Monday, May 3, 2021

The Pandemic Saved Oro Valley Municipal Golf

A call to broaden the use of the half percent sales tax subsidy
Wednesday, the the Oro Valley Town Council will discuss broadening the use of the existing half-percent sales tax subsidy. That subsidy was enacted in 2015 to subsidize the operations of 45 holes of golf; and to fund the conversion of a clubhouse into a community center.

The total amount of the subsidy tax now collected exceeds the targeted initial funding. It is expected that this will continue in the future. It is because of this that council will consider broadening the use of these tax dollars. In 2015, the town estimated that the subsidy would be $2 million annually. At that time, the sport of golf was in decline locally and nationally. The clubhouse was in disarray. A subsidy was the only way the town could maintain the property.

The pandemic saved Oro Valley municipal golf by making it financially sustainable
The pandemic did so in two ways. 

First, people returned to the links because golf was one of the few activities they could do and still maintain social distance.  Nationally, there are more that a half million more players in 2020 than in 2019.  This translated into a 14% increase in rounds played nationally, despite the fact that many of the nations' courses closed for at least some period of time. Oro Valley municipal golf rounds have also increased.  The result is that Oro Valley municipal golf revenues are expected to be $3.5 million this year. 

Second, local sales tax revenues increased. This was because residents could not spend dollars in stores outside Oro Valley. Stores were closed. Instead, residents shifted to online shopping. 

Everything purchased online by an Oro Valley resident includes an Oro Valley sales tax. Oro Valley would not have accrued this sales tax revenue had the resident travelled to and physically purchased these goods elsewhere, 

The financial result this year is that the town projects that the half percent sales tax subsidy will exceed $2.8 million. That’s 40% more than the original target of $2 million.

This year the town projects that municipal golf financial performance will be close to its subsidy target is 
When all factors are considered, municipal golf financial results are expected to be less than the $750,000 annual council-set sales tax subsidy target. Per the town’s February financial report: “The year-end sales tax support for golf operations is estimated to be $697,208. This figure includes a projected net [loss of] $(905,284) for contracted golf operations, [adjusted for] $125,000 in outside HOA contributions, and $83,076 in local sales taxes generated from golf related operations.” 

A trend or blip? Either way its worth celebrating
What will happen once the pandemic is over? Will those who jumped into golf lose interest? Will players lose the time to play once they are no longer working from home? Will people reduce their online purchases in favor of in-person retail store visits? What will golf operators do to keep the momentum going? 

Time will tell. 

In the meantime, it's good to celebrate even a “blip” when it comes to the financial results of Oro Valley Municipal Golf.