On Tuesday, the Oro Valley Town Council received a Council report that confirmed the worst fears of town residents and the three council members who voted against the purchase of the El Conquistador Country Club and golf courses: the risky purchase was destined to lose the Town money.
In the report, Town Manager Greg Caton provided “proposed measures intended to eliminate or mitigate the impacts of the updated Troon-projected financials illustrating a $2.3 million net loss.” The report was not included with the amended Town Council meeting agenda released to the public at 10:50 a.m.
According to the report, those taxes are clearly not enough to stop the hemorrhaging of money from the risky purchase. In fact, losses have increased to the point that drastic measures are required to mitigate the impact of a $300,000 Community Center Fund shortfall. Even if the proposed measures are approved, the year-end fund balance in the Community Center Fund for FY 2015/16 is estimated to be a mere $42,208.
The report reads in part:
Troon has provided updated FY 2015/16 year-end financial projections for the Troon-managed operations at the Oro Valley Community & Recreation Center with the February financials included on the April 20th Council meeting agenda. The updated projections show a $2.3 million net loss for the current fiscal year compared to previously-provided projections earlier in the fiscal year showing a net loss of approximately $2 million.
As a result, the year-end fund balance for FY 2015/16 in the Community Center Fund is now estimated at $128,000, compared to the previous estimate of $425,000, for a difference of approximately $300,000. This $425,000 fund balance was intended to be carried forward into next year’s budget and allocated toward the $596,000 budget for capital improvements at the Community & Recreation Center.
Staff would like to provide Town Council with the following proposed measures to eliminate or mitigate the impacts of this projected $300,000 fund balance shortfall:
1. Postpone the start of the 10-year payback of the $120,000 loan repayment to the General Fund to begin in FY 2016/17, rather than FY 2015/16. This would require Town Council approval to amend the FY 2015/16 budget to remove this loan repayment from the Community Center Fund to the General Fund, which could be brought forward in May for consideration.
2. Eliminate the requested FY 2016/17 Community Center CIP project amount of $75,000 for the golf irrigation pump rebuild as we plan to include this project into the Community Center energy efficiency project scope that will be presented to Town Council on May 4th, which would require staff providing an update to the FY 2016/17 Community Center CIP project list and amounts.
3. Reduce the requested FY 2016/17 Community Center CIP project amount of $75,000 for the tennis court resurfacing project. It is anticipated that this work can be self-performed by Town crews for a reduced amount, and staff is currently researching an updated cost for this project. This would require staff providing an update to the FY 2016/17 Community Center CIP project list and amounts.
4. Based on current sales tax collection trends, it is anticipated that the 0.5% sales tax collections in the Community Center Fund may slightly exceed the $2 million budget. This revised estimate would be shown in the March 2016 Community Center Fund financials.
5. Savings of $36,000 per attorney/client information provided earlier today, April 19, 2016.
The above measures create budget savings and relief that impact both the FY 2015/16 financials and the FY 2016/17 proposed budget amounts.
The measures that impact the current fiscal year in the Community Center Fund are shown below:
| Current estimated year-end fund balance as of February 2016 | $128,193 |
| Savings from postponing loan repayment to General Fund | $120,000 |
| Estimated overage in sales tax collections* | $30,000 |
| Savings per attorney/client information | $36,000 |
| Revised estimated year-end fund balance FY 2015/16 | $314,193 |
*Please note that the additional revenue from the sales tax collections is a rough estimate, subject to change.
The measures that impact the FY 2016/17 Manager’s Recommended Budget are shown below (please refer to Page 9 of the FY 2016/17 Manager’s Recommended Budget book for the Community Center revenues and expenditures listed below):
| Carryforward est. beginning fund balance (see above) | $314,193 |
| Add: Recom. Community Center Fund revenues | $6,615,238 |
| Less: Recom. Community Center Fund expenditures | $(6,987,403) |
| Add: Savings on golf irrigation pump CIP project | $75,000 |
| Add: Estimated savings on tennis court resurface CIP** | $25,000 |
| Revised estimated year-end fund balance FY 2016/17 | $42,028 |
**Please note that the savings on the self-performed tennis court resurfacing are a rough estimate, subject to change.
With these measures approved, the year-end fund balance in the Community Center Fund for FY 2016/17 is estimated at $42,028 compared to $52,963, as presented in the Manager’s Recommended Budget.