A new audit finds San Diego is missing out on millions that could help close budget deficits by not aggressively updating leases for Fairbanks Ranch Country Club and seven other golf facilities the city owns but doesn’t operate.
Those properties include Tecolote Canyon Golf Course, where a planned full closure starting this Sunday has prompted speculation about the course’s future.
The 47-page audit criticizes city officials for allowing expired leases to remain in place at below-market rates despite golf’s sharp increase in popularity since the COVID-19 pandemic began.
In fiscal year 2024, the city earned only $3.7 million in lease revenue despite the eight properties — seven courses and the Lake Hodges driving range — generating $34 million in revenue.
The audit says Fairbanks Ranch, which generated $16.7 million in revenue that year, has particular potential to be a cash cow for the city. The existing lease pays the city less than $1 million a year.
The audit also recommends the city aim to boost the value of its golf properties by strengthening its evaluations of course operators, studying revenue trends, inspecting courses more frequently and requiring operators to pay for renovations.
“Reporting on performance and lease terms is essential to identify performance trends and potential revenue opportunities, and could be used by policymakers and city management to determine the highest and best use of the city’s lessee-operated golf properties,” the audit says. “Lack of regular site inspections and ongoing holdovers put the city’s leased golf course properties at risk of property deterioration, reduced public benefit and lost financial value.”
The audit was created by City Auditor Andy Hanau and his staff, who operate independently from other city agencies so they can evaluate without interference.
It comes as San Diego faces a nearly $120 million projected budget deficit for the fiscal year that begins July 1.
Pipe work is forcing the closure of the Tecolote Canyon Golf Course for the coming months. (K.C. Alfred / The San Diego Union-Tribune)
The audit says the increasing popularity of golf has made the city’s properties more valuable and could help the city close that budget gap and stabilize city finances in future years.
Four of the eight properties have expired leases and almost certainly could generate more income if the city aggressively pursued new deals, the audit says.
That’s partly because the city courses operated by outsiders likely reflect the increases in rounds played and in revenue at city-operated courses Torrey Pines, Mission Bay and Balboa Park, the audit says.
When fiscal 2023 is compared to fiscal 2025 at those three courses, the audit says rounds played rose by about 5% and revenue by about 15%.
City officials quickly agreed to all of the audit’s recommendations, noting that they recently notified the operator of Fairbanks Ranch — the Bay Clubs Company — that its lease payments will go up this July.
“The recommendations collectively strengthen the city’s oversight, accountability and financial stewardship of its leased golf course portfolio by standardizing performance reporting, formalizing annual performance reviews and site inspections, and ensuring lease terms reflect current market conditions,” wrote parks director Andy Field and economic development director Christina Bibler.
Field and Bibler said the recently renegotiated lease for Presidio Hills Golf Course complies with the new goals and requirements recommended by the auditor and could serve as a template for future leases.
The city also released a request for proposals last summer for Mission Trails Golf Course, which is expected to lead to a new lease that they expect to boost city revenue and possibly the quality of the course.
City officials say they plan to do the same in the next 30 to 60 days for Tecolote Canyon, which will close after Sunday’s rounds to allow crews to finish replacing a sewer line that cuts through the center of the course.
A spokesperson said city officials are committed to reopening the course under a new lease when construction is complete this summer. But some users of the course and nearby residents are skeptical.
Many worry the city may not reopen the course. Others are worried the course will become a ragged field of weeds within weeks that could increase wildfire risk or attract homeless encampments.
That speculation has been fueled partly by the city terminating the lease of course operator American Golf on Jan. 30 — more than three years after the lease expired and American Golf shifted to a month-to-month arrangement.
Tara Lewis, spokesperson for the city’s Economic Development Department, said the decision to terminate the lease fits with the goals outlined in the audit and is not an indication the course won’t reopen.
“Given the stage of the city’s major infrastructure project that goes through the middle of the course, it was the right time to close out this chapter and open a new one for Tecolote Canyon Golf Course,” she said. “The decision not to continue under the current lease aligns with the city’s ongoing real estate strategy to attract new investment and responsibly manage city-owned assets, improve operations, better align with market value, and enhance long-term revenue and public benefit.”
Mitch Harmatz hits at the Tecolote Canyon Golf Course driving range on Feb. 10, 2026, in San Diego. The range will stay open until Sunday while the rest of the course is now closed. (K.C. Alfred / The San Diego Union-Tribune)
Revenue was down 35% at Tecolote from August through December compared with the same period in 2024, and the course’s Men’s Club and Women’s Club no longer play there.
The course shrank from 18 holes to nine last summer during the earlier stages of the sewer line replacement, but city officials said the final phases of the project require a complete closure. The driving range is the last part of the facility to remain open.
Michael Scott, a golf instructor who has worked at the course for 15 years, said Tuesday that users of the course and its driving range are frustrated, sad and confused as the closure nears.
Many are disappointed to see the possible departure of American Golf, which offers an unusual driving range deal that is highly popular — users can pay $45 a month for unlimited range balls the entire month.
Lewis said American Golf is expected to be a strong candidate in the upcoming request-for-proposals process.
Some users say, however, they expect the city to choose an operator that will invest more in the course — but also charge golfers more. Tecolote has an outdated clubhouse and irrigation system that badly need upgrades.
Opened in 1964, Tecolote was jointly designed by architect Robert Trent Jones and legendary pro golfer Sam Snead. It’s an executive course, meaning there are only par-3 and par-4 holes — no par-5 holes.
The City Council’s Audit Committee will discuss the new audit at a meeting scheduled for 9 a.m. Wednesday at City Hall, 202 C St.
The eight golf properties the city owns but does not operate include three outside city limits — Fairbanks Ranch in Rancho Santa Fe, Carlton Oaks in Santee and the Vineyard at Escondido — and five inside the city — Lake Hodges range, Tecolote in Clairemont, Presidio Hills in Old Town, Colina Park in City Heights and Mission Trails in San Carlos.