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A struggling Newstead golf course is losing its tax breaks after an ownership change.

The new owners of Arrowhead Golf Course lost property tax breaks estimated to be worth a total of $200,000 through the next seven years after the Erie County Industrial Development Agency board voted against transferring tax incentives approved under the administration of then-County Executive Joel A. Giambra to the new owners.

Transferring tax incentives to a new owner normally is routine, but the Arrowhead tax breaks were challenged by current County Executive Mark C. Poloncarz, who argued that golf courses are not an appropriate use of tax incentives.

The IDA approved the tax breaks for Arrowhead in 2002. While golf courses normally would not qualify for tax incentives, the IDA board ruled at the time that the Arrowhead project provided “unique goods or services” because there was a lack of public golf courses within a 45-mile radius of the site.

Poloncarz, however, said Arrowhead initially was built to be a private club, but later switched to being a public course after failing to sign up enough members. As a public course, Arrowhead is in competition with those operated by local municipalities and Erie County.

“I’m a little bit leery of offering public incentives to an entity that competes against public golf courses,” Poloncarz said.

County Legislator Thomas A. Loughran, D-Amherst, cast the lone vote against rescinding the remaining tax breaks, arguing that it was unfair of the agency to take away incentives that it previously approved.

“A deal is a deal,” Loughran said.

But Poloncarz said the incentives were approved by a different IDA board under a different county executive. The terms of the tax breaks gave the IDA “absolute discretion” in determining whether to pass on the incentives in the event of an ownership change, IDA officials said.

Arrowhead struggled financially and was on the brink of foreclosure last year. Jack R. Willert, one of the original developers of the course, acquired the mortgage through an entity he formed, Mulligan Capital, to prevent foreclosure on the property.

As part of the ownership shift, the course was acquired by Pillar Real Estate Advisors, a Clarence investment company.

Willert told the IDA that terminating the tax breaks “will jeopardize the continued operation of the project and will jeopardize the jobs created by the project.” The golf course has about 18 full-time employees and eight to 10 part-time workers, IDA officials said.

email: drobinson@buffnews.com