Monday, December 8, 2014

Mayor Hiremath Answers LOVE Reader Questions On Community and Recreation Center

Oro Valley's pending decision to acquire the Hilton EL Conquistador golf and tennis facility is a game changer for our community.  The plan is to use it as a community and recreation center.

Many of our readers have asked us questions regarding the acquisition of the property. Rather than guessing the answers, we posed the questions to Mayor Hiremath. He was kind enough to respond quickly.

Here are the questions and his response to each:
  1. How did Oro Valley Come upon the opportunity to purchase this property? This idea was spurred during discussions with some potential purchasers of the hotel (that purchase opportunity ultimately fell through).
  2. Why do you believe that this is the right thing for the community to do? This provides a very unique opportunity for the Town to acquire a turn-key operation that will serve as the Community and Recreation Center. Recent community survey results have indicated that the majority of our residents are interested in having a community center. Additionally, the Golf and Tennis fit into our strategy of youth and amateur events.
  3. Why doesn’t the town purchase the property directly from Met Life? We explored that opportunity and they wanted a higher purchase price.
  4. Do you believe that the general decline in interest in golf has bottomed out as Greg Caton does? Yes. A lot of golf courses are in transition and investors are seeing the growth potential in this industry. 
  5. Do you believe that it is not necessary for council to get public input on this transaction? If so, why? We are currently receiving a lot of public input regarding this potential. Residents are welcome to submit their thoughts and ideas through Constituent Services, where it will be tracked, answered (if appropriate) and ultimately shared with Council.
  6. Why does the town need to raise the sales tax to finance this? Why not bond it? A bond is a loan. We need additional revenue to pay for the capital improvements. Additionally, there are operational shortfalls, which require an additional revenue stream. You can’t pay for operational short-falls with a bond (or loan).
  7. Why must the council make a decision on December 17? In other words, whey the rush? The new purchasers are looking to sell the property shortly after their acquisition, so that is driving the timing. We had completed extensive due diligence, and that information will be presented over the coming weeks. I believe we have all the information needed to make an informed decision.
  8. Why should the town, subsidizes sports such as golf that most of us don’t play or plan to play? Communities offer a wide-range of recreational opportunities that fit the needs and desires of a diverse community. We all benefit from a diversity of offerings. For example, I personally may not utilize our parks; however, I still receive benefit from a community that offers park amenities. I believe you utilize our trail system and some residents don’t. So, the residents who golf, but don’t use the trail, might ask why should we build trails when they don’t use them. Again, it is our responsibility to offer a wide range of parks and recreational opportunities.
  9. Why doesn’t the town sell the golf course to a third party? The facility operates as one unit, so that is the way we are approaching the acquisition and the operations. After a few years, the golf course will be a profitable asset. So, I believe long term this will be in the best interest of the community to maintain control and ownership.
  10. If Hilton cannot market the hotel with its courses and tennis courts, why does the town think that Oro Valley can successfully promote golf and tennis? We are contracting with a company (Troon) which focuses on golf, tennis and fitness (although we will operate the fitness portion). They are experts in the business, and with the capital improvements we have planned, will move the facility to an improved position in the market.
HSL Management is purchasing the property from MetLife.   The town is purchasing the property from HSL Management.  HSL Management contributed funds to Mayor Hiremath's PAC.  We respectfully asked the Mayor if he felt there was a conflict of interest.  Though we did not expect him to respond, he did.
"I believe this project will be in the best interest of the community and I will base my decision with that perspective in mind. There were a variety, and numerous, contributors to my campaign over both election cycles, each that have a passion and interest in their respective areas. The implication that campaign contributions are a factor in my decision making is ludicrous"
Once again, thank you Mayor Hiremath for answering your questions.

Oro Valley has a web page that provides facts about the proposed community and recreation center.

If you have other questions, we encourage you to write to  Oro Valley constituent services.

Finally, we invested our time in visiting the facility. Here is a link to the pictures.
Our thanks to the Hilton Hotels and Resorts for our tour of the La Canada facility.


Richard Furash, MBA said...

One question/answer had me go " Uh, what"? Why doesn't the town buy it from Met Life? They wanted a higher purchase price. So HSL buys it and sells it to us for less than he paid? Something sounds fishy.

Richard Furash, MBA said...

Hiremath stated that this was "a very unique opportunity for the town to acquire a turn-key operation."


From the AZ Star article..."But the place is a fixer-upper. The town has identified $2.5 million in renovation projects in the community center and $3 million in projects on the golf courses over 5-6 years. Those costs include a $1.55 million project to replace irrigation systems on one golf course."

Richard Furash, MBA said...

Shirl, please send that to the mayor and council if you haven't already done so.

Richard Furash, MBA said...

That is the understatement of the month!

Richard Furash, MBA said...

Where's HSL getting the money to buy it in the first place? He can't afford to keep up the properties he already has. Methinks the relationship between HSL and Hiremath/Council is way too cozy!

Richard Furash, MBA said...

Thanks to Richard and the Mayor for the discussion. We are very pleased with this initiative and if the membership value improves at El Conquistador after the town purchase we may even consider re-joining the club as we recently resigned our membership due to the course deterioration and inferior value received.

Last summer we visited and played several rounds at a well maintained and operated municipal course in Indiana (where annual memberships are based on eight months due to the winter closure) and in a discussion with the Club Pro and one of the members reflected that they had converted from a corporate ownership to municipal ownership some three and one-half years previously and this initiative saved the club. They described that the keys to their success and growth following the conversion was the added value of not having to produce a profit for corporate investors, keeping their pricing reasonable and not bench marked to fees at high priced private courses, and modifying their restrictive dress code to allow collarless shirts (no tank tops) and denim shorts and trousers (no short shorts) that appealed to a younger and larger playing demographic.

These folks maintained that their club membership and total paid rounds increased some 200+% in the first two years of municipal ownership and has grown slowly but steadily since. The green fees with cart for weekend prime hours was $36.00 and weekday prime hours were $26.00 . The after 1:30 pm rates were about 20% less and starters were still on duty at 2:00 pm when we played there. Monthly golf memberships were $165.00 for prime hours and $125.00 for non-prime hours and included utilization of the tennis and fitness facilities. This compares to the $8000.00 initiation/membership fee and $435.00 monthly green fees we were paying at the deteriorated Hilton courses that still utilizes restrictive dress codes that are not conducive to attracting a younger demographic.

Bottom Line: Oro Valley needs this facility in its inventory of services. My kudos to the town leadership for their efforts in making this happen.

Richard Furash, MBA said...

Thanks for sharing your experience with us.

Richard Furash, MBA said...

+1 Something is rotten in this "deal".

Richard Furash, MBA said...

If a deal sounds too good to be true...beware!

Of course a community center would be a desireable asset. We all have a 'Wish List' to keep our Town a Community of Excellence.

There are simply too many unanswered questions.
Why? Does the current council majority think we're incapable of understanding all the extensive research they claim to have done? It would seem a full disclosure to the taxpayers of Oro Valley is in order.

Oro Valley has been sitting on the Naranja Town Site property for in it's use due to the millions it will cost to put in the utilities. We've been told we can't afford those mprovements. Yet we can afford millions for golf courses and a huge building with a resturant in need major work?

•Why would we buy a property knowing it will cost millions to restore and will still operate at a loss?

•How much property do the taxpayers of Oro Valley want to pay for?

•Will the golf courses be declared unaffordable, then rezoned and sold to HSL to build more apartments?

•What is the long term deal with the seller, a major financial contributor to the re-election campaigns of the current Council majority?

This isn't the first time this majority has tried to raise the sales tax. They had it on the agenda at the same time they passed doubling the Utility Tax without the sunset clause promised in 2006.

What's next? Is the Mayor & Council going to claim a financial disaster is on the horizon? Asking taxpayers to bail out their wreckless spending with a property tax?

Is the current majority even interested in hearing from us?
Is expanding their fiefdom their top priority?

Perhaps its time to remind them they work for us.

Richard Furash, MBA said...

Excellent points, Ms. Culver. This deal is so good, it stinks.

Richard Furash, MBA said...

They just got re-elected so they don't care. An article in today's Star says there's another interested buyer. I say let them have it.

Richard Furash, MBA said...

When decisions are rushed then mistakes are made.
I have heard comments in Town like "Money pit" and the numbers don't add up to this proposed deal! I kind of feel confident with the Town staff numbers, but feel as though some line items are missing.
1. Who picks up the reclaimed water costs? The Town or ultimately the rate payers.
2.When governments acquire property then the property is no longer subject to property taxes. Which leads to higher property taxes for residents and budget short falls for school, fire and other taxing districts.
3.When a government subsidized enterprise completes with private businesses then everybody loses, due to the fact that governments aren't required to make money. Ultimately they can drive any competing businesses out of business, which results in lost sales taxes, business license fees, and higher default rates on commercial property.
Lets not kid our selves corporations like HSL are in business to make money, when there is a component that doesn't fit the bottom line then they spin it off. If the other offer that HSL has on the property is better than the Town's then HSL would take it, end of story. There have been many occasions where corporations will gift properties such as this to a government to rid themselves of the on going liability and allows them the opportunity to receive a full tax credit for the appraised value of the property, which helps their bottom line.
My advice to the Mayor and Council is to slow down! Stick with its "In our Nature", there have been grand master planned projects such as Naranja Town Park, Steampump Ranch and Honeybee Indian Preserve that all languish today. If this is the Council's idea of an early Christmas present then please take me off the list; I would prefer a bag of coal which would allow me to heat my house.