Monday, January 8, 2018

The Watchdog Report: July through October 2017 Financials

The October 2017 financials were on the Consent Agenda during the December 6th Council meeting. However, because the mayor has instructed councilmembers to ask their questions of staff prior to the meeting, once again there was no discussion about the continued losses of the Community Center. Does the mayor believe that the citizens are not interested in hearing about this continued drain of taxpayer money?

The Community Center Fund (CCF) was initially set up to pay for everything connected with the purchase of the Country Club, Golf and Tennis facilities from HSL. Two and a half years later, and this still has not happened.

First Four Months of the Fiscal Year  ~ Over $400,000 in the red
The Community Center Fund ended the first four months of the 2017/18 fiscal year (July 1 through October 31) $415,161 in the red. This is considering all the revenues derived from golf, tennis, food and beverage, and non-aquatic center swimming, along with $680,721 in sales tax revenue.

Troon has lost $1,025,260 in the first four months of the fiscal year, yet still only projects a year-end loss of $1,822,941. We are coming into the prime season for golf, and we can only hope that Troon gets it right this year.

October Losses ~ Troon lost almost $10,000 more this October than last October
While the Town manages the recreation center, Troon is contracted to manage golf, food and beverage, some tennis and swimming. Troon's balance sheet is no better. They lost $270,953 in October 2017 which is $9,905 MORE than they lost in October 2016. This loss is despite an increase in golf memberships and the corresponding increase in revenue from member dues.

Utilities were also $72,007 higher than October 2016.

The Town's portion of the Community Center (the recreation center) lost $44,074 in October. Nevertheless, staff stands by their projection of ending the 2017/18 fiscal year only $86,017 in the red.

How they derive this figure is questionable considering (1) $94,250 is planned in capital outlay and (2) a $120,000 loan re-payment is owed to the General Fund. You might remember that the first $120,000 payment owed in year-one has not been paid…and the payment for year-two was accomplished only by taking an additional $350,000 from the General Fund. (To be clear, the General Fund has transferred $1.5 million of YOUR MONEY to the CCF).

Overlook Restaurant averaging $12,000 per month in losses
The Overlook Restaurant lost $13,687 in October 2017 bringing the total loss in the first four months of the fiscal year to $47,701. Keep in mind that the Overlook pays no rent/mortgage or utilities like a normal business would. This restaurant was closed when the Town purchased the property so why did they re-open it? And why hasn’t the Council tried to contract it out? If there are no bidders for the contract, then CLOSE it. The Town is supporting the elite 242 members of the "club" by providing discounted food, discounted merchandise, and a free driving range. To be more precise, the Town is not supporting the golf members, you are.

Citizens are preparing an alternative
Last summer, the Town paid more than $50,000 for a golf study in an effort to minimize the stupidity of their decision to purchase this property. To date, they have ignored the recommendations. Two citizens are currently preparing an alternative that will be completely vetted and presented to you in the near future.

This purchase was outlandish when it was made and, at two and a half years into this misadventure, there is no reason to believe that the fiscal bleeding will ever stop.

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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.