Wednesday, May 10, 2017
$15M for parks went to golf courses in Phoenix -- will parks get repaid?
$15 Million
Dustin Gardiner , The Republic | azcentral.com Published 7:02 a.m. MT May 9, 2017
A group of Phoenix activists are pushing the city to come up with a plan to repay more than $15 million from a voter-approved tax that funds parks. Four years ago, the City Council borrowed to pay off debt from struggling municipal golf courses.
The residents accuse Phoenix of illegally misusing money from the voter-approved parks initiative. City officials say the transfer of funds was allowed.
While the debate has simmered for several years, it has received increased attention from city leaders lately as the Parks and Recreation Department, which manages city golf courses, works to develop a plan to return the money. The city doesn't have any money to repay it today.
But the parks department is considering selling some of its unneeded properties so it can start repaying the money in the near future.
This is what you need to know about the ongoing standoff between activists and City Hall over parks money:
How did it start?
Nearly a decade ago, the city asked voters to extend a special sales tax to fund parks and preserves.
Ballot language for the 2008 Phoenix Parks and Preserve Initiative, which extended the tax for 30 years, stated the money would pay to maintain, improve and expand green spaces and desert trails. It didn't say anything about golf courses or paying off city debt.
Voters overwhelmingly supported the initiative, with nearly 83 percent signing off at the ballot box. The tax amounts to one cent for every $10 purchase.
But Phoenix leaders soon found an unexpected use for the money: debt-ridden city golf courses.
In 2013, the City Council voted to borrow more than $15 million from parks initiative funds to pay off debt from its struggling golf courses. The city's golf courses had lost money for more than a decade as the popularity of the sport declined.
Golf courses were a city enterprise fund, meaning they were supposed to operate as a self-sustaining business separate from the rest of the city's general-fund budget.
Because the courses kept racking up debt — Phoenix loaned money to itself to keep the enterprise fund afloat — council members later decided to close the separate golf fund and made golf part of the city's operating budget.
But the city still needed to get rid of about $15 million in debt the golf fund owed to the city. That's when the council voted to take it from parks initiative funds.
Council members vowed to repay the money, though none has been repaid to date.
Activists are pushing city leaders to make good on their commitment. They contend Phoenix's use of parks funds to erase red ink from golf courses betrayed the will of the voters, and the group has considered filing a lawsuit to force the repayment.
Greta Rogers, a resident and part of the group challenging the city's decision, has publicly blasted the move at numerous council meetings.
"They committed fraud," Rogers told The Arizona Republic. "It should never have gone to pay debt. Period."
She said if the city had told voters that parks initiative money would be used to pay off debt from failing golf courses, the measure never would have passed.
"Voters aren’t going to pay for government to screw up," Rogers said.
The city's current plan to repay the money seems improbable: Profits from golf course operations are expected to eventually fund it. But that won't happen anytime soon because the city says its courses must first break even and pay for $8 million in needed improvements, such as irrigation systems.
Phoenix's golf courses haven't made a profit for about two decades, and Rogers predicts the money will never get repaid under the current plan.
If the money materializes, the city could potentially use it help pay things like more rangers to patrol city parks, new playground equipment and trail maintenance and upgrades.
What do city officials say?
Phoenix-owned golfcourses
Here's a breakdown of how each course fared during the last fiscal year:
Aguila (18 holes)
8440 S. 35th Ave.
Rounds played: 61,454
Loss: $38,415
Cave Creek (18 holes)
15202 N. 19th Ave.
Rounds played: 56,804
Loss: $39,151
Encanto (18 and 9 holes)
2775 N. 15th Ave.
Rounds played: 47,323; 28,727
Profit: $38,866
Palo Verde (9 holes)
6215 N. 15th Ave.
Rounds played: 28,998
Loss: $211,848
Note: Two of the city's six golf courses, Papago and GCU, are operated and managed by ASU and GCU, respectively. The city did not have round numbers or financial returns for the performance of those courses. The schools bear any losses with those courses.
Parks and Recreation Director Inger Erickson said the use of initiative money to pay off the city's golf debt was necessary because the city's Finance Department feared outstanding golf debt could hurt the city's bond rating.
Erickson said the city has worked hard to stem its losses with golf courses by cutting costs and signing agreements for Arizona State University and Grand Canyon University to operate two of the city's six courses, which the schools use for their golf teams and various events.
ASU operates the Papago course in east Phoenix. GCU operates the former Maryvale course, now known as GCU Golf Course, and the university built a new clubhouse.
Erickson said the city still intends to repay parks initiative money it borrowed, but there is no timeline for when that could happen. Her department is working on a plan to possibly sell unneeded parks properties to come up with the money.
“I think everybody’s intention is to pay it back," she said. "How you get there is the question. I can’t create money. I can’t cut other programs to get to that."
The department is working to sell two properties right now: a vacant lot adjacent to the Rose Mofford Sports Complex near the Metrocenter Mall; and a vacant lot next to Kuban Park. Erickson said she will likely recommend the council use proceeds from the sale of those properties to begin repaying the debt.
It was unclear how soon the properties could be sold. Erickson said the city intends to sell them through a public-bid process.
Residents pushing the city to repay parks money say they welcome the proposal and hope the city will approve a specific plan outlining which unneeded parks properties will be sold.
How are city courses performing?
Erickson said the department plans for its golf courses to break even this year after many years in the red. In the last fiscal year, which ended June 30, 2016, the courses lost about $133,000.
Those losses were covered with money from the city's general fund. Erickson said the city has not budgeted any money to cover losses with the golf courses this year because it plans to break even.
But the popularity and fiscal performance of the city's courses varies. Just one golf course operated by the city, Encanto, made a profit last year.
