Golf club rents are reviewed

The semiprivate club, which leases land from Quincy and Milton, is being put under the microscope on both sides. In Milton, town officials are reviewing their lease agreements. In Quincy, city councilors will discuss the club’s revenues Wednesday night with an eye toward getting a bigger slice of the pie.

All this attention comes on the heels of a review conducted by an independent accounting firm for Quincy, which has raised questions about the way Granite Links calculates its rent payments.

The operators of the golf club maintain they have been paying rent on time and abiding by their leases, and they say they welcome the scrutiny.

Rising hundreds of feet above sea level, the 27-hole Granite Links course and clubhouse was developed by Quarry Hills Associates Inc. on what had been long-neglected public property - abandoned granite quarries and three closed landfills. Using dirt from the Big Dig, the developer filled in the quarries and transformed the harsh, rocky landscape into lush greens and fairways. The first nine holes opened in 2003, and the rest was completed in 2006. Golf Digest named it one of the 10 best new upscale golf courses in the country.

Quarry Hills Associates has paid more than $2.8 million in rent to Quincy since the course opened, according to city records. Its most recent payment, for $124,464, was made on Oct. 15.

“We’re scrupulously careful never to go into default,’’ said club co-owner Bill O’Connell.

The club has a 50-year tax-free lease with Quincy, in which it agrees to give the city a percentage of its revenues. This summer the city quietly hired Di Pesa & Co., a Quincy accounting firm, to review the lease agreements and the club’s revenues.

In its Aug. 21 report draft to the city, Di Pesa stated that the club may owe Quincy upwards of $50,000 in back rent from 2008. The draft, a copy of which was obtained by the Globe, has not been released.

The owners of the club disagree, adding they had not seen the draft.

“I’ve never had anybody from the city call me and talk to me about this,’’ said O’Connell. “They’re our partner. The city can audit us any time they want.’’

In the draft of its report, Di Pesa said the way the club accounts for its business expenses may have resulted in lower rent payments to the city. In one example, it said the club provided $143,000 in free and discounted meals at its restaurant in 2008. “If the city determines certain items . . . are not ‘ordinary and necessary expenses and costs’ as referred to in the lease, there would be an impact on the rent due the city on these items,’’ it said.

Di Pesa did not return a phone call seeking comment.

Quincy Mayor Thomas P. Koch’s office declined to comment on the draft. “That has been not been released to anyone,’’ said James J. Fatseas, the mayor’s chief of staff.

Fatseas said that Quarry Hills Associates had been making fixed rent payments to the city, and that this was the first year that payments would be variable, based on the club’s revenues.

Because of that change, said Fatseas, “The mayor asked to have a review of this as part of our due diligence with Quarry Hills Associates. At one point there was a fixed dollar amount we were receiving from [Quarry Hills Associates]. We thought it would be a good time to review that, and see where we stood.’’

Fatseas said the draft by Di Pesa has not been finalized, and is currently being reviewed by the city’s auditing firm, Powers & Sullivan. He said city officials are scheduled to meet with Powers & Sullivan to discuss the preliminary findings, then follow up and discuss the matter with Quarry Hills Associates. A final report would not be released to the City Council until they met with the club’s owners, he said.

That process could take at least three to four weeks, he said. For now, “I can’t comment on a draft report,’’ said Fatseas. “It shouldn’t be in anybody’s hands but ours. It’s still subject to review by our auditing firm.’’

Meanwhile, the town of Milton is also reviewing its lease agreements with the club, said Milton Town Administrator Kevin J. Mearn. Over the past couple of months, officials have been taking a closer look at the rent and tax payments, and they have been communicating with the club, he said.

On Wednesday, the Quincy City Council’s oversight committee plans to delve into the club’s finances as much as it can, said Ward 6 City Councilor Brian F. McNamee, who chairs the oversight committee and called the hearing. Representatives from Quarry Hills and Di Pesa have been invited to attend.

McNamee said he wants to learn more about the revenues generated on the golf course, as well as a methane energy project that Quarry Hills has undertaken at the former landfill.

“With the exception of the mayor hiring an outside accounting firm to do some procedures, there has been no effort to provide oversight on [the Quarry Hills Associates] contract,’’ said McNamee. “Who’s benefiting from this arrangement? This was one of those joint partnerships that was promised to be good for the city. There’s a real public need to know in regard to this. How good has this been for us?’’

At the hearing, McNamee said, he would like to find out how the club calculates its rent payments. “I want to make sure we’re getting what’s owed to us,’’ he said.

McNamee has also written to Koch requesting that a multiyear audit be conducted on Quarry Hills Associates.

Emily Sweeney can be reached at esweeney@globe.com.