* Opinion: Prescott Valley is Heading for an Economic Disaster Never Seen Before in Arizona – Bill Williams

Chart: The chart above shows $56 million in cap ex for 2029 and an accumulated cap ex of $236 mil as we approach FY 2029

The Town of Prescott Valley has a dream of spending $236 million on capital improvements by fiscal year 2029, but I am appalled at mismanagement from the top down. Looking at the $236 mil cap ex, please note it does not represent the other budget which is the ‘yearly budget for operating expenditures, personnel (salaries), various costs and debt’ which, if we use last year’s budget number and add it to the 5-year accumulation of $236, we approach PV’s first half a billion-dollar sinkhole. The town has no numbers on where a half billion will come from or even $236 million, but most likely, a property tax and a sales tax increase, and borrowing money along with permit fee increases for citizens trying to build a fence or add a room, and for our developers trying to build neighborhoods.

Photo: Prescott Valley City Hall

A town can go broke by overspending when it consistently spends more money on services and projects than it collects in revenue through taxes and fees leading to a growing budget deficit which can eventually deplete its financial reserves and make it unable to meet its financial obligations such as paying salaries or maintaining infrastructure.

BROKE-NESS NOT WOKENESS

Factors that contribute to town overspending and going broke are excessive public projects; taking on large scale construction projects without sufficient funding can quickly drain a town’s finances. Unrealistic budgeting is: failing to accurately estimate future revenue and overestimating potential savings that can lead to overspending. Prescott Valley has $120 million stashed in 7 different earmarked funds; will they be raided?

Poor financial management is lack of proper budgeting practices, inadequate oversight and not monitoring spending closely which can lead to uncontrolled expenditures.

Unfunded liabilities mean failing to adequately fund future obligations like pensions and other things that can create a large financial burden down the line; economic downturns which none of us can seem to forecast accurately could see economic recessions with Prescott Valley’s revenue decrease, while the need for social services increase leading to a budget gap. But nobody is talking about this. The town boasts of having a balanced budget policy, and the people to make that happen. We will see.

The consequences of overspending are reduced services to manage the deficit; a town may have to cut back on essential services. Our town has no idea where it will get water for the $236 mil projects, other expenses, or for ‘Final Granville’s’ hundreds of homes (as I call it), or the 70,000-to-100,000 town population that an ex vice-mayor dreams of. ‘Final Granville’ is in town development services plans as either Granville 17 or 19. Drive north on Glassford Hill Road under our new $400,000 welcome-to-town arch and you will see the bulldozing. PV cannot even gauge how much water is in the aquifer under the town. Those newcomers are coming fast. But what will welcome them here? No assurance of water? Potholes? Missing fire hydrants?  The town is woefully short on fire hydrants.

Higher taxes will have to come in to generate more revenue; the town raising taxes can discourage businesses and residents from staying.

We could see a credit rating downgrade, making it more difficult to borrow money at favorable terms. Currently, acquiring new debt to the tune of $20 million is what it will cost, long range, to fix the PFAS (forever chemical pollution) treatment in Prescott Valley, and that’s on top of an initial outlay of $8 million, according to recently consulted town experts. So, we will already begin borrowing to fix debt years before the $236 mil, 5-year pipe dream.

Infrastructure will decline in PV. As my previous commentary shows, we can’t afford enough fire hydrants and that is a massive safety issue and shirking of responsibilities by all of town leadership.

TRUTH AND CONSEQUENCES

Lack of funds for maintenance can lead to deteriorating roads, buildings and other public infrastructure which is already happening in Prescott Valley. Budget cuts can lead to layoffs of public employees.

What the town of Prescott Valley leadership is doing is looking outside the window, seeing that it’s raining and predicting that the climate is in for an extended wet cycle.

Our budgets are varying widely from year to year and this awful projection of $236,000,000 for capital improvements over 5 years does not give us a true picture of fiscal years leading to 2029 where we will probably have a budget for everything else such as costs, salaries and debt of well over $200 million each year; yes, part of the $200 million will include some cap ex, but why comingle cash? When I expressed this to a county supervisor that person said, “Your 500 million is more than we are going to spend; that’s a half a billion dollars.”

Prescott Valley was set up by our county supervisors as a strong town manager, weak mayor, and strong council form of government back in the 1970s. But it has become apparent that Mayor Kell Palguta is running roughshod over Town Manager Gilbert Davidson and together they may be taking the town into debt from which it may not recover.

A new resident from Irvine, CA and one from Livermore, CA tell me that PV is showing signs of becoming those towns. I’m a big proponent of Strong Towns and Urban 3. The authors have written books and incredible white papers about towns going broke and Prescott Valley will go broke, someday.

Infrastructure is investment spending and all the other services we have are consumption spending. Nobody expects fire departments (which in our area, is of course a county responsibility), police services and others to make a return on an investment; there is no investment; this spending is consumption and its continuation depends on the city having enough revenue from the return on its infrastructure investments.

Our roads are bad and we have no money to beat the PFAS water pollution challenge; a large water pipe that will go from Stoneridge neighborhood to Prescott Country Club is a bypass to get clean water to the Quailwood neighborhood; there is no longer a plan to fix the three PFAS polluted wells in Quailwood, just one now, because we have no money. So, we will bypass.

When we treat infrastructure spending like it’s consumption spending, something like having a police department or maintaining a park, we tend to make stupid infrastructure decisions and our town manager seems to be playing along with that.

While our town plans to increase its liabilities by large percentages, our residents are only increasing their incomes by a fraction of that, and this is the path ending at insolvency.

Cities can experience growth and job creation today quite easily if they are willing to take on a disproportionate amount of long-term liabilities. But town manager Gilbert Davidson wants more, not less. In other words, I’ll gladly pay you Tuesday for growth and jobs today. Well now it’s Tuesday and it’s time to pay up; we cannot continue to grow this way and remain solvent. It’s time to start building a strong town.

It may be time to show town manager Gilbert Davidson and Mayor Palguta the door. They have created their own fiefdom by hiring many new employees in just the first 2 ½ years of Davidson’s rule as town manager – many are department heads and deputies at six figure salary levels. Davidson appears to want to run the Kingdom of DAVID-son, ruling over money that isn’t his and hundreds of town employees, but many will be the first ones fired in coming years when we have our “come to Jesus” moment and realize they have been selling us a bill of goods all this time.

Prescott Valley is known for making bad financial decisions under the Mayor Harvey Skoog administration. The town is still paying millions to retire the debt on the Findley Toyota Event Center – the multi-use arena loses $500,000 a year mostly because it can’t book acts or performances.

THE EVENT CENTER WITH NOT ENOUGH EVENTS

The town likes to trot out its version of a 2017 “contract story” which sets up the Community Facility District that oversees the PV Entertainment District, which has a movie theatre and a miniature golf course. But the agony of the original deal started back in 2005 and includes the formation of an entertainment district that now runs from Fry’s grocery across Highway 69 and includes acreage around the event center purchased from the Fain Signature Group (FSG), with obligations showing who would take care of the parking lot, landscaping and lights. A former town council member who voted against the whole idea said, “Originally it was a 20-year contract with FSG getting the property free at the end. But lawsuits from bond holders changed the ownership.”

The former council member added, “The original development agreement was for 23.8 Million with FSG “give backs” of about 15 Million. That did not include the forever town payments for FSG land used for parking lots, lighting and landscaping we are still paying for.” And it appears we drove the event center into the ditch with the new facilities district arrangement.

Photo: The core of the event center facilities district is the Toyota Event Center, a new hotel on the right, the rebuilding of the fire-destroyed Legado Apartments (back right) and the Homestead Talking Glass Apartments on the left behind the trees

The sordid history of the event center includes a bankruptcy around 2015. The convoluted contract declares the facilities district the owner but it leases to “the Prescott Valley Event Center.” And a 2020 version describes the wide net that was thrown over what they call the Growth Character Area, whatever that is.

From 2005 to 2017, the town made $23 million in bond payments on the event center. And in 2016 the town approved folding in nearby apartments and businesses as if they would help the entertainment center as one big district.

Prescott Valley currently owes $13 million on two event center bonds. $1.1 million was used to purchase the building. PV is the owner. The bonds won’t be paid off until 2037 and 2033 respectively. The town spends nearly $800,000 per year on operational expenses.

And several years ago, the town sold all its water rights to a New York company called Water Asset Management. In 2032 the rights for the water beneath the town will come up for sale. If Prescott Valley wants the rights back, it will pay a pretty penny, and may have to incur debt for that. Harvey Skoog had a street named after him.

If our government is serving the interests of the town, it should be better managers of the public purse without allowing or creating unnecessary spending, yet Davidson has. A survey of town residents successfully beat back the mayor’s plan to create an amusement park on top of the town’s only mountain – Glassford Hill.  The mayor also voted for the Sundog Connector roadway which would have built a four-lane highway up and over the southern slope of Glassford Hill. The plan was slaughtered by one of five citizens activist groups cropping up in the last couple years – the Sundog Disconnect which still has an informational website, that includes the concept drawing of the four lane highway.

Photo: Glassford Hill with snow

Good department managers should trim unnecessary spending when it is discovered. I advocate for the creation of the PV DOGE Department.  Davidson/Palguta are trying to run this town based on tax money, so respecting the feelings of the ones paying taxes matters only to the people  and not to Davidson/Palguta. If public safety and schools decrease, the ones that are likely paying the most taxes will move out of this town. We are suffering from the flight of our millennial generation in Prescott valley – they can’t find decent salaries or affordable housing, and if that generation leaves in big numbers, it helps the town die. Our economic development manager, who reports to Davidson has done nothing to bring a job or a company to this town; yes, we have Jersey Mikes, a new brake shop, and ‘hamburger row’ on Highway 69 in front of Safeway, but can that pay for a $2,600 a month two-bedroom apartment?

Poor paying jobs, or no jobs, and unattainable housing, plus the cap ex and other budget obligations will help to kill Prescott Valley. The town has had in its possession a 90-page economic development plan from highly paid consultants, for one year. There has been no movement on bringing jobs here. But we are ready to go nuts on a $236 mil 5-year sinkhole.