According to Town Manager Mary Jacobs, without millions in additional investments in the two 18-hole golf courses at The Oro Valley Community Center and and the nine-hole Pusch Ridge Golf Course, the town will have limited options to increase the financial outlook of its golf operations. The town spent roughly $2.7 million on upgrades after it acquired the courses in 2014.
Oro Valley, Ariz., will have to decide whether to put about $5 million into its struggling golf operations to fix aging infrastructure and make significant changes to the community center, the Tucson-based Arizona Daily Star reported.
Town Manager Mary Jacobs said without millions in additional investments—the city has already spent roughly $2.7 million in upgrades after it voted to acquire three courses, with 45 total holes, in 2014—the town will have limited options to increase the financial outlook of its golf operations, the Daily Star reported.
In December 2014, the Town Council voted 4-3 in favor of purchasing El Conquistador Country Club for $1 million, a deal that included a half-cent sales-tax increase to pay for the since-completed renovations to turn the club into a community center that is open to the public. C&RB reported on the facility’s opening in October 2015.
The Oro Valley Community Center has two 18-hole golf courses. The town also operates the Pusch Ridge Golf Course, which has nine holes, the Daily Star reported.
“It is my professional opinion that pre-purchase financial/operational projections were overly optimistic in suggesting that initially needed capital investments in the aging facility and golf courses could be paid from the Community Center Fund,” Jacobs wrote in a recent memo to the Town Council. “The financial model was overly reliant on a projected increase in membership, something that did not transpire as expected.
“This is very much a chicken-and-egg scenario. The condition of the facility and courses at the time of its purchase by the town necessitates further immediate investment in order to get the operations at a point where they can be sustainable within the fund.”
Officials expect that the golf operations this fiscal year are on track and will not require additional funds from the town’s general fund to operate. However, there are a number of looming infrastructure issues facing the courses, including irrigation systems in all three courses that generally are past their useful life, the Daily Star reported.
“The irrigation (systems are) inefficient, costly to maintain and likely leaking significantly,” Jacobs said.
The town spends about $1 million on water for the golf courses annually. There were serious conversations about downsizing the two main golf courses from 36 holes to 27, but town officials believe the savings from reducing operations would not make up for the projected loss in revenue from fewer holes, the Daily Star reported.
Rob DeMore, vice president of operations for Troon, which has operated the courses for the last three years, said the proposal to eliminate nine holes of golf from the main courses is problematic, as it would cost the city money upfront to reconfigure the courses and find new recreational uses for portions of the courses no longer used for golf, the Daily Star reported.
Troon notes that projections show the current 36-hole configuration will continue to generate more revenue than the 27-hole option. “There is an enormous competitive advantage to have two 18-hole golf courses,” DeMore told the council recently.
If the council backs a plan to reduce the number of holes from 36 to 27, DeMore said, it could lose as much as 35% of its revenue from golfers, the Daily Star reported.
DeMore was less enthusiastic about the Pusch Ridge course, saying the number of rounds being played at the nine-hole course has largely been stagnant over the last three years and the course is expensive to operate, as it relies on potable water for irrigation, the Daily Star reported.
The town has been discussing with HSL Properties, which owns the Hilton El Conquistador resort, about taking over the Pusch Ridge course. Jacobs said no final decision has been reached and the town has already budgeted for the next fiscal year to continue operations at Pusch Ridge, the Daily Star reported.
Citing increased demand for the town’s recreational facilities, Jacobs discussed plans to increase indoor space at the community center’s clubhouse, home to The Overlook restaurant, which continues to lose money, the Daily Star reported.
“The Overlook is just not viable anymore,” Jacobs told the council recently. The town projects the restaurant will lose $100,000 in the current fiscal cycle. The town solicited bids for a private business to take over the restaurant, but Jacobs said it did not get any offers.
The council was asked by Jacobs to consider converting the 5,282-sq. ft. restaurant, which features high ceilings and a loft-like view overlooking the golf course and surrounding Santa Catalina Mountains, into a recreational and fitness space, the Daily Star reported.
The Garden Cafe on the ground floor of the community center could be expanded and turned into a self-serve bar and grill, eliminating table service. The change in the type of restaurant service with a limited menu would help reduce food and personnel costs, Jacobs said.
A final decision on golf operations will be made in a few months, Jacobs said. At a recent meeting, the council leaned toward not making any changes to the two 18-hole courses but asked staff for more information, the Daily Star reported.
In its first year of operation, the city had to shore up the golf enterprise with $863,000 from the general fund after putting in $2 million into the golf course and restaurant. In the following cycle, fiscal year 2016-2017, the golf enterprise fund ended up $600,000 in the red, the Daily Star reported.
Jacobs said that for the current fiscal year, which ends June 30, the enterprise will be revenue neutral, the Daily Star reported.
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