Thursday, November 21, 2019

The Watchdog Report: Golf Revenue is Decreasing

First quarter golf revenues are down
The September 2019 financials have been posted. Despite the accolades from the Town Manager and the minority-3 council members, golf is still losing money and is now generating less revenue compared with the same time period in 2017 and 2018. First quarter revenues (July 1 through September 30) have shown:

• Through September 2017, golf revenues were $174,990
• Through September 2018, golf revenues were $219,812.
• Through September 2019, golf revenues are $168,451.

The factual numbers show that the golf revenues were $51,361 less than the prior year and $6,539 less than two years ago. If golf is doing so well, how can this happen?

In September 2019, there were 1,487 non-member rounds of golf. This compares with 1,529 rounds played at a public course within 5 miles of the El Con. Through September 30th, there were 239 various golf memberships. Troon’s goal for memberships was 319 but has been reduced to 275. If golf is doing so well, why have the membership expectations been lowered?

As an aside, the Overlook Restaurant lost $5,225, bringing the total losses through September to $35,706.

The Community Center is doing very well
As of September 30, 2019, the Town has made $8,926. Through September 2019, our sales tax subsidy is $556,520. Fiscal year 2018/19 that ended on June 30th, showed that the Town’s portion of this investment was a positive $57,747. Add to that the sales tax subsidy of $2,463,034 and you have over $2.5 million ($2,520,781).

Imagine there’s no golf
Imagine if all we had to worry about was the Community Center and not golf. With the Town support, coupled with the sales tax subsidy, we could make all the needed capital improvements to the Community Center including making it ADA compliant.

It is the golf portion of the investment that is the troll and it is this part of the investment that is dividing the Town.

In summary, golf revenues for the first quarter of this fiscal year are less than they were in 2018 and 2017. This should not surprise anybody. We have a 5-year history of this in Oro Valley.

According to the Town Manager we need to withdraw another $1.9 million from the General Fund and bond for an additional $3.2 million to provide for the needs of golf and the community center building. We cannot fund with “pay as you go” as long as we continue to maintain 36 holes of golf. This has been empirically evident by the history of the last five years.

The development scare tactic
The fear of development occurring if we don’t continue with 36 holes is a scare tactic. The HSL/Oro Valley purchase agreement states on page 5 that, “the Resort Course (Pusch Ridge) and the La Canada Course shall be deed restricted so that such courses are only used as golf courses, open space, or recreational amenities…” The Town cannot sell the property because State law mandates that any Town asset over $500,000 cannot be sold without a vote of the citizens.

18 holes won’t require additional funding
It’s true that if we decide to go with an 18-hole option (utilizing the Conquistador Course) we will lose about $900,000 in member dues and $100,000 in HOA contributions. However, this loss in revenue will be offset by the lower water needs, not to mention a reduced need for personnel, cart leases, and equipment. The water savings alone is over $400,000 and the Town currently budgets over $5 million for personnel, operations and maintenance, and equipment leases.

The Town has already withdrawn over $1.5 million from the General Fund and has bonded for energy efficiencies (a new irrigation pump on Conquistador and a new HVAC system at the Community Center). We do not need to borrow more money or withdraw more money when 18 holes can do a better job of sustaining without additional funding. If we are going to bond or borrow money from the General Fund, we should do it to pay our Public Service Retirement debt (ASPRS), or improve Steam Pump Ranch, or improve our parks, our Little League fields and our soccer fields. Let’s fulfill the needs of all our Citizens. It is not equitable to place so much focus on one particular group of citizens.
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. He was an Air Traffic Controller for 30 years. He and his wife moved to Oro Valley in 1998. Mike served on the Oro Valley Development Review Board from 2005-2009 and the Board of Adjustment from 2011-2012. He served on the Town Council from 2012-2016 during which time he was named a Fellow 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.