A lifetime use of golf course and tennis facilities at under market rates are just two of the benefits for HSL Properties in its sale of the El Conquistador Country Club to the Town Of Oro Valley.HSL's Benefits Are Many
These and other benefits to HSL are detailed in agreements that the town signed when it purchased the El Conquistador Country Club earlier this month. The agreement includes priority bookings for tee times and the full use the golf courses and tennis facilities.
The Hilton El Conquistador Resort looks like a four star Hilton resort but does not have the huge and money losing proposition of operating golf and tennis facilities.
The agreement is a "no recourse" agreement. Oro Valley will bear the full cost of remediation for any reason.
The agreement stipulates that the sale is at a bargain price. That purchase price is $1million. Thus, HSL may be entitled to a large donation deduction on their tax return. Who knows how much of a tax deductible loss they will claim, a loss that returns 30 cents on the dollar. Remember too that HSL purchased the resort and property out of bankruptcy for an estimated $15million.
Oro Valley's Benefits Are Few
Mayor Hiremath, the rest of the Majority-4, and Town Manager Caton tout this purchase as great deal for Oro Valley. They claim that the town gets a community center. They claim that they are protecting land from possible future development. Many question these assertions.
Instead of a first class community center, Oro Valley gets to rehabilitate 2 plus golf courses, refurbish an old building, and operate at least some of these facilities for 2 generations. Oro Valley will spend an added $8+mil plus to fund this endeavor in 2015-16 alone, with millions to follow for at least the next 4 years.
Oro Valley has assumed a contract with Troon Golf. It is a contract that, given the timing and circumstances, HSL negotiated on behalf of the town. The town avoided competitive bidding requirements even though it has been party to the Troon discussions for some time. Troon, for example, attended and spoke at the Oro Valley council meetings in December.
What options does Oro Valley have if things don't work out?
It looks as if those who live along or use the El Conquistador Course will be the first to know. The town has the option of closing this course. The town could let this course return to desert. Or, perhaps, the town could sell it for whatever purpose it wishes. It seems that not all of the property owners were protected in the purchase of the El Conquistador Country Club, as alleged by Mayor Hiremath.
What else can the town do? By agreement, the town must keep at least one course operating, the La Canada course. If it abandons that course, HSL has the right to lease it from the Town Of Oro Valley for $10,000 per year, plus a stipend that repays Oro Valley over 50 years, interest free, for any improvements the town makes to that course. If Oro Valley closes the 9 hole resort course, the agreement requires the town to maintain it as a park. What a great benefit for the El Conquistador Resort.
Benefits To Oro Valley's 41,000 residents are few
Residents get to pay a half cent sales tax increase. They get to drive to a golf club to visit their community center, a building that has no physical closeness to any park or recreation center. Indeed the community center will be a "an island unto itself."
Those who are members of any of Oro Valley's private golf courses will see the Town competing for golf memberships and player rounds. Pricing will become even more competitive because. unlike a private club, the town seems to think that it has an infinite well of revenue to support what could turn out to be a huge long term financial and operating headache.
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