Guest View-Diane Peters: "Golf Tourist" Revenue was Based on Speculation with No Supporting Data

Back in 2019, in order to not appear self-serving in their efforts to keep the town-owned golf courses open, residents living along the golf courses figured out that they needed to come up with an argument for why the golf courses were good for the entire town and not just good for their views and their property values.

The bed tax and sales tax argument
They argued that the golf courses benefited the entire town by attracting tourists who came here to play golf and that these “golf tourists” were contributing to the bed tax and sales tax. However, no one ever supplied any statistics on how much revenue these supposed golf tourists are bringing in or any proof that they bring in more in revenue than what it's costing us taxpayers to maintain these courses. As such, I asked the town manager if the town had any statistics to prove those claims. And it turns out, they did not.

My email to the Town Manager

“The argument of the golf crowd is that the golf courses bring in revenue in the form of bed tax from the hotels and sales taxes in our shops and restaurants. But where is the proof of how many people who stay at our hotels are playing golf on the El Con golf courses? Can the town show exactly how much bed tax and sales tax revenue we are receiving from people staying in our hotels who are here for the purpose of playing golf on the town-owned golf courses?”

The Town’s Response

“The Town cannot show exactly how much bed tax and sales tax revenue it is receiving from people staying in hotels within Town boundaries for the purpose of playing golf on Town-owned golf courses.”

As I suspected, the “tourist revenue” argument was purely conjecture and has no merit at all.

Opinions without factual evidence
One person who lives along the golf courses commented on social media that the golf courses were a “net add” to the town. But when I asked him to provide the “actual monetary statistics,” he could not. He responded only that: “They bring people [tourists] in. They are beautiful. The golf courses keep property values up.”

Well, one could argue that the desert landscape brings people [tourists] in, it’s beautiful, and it keeps property values up. But we’ve all seen how Oro Valley allows mass grading of the desert with no concern at all for its beauty or how it affects our property values.

Three reasons why I never believed the “golf tourist revenue” argument

1. When any of our friends or family have visited us in the past 18 years, not one of them inquired about golf courses in the area. They wanted to experience the desert and desert wildlife, red rock country, Wild West history, and Native American history. As such, they took day trips to Saguaro National Park, Tombstone, the White Stallion Ranch, San Xavier Mission, Tubac, and Nogales, Mexico. Others headed up to Sedona for a few days after leaving Oro Valley. Again, not one of them had any interest in playing golf.
2. When my husband and I moved here in 2003, we came for the desert and mountain views and the dry climate. Golf courses were not on our radar.
3. When planning a vacation that includes golf, why choose Oro Valley over Scottsdale when Scottsdale has a far greater selection of adjacent quality dining, boutique shopping, museums, and art galleries?

The “net add” just doesn’t add up. Their whole argument was based on hyperbole. Six years into this boondoggle, I still fail to see what’s in it for the rest of us.
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Diane Peters has lived in Oro Valley since 2003, moving here to escape the humidity of the East Coast. She’s been involved in OV politics and development issues since 2006, including organizing a citizens group in 2014 that spent 9 months negotiating a controversial 200-acre development project. In her past life, she worked in medical research at various University Hospitals in New England. Her interests include reading, writing, nature photography, travel, art galleries, museums, and politics.

Guest View: Mike Zinkin ~ Oro Valley Government lies to the citizens

Those who saw the movie, "The Post" learned that the "Pentagon Papers" were a classified government document that showed that every presidential administration from Eisenhower to Nixon lied to the American people about what was going on with the Vietnam War. Although not of the same scope, something very similar is happening in Oro Valley.

Town Staff Controls the Message
When one attends the Newly Elected Training Session (for new councilmembers) presented by the Arizona League of Cities and Towns, one learns (among other things) about the Open Meeting Laws, how to work with the media, and that Town staff controls the message.

Governing boards, whether they be City Councils, School Boards, Boards of Supervisors, etc., are made up of ordinary people. They are not Planners or Civil Engineers or Public Safety experts. They are laymen that are interested in their communities and have a desire to help establish policies. As a result, they depend on the information provided to them by their staff.

Staff works for the Town Manager, who works for the majority of Council. During my four years as an Oro Valley Town Council Member, I was told on many occasions by former Town Manager, Greg Caton, that, "I do not work for any individual Councilmember, I work for the Council majority."

Why is this the case? Because if the Town Manager does not please the Council majority, the Town Manager will lose his/her job. As a result, the message that the Town Manager gives to the 7-member Town Council is manipulated to please the 4-member Council majority. It’s in the Town Manager’s best interest to tell them what they want to hear.

This happens all the time, but on December 17, 2014, the night the Council voted to purchase the HSL property (the Community Center plus Golf and Tennis), the staff controlled the message to show that the purchase was desirable for the Town because that’s what the mayor and his Majority-4 cohorts wanted to hear.

The Message was a Lie
Now that we have almost three years of financial data as evidence, we can see that the message was a lie.

The message was that all expenditures, including the needed capital improvements, would be covered by the dedicated increased sales tax plus the revenues derived from the facility and that no money would be taken out of any other Town funds to supplement Community Center/Golf expenses (other than for the initial transfer of $1.2 million from the General Fund to the Community Center Fund which would be paid back at $120,000 per year for 10 years.)

The Power Point presentation provided to the Council shows that in the area of capital improvements for both the facility and golf, they would spend the following:

$810,000 in FY 2014/15      (including $50,000 for golf improvements)
$1,860,500 in FY 2015/16   (including $1,310,500 for golf improvements)
$1,772,500 in FY 2016/17   (including $1,282,500 for golf improvements)
$596,000 in FY 2017/18      (including $130,000 for golf improvements)

And between 2015-2018, they were going to spend:

$1,037,000 for "ADA and Code Compliance Life Safety Issues"
$522,000 in "Facility Restoration"

These two slides show what they were planning to spend on golf improvements, ADA compliance, and facility restoration in each fiscal year. [Click to enlarge]

With this information, the Council majority (Mayor Hiremath, Vice Mayor Waters, Councilmembers Hornat and Snider) voted to purchase the property. However, it now appears that the staff lied in order to please the Majority-4 Councilmembers.

The Budget was a Lie

In fact, after the purchase was made, staff only budgeted the following:

$1,115,000 in FY 2015/16    (NOT the $1,860,500 that was promised)
$527,200 in FY 2016/17       (NOT the $1,772,500 that was promised)
$94,250 in FY 2017/18         (NOT the $596,000 that was promised)

How much did they actually spend?

The real story lies in what they promised vs. what they budgeted vs. what they spent.

In FY 2014/15, they spent only $37,873 of the $810,000 they promised. I’ll give them a pass on this due to the 2015 referendum which delayed the purchase until May 2015; however, the promised capital improvements were not carried over to the next fiscal year.

In FY 2015/16 the total capital outlay was only $499,744 of the $1,860,500 they promised.

In FY 2016/17 the actual capital outlay was only $72,414 of the $1,772,500 they promised.

Half-way into FY 2017/18, the capital outlay is only $29,464 which is a far cry from the $596,000 they promised.

The promise that no money would be taken from any other Town funds was a Lie
Remember that all this money was going to come from the sales tax increase and revenues from the golf and community center. There was not going to be any more money taken from the General Fund (other than the $1.2 million to start the Community Center Fund).

Here’s what actually happened. In June 2017, the Town Council voted to transfer an additional $350,000 from the General Fund to the Community Center Fund. Later in 2017, the staff took $21,323 from the Bed Tax fund (hotel room tax) to cover the overage from tennis court improvements.

Now the Town Manager and Council are discussing the potential of bonding (incurring a debt service) for the continued improvements required for the Community Center facility and Golf courses.

They lied. It’s clear that there was no way the needed capital improvements and the required Operations and Maintenance for the purchase would be covered by the sales tax increase. They didn't even budget for the promised improvements in the subsequent budgets. They promised there would be no debt service (bonding) but now they’re discussing bonding to pay for Community Center expenses. They lied.

You think this is bad? Part 2 will discuss Troon’s lies.

[Slides provided in this article are from the December 17, 2014 Power Point presentation]

Part 2 will be published on Thursday.

Editorial ~ Remember when?

Today we will take a trip down Memory Lane to see if the assertions made by the mayor and council regarding the Community Center/Golf Courses have proven to be true or false.

2014 Assertion: The Community Center is a Turnkey Operation (False)
Remember how the Mayor told us about the "turnkey" operation we were getting with the purchase of the Community Center? That "turnkey" operation has already drained $2.45 million from our General Fund Contingency.

2015 Assertion: The sales tax increase will cover all Community Center expenses (False)
Remember being told repeatedly by the Town Council that the Community Center Fund (financed with the dedicated sales tax revenue) would cover ALL the needs of the Community Center including golf and tennis and that NO MONEY would be taken from any other fund? [See “2017 FACT” below to see how that turned out.]

2017 Assertion: The Community Center is not using any other Town funds (False)
Remember Councilmember Steve Solomon stating at the April 19th council meeting:

“The Golf and Community Center revenues and the dedicated half cent sales tax for this year will cover all of its costs. It’s not using any other Town funds. It’s not taking money from any other Town project or Town source.”

Once again, Solomon is full of bluster. Read on to learn why.

2017 FACT: Town dips into Bed Tax Revenues to cover Community Center renovations
The Quarterly CIP Report (Capital Improvement Program) for the quarter ending 12/31/17 revealed that the Tennis Court Improvements were budgeted for $75,000. However, the improvements actually cost $96,323. (This is a 28.4% miscalculation).

Where did the additional funds come from to cover the overage? They came from the Bed Tax Fund! (The tax on hotel rooms).

So now we have another fund supporting this “turnkey” operation. This does not include the monies that Councilmember Rodman stated that we will need to borrow ($4.7 - $5 million) to fulfill the recommendations identified in the Town Manager’s presentation to the Council during the February 7th Golf Study Session. Rodman stated, “We’re going to have to finance this no matter what we do.”

Conclusion
Council assertions about the financial sustainability of the Community Center/Golf Course purchase have been, at best, wishful thinking…and at worst, deliberate lies to cover for their reckless decision to purchase this money pit. 

As a side note, the Department of Defense and the U.S. Air Force are no longer going to supplement golf at Davis-Monthan.  The Blanchard Golf Course is closing at the end of April.  The U.S. Government has decided to stop paying $400,000 a year to water the golf courses and to discontinue supplementing the $700,000 a year in golf losses.  For how long will Oro Valley continue to supplement the losses at the El Con Golf Courses?

. . . . . . . . . . . . . . .

Editor’s Note: Mayor Hiremath and Councilmembers Hornat, Snider, and Waters are up for re-election this year. These are the four “public servants” who made the disastrous decision to purchase the Community Center (including 31 tennis courts and 3 golf courses) and to increase your sales tax in order to meet the expenses. You will have an opportunity to vote them out of office during the primary election in August.

Bits and Pieces

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The saga of the El Conquistador's bankruptcy continues.

"Hotel operators and investors interested in bidding on the Hilton Tucson El Conquistador Golf & Tennis Resort are scheduled to meet at 11:30 a.m. Dec. 6 on the east steps of the Pima County Superior Court Building, 110 W. Congress St.

In the meantime, the resort will continue to run as usual."

(Source: Arizona Daily Star)
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OV Seeks Nominations for 2012 Volunteers of the Year

ORO VALLEY, Ariz. (October 1, 2012) - The Town of Oro Valley is accepting nominations for the 2012 Volunteers of the Year. The Town is looking for two individuals who embody the spirit of volunteerism by going above and beyond the call of duty in an effort to better our community. One man and one woman will be selected based on the outstanding nature of their volunteer efforts and will be recognized at the annual Volunteer Appreciation Reception on December 13, 2012, 6 – 8 p.m. at the Hilton El Conquistador Golf and Tennis Resort.

Nominations are open to anyone who has volunteered for a Town-sponsored project, program, department, committee, etc. Serving on a Town board or commission certainly meets that criterion, but is not a requirement for nomination.

Nominations must be received by Friday, October 26, 2012.

Nominating is simple! Just submit a nomination letter as well as a supporting letter from a second individual to Misti Nowak, Town of Oro Valley communications administrator.

Nominations may be hand-delivered to Town Hall, or submitted by email or postal mail. Submissions received after October 26 will not be considered. Both letters of support must be submitted together.

Hand delivery
Oro Valley Town Hall, 11000 N. La Cañada Dr., Attn. Misti Nowak

Email
mnowak@orovalleyaz.gov

Postal mail
Town of Oro Valley
Attn. Misti Nowak
11000 N. La Cañada Dr.
Oro Valley, AZ 85737

All nominees will be notified prior to the Volunteer Appreciation Reception on December 13, and will have their names printed in the program. Nominations will be judged by the Town’s Volunteer Selection Committee. All decisions are final.  (Source: Oro Valley Press Release)
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Enroll now for OV’s COMMUNITY ACADEMY: Local Governance 101

ORO VALLEY, Ariz. (September 28, 2012) - The Town of Oro Valley is pleased to offer the Fall 2012 Community Academy, an opportunity to learn more about your community, including classes on sustainability, Town finance and the Town’s vision for the future.

A series of six classes will be held on Thursday evenings, 6 - 8:30 p.m., Oct. 11 – Nov. 15, 2012. All classes take place at Oro Valley Town Hall, 11000 N. La Cañada. Space is limited.

There is a $50 fee to cover class materials, which are yours to keep at the conclusion of the Academy.

For more information or to enroll, go to www.orovalleyaz.gov and click on the “Events & Projects” tab. You may also call Roseanne Flores at 229-4832.

Fall 2012 Schedule of Classes

Oct. 11 Oro Valley Town History and How Your Town Works

Oct. 18 The Town’s Vision for the Future and Our Place in the Region

Oct. 25 Conservation & Sustainability

Nov. 1 Design Excellence & Regulation in the Community

Nov. 8 Town Finances & Economic Development

Nov. 15 Water & Transportation

Dec. 5 Graduation

(Source: Oro Valley Press Release)
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DEPLOYMENT UPDATE:

High Visibility Enforcement (HiVE) on Oracle Road at Magee and Suffolk

ORO VALLEY, Ariz. (October 3, 2012 ) - The Oro Valley Police Department HiVE deployment on October 2 resulted in the following activity at the Oracle/Magee and Oracle/Suffolk intersections:

• 47 traffic stops were made
• 28 of those stops were for moving violations (e.g. running a red light, speeding, failure to yield)
• 32 drivers received written warnings
• 3 drivers were cited for moving violations
• 12 drivers were cited for non-moving violations (e.g. no proof of insurance, expired registration)
• 0 collisions

OVPD will continue HiVE efforts over the next 90 days to increase awareness and reduce collisions related to inattention, following too closely and failing to yield to other drivers. Dates, times and locations of future deployments will be announced in advance.

If you have any questions about this news release or traffic-related issues in Oro Valley, please contact Lt. Chris Olson at 229-4902. (Source: Oro Valley Press Release)

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Shoring Up The Bed Tax

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Yesterday, in "How Fiscally Sound Is The Bed Tax?", we discussed the bed tax, which is the "work horse" for paying for the reconstruction of and the operation of the aquatic center.  We have concluded there is some need to "shore up the bed tax", especially for 2013 and beyond.  This is because there is a shortfall of funding at that time.

We believe there is another reason to bolster this fund.  This is because there is a risk that the revenue stream will not materialize as projected.  Such could occur because the economy continues to be sluggish.  It could also occur if the major revenue source, the El Conquistador, has financial problems. And it does!

The bed tax is only as successful as the  El Conquistador. This is because the  El Conquistador is the main source of bed tax revenue.  There are others sources of the bed tax but they are not significant in relation to the El Conquistador.

If anything happens to the El Conquistador's revenue stream, if their sources of room bookings are lower than projected, then bed tax revenues will not be as projected.  So, its a "problem" when SAACA decides to not hold its Jazz Festival in October at the El Conquistador, choosing instead to hold it outside or Oro Valley.

Now, we have learned that the El Conquistador is in consensual bankruptcy.  This adds another level of uncertainty around the stability of this bed tax revenue source. 

The resort is owned by Ashford Hospitality Trust.  It is managed by Hilton. On 12/29/09, Ashford refinanced an almost $20 million loan from Met Life. (Source)  Met Life actually is the primary secured debt holder.  As such, they will  "call the shots" in any bankruptcy or reorganization proceeding.

Yes. The El Conquistador is in the process of renovation. Our guess is that the property is being put in "shape" in order for it to be sold.

The future of the El Conquistador is uncertain. Therefore, the future of bed tax revenues are uncertain.

When we asked if the town was concerned with the potential impact of a bankruptcy of El Conquistador ownership and management  in terms of endangering the bed tax revenue stream we were told by Town Manager Greg Caton and Town Finance Director Stacy Lemos that they were not concerned since situations like the one facing the El Conquistador rarely result in the facilities "going dark, so they will have bookings."  We asked if the town had a contingency plan and Greg did not respond.

There is another reason to shore up the bed tax. That is the uncertainty of the expenditure stream.  The town has already experienced a substantial increase in the cost of reconstructing the aquatic center.  The town has used its bed tax reserves to cover these costs. There are no more reserves.  In addition, the feasibility report on the aquatic center indicated that the center would not be a self-sufficient operation; that it would cost the town money. How much depends on uncertainties like the number of meets held and the costs of running a new facility.

We think that it never hurts to be cautious.

We need to shore up the bed tax.  We need to make it more secure.

One solution is to annex Westward Look.  We have heard that  Westward Look does not want to be part of Oro Valley because of the bed tax, which is 6%.  Council Members with whom we have spoken regarding the bed tax have indicated an interest in reducing the bed tax to 5% as in inducement to Weswtard Look.   This would have the benefit of giving Oro Valley resorts a financial advantage over those outside Oro Valley. It would also broaden the base of the bed tax, well beyond the El Conquistador.  Certainly, it is worth considering.
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How Fiscally Sound Is The Oro Valley Bed Tax?

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The Oro Valley Bed Tax is a source of funding for the aquatic fund.  So, the financial health of bed tax is critical to the financial success of the aquatic center.  If the bed tax is not sufficient to pay for the debt service on the aquatic center and for the operating cost of the center, then the general fund will have pick up the "slack."

We think, therefore, that it is reasonable to ask: "How healthy is the bed tax?"

With this question in mind, John Musolf met with Town Manager Greg Caton and Director of Finance, Stacy Lemos.   They provided John with their perspective which is:

• Projected bed tax revenues for 2012-2013 are $788,000. This is 99% of last year's level.  Caton and Lemos feel comfortable that this amount of revenues will occur.
• They project expenditures of $666,500.  They feel comfortable that this level of spending will be met.   
• Next year, Oro Valley will take more from this fund than they put in, assuming that bed tax revenues meet this year's projected level.  Lemos believes that next year's spending level will be substantially more; approximately $925,000.  This is because of interest payments on the aquatic center bonds and greater spending on MTCVB. 

The big risk with the bed tax this year and, therefore the aquatic fund, is that the bed tax revenues will be less than projected.  This will even be a bigger risk next year when spending will increase, resulting in the need for substantial additional bed tax revenues.

How fiscally sound is the bed tax?  Is there is some reason for concern?  Does Oro Valley need to stabilize and increase this revenue source?  We will discuss more on this tomorrow.
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