County should nail down terms of Heritage loan

Beaufort County's $1 million commitment to the Heritage golf tournament is a sound one-time investment, but county officials risk public support when the terms for what they called a loan are still up in the air at this late date.

County Council must decide what the county is due for its support of the PGA Tour event and when it is due.

The Heritage Classic Foundation has searched for more than a year without success for a company to pay $7 million to $8 million to put its name on the tournament. The foundation secured a spot on the 2011 schedule by pledging $4 million of its own reserves and getting $1 million commitments from the Town of Hilton Head Island and Beaufort County.

The ordinance passed by County Council on Sept. 13 lays out parameters for the loan. The money was to be used to secure the 2011 tournament date. Any money advanced to the tournament is to be paid back within 60 days of securing a new title sponsor or a group of sponsors willing to pay $4 million or more to the tournament. The county can use advertising time to promote Beaufort County if advertising spots are available or sell unsold advertising spots to recoup the money.

The ordinance is confusing in that it anticipates a scenario that didn't pan out. For example, it calls for updates on the tournament date process even though the date was set by the time the ordinance became law. It also states that any unpaid loan balance as of Feb. 1 can be converted to a five-year loan, with interest. But tournament officials didn't request any money until March 1.

Tournament officials have offered the county 16 advertising spots on the Golf Channel. The foundation would retain 32 spots on CBS and try to sell them to replenish its reserves.

Foundation chairman Simon Fraser said the nonprofit organization needs to have cash in hand, or it might not be able to operate after the April tournament.

"The only way we're going to put on a tournament moving forward is if we have some money," he said.

He's right. If the foundation is fortunate enough to find a title sponsor for 2012 before it's too late (and no one has said exactly when that is), then it will need some operating cash to move ahead.

County attorney Lad Howell said earlier this month that he had been instructed to "start thinking about how to craft a loan agreement" using the ordinance guidelines.

That should have happened months ago.

A question for County Council is whether it wants to insist on getting the county's money back before the foundation replenishes its own coffers. Will the county accept a longer-term payback? Are the Golf Channel advertising spots sufficient payback and if so how will the county use them?

Hilton Head's Town Council, which did not put any conditions on its $1 million commitment, has agreed to accept its 16 spots. Town manager Steve Riley estimated that the 30-second spots, which would air Thursday and Friday of the tournament, were not worth a full $1 million, but noted the town was getting something of value in return for its investment. The town will get the Hilton Head Island-Bluffton Chamber of Commerce to produce the advertising and could tap an emergency marketing fund to help pay for it.

How the county will proceed isn't clear, but it should be. County Council members are expected to take up the matter March 21 at the council's next Finance Committee meeting. That's less than a month before the tournament.

We don't expect the county to renege on its commitment to the Heritage, but officials should get the terms of that commitment nailed down.