The truth is: The El Conquistador Golf & Tennis Club purchased by the Town of Oro Valley is losing more money than projected and with that continued trend, losses will far exceed the revenue from the 25% sales tax increase implemented by the council majority in March 2015.
Golf Loses total $650,000 in just 2 months
Specific to the golf operations, in the first month (July), Troon Management, the contract operators of the golf course reported a 40% revenue shortfall from plan. The $98,781 total revenue collected was $65,825 less than the budgeted $165,607. Keep in mind that the $65,825 shortfall is on top of the $259,252 they planned to lose. Therefore, the net effect is that more than $325,000 was lost in just the first month of operations.
This 2-month total is a loss of $650,000!
I recognize that golf play is lower during the hot summer months, but Troon’s projections reflect that. There is no reason to believe that comparable shortfalls will not continue throughout 2015-16 and the Town cannot afford to sustain the losses.
Town hides losses
The financial reports provided by the Town do not state these facts that simply. The July and August financial results for the golf operations would not have come to light if not provided by Council member Mike Zinkin (See Video-Right).
Town Manager Greg Caton and Financial Director Stacey Lemos did not dispute his numbers during the September 2 meeting.
Ms. Lemos proudly reported that the Community Center and Golf Fund closed fiscal year 2014-15 with a fund balance of approximately a million dollars on June 30, 2015. What she failed to mention and Council member Zinkin pointed out was that the Majority Four approved the transfer of $1.2 million out of the Contingency Fund in May 2015. Those contingency funds appear as revenue and not robbing Peter (Contingency Funds) to pay Paul (golf and restaurant operations).
The earmarked sales tax revenue is reported by the town as "revenue." It is as if the sales tax was routine operating income like green fees; and not revenue taken off the backs of those who pay the higher sales taxes when they shop in Oro Valley.
Losses don't include millions in planned golf course capital improvements
Bear in mind that the monthly losses would far exceed $325,000 had the town not put the brakes on planned golf course capital improvements and maintenance. The town's original plan was to spend $1.75 million dollars on these items in 2015-16. As a means of slowing the bleed of red ink, those expenses were cut back to $75,000 in the 2015-16 budget.
The spending brakes will no doubt be lifted after the November election, if the recalled incumbents are re-elected. Regardless, if the Town stays in the golf business, the $1.75 million and more will have to be spent on golf course improvements in 2015-16 or in the foreseeable future.
Tomorrow: What Oro Valley residents can do about Oro Valley-owned golf courses
Debra Arrett has received numerous national awards for her business expertise and entrepreneurial skills. She considers herself to be semi-retired, but continues to own and operate the dairy commodity businesses she founded dating back to 1984. Since moving to Oro Valley in 2000 she has served on the Sun City Oro Valley Board of Directors, Long Range Planning Committee, Government Affairs Committee and Chalk Creek Wash Commission. She serves on the Board of the Oro Valley Community Foundation and is a member of the Oro Valley Business Club and Chief Sharp’s Advisory Committee.