Tuesday, June 18, 2019

More Oro Valley Stores Closing

Store closings are a nationwide problem
LOVE has noted that stores are closing in Oro Valley. Empty storefronts are not just an Oro Valley problem. It's a nationwide problem. There are lots of reasons for it.

Recent Oro Valley retail store closings, like the closing of Platinum Fitness in April, or now the closing of the Alfonso's Olive Oil and Balsamic store, Rigazzi's and a cleaners in the Trader Joe's Mall are gaining attention on Nextdoor.com.

Nextdoor.com readers speculate on the causes
A recent comment that was posted on Nextdoor.com spawned an  interesting conversation.

The originator of the posting (see panel) suggested that the council get involved in retaining business. Others responded, citing host of reasons why stores close including:
  • The seasonal transient nature of some Oro Valley residents
  • High lease rates (which was the cause of the closing of Platinum Fitness)
  • Oro Valley's higher than competing communities sales tax rate
  • The rise of online shopping
Store closings are really the problem of the store owner
It's far too easy to point to outside forces causing a retail business to fail. Our experience in working with retailers for 60 plus years has taught us that there are really six possible causes of a store's failure. Any one or a combination of these can do a store in!
  • There wasn't a market for the product the retailer sells in first place;
  • The store is just another "me too" business;
  • Poor location;
  • The retailer failed to bring sufficient capital to weather the startup time it takes to get a business established;
  • The economic formula for making the business a success just wasn't there. For example, if the rent is going to be too much in relation to the business that will be done then the store is simply not financially feasible; and
  • Store management simply did not know how to operate the store efficiently. For example, they buy too much inventory or too much of the wrong inventory. So, they have to mark down the product to get rid of it or customers walk out because what they want isn't there.
Can the council fix this problem?
Some Nextdoor.com commenters suggested that the town council do something to fix this problem. The only factor that the council controls is the sales tax. Reducing the sales tax is hard to do until the council fixes the hemorrhaging losses of the town owned country club community center.  We will learn more about the options and the possible financial impact of them at tomorrow's regular council meeting.

More real Oro Valley jobs paying real wages can pave the way to retail store success
The hope for Oro Valley is that Oro Valley Economic Development Director JJ Johnston's five year comprehensive economic development strategy will work. As we have previously written, it calls for bringing in non retail businesses to bolster real employment in our community. The UA Veterinary School is an example of this. Once the town has more "real jobs that pay real wages" the town will have more people working here full-time who will need and who will visit retail stores.

Monday, June 17, 2019

Guest View: Jim Tripp ~ The tip of the iceberg: Annexation of 885 acres of State Trust Land at Tangerine and Thornydale is a pilot project for 9.3 million acres of trust land

Since last August, I have been researching the Arizona State Land Department (ASLD) proposal to put approximately 3100 houses (with their associated cars and people) on the proposed annexation of 885 acres of State Trust Land at Tangerine and Thornydale.

I read the plan and wondered: "Why isn't the CAP Water Board trying to block this development, which will require 860,000 gallons of water day? The Colorado River is already over-allocated, which has led to us being under a Drought Contingency Plan."

Two conflicts of interest uncovered
Oh. Lisa Atkins is the Board President of CAP (Central Arizona Project) as well as Commissioner for ASLD. That would explain it. Although her position at CAP is not a paid position, she does have a conflict of interest as Commissioner of ASLD and CAP Board President. Ironically, Atkins said at "sunset" meetings for the ASLD that any attempt to merge ASLD with another related State department would inevitably lead to conflict of interest because control over different but related natural resources inevitably leads to conflict of interest!

So who is her Deputy Commissioner, I wondered? It’s Wesley Mehl of Tucson. According to the Tucson Sentinel in an article from July 2015, "Mehl is the son of developer, David Mehl, who along with brother George built the La Paloma resort in the Catalina Foothills, and the Dove Mountain development in Marana." That would explain why we are continuing the residential housing boom during deepening drought.

Sacrificing water and ignoring conflicts of interest
But maybe it's all worth it if it improves funding for K-12 education. That's what they said at the public meetings. In fact, they justified the whole project on the basis of a constitutional mandate to sell Trust Land for the benefit of K-12 education.

So I checked that out. Arizona ranks 48th out of 50 in public education funding, and K-12 education is by far the biggest single expenditure in the State budget. The Trust Fund has billions in it, but it costs billions every single year to fund public education. Maybe we need to sacrifice water and look the other way at conflicts of interest if it will help K-12 education.

The math doesn’t add up
So I estimated that the Trust land might sell for something like $100 million, which would perhaps yield 3-4% ($3-4 million dollars per year) on the $100 million. But the plan adds 1,767 K-12 students, at a cost of about $15 million per year (to stay in 48th place), for a net loss of $11-12 million per year.

Why is the Marana School District (where the Oro Valley annexation is taking place) allowing this? Because they will get their $8500 per year per student from the General Fund, even if those students drain the General Fund at $11-12 million per year. State taxes will have to be raised or other services curtailed, to make up this deficit. What an irony, given that the whole point of Trust Land sales was to provide enough money so that K-12 education would never cost taxpayers a dime as Arizona moved from Territory to State!

Marana School District CFO never reviewed the site plan
I contacted Don Contorno, Chief Financial Officer of Marana Unified School District, who wrote a letter of approval to Oro Valley for taking on the students. He wanted to know where I got the outlandish number of 1,767 K-12 students, and I told him that it was from the published Site Specific Plan. He sheepishly confessed that he never read the plan and assumed the area would be developed like Sky Ranch.

A “Model” for future development
ASLD and Oro Valley have not publicized that this is a pilot project to be rolled out for the entire 9.3 million acres of trust land, with a stated goal of speeding development by transferring zoning rights from citizens to developers via "zoning banks."

LOVE readers and residents of Sky Ranch, Tangerine Crossing, and Dove Mountain need to present a united front now and in the future.

You can view a detailed slide presentation HERE

Please visit my Facebook page (MyLand.YourLand.AZ)   HERE
Jim Tripp has a Bachelor’s degree in Biological Sciences from Cornell University and a Ph.D. in Molecular and Cellular Biology from Oregon State University. Prior to retirement, he was employed as a Federal Regulations Analyst for Wisconsin Power and Light and as a Research Scientist at UC Santa Cruz and Berkeley National Labs. He has over 30 scientific publications to his credit.

Friday, June 14, 2019

Weekend events in Oro Valley

Got kids?

Saturday, June 15th
Drive-In movies on the Driving Range | 7:15 p.m.
Oro Valley Community Center, 10555 N. La CaƱada Drive

This is the first of four free Drive-in Movies as the Town of Oro Valley presents G or PG-rated movies on a giant, inflatable outdoor screen.

Audience: All ages
Day: Third Saturday of every month

Movie schedule:
June 15    Miracle
July 20     The Lego Movie 2: The Second Part
Aug. 17    Spider-Man: Into the Spider-Verse

Set up a blanket or some chairs, or hang out in one of the Town’s golf carts (only Town carts are allowed, please don't bring your own vehicle).

Please be courteous to others and leave your pets at home.

Father’s Day Free Admission

Sunday, June 16

June is National Men’s Health Month and to mark the occasion, the Town of Oro Valley is offering free admission on Sunday, June 16 (Father’s Day) to:

• Oro Valley Community Center fitness area
• Oro Valley Aquatic Center
• Naranja Park Archery Range

Thursday, June 13, 2019

Guest View: Mike Zinkin ~ Lack of due diligence is responsible for “the mess” at the Town-owned golf courses

Today, Mike Zinkin is responding to Bob Sterritt’s Guest View that was published on Monday.
I am very happy to hear from a LOVE reader regardless of the viewpoint. However, I feel that Mr. Sterritt might be a little confused about the intent of my Watchdog Reports.

I have never been opposed to the Community Center portion of the purchase and I have never spoken ill of it except for the fact that it is still not ADA compliant. I stated that from the dais (when a council member) as well as in written communications. I do feel that we would have been better off building a new, state of the art, ADA compliant community center as opposed to purchasing a 1980’s building in need of updating and retro-fitting.

In my March Watchdog Report, I stated that “one might be impressed and think we are working ourselves out of this mess.” Mr. Sterritt asked, “What mess?”

The mess began in December 2014 when the minority council members (Bill Garner, Brendan Burns, and myself) asked to see the purchase agreement before it was signed, but the majority Hiremath group did not think that was needed. Mr. Sterritt, I would bet that you would put more energy and effort into buying a car. I’ll bet that you would study the market and determine what the car was worth based on comparable cars.

Prior to the purchase, in December 2014, I asked to see statistics on how many rounds of golf were played on the El Con courses during the most current year, and the response was “that’s proprietary information.” Imagine asking a car salesman what the estimated miles per gallon was on the vehicle you were considering purchasing and his response was, “that’s a secret.”

My point is that the Town purchased this property without any due diligence. The Hiremath gang also purchased it even though the majority of residents who expressed their opinions via emails to the council and during the public meetings were against this purchase.

The sport of golf is dying. This is echoed in the National Golf Foundation study that the Town contracted. The 170-page study concluded that:
“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.”
Mr. Sterritt, I am going to assume that you and I are in the same generation. Our generation is the last generation to support golf.

You mentioned the appraised value, but there is a difference between appraised value and market value. As an example, Stone Canyon Golf and Dove Mountain Golf both sold for well under $1 million.

We opened the golf courses in May 2015. The Troon losses as of March 30, 2019 are $8,867,541. Promised capital improvements of $2,878,000 have not been accomplished. Troon desired to have 315 members by December 2016. As of April 30, 2019, the golf membership was only 236. It is not my Watchdog Reports that are causing this; it is the state of golf in the new millennia.

Since November 2019, the Town’s courses have had 22,008 rounds of outside play on 45 holes. A public golf course within 5 miles of the Town’s courses had 27,021 rounds on 18 holes. This is not being negative; this is merely stating the facts.

Again, let’s be clear. I have never been negative about the community center, tennis, fitness, and recreation. My focus has been on the financial drain that golf is doing to our Town.

Below are links to two articles that conflict with the notion that closure of the golf courses will decrease property values:

Repurposing golf courses
9 surprising things that add value to your house

The Town has owned the courses for 49 months. The losing trend for golf has not subsided.  As such, we should work to minimize the drain that golf is currently placing on our town.
Editor’s Note: You can read more of what’s in the National Golf Foundation Study at the below links. Part 1 discusses the options that were provided by the golf consultants to cut the losses. Part 2 contains a summary of their conclusions regarding the problems with the El Con courses.

Part 1

Part 2

Wednesday, June 12, 2019

Winfield Takes Reigns In Fixing Town's Unfunded Public Service Pension Liability

The unfunded public service pension liability is $23 million
Mayor Joe Winfield made it clear at last week's Oro Valley Town Council meeting that his council is going to both recognize and work to pay down the town's unfunded public service pension liability ("PSPRS" [Arizona State Public Safety Personnel Retirement System]) of approximately $23 million.

Approximately $2 million is allocated in this year's budget to do just that. There is also an added $1 million that is being paid to cover this year's liability.

Oro Valley is not unique in having an unfunded pension liability problem. According to the PEW Institute, Arizona has funded only 63% of its pension liability. Unfunded pension liabilities are significant for most communities in the US, What is unique is that our town, under Winfield's leadership, is going to do something about it. 

The Question: Pay less now or more later?
Council Member Nicolson wants the liability paid sooner rather than later. He emphasized that paying the liability down sooner rather than later saves the town money because the amount paid in will immediately start accruing compound interest, thus reducing the amount of future payments. The money is expected to earn over 7% once invested to fund the liability. The actual return, however, can vary significantly depending on how the private sector is doing economically.

Council member Rhonda Pina agreed for the need for a paydown, though perhaps disagreed with the timing. "We do need to make a pay down." She, and Council Member Rodman, want to be sure that the pay down does not impede the funding for other services. Regarding future budgets, she emphasized that "we're cutting back on future services and need the ability to be flexible" when it comes to paying down this pension liability.

Winfield provides direction
Winfield became aware of this unfunded liability last October. "This is a significant issue that we as a council...are taking ownership of," he noted at the council meeting. "I believe that the budget that has been presented that includes payment towards the principal is a wise move." Winfield is depending on staff and the town's budget commission to study this situation to provide future direction. "I believe that once that occurs, then it will be a natural next step for the staff to begin to look at...a variety of options of how to address this unfunded liability which we know has grown significantly."

"I want to go on the record that this is a significant issue for us as a council and a first step is to define the PSPRS policy, to really articulate what the problem is and then to give to our very capable staff some options..." on how to deal with this liability. "We may have to be thinking out of the box" to solve this problem.

Specifically addressing the police, Winfield said the police "...put their lives on the line. We want the pension to be there for them."

Council Member Rodman summed it up: "I agree with everything you just said...Every pension plan in this country is underfunded."
Source: Oro Valley Town Council Meeting, June 5: Mark 1:25 to 1:32

Tuesday, June 11, 2019

Alleged "Pima County Sheriff's Officer Captain Mark Bowen" Scams Oro Valley

We received a call from Captain Mark Bowen, Badge 8004, Captain of Warrants for the Pima County Sheriff's Office. He informed us that we had two outstanding warrants for failure appear for federal jury duty. One warrant was for "Contempt of Court" the other was for "Failure To Appear."

We knew it was a scam.  A county Sheriff is not going to enforce a federal warrant. And, most certainly, no peace officer is going to call us on the phone about this. No. Instead, if it were real, we'd receive a notice in the mail or perhaps a personal visit.  Besides, we never received jury duty notice.

So, we decided to waste his time. We spent 15 minutes with him asking him to explain what was happening and what we needed to do. His explantations were deliberately confusing. What we needed to do was to go to the local police station and spend 8 hours being processed; or, for a mere $3, we could expedite the process and get the whole thing taken care of at the police station in no time. Of course, he wanted us to pay by credit card, including the CVV; and he wanted to put an "Ap" on our phone to trace our progress to the police station.

We asked so many questions that, at one point, he accused us of being stupid. "Did you have a stroke? Because you don't understand me," he said. And when that didn't work he yelled as us. We told him that that was not very nice. We told him we knew his boss, Sheriff Napier and that Mark would never want any of his people acting like this.

For some reason, rather than just giving up, Captain Bowen told me that we had made a mistake. We had misidentified ourselves at the beginning of the conversation. He wasn't looking for us. He was looking for someone else with the same last name.

"Why did you waste my time?" he asked.

This scam has been running for many years, recently in Cochise County. One search turned up this California incident. This scam has be written about by the FBI. We did report this incident to the Oro Valley Police.

Monday, June 10, 2019

Guest View: Bob Sterritt ~ What mess?

My wife and I are long-term residents of Oro Valley. We would like to offer another viewpoint to Mr. Zinkin’s incessant berating of the town-owned El Conquistador Community Center and Golf Course facility.

For us, the Community Center and it’s amenities are an important part of our active senior lifestyle and we dispute the notion posted by Mike Zinkin in a recent offering in LOVE. Zinkin said, “one might be impressed and think we are working ourselves out of this mess.” (You can read that article HERE)

What mess?

The original purchase of the El Conquistador property, valued at more than $26,000,000 for a mere $1M, provided immediate Community Center benefits not only for golfers, but includes swimming, tennis, pickleball, and fitness facilities for Oro Valley citizens. I question how long the Town would have taken, and at what cost, to construct to provide similar amenities.

In Mr. Zinkin’s article, he cites $94,231 in higher revenues in 2018, but neglects to mention the accounting loss of $284,306 in tennis revenue which is now being posted as monthly rental payments to the Town. Why not work towards solutions in lieu of the negative rhetoric with misleading information?

Articles by Mr. Zinkin, which cast gloom and doom, are having a negative impact on “membership and membership fees” per Troon’s report to the Council May 8th. Perhaps the negative bias reporting in LOVE is part of the problem, not a solution.

Oro Valley is seeing the impact of the closure of the Golf Club at Vistoso with at least one home sale cancellation, overall sales volume decreasing, lower property values, and ultimately lower tax revenues. Is Zinkin proposing repeating that mistake with the closure of additional courses?
LOVE prides itself on making sure that posts are factually supported.  As such, we have asked Mr. Sterritt to substantiate his finding of "lower property values" and "lower tax revenues" and that the home sale cancellation referenced in the article was due to the buyer discovering that the Vistoso Golf Club would be closing.  We are awaiting his response and will update the information as it becomes available.  We have also afforded Mike Zinkin an opportunity for a rebuttal if he wishes.