Chairman Beasley made a statement and three motions regarding the golf courses at the Budget and Finance Commission meeting on October 15th. The motions would prevent bonding of golf course improvements and would make the “pay-as-you-go” approach impossible by diverting the sales tax subsidy above $750,000 to the General Fund.

Please see below for the clip and transcript:

 

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The Town Council and Finance Commission have convened many meetings for months involving what to do with golf courses owned by the Town of Oro Valley.

We’ve heard from town residents living around the golf holes and others not near the courses.  We’ve had presentations from golfers and non-golfers.  Information was presented about property value concerns and data presented by various sources looking at alternative uses for golf courses.  We’ve seen multiple economic forecasts and projections related to the courses prepared by the Town of Oro Valley, Troon, a contracted consultant, and even a preliminary set of projections by the commission.  Importantly, we also have audited history of the losses associated with the golf program since the Town of Oro Valley acquired the courses.

Golf appears to be taking a disproportionate amount of the Town of Oro Valley’s resources benefiting a limited number of town citizens and others who are not residents but utilize the golf courses.

There is a lot of emotion related to the discussion of golf.  What is clear is that golf and other recreation facilities are expensive to the Town of Oro Valley but represent a valuable amenity to the residents of the Town of Oro Valley.

Going forward the town has many rising demands on financial resources including an extremely large and increasing unfunded pension liability for employees, rising salary and benefits costs for employees including police, requirements for expenditures to maintain Town of Oro Valley assets, and the continuing need to modernize Town of Oro Valley facilities and provide additional services for citizens – all 44,000 plus.

The Town of Oro Valley is nearing build out and new income sources are limited.  The growth of revenues is projected to slow significantly and that will force difficult decisions on allocating resources.

The Town of Oro Valley council has decided to maintain a 36 hole golf program that requires contributions from HOAs around the courses totaling 125k per annum and fees are being increased on golf members by 10% on or before Jan 2021. Current projections by Troon and the Town of Oro Valley for 36 hole golf program have cut costs to the point that nearly every expenditure is fixed in order to minimize losses and the forecast creates targets that establish max subsidies by the Town of Oro Valley to be funded by sales taxes.

The Town of Oro Valley council resolution approving 36 holes of golf establishes annual financial targets based on Town of Oro Valley and Troon forecasts, but, no accountability, penalties, or contingencies are created if the forecasted targets are not met.

I do not disagree with the Town of Oro Valley council decision of proceeding with 36 holes of golf, but the consequences of the golf program not meeting the projections are that we are likely to be back in the same situation as we have been in the last many months / years.

Because of the future uncertainty of revenues, and I really question some of these forecasts, and history showing very large losses subsidized with sales taxes, combined with other major Town of Oro Valley financial requirements, I make the following motions:

ONE:  The finance commission recommends to the Town of Oro Valley council that if the financial targets as forecasted by Town of Oro Valley for 36 hole golf program as identified in the approved council motion dated October 2, 2019 are not met in the next 3 fiscal years, then the Town of Oro Valley will require the contributing home owners associations and golf members to make up the excess losses, capping the Town of Oro Valley subsidy at 750k per annum. In addition, all capital expenditures for golf should be on a “pay as you go” basis with no borrowing allowed.

TWO:  The finance commission recommends to the Town of Oro Valley council that if the homeowner associations and golf members cannot – or will not – make up the losses described in #1, then the Town of Oro Valley discontinue the Canada course, operating only the 18 hole Conquistador course and return non-owned holes to the home owners and repurpose the remaining holes. Maximum Town of Oro Valley funding going forward for the 18 hole golf program should be capped at $500k per annum using the existing supplemental sales tax.

THREE:  Finance commission recommends that the Town of Oro Valley council re-direct funds from the half percent sales tax currently in place to support golf and recreation so that money in excess of $750k per annum be placed in the General Fund and be utilized for reducing the unfunded liabilities in the Town of Oro Valley pension plans.

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