Town Council Regular Session


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  Item # 1.       
Meeting Date: 12/17/2014  
Requested by: Kristy Diaz-Trahan
Submitted By: Kristy Diaz-Trahan, Parks and Recreation
Department: Parks and Recreation  

Information
SUBJECT:
RESOLUTION NO. (R)14-66, APPROVING THE ACQUISITION OF THE EL CONQUISTADOR COUNTRY CLUB, GOLF, AND TENNIS FACILITIES AND AUTHORIZING THE TOWN MANAGER TO TAKE THE NECESSARY ACTIONS TO COMPLETE THE ACQUISITION
RECOMMENDATION:
Staff recommends approval to acquire the El Conquistador Country Club, Golf, and Tennis facilities located at 10555 N. La Canada Blvd., and the Golf and Tennis facilities located at 10000 N. Oracle Rd.
EXECUTIVE SUMMARY:
Staff requests Town Council approval to purchase the El Conquistador Country Club, Golf, and Tennis facilities as noted below:
  • 31,475 sq. ft. building (La Canada location)
  • 5,600 sq. ft. building (Oracle location)
  • 324 acres of land
  • 31 lighted tennis courts (15 at La Canada and 16 at Oracle locations)
  • 2 heated pools (La Canada location)
The purchase will include a management contract with Troon, who will manage golf and food & beverage operations.  The Country Club will transition into Oro Valley's first ever Community & Recreation Center, which the Town of Oro Valley Parks & Recreation Department will manage, along with the related tennis courts.
BACKGROUND OR DETAILED INFORMATION:
The Hilton El Conquistador Golf & Tennis resort, currently owned by Met Life, Inc., is scheduled to be purchased by HSL Properties, Inc. on December 18, 2014.
 
HSL Properties is interested in selling the Country Club, Golf, and Tennis facilities to the Town of Oro Valley for $1,000,000. 
 
The facilities include the following:

10555 N. La Canada Location
  • 31,475 sq. ft. building
    • Meeting rooms and classrooms
    • Racquetball and multi-use courts
    • Dance/fitness room
    • Cardio and strength equipment
    • Children’s activity room
    • Golf pro shop
    • Full service restaurant, bar, and kitchen
    • Small café
  • 15 lighted tennis courts
  • 2 swimming pools
  • 2 18-hole golf courses
 10000 N. Oracle Location
  • 5,600 sq. ft. building
    • Golf and tennis pro shop
    • Small food service area
    • Storage facilities
  • 16 lighted tennis courts
  • 1 9-hole golf course
These recreational amenities align with the Parks & Recreation Department’s mission “To enhance the quality of life for all Oro Valley residents by providing exceptional community facilities and programs for all ages."   The programming and management intent is to (1) Transition the Country Club into the Town’s first Community & Recreation Center, which will include tennis programming; (2) Retain the golf management contract (Troon) that is included in the sale to manage golf and food & beverage operations.
FISCAL IMPACT:
The proposed acquisition cost for these facilities is $1 million to be paid in cash over the next three fiscal years as follows:  $300,000 in July of 2015, $350,000 in July of 2016 and $350,000 in July of 2017. It is anticipated that these funds would come primarily from the Town's General Fund and a small portion from the Bed Tax Fund.

Based on financial projections prepared for both the Community and Recreation Center operations and the golf and food and beverage operations, it is estimated that the facility operations will result in an estimated operating deficit of approximately $1.2 million in the first year; however, it is anticipated that this deficit lowers each year and turns positive by FY 2018/19 as a result of increased capital investment, marketing of the facility and programs, and quality management. Capital investment needs at the facility total about $5.5 million over the next five fiscal years and address accessibility and life safety improvements, replacement of aging equipment, and golf course upgrades.

To fund these needs, a 0.5% transaction privilege tax (TPT) increase is being proposed, raising our current TPT tax rate from 2% to 2.5% to generate approximately $2.0 million annually in additional revenues to be dedicated to funding the operating subsidy and capital costs of this facility over time.

Should this property be acquired by the Town, it is estimated that operations of the entire facility would be turned over to the Town from HSL Properties during the first quarter of the 2015 calendar year. In order to accommodate accounting for these new operations into the Town's adopted budget for FY 2014/15, staff anticipates bringing a budget amendment request to the Town Council in early 2015 to amend the budget and allocate funding for the operating costs and any immediate capital needs of this facility through the remainder of the current fiscal year.
SUGGESTED MOTION:
I MOVE to (approve or deny) Resolution No. (R)14-66, approving the acquisition of the El Conquistador Country Club, Golf, and Tennis facilities as presented.
Attachments
(R)14-66 Acquisition of the El Conquistador


    

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