Pusch Course Options Puts Oro Valley "Between A Rock and a Hard Place”

Town Manager: Two "most viable options"
The town has two "most viable options" regarding what to do about the Pusch View 9-hole golf course. This according to a memorandum to the Oro Valley Town Council from Town Manager Mary Jacobs. 

The options are: To permanently convert the 9-hole course back to natural open space for passive recreation use; or to operate etc Pusch Course during the peak season beginning next fall. 

Golf is the most costly option

Over the next five years, operating the course will cost the town about $2.6 million. Allowing it to revert to natural space for recreational use will cost a minimum of $1.6 million. There is a third option the memo does not mention. The difference in cost of $1million is significant.  (See panel)

LOVE identifies Option 3: Add this decision to the Parks and Recreation Master Plan Study

The town is engaged in a lengthy process of developing a ten year parks and recreation master plan. This property should be included in that study. 

There is no reason to rush a decision. HSL, the owner of the resort, can not force the town to do anything as dictated by the original contract. This is because contractual agreements usually have a "Force Majeure" clause. That clause suspends enforcement of a contractual agreement clause when there is an "act of god". The pandemic is such. Certainly, the town's purchase agreement with HSL for the property has such a clause.  

We suspect that the pandemic will not be officially declared over by the federal government until mid 2022, assuming that the actual infections rate is close to zero by year end.  Then, in 2022, the town can reengage HSL, the resort owner, in a discussion of them taking back the course if that is the course of action it chooses.

As for homeowners and the homeowner associations next to the course, they can wait.... Just like the rest of us. What happens regarding this property is important to all of us.

Drinking water is a huge issue if a golf course is maintained
The course uses drinking water for irrigation  The town will have to use substantial amounts of drinking water to maintain the course. The course will use up to 45 million gallons annually. That’s equivalent to 139 acres of water covered to a depth of one foot. That’s enough water for more than 500 homes for a year!

Town admits error

"Under-billed" water to course for twenty years

In addition, the town has been billing the water at a bargain rate. The course pays on the the rate for the first tier of the water rate. That’s intended for up to 7,000 gallons per month. After that, there are two other tiers with water costing more per gallon used.

According to the memo, the town just discovered this error in billing while doing the options analysis.

 “For the past 20 years, the course has continually been billed at the Tier 1 rate.’ Jacobs has no idea when it happened or how it happened. This means that the town was incorrectly billing water before the town owned the property.

The memo suggests that the town create a “turf” water rate at the tier 1 rate just to keep the cost down. If the correct rate were applied, the estimated added cost of water would be $70,000 per year. That is a yet another golf subsidy.

Creating a community natural space amenity not a “slam dunk”
To be clear, the Town of Oro Valley did not get a bargain when it purchased this course. Much of the asphalt paving is cracking, uneven or in need of replacement. The memo notes that it is estimated that 70% of the pathways need to be replaced. In addition, the memo states, and we do not agree, that there may be some short-term negative impact on neighboring property values. The memo also voices concern that there may be people from outside of Oro Valley who will want to walk the trail. This, they claim, could cause safety issues.

Council to discuss Wednesday
The council will discuss what to do with the course this Wednesday. We imagine that many residents in or near the course and their homeowner's association will attend the meeting in an effort to pressure council to make a decision that favors their interests. This approach worked last year for those who wanted the town to continue to maintain the two 18-hole courses. Both Mayor Winfield and Council Member Jones-Ivey are highly susceptible to this approach.

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Guest View: Mike Zinkin ~ Oro Valley government needs to come out of the shadows

When will our elected government come out of the shadow of Town Manager, Mary Jacobs? Have you noticed how many Executive Sessions there have been? Why are the lawyers hiding behind the cloak of an Executive Session to brief the Council? Why not do public business in public?

Here are a few examples:

The new golf management contract
The Town placed a “request for proposal” for a golf management contract. Ms. Jacobs is correct in that the Council is now out of the picture as far as the selection is concerned (that is why we have a Contract Officer). However, the Council should still be involved in the final wording and approval of the contract.

Has anybody seen the golf management contract on an agenda? The mayor stated that effective 10/1/20, the golf management team would be responsible for all food and beverage and that the Town would no longer subsidize it. Did this happen?

In a recent communication with the Town, I am told that “The golf management contractor is responsible for food and beverage operations, including losses it experiences.” The inception date was not included in the email so we must assume that it began on 10/1/20.

The MOU between HSL and the Town regarding the leasing of the Pusch Ridge course
The Council came out of Executive Session on September 23rd and publicly voted to continue the Memorandum of Understanding (MOU) from 10/1/20 to 1/31/21. What MOU? Has anybody seen the MOU? Shouldn’t the citizens have access to this information, especially those living adjacent to the Pusch Ridge course?

The new golf management company (Antares) has a different way of providing their numbers
Look at the financials at right. Where are the utility expenses? Are the cart fees exclusive of the trail fees that the members pay? What exactly is included in “Other Expenses” of $12,590?

There is something suspicious when comparing the golf financials from Troon vs. Antares. Troon lost $422,049 from July 1 through August 31, 2019. Antares lost only $291,711 from July 1 through August 31, 2020 despite temps of 108 degrees every day and bad air quality from the Tucson and California wildfires. This is a $130,338 dollar difference. Can Antares be that much better than Troon, whom we were originally told was “the Rolex of golf management companies”?

Covert operations
The Town Council needs to govern in public. The Town’s lawyers need to express their opinions in public. The tax-paying citizens need to see and hear what the Town Council is seeing and hearing. Government should not be a secret.
…..
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.

Summary: Oro Valley Town Council Special Session – July 24, 2019 – Part 1.

TOPIC: Discussion and Possible Action regarding Town of Oro Valley Golf Operations

This meeting is part of a “Golf Options” series, including a Town Council Study Session in January 2019, a Listening Session in February 2019, and approximately 6 Executive Sessions. (The Executive Sessions focused on contractual obligations between Troon, HSL, and the Town of Oro Valley.)

The meeting was organized as follows:

Staff presentation – Public Input – 15 minute break
Additional 30 minutes of public input – Town Council Discussion

Mayor Winfield set the ground rules for the meeting. He asked the audience to please be respectful, acknowledging that the meeting was taking place in a house of worship (Church of the Nazarene). He requested that there be no applause or jeering during or after any resident’s speech. He reiterated that he wanted the meeting to be a civil and safe setting for everyone.

According to a local news report, there were over 700 people in attendance.

Town Manager Mary Jacobs gave her summary analysis of golf operations
She referred to the Summary Document which is on the Town’s website – Summary of Town Manager’s Analysis of Golf Operations.

“The Town acquired the former El Conquistador Golf and Tennis Club in December 2014 for $1M dollars….At the time of the purchase, the initial projections predicted that following an investment of $2.8M in capital improvements, the golf courses, restaurant and tennis operations combined would break even after 5 years…In addition, there would need to be about $9.2M in various capital expenditures over 10 years of which an estimated $6.4M would be for the golf courses.”

Town Attorney, Gary Cohen discussed three key contractual obligations
(1) Golf course restrictions. The agreement between HSL and Oro Valley limits the possible uses to golf courses, open space, or recreational amenities in a manner compatible with the operation of the resort as a first-class property.

(2) HSL’s rights upon discontinuation of one or more of the courses. HSL shall have the right to lease such facilities from the Town for a 50-year term. He believes the lease tern is $10,000 per year.

(3) Golf course operator provision. The requisite qualification for the operator of the golf courses is as follows: a professional national or regional management company with prior experience managing both municipal and resort golf courses.

Slide presentation by Mary Jacobs

2017 National Golf Foundation Options (NGF recommended Option B: 27 holes)

Town Criteria

Key Overall Assumptions

Capital Investment Assumptions

Natural Open Space Examples – “The Art of the Possible” 

Public Park Space Examples 

36-hole option – Pros and Cons 

27-hole option – Pros and Cons 

18-hole option – Pros and Cons 

No golf/Open space/Recreation – Pros and Cons 

Part 2 will be published on Wednesday and will include the public comments.

Guest View: Mike Zinkin ~ The impact of the HSL Contract

Town Council never reviewed the Community Center/Golf Courses Purchase Agreement
In December 2014, the negotiated purchase agreement between HSL (Humberto Lopez) and the Town was delegated to former Town Manager, Greg Caton. Former Town Attorney, Tobin Sidles, was also on the team. During the process, three council members (Bill Garner, Brendan Burns, and myself) requested that the Council have a chance to review the agreement prior to the closing of escrow.

The Council majority (Hiremath-Hornat-Snider-Waters) did not think this was necessary because [paraphrasing], "We pay these people (Caton and Sidles) because of their expertise and who are we to interfere?" The agreement is a 585 page PDF file that appears to have been written entirely by the HSL team as it is heavily slanted in favor of the seller.

Below are excerpts from the self-serving contract:

Agreement: The Town can never manage golf because the agreement states that, "the Purchaser (Oro Valley) shall not terminate the Management Agreement unless…Troon is replaced with a professional national or regional golf management company with prior experience managing both municipal and resort courses."

Impact: The Town cannot reduce expenses by managing the golf courses themselves.

Agreement: The El Conquistador resort gets priority golf and tennis reservations.  "Resort owner and its hotel management agent shall be permitted to book reservations for the La Canada Course and at all tennis facilities for its hotel guests ....which allows the Resort owner to reserve golf and tennis for Resort guests on a priority basis (provided the booking is made at least two weeks in advance)."

Impact: The El Conquistador Resort gets priority tee times over golf members and outside players, even when resort guest rounds are comped. Golf Members are paying for resort guests to get priority tee times.  Taxpayers (you) are paying for other people to enjoy free golf!

Agreement: Remember when the Mayor (and others) used scare tactics to convince citizens that if the Town did not purchase this property, there was the potential for other development on the golf courses?  This is not true.  The agreement states: "The Resort Course and the La Canada Course shall be deed-restricted so that such courses are used as golf courses, open space, or recreational amenities, the Tennis Facilities for at least 28 courts shall be deed-restricted and may only be used and operated as tennis courses and related uses, if the Town ceases to operate the Canada Course or Tennis Facilities, then the Resort Owner shall have the right to lease such facilities from the Town for a 50-year term.” [$10,000 per year for 50 years.]

Impact: Residential and/or commercial development is not permitted on the Resort (Pusch Ridge) and La Canada course. A minimum of 28 tennis courts must remain in operation even if the Town is losing money on them.

Agreement: The agreement states that "as long as the Resort Property is used as a resort or hotel, at the election of the resort owner, the name of one or both of the two 18-hole Golf Courses SHALL contain the words "El Conquistador."

Impact: The Town must provide free advertising for the El Conquistador Resort.

Agreement: The agreement states that "if, at any time the Resort Course and or/La Canada Course become a discontinued Facility, and is utilized as open space or a recreational amenity instead of a Golf Course Facility, then, provided the Resort owner does not elect to enter into a Discontinued Facility Lease for all or any portion of such Discontinued Facility, the Town SHALL maintain, repair, and landscape such open space and/or recreational amenity, in a manner that controls dust, removes litter and debris, and landscapes and maintains the open space in a manner compatible with the operation of the Resort as a first class resort property."

Impact: If the Town discontinues the golf facilities, the Town is still obligated to pay for maintenance, repair, and landscaping of those grounds if the Resort does not exercise its option to lease the courses. The Town must continue to maintain the property for the holes south of Lambert even though it is not Town property and is owned by The Village of La Canada HOA.

A contract by HSL for HSL
It’s clear that this contract was written “by HSL for HSL” as everything in the contract is written to protect HSL. This is a legal document, signed by the former town manager. Hence, we are stuck with it.

Nice job, Mr. Caton, Mr. Sidles, and those four members of the Council who did not desire to review the Agreement prior to the close of escrow. Too bad the mayor and his cohorts did not desire to "get into the weeds.” During the last Council meeting that Mr. Caton attended as our Town Manager, the mayor stated that Mr. Caton "always hit it out of the park.” After reading this agreement, one might wonder -- for whose team was Mr. Caton playing? What happened to Oro Valley Residents being at the top of the Town of Oro Valley Organizational Chart?

The REVISED Town of Oro Valley Organizational Chart