course. Town officials are working on a townwide nepotism policy that would apply to the course, according to the audit.

The town should consider adopting an ethics hotline where employees and vendors can anonymously report fraud or unethical behavior, auditors also wrote.

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