Title
Policy Regarding Proceeds of Excess City Land, Including Park Land, Sales and General Fund Payment Plan to Phoenix Parks and Preserve Initiative (PPPI) for Golf (Ordinance S-43701)
Description
This report requests City Council approval of a Policy, recommended by the Parks, Arts, Education and Equality Subcommittee, regarding proceeds of City excess land sale, including park land, be utilized to make payment to the Phoenix Parks and Preserve Initiative fund for golf debt.
Report
Summary
In 2013, the City Council adopted a plan to address the deficit in the Golf special revenue fund. Since 1981, City golf courses operated by the Parks and Recreation Department had been accounted for separately from the General Fund. Beginning in 1998, the golf courses generated consistent deficits with expenses exceeding revenues and minimal capital investment. The deficit was carried as an account receivable by the City's Finance Department for nearly 12 years and grew to a total of $15,032,000. This meant the City's cash pool was, in effect, carrying the Parks and Recreation Department program deficit for Golf.
A payable amount this large carried on the City's books was certain to raise questions from credit rating agencies. In 2013, the City Council took forceful action to address the Golf Fund deficit and preserve Phoenix Municipal Golf. The City Council used PPPI funds to pay the Parks and Recreation Department's Golf fund debt to the City financial pool over three years. This was legally sound, as the funds were used to preserve, protect, and maintain recreation facilities and open space.
The action to continue Phoenix Municipal Golf was taken to protect neighborhoods and to sustain one of the City's most popular recreation activities. Phoenix Golf generates the most revenue and has the smallest gap between revenue and expenses of any other City recreational offering including soccer, softball, and swimming.
In 2017, the City Council asked about a plan to return funds to PPPI equal to the $15,032,000 payment. Staff recommended using proceeds from the sale of park land. On May 24, 2017, Parks, Arts, Education and Equality Subcommittee members recommended the City utilize proceeds of all eligible City land sales, including park land sales, to PPPI until the $15 million is reached. This is one-time cash that Mayor and City Council can allocate as it finds appropriate.
It is important to note that City lands have been acquired through a variety of methods such as Bond funds, Community Development Block Grant Funds, Impact fees, private donations, voter-approved Phoenix Parks and Preserve Initiative (PPPI), and other funding sources. When City land is sold, staff will perform an analysis of the history of acquisition to determine eligibility of where the sale proceeds may be reinvested. Impact fee purchased property, for example, has restrictions and would be ineligible to repay the PPPI fund. However, in general, land that was acquired with bonds that have been retired, land that was acquired through PPPI, General Fund or land that was donated by private individuals with no restrictions are eligible for discretionary use.
The use of park land proceeds to reimburse PPPI has a direct connection. The use of all other land proceeds has less connection to PPPI and could conflict with other funding needs the City has for the proceeds.
Concurrence/Previous Council Action
This item was recommended by the Parks, Arts, Education and Equality Subcommittee on May 24, 2017, by a vote of 4-0.
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Parks and Recreation Department.