The Watchdog Report: January 2021 Municipal Golf Financials

 

According to Troon, the month of January 2021 showed a profit of $31,707. However, for the fiscal year, (July through January) golf lost $616,587. The Town’s portion of the Community Center Fund (CCF), which is primarily fitness, has lost $158,088.

When will the tax subsidy finally be lowered to $750,000?
YOUR tax subsidy is saving the CCF. For the first seven months of the fiscal year, your subsidy was $1,657,461, which allows for the CCF to show a surplus of $753,871. Not long ago, the Mayor stated that he desired no more than $750,000 in tax subsidy. It doesn’t appear that this is going to happen. Town Manager, Mary Jacobs still intends to spend $1,124,500 in Capital outlay. Where is this money coming from? The General Fund? It certainly isn’t coming from the CCF.

Golf Members and Golf Rounds

As of 1/31/21 there were 304 golf members, an all-time record. The non-member rounds played on the 36 holes were 3,266, which includes 717 rounds played on the “member course.”

The model for Oro Valley is that our 36 holes are a combination of a public course and a public/private course. In January 2021, there were 6,956 combined rounds played on those 36 holes.

How does this compare to other establishments?
An 18-hole public/private course within 5 miles of Oro Valley had 6,528 rounds in January and an 18-hole public course within 5 miles of Oro Valley had 3,588 rounds played. When you add the two together, there were 10,116 rounds played on those 36 holes. When comparing apples to apples, there were 45% more rounds played on the other 36-hole combination.

A waste of water and taxpayer money
Besides wasting money, how much water was wasted? The closed Pusch Ridge course used 69,000 gallons of potable water providing for a bill due 1/27/21 of $742.71. The remaining 36 holes used a total of 13,396,000 gallons of reclaimed water providing for a bill of $39,702.80, also due on 1/27/21.

The Council will tell you, “don’t worry about the Pusch Ridge Course because the plan is to keep it for only 3 more years.” This is the same Council majority that ran on a platform of doing something about the golf losses. It appears that all they have done is kick the can down the road until their current terms expire.

We should all continue to worry about the monetary losses and the unconscionable use of water on these golf courses.

Partial February statistics are available
Golf Course Water Usage: There were 900,000 gallons of potable water used on the closed Pusch ridge course, costing $3,838.95. There were 9,673,000 gallons of reclaimed water used on the remaining 36 holes, costing $29,115.88.

Golf Rounds: There were 8,396 rounds of golf on our private/public and public courses, but there were 11,121 rounds of golf played on the courses within 5 miles. The outside courses experienced 32% more rounds than our Town-owned courses.

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Mike Zinkin and his wife have lived in Oro Valley since 1998. He 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. He was named a Fellow for the National League of Cities. He was a member of the NLC Steering Committee for Community and Economic Development and a member of the Arizona League of Cities Budget and Economic Development Committee. He was an Air Traffic Controller for 30 years. Mike 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.

The Watchdog Report: Community Center Financials through November 2019

There has been no new information regarding Town’s finances since August. When I brought this to the Town Manager’s attention (via an email) the Council agenda was then amended to show the finances through November 2019. Apparently, the Finance Department was “strapped” and did not have the time to prepare the financial information.

It’s my impression that, until it was brought to the Town Manager’s attention, Ms. Jacobs had no priority to relinquish the Town’s financials. One wonders if this was due to the Town Council not making it a priority or if it was simply not a priority of Ms. Jacobs.

There is no good news to report
In the past, the one area where we were doing well was with the Town’s portion of the Community Center. However, through November 2019, The Town’s operations (fitness, recreation programs, non-Aquatic Center swimming) lost $34,827. For comparison, at this same time in fiscal 2018/19, the Town had profited $7,650.

YOUR sales tax revenues amounted to $956,766 which is $47,303 more than last year. The money spent for capital improvements remains at $20,835, without a penny being spent on ADA compliance. The transfers out remain at $148,810 which is to pay for an Energy Efficiency Bond.

Another shell game
The $148,810 transfer is interesting. The Town Manager reported to the Council that there was no debt service concerning the Community Center Fund (CCF). When I asked her what the $148,810 was for, she replied that it was a transfer to the “debt service fund” to pay for the bond allocated to the CCF. It seems that she wants the Council to believe that there are no bonds associated with the CCF, when in fact, there is one.

Troon Golf and Overlook Restaurant
Troon Golf has lost $1,031,624. (Revenues of $1,084,403 minus expenses of $2,116,027). The golf revenues (non-member play) were $353,357. This is $71,621 less than FY 2018/19. Non-member play allowed for 2,755 rounds on 45 holes of golf. The public course within 5 miles had 3,211 rounds on just 18 holes. That’s 456 more rounds. Why aren’t we doing better? After all, according to the members, the courses are in the “finest condition ever.” So why hasn’t Troon improved on these numbers?

Nov. 2019 YTD Financials
(Click to Enlarge)

Through 42% of the fiscal year, the CCF is $279,469 in the red. It doesn’t help that the Overlook lost another $3,519 bringing its total year-to-date losses to $57,942.

The Town is searching for a new golf operations management firm
The only good news is that the Town has issued a Request for Proposal (RFP) in an effort to find a new contractor to manage the Town’s golf operations. According to the RFP:

“The successful contractor will provide comprehensive services to improve the operation, maintenance, and financial performance of the Town’s two 18-hole golf courses, including food and beverage operations.”

LOVE will report a bit more on this Friday.
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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. 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.

Guest View: LOVE Contributor ~ We Deserve Better

I recently reviewed the Employment Agreement between the Town of Oro Valley and Town Manager, Mary Jacobs. My conclusion is that we are paying a lot of money and receiving little in return. One would think that when the Hiremath crew was searching for a new Town Manager, they would have preferred one that had some experience in Municipal golf, as that was a very divisive topic at the time. Instead they chose an individual who not only had no prior Town Manager experience, but also no experience in municipal golf. Is this the individual we deserve?

In the contract entered into on May 30, 2017 between the Town of Oro Valley and Ms. Jacobs, the contract stated, “The term of this agreement shall be for a period of two (2) years.”

Ms. Jacobs’ initial salary was $160,000 per year. However, just 15 months later, on September 5, 2018, her salary was increased to $180,000 per year. This was almost nine months before the 2-year contract was to expire or be renewed.

In addition, the Town paid for her moving expenses, up to $5,000. The Town also pays for the following:

• a deferred compensation payment into a 457 retirement account of $5,000 per year.
(Increased to $10,000 per year on September 5, 2018)

• 80 hours of vacation pay -- the equivalent of 10 days’ vacation.
(Increased to 27 vacation days per year, or 5.5 weeks of vacation, as of September 5, 2018)

• health, vision, dental, and disability insurance

• up to $90.00 per month to help defer costs associated with technological use and requirements for Town purposes (cell phone?)

All of this was given to an individual who had no Town Manager experience and had served as an Assistant Town Manager in Sierra Vista for 17 years.  Do you know anyone who has ever gone from 2 weeks of vacation to 5.5 weeks of vacation after barely a year and a half on the job?  Do you know anyone who received a $20,000 salary increase after just 15 months on the job?

This extremely well-compensated individual with no municipal golf experience relies on Troon for numbers. This is after Troon had shown that their forecast for the previous 5 years has been off by $9 million.

Ms. Jacobs also supported the Comprehensive Economic Development Strategy (CEDS) that supported eliminating citizen participation in business and commercial development in order to accelerate the review and permitting process. CEDS removes Neighborhood Meetings and Planning and Zoning Public Hearings from the process, eliminating the citizens’ voice.

Jacobs has no concept of why Oro Valley incorporated, which was to include the citizens in the decision-making process. We did not want to be like Tucson or Pima County.

With all the money and benefits budgeted for a Town Manager, we deserve better.

You can view the 2017 contract and the 2018 amended contract below.  The information provided in this article can be found in Sections 2, 7, and 9.  The amended agreement can be found on Page 9.

You can view the town's contract with Ms. Jacobs here.
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Editor’s Note: CEDS was approved by a 7-0 vote at the September 18, 2019 council meeting.

Observations on the Town Staff and the Green Shirt members

Town Staff makes major decisions without Town Council or citizen input
At last Wednesday’s Town Council meeting (September 18th) former Oro Valley council person Mike Zinkin gave a speech during the "Call to Audience" portion of the meeting. Although he was not there to speak about golf, he had to wait an hour for his chance to speak because “The Green Shirts” had packed the room again and they dominated the "Call to Audience."

You can watch Mike’s speech below. It was about the Town Staff’s encroachment over the past ten years into the governance of Oro Valley. According to Mike, this has resulted in the town staff, rather than the elected Town Council, asserting too much control in Town decisions.

Below are just a few of Mike’s observations:

• The El Con purchase had no oversight by the prior council and we’re now experiencing the complications of that lack of oversight.

• The last General Plan, approved by the citizens, had a sentence removed from it by a staff member. As a result of that sentence being removed, the potential for a 5-story building was planned along First Avenue. The General Plan previously stated that not even a 2-story building was allowed to be seen from First Avenue. Staff removed that sentence. The council had no say in it. The people had no say in it.

• Despite the intersection of Moore and La Canada meeting only 2 of 9 criteria for a Signal Warrant Analysis, a roundabout is being installed that costs twice the amount of a traffic light.

• A “house” is being built on Tangerine (west of La Cholla) that contains a 10,000 sq. ft. basketball court with a bedroom stuck in the corner. Staff says that’s residential.

• Staff extended the Troon contract for 6 months without Town Council approval. They extended that contract into a new fiscal year. It was never budgeted, in violation of Town Policy #6.

• Staff has no experience in municipal golf. Their “experts” are Troon -- and Troon has a dog in this fight.

Indeed, Zinkin is correct
The staff is not elected by the citizens. The Town Council is supposed to make the decisions and the Town Staff is supposed to execute the decisions. But for years we have had a situation whereby the Town Staff makes recommendations to the council. This serves only to allow the “lazy” members of council to not have to take the time to “get into the weeds” but rather make their decisions based on whatever the staff recommends.

Adults behaving badly
On a separate note, as you watch the video, look at the behavior of the two women in the “Green Shirts” who are seated directly to the left of the podium. Watch what they do in the first 10 seconds or so after Mike’s name is called. For the record, the woman with the blonde hair is Jennifer LeFevre, founder of the green shirt crowd.

When Mike's name is called, LeFevre makes a face and rolls her eyes. She then said something that was clearly rude because she immediately covered her mouth in embarrassment, obviously worried that the microphone might have picked it up. (Reading her lips, it appears that she said, "Oh sh--").  The woman sitting next to her then whispered something to her, at which point the two of them gave Mike the "once-over" and made another face, seemingly ridiculing something that he was wearing.  (We had a technical difficulty with the video.  It does not show the part with the women whispering and making a face.  You can watch it on the Town website under Meetings and Agendas - Archived Videos - Town Council Regular Session - Sept. 18th Video - 1:04 time stamp on the video).

These are the people of the “Green Shirt” crowd. They have exhibited junior high school behavior at every town meeting we've attended or watched online.

For the record, prior to the council meeting, Mike was officiating a football game between Wilson School and La Cima Middle School. The game finished at 5:50 and he headed straight for the 6:00 PM council meeting to speak at the all to Audience. He did not have time to stop home and change clothes.

The Watchdog Report: April 2019 Community Center Financials

The Community Center Fund (CCF) ended April 2019 with a positive balance of $698,301. Although a positive balance of this magnitude is a good sign, there are a lot of promised obligations that need to be fulfilled…and they’re not being fulfilled.

What happened to ADA compliance?
We have owned this property since May 2015 and it is still not ADA compliant. Why isn’t the Town Manager funding an elevator for the Community Center? Does anyone care about our citizens who are disabled and currently have to enter the building through the loading dock? What happened to the funding for ADA and Code Compliance and Life Safety Issues that was shown during the Power Point presentation in December 2014?

ADA and Code Compliance Life Safety Issues

FY 2014/15         $381,000
FY 2015/16         $445,000
FY 2016/17         $69,000
FY 2017/18         $142,000
FY 2018/19         $106,000
TOTAL              $1,143,000

Greg Caton (Town Manager in 2014) promised that between FY 2014/15 and FY 2018/19 that the Town would spend $1,143,000 to remedy these issues. Fiscal year 2018/19 ends on June 30th and to-date the Town has spent ZERO on ADA compliance.

What happened to paying back the $1.2 million dollar loan?
In 2015 the Town Council borrowed $1.2M from the General Fund to start the Community Center Fund with a promise to pay back $120,000 per year for 10 years. There has been no transfer of the promised annual $120,000 from the CCF to the General Fund.

Gains and Losses
Troon lost $85,220 in April 2019, bringing their losses to date to $1,267,303.

The Overlook lost $2,232 in April bringing its total losses so far this fiscal year to $89,679. Since the Overlook opened in 2015 it has lost $556,141. Of interest is that four years into this endeavor they are still losing more than what they've budgeted to lose. Budgeted losses YTD were $58,712. Actual losses YTD are $89,679. (Difference of $30,967).

The Town part of the investment (fitness, recreation, swimming) made a little over $125,000 as of April 2019. There is nothing wrong with the Community Center part of the investment; it is golf that continues to be a financial drain on the Town. So far this fiscal year your sales tax revenues dedicated to the Community Center and Golf amount to $2,033,576 (as of April 2019).

Looking ahead
I recently submitted a Freedom of Information request asking for the number of employees assigned to maintain the golf courses, including supervisors and mechanics, and the total water usage for 36 holes (either in gallons or acre feet). The Town responded that they did not have the requested documents because these items are not broken down individually. I’m not sure if this is stonewalling or irresponsible management. How can the Town not know how much water is utilized or how many employees are utilized for golf maintenance? I am trying again with a revised submittal.

I am currently working on a plan for an 18-hole, strictly municipal model for golf. Town Manager, Mary Jacobs, seems to be leaning towards the 36-hole model if the adjacent HOA’s supplement the Town via increased HOA dues. The recently passed budget still includes the Overlook and the 36-hole model. One wonders what it will take to get the Town Manager to understand that the current model for golf is not working.
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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. 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.

Guest View: Mike Zinkin ~ Lack of due diligence is responsible for “the mess” at the Town-owned golf courses

Today, Mike Zinkin is responding to Bob Sterritt’s Guest View that was published on Monday.
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I am very happy to hear from a LOVE reader regardless of the viewpoint. However, I feel that Mr. Sterritt might be a little confused about the intent of my Watchdog Reports.

I have never been opposed to the Community Center portion of the purchase and I have never spoken ill of it except for the fact that it is still not ADA compliant. I stated that from the dais (when a council member) as well as in written communications. I do feel that we would have been better off building a new, state of the art, ADA compliant community center as opposed to purchasing a 1980’s building in need of updating and retro-fitting.

In my March Watchdog Report, I stated that “one might be impressed and think we are working ourselves out of this mess.” Mr. Sterritt asked, “What mess?”

The mess began in December 2014 when the minority council members (Bill Garner, Brendan Burns, and myself) asked to see the purchase agreement before it was signed, but the majority Hiremath group did not think that was needed. Mr. Sterritt, I would bet that you would put more energy and effort into buying a car. I’ll bet that you would study the market and determine what the car was worth based on comparable cars.

Prior to the purchase, in December 2014, I asked to see statistics on how many rounds of golf were played on the El Con courses during the most current year, and the response was “that’s proprietary information.” Imagine asking a car salesman what the estimated miles per gallon was on the vehicle you were considering purchasing and his response was, “that’s a secret.”

My point is that the Town purchased this property without any due diligence. The Hiremath gang also purchased it even though the majority of residents who expressed their opinions via emails to the council and during the public meetings were against this purchase.

The sport of golf is dying. This is echoed in the National Golf Foundation study that the Town contracted. The 170-page study concluded that:

“This facility is aging and has seen declines in activity and is now operating at a deficit, up to $2.1 million+. The loss on operations is a result of several influences…a recent recession, increasing competition, declining physical condition, and declining interest in golf.”

Mr. Sterritt, I am going to assume that you and I are in the same generation. Our generation is the last generation to support golf.

You mentioned the appraised value, but there is a difference between appraised value and market value. As an example, Stone Canyon Golf and Dove Mountain Golf both sold for well under $1 million.

We opened the golf courses in May 2015. The Troon losses as of March 30, 2019 are $8,867,541. Promised capital improvements of $2,878,000 have not been accomplished. Troon desired to have 315 members by December 2016. As of April 30, 2019, the golf membership was only 236. It is not my Watchdog Reports that are causing this; it is the state of golf in the new millennia.

Since November 2019, the Town’s courses have had 22,008 rounds of outside play on 45 holes. A public golf course within 5 miles of the Town’s courses had 27,021 rounds on 18 holes. This is not being negative; this is merely stating the facts.

Again, let’s be clear. I have never been negative about the community center, tennis, fitness, and recreation. My focus has been on the financial drain that golf is doing to our Town.

Below are links to two articles that conflict with the notion that closure of the golf courses will decrease property values:

Repurposing golf courses
9 surprising things that add value to your house

The Town has owned the courses for 49 months. The losing trend for golf has not subsided.  As such, we should work to minimize the drain that golf is currently placing on our town.
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Editor’s Note: You can read more of what’s in the National Golf Foundation Study at the below links. Part 1 discusses the options that were provided by the golf consultants to cut the losses. Part 2 contains a summary of their conclusions regarding the problems with the El Con courses.

Part 1

Part 2

The Watchdog Report: There are several ways to cut the losses at the Town-owned golf courses

Over the past 4 years, many people have asked me what I thought the alternative was to the current golf situation in Oro Valley. As a council member, I often answered, “It doesn’t matter what I think, it matters what the People think.” Since I am no longer on the dais, and after watching this situation unfold all these years, I will now share my complete opinion.

You already know that I was never a supporter of the El Con golf courses purchase from HSL. However, we now own it and we must figure out how to reduce the financial drain that this purchase has saddled on the community. My comments will only deal with an alternative to golf, as I have never been opposed to the Community Center part of the purchase.

Whether we like it or not, we own the acreage and need to decide what to do with it as the current model has a proven history of not being sustainable.

Path to Sustainability

I believe that we need to return to the original 18 holes of golf and become strictly a municipal facility. Stop all monthly deposits made from members and make all golfers pay for the driving range. Paying for the range can easily be accomplished by purchasing a vending machine that dispenses both a large and small bucket of balls. Tokens for this machine can be purchased from the pro shop.

For those existing members who currently own golf carts, the Town can offer the following: For the first 12 months after becoming a municipal course, offer a reduced green fee ($10.00 - $15.00) to all those individuals that currently own carts if they chose to utilize their own cart.

Being a public course doesn’t prevent the current members from starting a “Private Golf Club.” Many other courses currently foster their own clubs. Being a member of the club will allow you to play with the club on certain days and get prime tee times. For example, let’s say the club plays on Mondays and Thursdays. The club’s representative would contact the pro shop 2 weeks ahead of the day and have them set aside x number of tee times (for example 16 tee times). The El Con would reserve 4 tee times (4 golfers per tee time) during a peak time. (Times would change depending on the season).

Having only 18 holes of golf will drastically reduce the water usage, maintenance requirements, and equipment leases. Try this for 12-18 months and see if the Town can sustain the losses.

There are a few additional items that should be considered
The Management contract must be re-bid. Troon is not in the municipal golf course business. Find a “National” firm (as required by the purchase agreement) to manage the course.

Close the Overlook Restaurant. The Garden Café and the beverage carts can meet the food/beverage needs of the golfers.

The holes not included in the original 18 would still have to be maintained in a manner that would not reduce the property values for those citizens that live along the courses. They would not have to be “over-seeded” in the winter, thus saving water, and very little maintenance would be required as cutting the grass would not be necessary in the winter. The Town should continue to fertilize and mow the acreage during the warmer months.

There will be a monetary cost in re-purposing the remaining holes to rid them of the sand traps and greens. This can be accomplished with Town personnel.
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Editor’s Note: LOVE also received the following idea from one of our readers.

The answer to solve the money problem and keep all the neighbors happy is to simply lease one 18-hole course to the Men's club. They could set the annual dues to cover all the operating and capital improvements. In return, they have a private course with unlimited play and anytime access to tee times. Additionally, all property owners would continue to see a beautiful, well-manicured golf course. This could be a Win-Win for the Club, the adjacent homeowners, and the Town.

Town’s Golf Investment priority continues to run “off course.”

Below are the financial statistics for the Community Center and Golf since its inception in May 2015 through the last available financials in November 2018 (four months into the fiscal year).

Purchase Price

Total - $1,000,000

Total transfers from the General Fund to the Community Center Fund (CCF)

FY 2014/15 $1.2 million to start the CCF Fund
FY 2016/17 $350,000

Total Transfers - $1,550,000

Total sales tax revenues from the dedicated sales tax increase to fund the CCF

FY 2014/15 - $506,710
FY 2015/16 - $2,030,750
FY 2016/17 - $2,199,466
FY 2017/18 - $2,330,941
FY 2018/19 - $906,463 (through Nov. 2018)

Total Sales Taxes - $7,974,330

Grand Total of tax dollars funneled to the Community Center/Golf = $10,524,330.

That’s $10 million dollars of the people’s money and the Community Center is still not ADA compliant. This is your money that could have built a new, state-of-the-art Community Center. In addition, the sales tax increase could have been repealed after the new Community Center was built.

Total Troon losses – Forecasted vs. Actual

FY 2014/15 – Lost $1,112,252 (Opened for only two months)
FY 2015/16 - Forecasted - $1,518,343; Lost $2,567,385 -- (off by $1,049,042)
FY 2016/17 - Forecasted - $1,534,505: Lost $2,512,938 -- (off by $978,433)
FY 2017/18 - Forecasted - $1,822,941; Lost $1,993,040 -- (off by $170,099)
FY 2018/19 – Forecasted (see below); Lost $1,102,243 (through Nov. 2018)

In FY 2018/19, Troon initially forecasted losses to be $1,893,595. However, they updated their forecast to $1,936,101. We are only 4 months into the fiscal year, and they have already lost $1.1 million.

Total Troon losses - $9,287,858 and counting

Food and beverage losses (Overlook Restaurant)

FY 2014/15 – Unknown. (Opened for only two months)
FY 2015/16 - $255,570
FY 2016/17 - $114,792
FY 2017/18 - $96,100
FY 2018/19 - $62,325 (through Nov. 2018)

Total restaurant losses - $528,787

Member Dues

FY 2014/15 – $201,531
FY 2015/16 - $876,133
FY 2016/17 - $725,611
FY 2017/18 - $784,071
FY 2018/19 - $284,968 (through Nov. 2018)

Total dues - $2,872,314

The Town Council needs to ask staff the following questions:

• Why is the facility still not ADA compliant after almost four years of operations?
• Why are the citizens still subsidizing the Overlook Restaurant?
• Why is the staff still supporting the 45-hole golf model?
• Why is the staff still supporting a dedicated golf course for only 226 members?

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Editor's Note: We originally posted incorrect numbers for Troon losses in FY 17/18. We have corrected the information.

Guest View: Mike Zinkin ~ Did our Town Manager exceed her authority in extending the Troon contract?

There have been some recent changes to the Town’s contract with Troon.

The good news
Recently, Town Manager, Mary Jacobs, removed Troon’s responsibility to oversee tennis. This reduced Troon’s management fee from $144,000 to $120,000 annually. As a result, Troon’s monthly stipend was reduced from $12,000/month to $10,000/month. These changes became effective on October 2, 2018.

I think we can all agree that this was a move that the Citizens of Oro Valley can applaud. Tennis has now become the responsibility of Jennifer Fuchs who, in the past, was the Director of Tennis for the El Conquistador Resort. Removing this responsibility from Troon was a great move because although Troon is known as the “Rolex of Golf,” they appeared to be the “Timex of Tennis.”

All the above changes are within Ms. Jacob’s area of responsibility.

The potential problem
At the same time these changes were made, she also extended the Troon contract for 6 months. Herein lies the problem.

During numerous communications with the Town, they have failed to show where Ms. Jacobs has the authority to extend Troon’s contract without Council approval. She has some authority to work within a $20,000 limit. However, the contract, which is now $10,000/month was extended 6 months. This means that she exceeded her $20,000 limit as the contract extension amounts to a $60,000 expenditure.

Town Policy #6, Unbudgeted Expenditures
This policy was adopted in March 1997 and reaffirmed in April 2005. It states that ALL expenditures not previously budgeted shall be approved by Council prior to issuance of payment. It goes on to state that it is the responsibility of the Town Manager to implement this policy.

Why does this matter?
The fiscal year ends on June 30, 2019. Ms. Jacobs extended the contract from June 30, 2019 to December 31, 2019. Therefore, the entire extension reaches into the next fiscal year, FY 2019/20. Until the Council passes the FY 2019/20 budget, there are NO expenditures authorized past June 30, 2019.  So although the Town Manager may have the authority to extend the contract, there is no authorization to expend the funding without council approval.  I wonder if Troon realizes that this 6-month extension is currently without funding.

Continuing with this kind of mentality, the Town Manager could promise employee raises of 5% next year or promise to give the Chamber of Commerce $75,000 next year...but unless and until the Town Council approves the spending, these are empty promises.

Where are the checks and balances? The Town’s Legal Director works for the Town Manager, therefore, his loyalties are with the Town Manager, NOT the Council.

The bottom line is that the Town Manager extended the Troon contract without Town Council authorization to fund it.  Whether or not this current contract extension should be funded is now up to the current council when they deliberate on the 2019-20 budget.  In the meantime, Troon has a contract without legally approved funding.  This is not a good situation for them and it is not good for the Town.
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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. 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.

The Watchdog Report: August 2018

Community Center Fund
The August 2018 Community Center/Golf numbers are in. The Community Center Fund (funded with your sales tax revenues) to pay for ALL the expenses for the Community Center/Golf ended August 2018 $215,610 in the red. This is what Hiremath-Hornat-Snider-Waters referred to as “breaking even” during their 2018 re-election campaigns. This deficient includes $356,161 in your sales taxes to offset the losses.

Revenues were 869,664. Expenses were $1,121,274. When you add the fact that this fund started the year $74,010 in the hole, you get a fund balance as of August 31st of minus $325,620.

We lost $75,177 more in August 2018 than in August 2017.

Troon Golf
Troon’s revenues were $13,345 less in August 2018 than August 2017. This is partially because the dues the members pay were $10,752 less in 2018. What happened to the robust membership income? As of September 30, 2018, golf membership is down to 214. For comparison, golf membership in August 2017 was 238.

The Overlook Restaurant
The Overlook Restaurant lost $21,661 in August 2018. They pay no rent, they pay no utilities, and they do not pay for advertising, yet they still lose almost $700.00 a day. Since the close of FY 2015/16 (the first year of operation) the Overlook has lost $384,685 yet the “Hiremath” Town Council and Town Manager kept it open.

Summation
The golf membership is at an all time low, the Overlook continues to lose money, your sales tax revenues continue to increase, the Community Center Fund continues to be in the red, yet the Troon contract has been extended for another 6 months to December 2019. Additionally, the Pusch Ridge course was reopened on November 1st and we will continue with the same 36-hole model that includes private membership.

We still have September and October numbers to see before we can close out the legacy of Hiremath-Hornat-Snider-Waters. Although those two Watchdog Reports will be published after the new Council is seated, the numbers posted in those upcoming reports will still be the responsibility of Hiremath et. al.
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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. 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.

The Watchdog Report: Fiscal Year 2017/18 Final Report

The fiscal year (July 1, 2017 through June 30, 2018) has ended and we now have the final numbers regarding the financial status of the Community Center and Golf Courses.

Community Center
The Community Center Fund (CCF) ended the year $74,010 in the red. This number includes the fact that your sales tax contribution for the year was $2,330,941. It also includes the annual $120,000 pay back to the General Fund (the Town Council borrowed $1.2 million from the General Fund in 2015 to start the Community Center Fund).

The Town fell well short of their desired capital outlay. They promised to spend $94,250 in capital improvements, but spent only $45,464. The Town has fallen short of expected capital outlay since the Community Center inception in May 2015, hence the $6 million dollar bond for improvements in the FY 2018/19 budget.

The Town’s losses (fitness/recreation) were $123,800 in FY 2017/18 and a total loss of $291,009 since inception in 2015. In other words, the Town’s losses in FY 2017/18 were almost half of their total losses since 2015. Is this the trend we desire?

• The CCF ended FY 2014/15 with $1,025,222. 

• It ended FY 2015/16 with $162,152.

• It ended FY 2016/17 with $97,156  (however, this was due to the Council transferring $350,000 from the General Fund to the CCF).

• And it has now ended FY 2017/18 at $74,010 in the red.  The trend is not going in the right direction.

The Overlook Restaurant lost $96,100 in FY 2017/18. This is $23,606 more than forecasted.

Golf Courses
Troon Golf lost $1,993,040 in FY 2017/18. This is $170,099 more than forecasted. Since the beginning of this debacle, your sales tax revenues diverted to this fund have been $7,067,867 and Troon has lost $7,536,042.

Adding the Town’s losses since 2015 ($291,009) with Troon losses since 2015 ($7,536,042) equals total losses of $7,827,051. This number is $759,184 more than the sales tax revenues ($7,067,867) that were supposed to support this misadventure.  Are the members really paying their share for a private course?

Member Dues

FY 2015/16 ended with $876,133

FY 2016/17 ended with $726,811

FY 2017/18 ended with $784,071

Although member dues were $57,260 higher in 2018 than 2017, the fiscal year began in July 2017 with $58,678 in member dues and ended the year in June 2018 with $52,388 in member dues.

Fresh eyes
This investment continues to be an eyesore on our books. Beginning in November, we will have a new Council majority. Let’s hope that fresh eyes and innovative ideas can stem these losses. You can be assured that I will continue to keep a close eye on this situation.

Guest View: Tim Bohen ~ What the heck happened?

When the Town stated at the May 16 Council Meeting that outside golf revenues were way up through March 2018, this really caught my attention. Maybe the long promised outside play (non-member) golfers have finally arrived to save El Con golf. Per Staff, the Community Center fund is projected show a small surplus in 2017-18 mainly due to rising non-member golf revenues.

The March 2018 Troon cash flow statement (available for review on the Town website) reveals that March 2018 was the best ever month for outside play since the Town purchased the courses.

Several questions are raised
1. Did you see backed up foursomes on every hole all afternoon every afternoon in March?

2. After this great result at El Con, how did nearby Vistoso Golf Club see the need to close their doors just two months later? Did the Community Center steal its golfers? What the heck happened?

3A. Per Troon projections for FY 2017/18 (available on the Town website) El Con would have 318 members and would generate $1,793,000 in member revenue and $5,940,719 in total golf revenue.

3B. Per Town projections for FY 2017/18, the Town projected about 225 members, forecasted $811,811 in member revenue and forecasted $3,455,214 in total golf revenue. But somehow Troon is two years ahead of their 5-year plan. What the heck happened?

4. The NGF Study said the courses were in trouble and significant changes need to be made. A year later with no changes made we find ourselves two years ahead of schedule with respect to breaking even in the Community Center Fund. What the heck happened?

It’s all in the details
Absent any other source, you simply have to trust the Staff report made at Council. Needless to say, we should not trust it without seeing all of the supporting data, most importantly the outside golf receipts for March. We’re all paying for it with our sales tax. Show us the receipts!

It's a Community Center bought for the Community and paid for by the Community. Where is the detail that supports the newfound success? If I were the Town Council, I would gleefully share the details.

Fudging the numbers?
To those of us paying close attention, Community Center golf as managed by Troon is evolving into a financial scandal. Despite the fact that the sales tax subsidy has now risen to $2.3M (a $300K increase from FY 15/16) Troon and Staff still seem to feel the need to fudge the numbers to make it appear that the Community Center fund is turning a small surplus in FY 17/18.

The rising sales tax subsidy is the only good news regarding golf. And this has nothing to do with golf operations. A review of the Troon month-to-month numbers reveals no significant operational improvement in three years other than some hard-to-fathom outside play numbers for early 2018. But why?

Election year shenanigans?
Perhaps it is because we are in an election year and the Council is now seeking to justify major golf course upgrades to voters unfamiliar with the details. The bad news is out there. Golf courses are closing all over Arizona and nationwide. What is Troon doing right at El Con that others seem to be getting so wrong?

It’s the Management Contract, Stupid
Perhaps it is because the Troon management contract (which pays them $144K/year no matter what their results) is eligible for renewal in 2019 for 15 years unless the Town cancels the contract before March 30, 2019. Maybe some future revenues are being moved forward to the present to show a near term positive trend? Perhaps it’s, let’s keep the Troon gravy train going however we can?

Another way in which the Troon Management Contract may be terminated is per section 6.03 Financial Performance. In this case, if the facility does not earn 90% of the projected Gross Operating Profit (GOP), then the contract may be subject to cancellation. However the Purchase Agreement allows Troon to make up any shortfall within 30 days of being notified.

Imagine, if you will
Imagine a situation in which this shortfall is much less than $144K. In such situation, Troon may be motivated to simply pay the shortfall. The point is the amount to be paid to make up a shortfall, if any, is based upon Troon’s reported results. We as a Town should be monitoring Troon closely to ensure the fees we are paying are truly earned.

Thank you Oro Valley for making your residents need to learn about local golf course economics. That used to be a Troon issue. They are, after all, the experts. Now its a Town-wide issue and might remain so for at least 20 more years. Now that the Troon Management Contract renewal is coming up, we all need to be vigilant to ensure that Troon is reporting honestly and truly pulling their own weight.

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Tim Bohen grew up in Southern California and moved to Oro Valley in 2015. He has a Bachelors degree in Physics from UCI and an MBA from Loyola Marymount. He is employed as a Systems Engineer. He graduated from the Community Academy in 2016 and the Citizens Academy in 2017. He was recently appointed to the Oro Valley Historic Preservation Commission and is a volunteer mediator with the Arizona Attorney General’s office. His interests include aviation and history, with his greatest interest currently being frontier life and how the West was settled.

Guest View: Love Contributor ~ When saving face takes precedence over a solvent golf strategy

Today's article compares Oro Valley's financial golf strategy to USGA recommendations.

In an effort to offset the decrease in Municipal Golf participation throughout the country, the United States Golf Association (USGA) has determined two major causes for this decline and they are promoting solutions to save this sport.

(1) Time Constraints
The major factor is simply TIME. With today's busy family dynamics, young children have many sports to chose from, families have multiple daily activities, working hours have increased, single parenting creates transportation issues, and seniors must balance cost and energy against available time. A four or five hour activity becomes extremely difficult for almost every age group.

USGA Solution: Encourage 9-hole golf
As such, the USGA began a nationwide promotion of PLAY NINE. In addition to national advertising, local and state chapters are asking all Municipal Courses to encourage their golfers to play only nine holes. This, along with encouraging "Play Forward,” has increased the number of rounds played significantly in the past few years. In addition, 9-hole golf creates more rounds played with an increase in revenue and opens the potential golfer base significantly.

(2) Local Government is inept at managing golf
The second factor is that Municipal Golf, (when local government owns the golf course property), involves local government being involved with management. Since many such bodies do not have the skills nor staff to operate a golf business, they often hire specialized golf management companies to actively run the business. (In the case of Oro Valley, Troon was hired to manage golf.) Where this concept falls apart, is when the Town Staff or Town Council continues to dictate policies to satisfy special interest groups, certain voting blocs, or campaign contributors, rather than allowing the management company to use their resources and talents to meet the needs of the local golfers and the financial goals of the Town.

USGA Solution: Performance-based Compensation
According to golf course data studies, municipal golf courses have now reached a low of some 1350 locations within the United States, (Arizona now has less than 25). The USGA recommends that management company compensation be based on performance, not on fixed fees which eliminate the incentive to balance revenue with expenses.

How does Oro Valley Municipal Golf relate to USGA recommendations?

The Town is not encouraging 9-hole golf. Both of the two existing 18-hole courses are based on an obsolete and inefficient design whereby a golfer must play the entire 18-hole course before returning to the clubhouse. This eliminates any 9-hole play, eliminates that additional revenue, and closes the door to the USGA Nine Hole promotions.

The Oro Valley Town Council continues to pour money into these antiquated courses, instead of modifying the course to satisfy the needs of the golfing community. As an aside, at a time when the Council will do anything to promote more (and smaller) housing units to increase the sales tax base, they turn their backs on the 9-hole golfers, some of whom will move into those homes. Is this good management?

The Town is not employing Performance-Based Compensation. We are all aware that the Town Council employs Troon to manage the golf and food service business and that Troon is a nationally recognized golf course authority. The Town Council pays Troon $12,000 per month, regardless of whether they create a profit or lose millions, as is the history.

What Would Troon Do?
Regarding outside management, considering the Troon reputation, experience and staff, does anyone doubt their ability to operate a golf course to at least break even financially?

• Would Troon maintain 45 holes of golf knowing that the past usage barely supports only an 18-hole course?

• Would Troon allow a monthly fee that provides unlimited golf that isn’t covering their costs?

• Would Troon not immediately modify the course design to double the potential golfing base and use the efficiency of a 9-hole course to increase revenue?

• Would Troon continue to provide a free driving range, knowing that this is the single most profitable revenue course in a municipal golf facility?

Is there any doubt that Troon could resolve these financial issues within a matter of months, if they were given the charter to make the changes necessary to make El Conquistador Golf a true Municipal Golf Course?

The problem lies with the current mayor and council
It should be apparent to all taxpayers that the mismanagement of Oro Valley Golf lies with the Town Council and the Town Staff, not Troon. For some unknown reason, our Council and Staff can not understand the concept of municipal golf. Nor do they consider who actually pays the price for their errors including single parents trying to make ends meet and seniors living on fixed incomes. Most of these people will never even see the golf course, let alone play golf.

The practice of using money forcibly taken from the public is unforgivable. Not one penny of our sales tax should ever be used to hide the losses of the golf courses, just to protect the lifestyle of those who can well-afford the cost.

How do we stop this madness?
The solution is obvious and that is to vote for people who will represent the needs of the entire community, not just the chosen few. Let us all keep this in mind when selecting a new mayor and council in August.

The Watchdog Report: 2017 Mid-Year Community Center Financials

The December financials mark the mid-year point of the fiscal year (July 1 through June 30). Although the Council and staff want you to believe that everything is rosy, quite the opposite is true.

The Community Center Fund (CCF) has LOST $283,948 for the first 6 months of the fiscal year, and this takes into account that the Town has collected $1,061,203 in revenue from the increased sales tax which is dedicated to the Community Center.

The shell game continues
The CCF is forecasted to end the fiscal year $55,762 IN THE RED. However, without the $350,000 that the Council withdrew from the General Fund to meet expenses and pay back their $120,000 loan obligation, the fund would actually be forecasted to end the year an additional $230,000 IN THE RED. ($350,000 minus $120,000). Therefore, without the shell game, the actual forecast for the Community Center Fund would be to end the year $285,762 IN THE RED ($55,762 plus $230,000).

So as you can see, claiming that they will end the fiscal year at $55,762 in the red is just more Town Staff and Town Council smoke and mirrors.

Troon Financials (Golf plus Food and Beverage)
Half-way through the year, golf revenues are 44% of what was budgeted, member dues are at 41%, and food and beverage is at 45%. All three categories are short of expectations as they should be at 50% at the half-way point of the fiscal year.

Meanwhile, Operations and Maintenance expenditures are over budget at 57.4%.

The Overlook Restaurant was budgeted to make $1,550, but actually lost another $7,602 (a $9,152 miscalculation). In the first six months of the fiscal year, the Overlook has LOST $65,782.

Town Financials (Recreation Center, Member Dues, Swim and Tennis, etc.)
The truth is that the Town's revenues and expenditures are doing very well. Revenues are at 56.3% and expenditures are right on budget at 50%.

The whole truth is that the reason they are on budget is because they have not spent what they promised on capital improvements (facility restoration, ADA compliance, etc.)

When they purchased the property in 2015, they projected to spend $596,000 in capital improvements in Fiscal Year 2017/18 but when the time came, they budgeted for only $94,250. We’re now half-way through the fiscal year and they’ve spent only $29,464.

Something’s fishy
Something very strange occurred during the Staff Report regarding the December financials. The staff specialist that gave the report mentioned that part of the Troon/Golf losses for December were due to increased water usage. However, the Troon report shows that in December 2017, they spent $67,753 on utilities compared to December 2016 when the utility expense was $177,277.

Troon's report continues to be suspect as it also shows utility expenses for TWO MONTHS (November and December 2017) to total $154,032 which is $27,325 less than the utility expense for ONE MONTH (October 2017).

Remember, Staff controls the message and manipulates it to meet the desires of the Town Manager and Town Council. Can you trust what the staff says when the Town's own documents say otherwise? The Council never questions staff to verify the numbers even when the discrepancies are right in front of them.

What a deal
The Town is now marketing a "special summer program for golf.” From May 26 - September 9 you can purchase unlimited golf for $499 plus tax. This will allow you unlimited rounds as long as you play after 9 AM Monday-Friday or after 11 AM on weekends. Just think, for $499 you can play in the heat of summer while the members play during the coolest part of the day. If you want to play golf while it is cooler outside, you’ll need to play elsewhere.

Guest View: Mike Zinkin ~ Troon enters the Circle of Deceit

In yesterday’s article, “Oro Valley Government Lies to the Citizens” we offered numerous instances in which the Town Staff lied to the citizens in order to paint a rosy picture of what would happen if the Town purchased the El Conquistador Country Club with the intent to turn it into a Community Center for Oro Valley residents. Today’s article discusses how Troon also lied in order to seal the deal.

During the December 17, 2014 Town Council discussion on the El Conquistador purchase, it was a given that Troon would hold the management contract for golf, tennis, food and beverage. The purchase agreement with HSL Properties mandated that Troon must be the management company. Troon became part of the "pitch" that perpetuated the lies that Town Staff was giving the Council.

Here’s what Troon told the Council
Troon told the Council that their projections showed that in FY 2015/16, the Town would incur a $1,169,842 loss. In reality we lost $2,567,385. (Troon’s projection was off by $1,397,543).

Troon also stated that in FY 2016/17, we would lose $637,517. In reality, we lost $2,512,938. (Troon’s projection was off by $1,875,421).

Troon further stated that in In FY 2017/18, we were only going to lose $151,120. As of December 2017, we have already lost $1,257,785. (Troon’s projection is already off by $1,106,665).

Additionally, Troon stated that in FY 2018/19, the Town was going to MAKE $217,049. Keep in mind these numbers do not include the needed capital improvements we discussed yesterday because those improvements are the Town’s responsibility, not Troon's.

So far, Troon's projections have been off by over $4.3 million.

[Below is the slide showing Troon’s projections from 2015 through 2019. Click to enlarge.]

During the first year of Troon's contract with the Town, they admitted their error in the projections and offered to reimburse the Town for their last 3 months of management fees ($36,000) which the Town gladly accepted. This has not happened again. Troon continues to misrepresent the truth, and, more important, they continue to get praised by the Council. With this trail of untruths, how does Troon keep their job?

To sum up the last two postings:
• In order to please the Council majority, Staff lied to present a rosy picture of the HSL purchase.
• Staff did not even budget their own projections for capital outlay.
• Troon, in concert with Staff, made outrageous projections about golf revenues.

More lies on the horizon?
The current Town Manager, Mary Jacobs, has now inherited this mess. Her idea is to continue 36 holes of golf despite millions in losses and to incur a debt service to make up for all the previous lies. She has never considered discontinuing golf or at least reducing it to an 18-hole course in order to stop the bleeding. Remember, the Town Manager works for the Council majority and it’s in her best interest to tell them what they want to hear. So…will she also lie in order to keep her job?

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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.

TOWN COUNCIL MEETING

Wednesday, February 7, 2018
Town Council Chambers
11,000 La Canada Drive

4:00 PM ~ Golf Study Session
Open to the Public

Presentations by Town Manager, Mary Jacobs and Troon President, Rob DeMore. Also a possible discussion by the mayor and council regarding the future of the Community Center and golf courses.

6:00 PM ~Town Council Regular Session

Pay special attention to:

Consent Agenda, Item E

Resolution…with regard to the approximate 934 acres of State Land (Tangerine South and Tangerine North) the Town intends to pursue annexation, and does not have nor does it intend to adopt, regulations requiring the fencing of open range livestock grazing or prohibiting mining on State Land annexed into the Town.”

The Town claims that this is “a standard formality related to livestock grazing and mining” and that the “Town Staff does not anticipate either of these activities to actually occur on these two parcels.”

You can view the agenda HERE

The Watchdog Report: Golf and Community Center Financials from July through November reveal continuing losses

The November financials were on the Consent Agenda during the January 17, 2018 Town Council meeting, and as always, they were not removed for discussion. Why remove them when the story remains the same? This investment is a loser!

Community Center Fund remains in the hole
The Community Center Fund (CCF) was $364,689 IN THE HOLE, as of November 30th. Keep in mind that in 2017, the Council (with advice from the Financial Director) withdrew an additional $350,000 from the General Fund Contingency to supplement the CCF. Without this additional supplement, the CCF would be over $600,000 in the hole.

The Town is planning to transfer $165,956 out of the CCF by the end of the fiscal year. It’s not clear where they’re planning to transfer it (perhaps $120,000 back to the General Fund and $45,000 for capital improvements?) but to-date they have not transferred out one penny.

The Town Council borrowed $1.2 million from the General Fund Contingency in March 2015 to start the Community Center Fund with a promise to pay back $120,000 per year for 10 years. They reneged altogether on the initial payment in 2016. The 2017 “payment” was a shell game since they had taken out another $350,000 from the General Fund (as discussed above) and then used that money to make the $120,000 payment back into the General Fund. Does anyone want to wager if the Town Council is going to be able to make this year’s $120,000 annual payment?

Town Losses (Recreation Center): July 1st through November 30th
The Town, which is responsible for the recreation center and swim team/swim lessons, lost $48,009 in the first five months of the fiscal year. (The Town lost $86,876 during the same time frame in 2016 so this is an improvement).

However, this improvement is marred by Troon’s increased losses shown below.

Troon Losses (Golf, Food and Beverage): July 1st through November 30th
Troon lost $1,142,288 in the first five months of the fiscal year. That’s over $228,000 a month!

The food and beverage losses for November, primarily the Overlook Restaurant, were $10,481. Food and beverage is forecasted to lose $68,245 in FY 2017/18, but has already lost $58,182 just five months into the fiscal year. Oh well, just another incorrect forecast.

In November 2017 alone, Troon lost $117,028, while in November 2016 the loss was a mere $62,485.  That's $54,543 MORE in losses than in the same month last year.

Incorrect Forecasting Continues
Do you like the way golf is trending? This is the prime time of the year. Troon made a forecast to lose $1,822,941 during the entire fiscal year 2017/18, but has already lost $1,147,288 in just the first five months.

When will the Town Council get tired of all this and make a responsible decision? These continued losses are despite the $855,071 that they collected in sales tax revenue from July 1st through November 30th.

I am as tired of reporting these continuing losses as you are of reading about them. We need a Town Council who will act rather than just sitting back and allowing these repetitive losses to continue.

. . . . . . . . . .

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.

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.

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

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.

Guest View: Dick Leonard ~ The utter mismanagement of the town-owned golf courses. Part 1.

Thanks to Mike Zinkin’s Watchdog Articles on the LOVE Blog, the mismanagement of the town-owned golf courses continues to be exposed. After the resounding defeat of the Town Council’s latest scheme to pass a $17 million dollar Naranja Park Bond, it’s easy to see why such information is suppressed by the Town. For example, how many citizens know that their sales tax dollars are being used to pay for two completely different types of golf courses?

The first type is a Traditional Municipal Golf Course
In this type, each golfer pays the same daily rate for each round played. This does not include any other amenities that may be available at that golf course. This management style is common to every Municipal facility throughout the country, and when operated efficiently, generally requires little or no public tax subsidies.

The second type is a Municipal Country Club operation
In this type, the golfer becomes a Member by paying an annual fee. This type entitles the golfer and/or family to unlimited and exclusive play on a dedicated course. This includes access to whatever amenities are offered (pools, tennis, fitness, food discounts, driving range, etc.); whereas the daily fee golfer pays extra for each amenity used.

Nationwide, this style is privately owned and the Members are responsible for the entire cost of operation. However, in Oro Valley, taxpayers are responsible for all costs over and above the income generated from membership dues. For the last two years, these losses have cost Oro Valley taxpayers over 5 million dollars.

Is this fair?
There are no objections to having additional country clubs in Oro Valley nor to having a true municipal golf facility. However, if the town chooses to operate a country club facility, it should not be funded by the public. Note that the Oro Valley Country Club and Stone Canyon Country Club do not receive any public support.

Does anyone (except the Town Council and Staff) think it’s fair to make working families and thousands of members of the non-golfing public pay to support the lifestyle of 242 country club golfers? Not only does this require the expense of having a separate dedicated 18-hole course, but it also grants free access to all amenities of the Community Center.

The Numbers from Fiscal Year 2016/17
Total Troon income (member golf fees, non-member golf fees, cart fees, food and beverage, merchandise, tennis, etc.) was $2.9 million in FY 2016/17.

The dedicated half-cent sales tax increase brought in another $2.2 million in revenue.

Despite a total of $5.1 million in revenue ($2.9 MM/Troon and $2.2 MM/sales tax), the Town suffered a $2.5 million dollar operating loss, which after the $2.2 million in sales tax revenue, caused the Community Center Fund to drop by $300,000.

The Community Center Golf Courses cost the Town (via the taxpayer), roughly $2.5 million per year for the 45 holes of golf. The combined income from the Public (daily fees) and the Private (country club) member dues is roughly $1.4 million. Hence the sales tax subsidy, which you pay, to make up the difference.

In fiscal year 2016/17, there were 42,679 total public and private rounds played for a total of $1,456,722 in revenue. (Member rounds were 19,777 and non-member rounds were 22,992). If all rounds played were played with a daily fee rate of $40.00, the revenue would have been $1,707,160.

If the course was only 18 holes, we eliminated memberships, and charged an average of $40.00 per round (and assuming the same amount of rounds were played) the total operating cost would be closer to $1.7 million and no taxpayer subsidy would be needed.

Another example: If the average golfer plays 3 times per week times 52 weeks, they would play roughly 150 rounds per year. A daily fee golfer would pay $40.00 per round or $6,000 per year.

Currently, a member pays only $4000 per year for unlimited rounds. This is a loss of $2000 per year which is why the tax subsidy is necessary. This is exactly why there are no Municipal Country Clubs anywhere in the country but here.

Part 2 will be published tomorrow and will discuss questions to consider and some options for solving the golf course problems.