Thursday, July 27, 2017

Oro Valley Homes: A Seller's Market

Oro Valley home sales have been stable during the first six months of this year, averaging about 80 home sales per month. We draw this conclusion after reading the July report by Long Realty.

The report emphasizes month to month changes in home listing and sales activity:

"In the Oro Valley area, June 2017 active inventory was 272, a 5% decrease from June 2016. There were 79 closings in June 2017, a 31% decrease from June 2016. Year-to-date 2017 there were 490 closings, a 3% increase from year-to-date 2016. Months of Inventory was 3.4, up from 2.5 in June 2016. Median price of sold homes was $292,000 for the month of June 2017, up 8% from June 2016. The Oro Valley area had 93 new properties under contract in June 2017, up 16% from June 2016."

We like to look at a broader period of time. Thus, our emphasis on six months.

Oro Valley is is a "seller's" market. The median home sale price has increased to almost $300,000.  The Long report concludes that it is a seller's market for homes priced below $500,000. Generally it is balanced market between buyer and seller for homes priced greater than that.
---
Source: Long Realty July Report

Wednesday, July 26, 2017

Guest View: Mike Zinkin ~My thoughts on the results of the $50,000 National Golf Foundation Study

Below are direct quotes from the National Golf Foundation (NGF) Study contracted by the Town of Oro Valley to assess the Community Center Golf and Restaurant Operations

(1) "The overriding trends in the golf industry will present challenges to the Town of Oro Valley in continuing golf course operations. The total number of “core” golfers is declining and total spending on golf is declining along with them…NGF has also documented rapid inflation in expenses to operate golf facilities in this market, especially related to the cost of water for irrigation." (Page 24)

(2) "The City of Tucson’s public golf courses are down 25% in rounds and 19% in revenue since 2008, and other public golf courses report similar reductions…Hotel facilities are an important factor for feeding golfers to the ECGT [El Con Golf and Tennis] and ECGT will have to do more to accommodate hotel operators in the hopes of attracting a greater share of play." (Page 24)

(3) "As a whole, the ECGT and Pusch Ridge golf facilities combined to produce total top-line revenue of just over $2.9 million in 2016, the vast majority of which comes from golf fees, member dues and Food and Beverage sales. The on-site operating expenses at the facility totaled around $5.2 million…resulting in a roughly (-$2.3 million) loss on operations (excluding other necessary costs such as capital upgrades and new investment in infrastructure). (Page 25)

(4) “The Current financial condition is worse than most public sector golf operations in the U.S, where 67% of municipal golf course operations are able to cover on-site expenses, but not able to cover both on-site expenses and capital improvement costs (only about 33% can cover both)." (Page 25)

The Recommendations
The Study provides options to the Town outside of closing the total golf operation. I will focus on Option B and the Pusch Ridge conversion since the below quote indicates that this is what the study recommends.
“…the NGF sees a 27-hole facility at El Con Golf and a modified par-3 golf course (possibly 12 holes) at Pusch Ridge as a much better option for Oro Valley to provide a more sustainable golf facility for the longer term going forward.”

I expect that the Mayor and Council will go along with this since they never think for themselves and they will simply say, “We paid for this study so we should follow the recommendations.”

Option B
This involves a reconfiguration of the 36 holes at the Conquistador and Canada Courses. This would be reduced to 27 holes (three 9-hole courses). The cost of this modification is estimated to be $4,639,115 (Page 102)

All the holes south of Lambert would be removed causing a shock to the residents of "The Villages HOA" as they will now be totally responsible for the future of this acreage.

Pusch Ridge
The cost to convert the 9-hole Pusch Ridge course to a 12-hole, par-3 course, called the "Dirty Dozen,” is estimated to be $3,013,120. (Page 109)

The study mentions how the Pusch Ridge conversion would be an enhancement for the Hilton El Conquistador Resort. Do you think Humberto Lopez/HSL Properties is going to participate in the cost of this conversion? The study states that:
“HSL has indicated strong enthusiasm for the Dirty Dozen concept as a way to transform the existing course into something the resort can leverage as a must-play golf experience that will take less time, provide a truly unique one-of-a-kind golf experience in the region, and will fit a model where less resources and turf coverage are required to sustain the golf operation." (Page 64)

Double Trouble?
With these two options in place (Option B and Pusch Ridge) the Financial Analysis of Future Expected Performance reveals that even after spending $7,652,235 for improvements and upgrades, operating expenses are still expected to exceed revenues by approximately $1 million per year with no expectations of breaking even at Year-5 when the facility is still expected to lose $1,050,600. (From the 5-year projections chart on Page 81).

Although this loss will be offset by the $2,000,000+ in sales tax, keep in mind that there is NO discussion about the Community Center, other than the recommendation to contract the food and beverage operation. This is important to note because there will still be costs for continued capital improvements to the Community Center.

How about a Going-out-of-Business Sale?
The report states that closing the total golf operation will cost $80,000 to eliminate the Pusch Ridge course (Page 68), and about $3 million to close the remaining 36 holes (Page 67). In other words, by spending about $3.1 million, the Town can be out of the golf business. There would be a drastic reduction in employee costs, no need for cart leases, no more management fees, and utility expenses would be dramatically reduced.

The Town would still water, fertilize, and maintain the acreage in the summer, or they could just let the property return to its natural state. The $2+ million in sales tax revenue would more than cover this and the surplus dollars can go to improving the Community Center.

What do you think the odds are that this 7-member congregation will consider something reasonable, like cutting the Town’s losses (your losses) and moving on?

...............

Mike Zinkin has a Bachelor’s degree in history and government from the University of Arizona and a Master’s degree in Social and Philosophical Foundations of Education from California State University, Northridge. He was a commissioned ensign in the United States Navy Reserve in 1969. He worked as an Air Traffic Controller for 30 years. He and his wife moved to Oro Valley after retiring in 1998. Mike served on the Oro Valley Development Review Board from 2005-2009, the Board of Adjustment from 2011-2012, and the Town Council from 2012-2016. During his time on council, he was named as one of 23 Leadership Fellows for the National League of Cities University, he was a member of the National League of Cities Steering Committee for Community and Economic Development, and a member of the Arizona League of Cities Budget and Economic Development Committee.

Tuesday, July 25, 2017

Summary of the 170-page National Golf Foundation Study of Community Center Golf and Restaurant Operations. Part 2.

This is the second part of a 2-part article. Part 1 was published yesterday.

- - - - - - - - - -

Summary Conclusion

“This facility is aging and has seen declines in activity and is now operating at a deficit, up to $2.1 million+. The loss on operations is a result of several influences…a recent recession, increasing competition, declining physical condition, and declining interest in golf.”

“The local golf market has changed dramatically in the last decade and as we look to the future of golf in Oro Valley, there is genuine concern that the full 45-hole allotment may not be a good match for the current state of golf demand. The cost to properly maintain a complement of 45 holes is large and growing. The National Golf Study (NGF) review in 2017 shows that the cost to maintain El Con Golf is much higher than any standard, mostly a result of high utilities expense that is caused, in part, by an antiquated irrigation system.”

“The current financial condition [of El Con Golf] is worse than most public sector golf operations in the U.S. where 67% of municipal golf course operations are able to cover on-site expenses.

“Given this and the change in demand, the NGF sees a 27-hole facility at El Con Golf and a modified par-3 golf course (possibly 12 holes) at Pusch Ridge as a much better option for Oro Valley to provide a more sustainable golf facility for the longer term going forward.”

Given the above noted findings, it is clear that the Town will not be able to continue the operation “as-is” and changes will be required.

The most important and actionable recommendations made by the National Golf Foundation are listed below, noted in priority order:

1. Improve the physical condition of El Con Golf, including clubhouse enhancements.
2. Take action to reduce the amount of irrigated turf on all golf courses.
3. Upgrade the irrigation system to include new controls and in-ground piping.
4. Reduce to 27 holes at El Con Golf, with three 9-hole courses of equal quality and appeal.
5. Lease out (or concession) the Food & Beverage operation to a third party.
6. Implement the plan to renovate Pusch Ridge into a “Dirty Dozen” concept.
7. Enhance marketing and implement new activities that appeal to less traditional golfer segments, especially female golfers.

Golfers within a 10 mile radius
In its 2009 publication, “The Future of Public Golf in America,” the National Golf Foundation hypothesized that the best predictor of a public golf course’s success was the number of golfers per 18 holes within a 10-mile radius, with 4,000 identified as the key number for projected financial stability. The NGF has estimated that there are only about 1,400 golfers per 18-hole course in the Oro Valley Community Center market, thus lowering chances for successful golf operations.

Site Negatives
The location of both facilities suggests to the public that the facilities may be private. The location within a large residential community conveys a private club operation. The Pusch Ridge course proximity to the Hilton Resort leads most to believe the course is only available for use by hotel guests.

The configuration of the property is wide and physically diverse, leading to challenges in managing the full 36-hole property. There are four separate parcels separated by major roadways and require golf cart crossings at several points. Thus it will always require a larger-than-standard operating staff.

It is expected that there will always be a higher-than-standard maintenance expense at El Con Golf and Pusch Ridge, even if the total irrigated acreage can be reduced.

Numerous changes to land ownership, development plans, and golf corridors contributed to the awkward routing of the courses. In several locations, the distance between holes is significant and it is often difficult for players to know where to go next. Further, this awkward routing mandates cart use and contributes to extra management and maintenance challenges.

Irrigation remains the greatest area of maintenance concern and has shown considerable decline since the original development. The aging system is a mismatch of controls, heads, and inefficient pipe sizes that have been patched together over the years…and is costing the Town considerably in terms of inefficient irrigation.

The conclusion of the team is that a major investment in irrigation replacement must be made regardless of how the courses are to be reconfigured.

Closure of all 36 holes of golf
Probable cost is approximately $3 million and includes removing managed turf areas, revegetation of desert varieties, reshaping to allow for natural surface drainage, applying a hydroseed mix of native desert seed and a bonding agent that will help prevent erosion and allow the seeds to germinate. Twenty percent of the cost ($600,000) would be for design and engineering.

Monday, July 24, 2017

Summary of the 170-page National Golf Foundation Study of Community Center Golf and Restaurant Operations. Part 1.

On July 12, the Oro Valley Town Council met in special session to review and discuss a consultants report of their analysis of selected usage alternatives regarding the Oro Valley golf courses and restaurant facility. You can watch this discussion.

According to a statement by Mayor Hiremath at the special meeting, this investment in these golf courses  has lost $1.1 million in two years, but "is trending upward." This loss is after consideration of the increased sales tax we now pay to subsidize it.

We present a summary of the consultant's report in this first of a 2-part offering, We will post Part 2 tomorrow. These postings are submitted as a summary only without comment or opinion.  An opinion piece will be published on Wednesday.

The study is a limited-scope study, limited to analysis of specific options as noted in "Basic Options" later in this posting. Multiple paragraphs in the report indicate that the consultants are recommending "Option B."

Option A: 36 holes…..$5,115,775 investment…..21.2 acres alternate use…..20% savings
This includes two 18-hole courses, a reconfiguration with six new greens, one expanded green, and new paths.

Option B: 27 holes…..$4,639,115 investment…..32 acres alternate use*…..35% savings
A reconfiguration of the Conquistador and Canada Courses, retaining three 9-hole loops. This includes three new greens and one expanded green and new paths.

Option C: 18 holes…..$4,200,795 investment…..83.2 acres alternate use*…..45% savings
An 18-hole reconfiguration of the Conquistador and Canada Courses, retaining one 9-hole regulation length course. The reconfiguration requires one new green and new paths. Turf reduction is significant by reconfiguring several holes and making some of the parcels available for non-golf uses. These include 83 acres of Town-owned land and 29 acres that would revert to HOA-owned.

Pusch Ridge: 12 holes…..$3,013,120 investment…..14.9 acres alternate use…..70% savings
Three options: 1. Close the facility and repurpose the land into non-golf uses. 2. Renovate the facility bringing all golf features and areas back to an acceptable condition. 3. Transform the facility into a 12-hole, 3-par course to be called “The Dirty Dozen”. This reduces maintained turf to 11.9 acres and frees up 15 acres for potential repurposing. Cost: $3 million.

*Town owned property only. Does not include HOA-owned parcels.

The 36-hole option is still providing too much golf and higher maintenance costs. The 18-hole option will likely chase away all but the most die-hard members with private carts, resulting in revenue that is much lower than the savings achieved from lowered maintenance expenses.

Pusch Ridge Problems
Low activity, low revenue, difficult layout, lack of walkability, declining maintenance, low interest in 9-hole golf.

Even with modest rounds of activity (7,500) this course could cover all its expenses. “If the Town and Troon were to significantly enhance the marketing and promotion of the facility, and gain full buy-in from the adjacent resort (possibly through pre-purchase of rounds), the Dirty Dozen course could add as much as $112,000 in profit to the system.”

“It is always an option for public-sector owners of golf facilities to close or reduce golf courses and consider alternate uses of golf course property.”

Basic Options to be considered

1. Outright closure of one or both Town golf facilities. Further study on this is recommended as property values, tax base, and resort relations have to be considered.

2. Repurpose portions of golf course property that may become available due to proposed changes in size and space of golf facilities. Remove 32 acres at El Con Golf and 15 acres at Pusch Ridge Golf. Use this as natural space, passive recreation, intense recreation, or repurposing/ development.

3. Continue “as-is” with no major changes but only repairs and minor improvements. However, the result will be ever larger losses on operations in the coming years as expense inflation out-paces revenue increases.

4. Completion of golf course renovation resulting in retention of 36 holes (Option A)

5. Renovation resulting in 27 holes (Option B)

6. Renovation resulting in 18 holes at El Con Golf and Tennis (Option C)

Converting the land for other uses

Naturalized Open Space
Cost is relatively low and renders the land back to its familiar desert terrain and landscape.

Passive Recreation
More costs due to development of trails, ADA access, restrooms, security, lighting, etc.

Intense Recreation Uses
This would involve the highest cost to the Town due to building new recreation structures, infrastructure, parking, etc., involving not only upfront costs, but also ongoing maintenance costs.

Development Uses
Only prudent for the Town if a lease or sale of certain lands could be structured to provide the Town with a revenue source.

Financial Projections
All of the options will improve the economic position of El Con Golf, largely through reduced maintenance expenses (fewer maintained acres) and by shifting Food and Beverage (F&B) operations to a third-party vendor. Even with these recommendations, they still expect financial challenges for the next five years.

Continued operation with rounds at or near current levels will not lead to profitability and severe losses will continue but will become more manageable under any of the renovation options presented.

If the Town reduces maintained acreage, provides a new and modern irrigation system, and a modernized clubhouse, the facility would see improvement in economic performance regardless of the number of holes.

The 27-hole option (Option B) will most likely result in the strongest net performance for the Town due to retaining a strong share of members, comparable amount of daily fee play, and flexibility to allow for “member blocks” of tee times.

If the club is upgraded and reduced to 27 holes, the net income will improve because the revenue drivers will still be present but the maintenance expense with only 27 holes would help close the gap on operations expenses, although they still expect a loss on operations.

If they contract a third-party vendor to operate and absorb the risk of F&B, the economic performance should improve with immediate elimination of the large loss on F&B operations.
---
Part 2 of this article will be published tomorrow.

Friday, July 21, 2017

Not Quite Ready: Lambert Lane Construction Continues

"Update on road construction at Lambert Lane & La Cañada Drive

Oro Valley, Arizona (July 17, 2017) – Although Lambert Lane re-opened to drivers on June 30, there is still a tremendous amount of work being performed at the Lambert & La Cañada intersection, and motorists should continue to exercise caution and vigilance when driving through this area. Once completed, this section of Lambert Lane, west to Hacienda Hermosa, will be four lanes wide with a left-turn lane and a right-turn lane in each direction, plus a bus pullout on southbound La Cañada and another pullout on eastbound Lambert. The project is slated for completion later this year.

WORK COMPLETED SO FAR

So far, crews have performed critical infrastructure work, including adjustment and installation of utilities, and grading and moving more than 60,000 cubic yards of soil to widen the roadway and reduce the height of the hill to improve safety and visibility. Extensive slope stabilization work has been performed on both sides of the streets via construction of soil nail walls. New traffic signals have been installed, and old ones have been removed. Some of the paving work has been completed, and work has begun on erosion control materials and stormwater control measures, with the installation of storm drain pipe and catch basins.

WORK THAT WILL BE PERFORMED OVER THE NEXT FEW MONTHS

In the coming months, as crews wrap up the final stages of road paving and curb installation, new striping and signage will follow. They’ll also complete some of the major safety features, such as the installation of a concrete sidewalk on the north side of Lambert, and the construction of a 10-foot-wide, multi-use path on the south side of the road. Stormwater efforts will continue, with the placement of a storm channel on the north side of Lambert. Residents and motorists will also notice some aesthetic enhancements, as architectural treatments are applied to the soil nail walls, and decorative rock and metal cacti are installed throughout the project. Lastly, native vegetation will be replanted (along with the installation of new irrigation lines).

HOW TO STAY INFORMED

There are three great ways to learn more about this project and stay informed about future updates: · Check out the project photo album on Facebook. (You do not need to have a Facebook account to view the pictures).


UPCOMING LANE RESTRICTIONS

The Town of Oro Valley is grateful for the community’s patience and safe driving during this time. Please be mindful of ongoing work in the area and traffic control measures such as barricades and reduced speeds. The Town will issue “Traffic Alerts” when significant lane restrictions will be put into place, impacting your daily drive.

Two such alerts include the following (dates subject to weather): ·

  •  7/24/17—7/28/17: Lane restrictions on northbound and southbound La Cañada at Lambert for median curb removal, grading, new curb construction and backfill.
  •  8/4/17—8/7/17: Severe lane restrictions in all directions for median grading and paving.

PROJECT BACKGROUND

The Lambert Lane Phase II Project was launched to improve safety and visibility along Lambert, while widening the roadway to accommodate additional travel lanes, multi-modal enhancements, curbs and landscaping. The work is being performed by Granite Construction, Inc., and the project is funded by the Pima Association of Governments."

(Source: Town Of Oro Valley Press Release)

Thursday, July 20, 2017

Deadline Tomorrow For Submitting Pro and Con Property Tax Arguments

The Town Of Oro Valley is proposing a secondary property for your approval on this November's election ballot. The funds from this tax are supposed to be used to pay for even more ballfields in Naranja Park, as we have previously posted.

The election pamphlet that you will receive will explain the tax. In doing so, the pamphlet will include arguments for and against the bond offering. The deadline for submitting those arguments is tomorrow.

Anyone may submit an argument for publication. However, as you will  note further, it will cost you a whopping $250 to do so.

However, LOVE welcomes all views. So you are welcome to send us a Guest View and, assuming it meets our guidelines (see right panel) we will publish it for free.

The following is the Town Of Oro Valley press release that presents further detail:
---
"Deadline is Friday, July 21, to submit arguments “for” or “against” Naranja Park bond question 
 Oro Valley, Arizona (July 17, 2017) – As a reminder, any persons wishing to submit an argument “for” or “against” the Naranja Park bond question must do so by 5 p.m. this Friday, July 21, 2017. Arguments will be included in the informational voter pamphlet that is prepared and mailed to each household with a registered voter not less than 35 days before the date of the election. The bond question will appear on the November 7, 2017 ballot.

Arguments must meet the following requirements in order to be accepted for publication:

  • Argument shall not exceed 300 words in length. 
  • Argument shall contain a sworn statement of each person sponsoring it. 
  • Argument shall include the residence or post office address and telephone number of each person signing the argument. 
  • Argument shall be submitted to the Oro Valley Town Clerk in an electronic format, preferably Microsoft Word.
  • Argument shall include a payment of $250 (as allowed by Arizona state law). 
  • As required by law, all information—including the $250 fee—must be received by the Oro Valley Town Clerk by 5 p.m. on Friday, July 21, 2017.

For complete details on submitting an argument, you may read the official Public Notice from the Clerk’s Office. Click or copy/paste this URL into your browser: https://www.orovalleyaz.gov/sites/default/files/media/docs/2017/instructions-submitting-arguments-or-against.pdf

To learn more about the Naranja Park Bond Project, please review the May 4, 2017 press release and the project overview document at the links provided below.



Wednesday, July 19, 2017

The Tradition Continues: Oro Valley Kids Concert Series

OV launches new Oro Valley Kids Concert Series for 2017-18

Oro Valley, Arizona (July 12, 2017) – The Town of Oro Valley, in partnership with the Music and Dance Academy, is proud to announce the launch of the new Oro Valley Kids Concert Series, which provides an intimate, interactive experience for young children and their families where they can explore the sights, sounds and workings of instruments and dance. These free concerts will be held on the first Saturday of each month, from August 2017 through May 2018.

View the entire 2017-18 lineup, including location information, by clicking here or pasting this URL into your browser: https://www.orovalleyaz.gov/business/calendar/oro-valley-kids-concert-series.

“The Music and Dance Academy is celebrating more than 20 years in Oro Valley,” said Economic Development Manager Amanda Jacobs. “It was a natural fit to partner with them to offer this quality series and promote the Town’s arts, culture and business retention efforts.”

Mark your calendars now for the August and September concerts, and visit us online for the full schedule!

Saturday, August 5, 2017 at 10 a.m.
Location: Music & Dance Academy, 7954 N. Oracle Road
Explore the Music & Dance Academy Dance and interact with musical instruments at the Music and Dance Academy!

Saturday, September 2, 2017 at 10 a.m.
Location: Oro Valley Council Chambers, 11000 N. La Cañada Drive
The Adventures of Victoria the Violin Once upon a time, there were several instruments living peacefully in the Land of Notes. Then, along came a new instrument, Victoria the Violin. She was looking for adventure! Come join Victoria as she meets all sorts of new instrument friends!

Thank you to our community partners: Dr. JAW Orthodontists, Greater Oro Valley Chamber of Commerce, McDonald’s (1st/Oracle) and Smashburger.

Since 2011, the Town of Oro Valley has offered free concerts to residents and visitors of all ages, and it will continue to do so through its other monthly concert series offerings, including the Steam Pump Ranch Concert Series, Community Center Concert Series and Oro Valley Marketplace Concert Series. Learn more about the Town’s arts and culture offerings at www.orovalleyaz.gov.

Ed Note: These concerts were previously sponsored by deceased Oro Valley resident Bill Adler. It is nice to see the others have stepped into the breach to continue this concert series.
---
Source: Oro Valley press release