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Town Manager presents new plans for Oro Valley Community Center, including golf and restaurant operations

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In a February 2, 2018 memo to Oro Valley Mayor and Council, Town Manager Mary Jacobs presented a preliminary plan to decrease operating costs, increase revenue, and invest in much-needed capital improvements at the Oro Valley Community Center, including golf, fitness, tennis and food and beverage. That preliminary plan was also the subject of a February 7, 2018 Council Study Session, during which Council had the opportunity to ask questions and discuss the plan. 

February 8, 2018

In the coming days, Jacobs will develop a final plan and funding strategy, which will be included in the FY 2018/19 Town Manager’s Recommended Budget, tentatively scheduled for presentation on April 18, 2018.

Plan highlights, as noted in the memo to Council, include:
• Golf course turf reduction on the two 18-hole courses, and replacement of their irrigation systems;
• Plans for the Town to cease operating the nine-hole Pusch Ridge Golf Course near the Hilton Resort (The Town will explore opportunities to transition course operations to the Hilton Resort or develop a plan, in partnership with resort owner HSL and the adjacent HOA, for alternate uses of the course);
• Moving food and beverage operations to the downstairs café area, which will be reconfigured to an open kitchen/bar and grill with a limited menu.
• Reconfiguring the upstairs restaurant space to expand the facility’s fitness areas and program offerings, which are approaching capacity.

All told, the Town projects that these improvements and adjustments would result in annual savings or revenue increases of $400,000 within two years following full implementation of these capital improvements.

Expected outcomes include:
• Reduction in water use of 15 - 20%, estimated at $150,000 in cost savings annually (based on current rates) upon complete replacement of both irrigation systems and implementation of a strategic turf reduction plan.
• 15 - 20% increase in fitness memberships, with a corresponding estimated revenue increase of $42,000 - $56,000 annually after two years.
• 8 - 10% increase in the number of rounds of golf played at the El Conquistador and La Cañada courses, with an anticipated revenue increase of $100,000 annually.
• Annual savings of $33,000 in costs associated with removing the small pool.
• Annual savings of $75,000 - $160,000 at the Pusch Ridge course, depending on the final solution.
• Opportunities to expand programming for underserved residents, including seniors and youth.
• Opportunities to enhance arts and cultural programs.
• Opportunities to increase fees and memberships as facilities/courses are improved.

“It is settled Council policy that the Town now owns and operates the Community Center and its golf and tennis operations,” said Town Manager Mary Jacobs in her memo to Council. “Like our other community and recreational amenities and infrastructure, it is incumbent upon the Town to operate in the most efficient way possible, while providing the most opportunities to our residents to take advantage of this facility and maintain our exceptional quality of life.” 

How was the plan developed?

The Town Manager’s approach to developing the preliminary plan was a months-long, multi-step process, including the following:
• Town staff analyzed usage and operation trends, including financial performance; conducted site/facility visits; and reviewed local and national market data.
• The Town hired a third-party consultant group (comprising WLB Group, Inc., National Golf Foundation Consulting, Inc., and Forrest Richardson & Associates) to evaluate the operational and economic performance of the Community Center, including golf and restaurant operations, with the goal of identifying opportunities to reduce costs while still providing quality amenities and programs. The consultant report was published in July 2017, and those findings and recommendations were part of the Town’s analysis.
• The Town issued a Request for Information (RFI) to evaluate potential privatization of the Overlook Restaurant.
• Town staff reviewed contractual language and initial assumptions regarding the purchase of the facility and operations, as well as public comments from previous Council meetings.
• The Town Manager invited adjacent homeowners and golf members to share their thoughts and concerns directly with her regarding the consultant’s recommendations.

What is the Community Center’s current financial picture?

In less than three years of Town ownership and operation, the overall Community Center Fund financial performance has improved substantially. In year one, expenses exceeded revenues by $863,000. In year two it improved, with expenses exceeding revenues by $600,000. Now, in the current fiscal year, we are trending to match revenues with expenses; however, as Jacobs noted in the memo, this does not adequately address much-needed capital investments.

“It is my professional opinion that pre-purchase financial/operational projections were overly optimistic in suggesting that initial needed capital investments in the aging facility and golf courses could be paid from the Community Center Fund,” said Jacobs. “The financial model was overly reliant on a projected increase in membership, something that did not transpire as expected. While on track for a balanced fund this fiscal year, the condition of the facility and courses at the time of its purchase by the Town necessitate further immediate investment in order to get the operations at a point where they can be sustainable within the fund. This is very much a chicken-and-egg scenario. Without the improvements, expense reductions are limited and revenue increases cannot be maximized. With the improvements, I believe that the fund WILL be able to fund subsequent capital investments and enhancements in the future.”

It is important to remember that like other municipal recreational facilities such as parks, ballfields, multi-use paths and pools, the Community Center operations rely on community investments through general fund revenues to sustain its operations. The Town Council has dedicated $.005 of its $.025 sales tax specifically to this operation. The Community Center Fund makes up less than 6% of the Town’s overall annual budget.

When the Oro Valley Community Center first opened its doors nearly three years ago, the Town’s primary goal was to finally have a place where residents could gather for special events, programs, fitness classes, outdoor recreation and learning opportunities, because wellness and sense of community are critical at every age. By implementing these improvements and adjustments, the Town of Oro Valley will be better positioned, now and in the future, to ensure the Community Center is operating efficiently and is able to meet the unique needs of Oro Valley residents and guests.

Click here to read the Town Manager’s memo in its entirety.

 

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