Humberto Lopez Self-celebration Planned

As the Oro Valley Mayor Satish Hiremath, Vice-Mayor Lou Waters, and Council members Mary Snider and Joe Hornat face a recall election, the man behind the deal that spurred the insurgence, Humberto Lopez is preparing a gala to honor himself.

Lopez has invited Pima County notables among others to join him on September 18, in a “celebration of 40 years doing business in southern Arizona.” The “evening to celebrate four decades of dedication and investment in the communities of southern Arizona” is being held at Lopez’s El Conquistador Hotel and Resort.

The El Conquistador, the latest controversial acquisition by Lopez, is at the heart of Oro Valley’s recall effort. With the help of Mayor Hiremath and his fellow Council members, Lopez foisted the money pit of a golf course and other country club amenities onto the taxpayers of Oro Valley. That deal sparked outrage from fellow Council members Mike Zinkin, Brenden Burns, Bill Garner and residents of the tiny suburban community.

HSL - Hotel Arizona
HSL – Hotel Arizona

The El Conquistador is not the first hotel owned by Lopez that has left a scar on a community. His decaying abandoned hotel in down town Tucson sits as a monument to his business practices and the cronies who look the other way.

In January of 2010, Arizona Daily Star columnist Tim Steller wrote an expose of the developer. He questioned Lopez’s “repeated references to a MarketWatch survey of business climates that ranked Tucson 95th out of 101 U.S. cities.” At the time, Lopez’s bid to recall the Tucson City Council members was failing as was his down town hotel along with nearly every other business in town. Lopez told Steller that the recall was “about taking back the city, changing the perception that we’re anti-business.”

Lopez dropped the recall effort claiming in a statement released in February 2010:

“The mere possibility of it happening was enough to bring about the change that is desperately needed. From my perspective, this represents a clear success.

“Our goal was simple: we wanted the recall to be the tool that allowed us to reform the anti-business policies that have been an obstacle to new and existing businesses.”

The reality of that perception remained undisturbed as did the targets of his recall Councilpersons Regina Romero and Karen Uhlich.

Lopez, a democrat, who had earned the scorn of fellow democrats for the recall campaign, enraged them when he offered “his fleabag hotel to the city,” according to Tucson Progressive Pam Powers. Powers wrote:

“According to the Star, Lopez wants the city to sell bonds to renovate his hotel, lease it for 99 years, and build a new parking garage. How stupid does he think the City Council is? (Don’t answer that.) At least Councilman Steve Kozachik said the deal doesn’t make sense.

Humberto, buddy, if the Gem Show thought your hotel was adequate, there would be no push for a new hotel downtown. Duh…

Powers was referring to a November 2010 article by Rob O’Dell, in which he reports on the deal Lopez was hoping to make with the newly awakened City Council, who had promised to “reform the anti-business policies.”

That deal, according to O’Dell was a “complicated transaction that would allow him to lease the Hotel Arizona to the city for 99 years so it could be converted into a Doubletree and so that an Embassy Suites could be built next door.”

“Tucson taxpayers would be on the hook for the losses if the hotel plan did not meet projections,” noted O’Dell. However, the scheme would have allowed Lopez to “pay down the more than $20 million in debt he has on the Hotel Arizona property without having to pay taxes on the sale of the property.”

In 2012, “HSL developed and built include a $32 million, 304-unit luxury apartment complex, Encantada Riverside Crossing in Tucson,” according to the organization’s website. That same year, rather than incur a large tax bill, Lopez closed up the hotel, and left it to rot the core of Tucson’s core surrounded by Tucson’s growing homeless population.

The self-described philanthropist continues to expand his empire north to Oro Valley and Phoenix.

The HSL website includes an About Us page that appears to be slightly out of date and does not include the El Conquistador site:

Over the past 35 years, HSL has acquired, owned, operated and developed properties in Arizona, California, Colorado, Georgia, New Mexico, and Texas, and has formed more than 100 limited partnerships and limited liability companies.

Currently, HSL Properties owns and operates 41 apartment communities, with 32 in Tucson, 7 in Phoenix, 1 in Casa Grande, and 1 in Yuma. This amounts to approximately 10,000 units/families and over 7 million square feet.

Although the website reports that HSL owns the Dorado Country Club Golf Course, according to the Oro Valley recall organizers, Lopez could not make the purchase of the El Conquistador pencil out if it included the golf course and aging country club. As a result, he worked out a deal with Hiremath to have the Town of Oro Valley purchase it, and raise taxes to do so.

Lopez’s guests at the El Conquistador still have access to the course, which was a requirement by the Hilton chain.

A recent email by Councilmember Zinkin examines the purchase and the details Hiremath, Waters, Hornat and Snider “are not disclosing.” The email reads in part:

“The 45 holes of golf that were also forced through the Town Council without proper vetting are experiencing tremendous losses during just the first four months of ownership. They wish to limit the information they share with the public, at least until after the election on Nov. 3, because they are solely responsible for a decision that was contrary to the desires of the People. The numbers I am going to quote are from the Town, and the attachments are actual Town documents.

First look at how golf fared in May and June of 2014 (Attachment 1). The Town expected to lose $364,821, but actually lost $612,096. This loss is $247,275 MORE than what was forecasted. This loss equates to $6.03 for every man, woman, and child in Oro Valley (loss divided by 41,000).

So now lets’ look at the Troon forecast for FY 15/16 (7/1/15 – 6/30/16). Troon’s forecasted expenses for FY 15/16 (Attachment 2) include: payroll, employee benefits, employee related expenses, professional fees, advertising and marketing, repair and maintenance , operation expenses, cart and equipment leases, utilities (including water), insurance, fees, permits, licenses, and management fees. All this equals $5,508,571.

Next let’s examine Troon’s forecasted revenues (Attachment 3). Sources of revenue include: memberships, green fees, lessons, swim/tennis, merchandise, and food /beverage sales (to name a few). Troon’s forecasted revenues for FY 15/16 total $3,099,228.

Keep in mind that Troon has built into their forecast that the summer months will not fare as well as the winter months. By deducting the forecasted revenues, $3,099,228, from the forecasted expenses, $5,508,571, the forecasted loss for FY 15/16 of $2,409,343. These projected losses equate to $200,778 a month, or $4.90 for every man, woman, and child in Oro Valley. This figure is just the base of what it takes to run 45 holes of golf, and does not include the $75,000 the Town has budgeted for upgrades, nor does it include the $1.2 million that was taken from the Town’s Contingency Fund to start the Community and Recreation Fund. According to the Dec. 17, 2014 report to the Council by the Town Manager, an additional $1,282,500 is forecasted to be invested in additional upgrades in FY 16/17.

In July 2015 (Attachment 4), Troon forecasted 4,556 rounds of golf at $36.13/round. In actuality, only 3272 rounds of golf were played at $30.19/round. Troon missed its forecast by $65,826.60. In August 2015 (Attachment 5), Troon forecasted 4238 rounds of golf at $39.13/round. In actuality, the August numbers were 3234 rounds at 30.16/round. Again, Troon missed the forecast by $66,355.10. The total non-forecasted losses for July and August 2015 were $132,181.70. This equates to an additional $3.22 for every man, woman, and child in Oro Valley.

In September 2015, the Pusch Ridge course will close from 9/8 – 10/23 and the Conquistador Course will close on 9/14 for over seeding. Even with these closures, Troon is forecasting more rounds of golf will played at a higher cost per round.

The cost of golf (without upgrades and prior withdrawals from the Contingency Fund), along with the missed forecasts by Troon has cost (up to now) $14.15 a month for every man, woman, and child in Oro Valley. The future does not look bright and the numbers are not pretty. So, was the $1 million purchase of the golf course/Community and Recreation Center a smart decision? For HSL the answer is yes because they can keep the resort status on the back of the Oro Valley residents. For the Citizens of Oro Valley, the answer is a resounding NO.

As demonstrated in Steller’s 2010 piece, Lopez is rarely told no and “there have been plenty of blemishes along the way,” for him and his company, including filing for bankruptcy as an outgrowth of the savings and loan crisis.” Steller cites a 1993 Star story on the Resolution Trust Corporation’s lawsuit against Pima Savings and Loan and its loans Lopez:

RTC attorneys question five loans, totaling $14.45 million, that Pima made between 1983 and 1987 to partnerships headed by Tucson investor Humberto S. Lopez.

The funds were designated for buying and developing apartment projects, and for buying two parcels of land Pima held in its real estate owned portfolio.

RTC attorneys cite 16 problems among the transactions. Leading the list is an allegation that the defendants failed to obtain signed loan applications for any of the transactions.

The suit alleges that Pima’s directors funded a $4.7 million loan to build the Mission Sierra Apartments before an appraisal was obtained.

The Mission Sierra project is the subject of several other allegations, including Pima’s failure to obtain current personal financial statements about the guarantors.

“Instead, defendants used uncertified and self-prepared stale financial statements prior to approving the HSL La Mission (Mission Sierra) loan,” the suit says, adding that Pima also failed to verify the information or perform credit checks.

Out of town invite for Humberto Lopez self-celebration
Out of town invite for Humberto Lopez self-celebration

The past is in the past, and Lopez is expecting quite a turnout for his self-celebration. His magnanimity will be in full throttle for his out of town guests, who can sign-up for a complimentary stay at the El Conquistador and round of golf. Whether those guests know that hard-strapped Oro Valley families will be subsidizing that golf is unknown. What is known is that those out of town guests, due to a provision in the Hiremath/Lopez deal, will have priority when choosing a tee time, over the thousands of residents, who are picking up part of the tab and support the recall.

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