Dear Indian Wells Residents,
We have officially passed the one-month mark of Governor Newsom’s Shelter at Home Order. In some ways it seems like the time has flown by, and in other ways it’s like we’ve been stuck in our homes for ages. Collectively, we’ve experienced a lot together over the course of this month in isolation. And as we move ahead and adjust to the arrival of coronavirus, there will be more challenges for us to tackle as a community. One of the biggest for us - and the rest of the world - is going to be the negative economic impact of the pandemic.
As a tourist destination, Indian Wells depends on large-scale events and dollars spent by travelers to support our economy. With the cancelation of the BNP Paribas Open, the postponement of the Coachella and Stagecoach music festivals, and the cancellations of various conferences and seminars set to take place at our resorts (not to mention the halt of travel-related business as a whole) our City is already feeling a significant impact. The Hyatt, Renaissance, and Miramonte, have all temporarily closed.
Overall, the City anticipates more than $9.7 million dollar decrease in General Fund revenues through June 30, 2021 as a result of the COVID-19 pandemic. Most severely, a 29% drop from the 2019-20 revenue expectations primarily due to the cancelation of the 2020 BNP Paribas Open and closure of City hotels (keep in mind we are not done with the 2019-20 FY). Operating losses due to the closure of the Indian Wells Golf Resort in mid-March are estimated at $1.3 million alone for just the current fiscal year 2019-20.
One bright spot: we are pleased to say that the resort has resumed limited golf operations with two free rounds coming to residents with a Golf Resident Benefit Card in May. Keep your eye out for that information in the coming days. The Indian Wells Golf Resort has been doing amazing things during this pandemic from making sure residents have a place to get groceries. Grab take and bake meals and get to-go items. They have been organizing blood drives and have made over 60,000 masks that are essential to the valley as well as providing food items for the staff at JFK. This is what Indian Wells is about, “community”.
Of course, estimates of financial impacts are preliminary as there are currently many unknowns about coronavirus and its long-term impact. Questions remain as to when our hotel partners will reopen and at what capacity, what the potential social distancing limitations will be once they do, and when the flow of tourism revenue will once again head toward Indian Wells. I assure you that the City is aware of these unknowns and is making decisions based on sound fiscal management and the best public health policies and recommendations.
Fortunately, we are not heading into this predicament unprepared. Readying Indian Wells for a financial shock has been a core philosophy of the City Council for several years. In 2012, Council adopted a comprehensive City Cash Reserve Policy necessary to maintain quality operating standards in times of down tourism cycles and maintain superior capital assets and infrastructure (such as roadways, landscape, and streetlights). As a part of the budget process, the City reserves roughly $2.0 million dollars annually. Current City reserves total nearly $40 million dollars.
The City took action to expand Indian Wells’ revenue stream to keep up with the growth of these expenditures by creating new revenues. In part, the City created a medical insurance billing program, increased the transient occupancy tax (T.O.T) rate, and implemented a three-year citywide cost saving plan. These steps among others have improved the City’s fiscal position. Prior to the COVID-19 crisis, we were even named the 5th financially healthiest City in California by the California State Auditor.
Another measure taken by the City was to immediately address expected revenue losses from the canceled BNP Paribas Tennis Tournament and closure of our local resorts by putting our fiscal plan in place, using anticipated surplus revenues in this year and next year’s budgets, delaying planned donations, deferring capital improvement projects, and controlling costs in our current operations. These actions should allow City Council to move through this period
without
using City reserves.
I have thrown a lot of numbers and information at you, but conveniently the City has also invested in financial transparency with two key documents. One is our Financial Primer that helps explains the City’s Finances and the second is our Budget at a Glance. You can find each document at this link . I encourage you to read them for additional background about the City’s finances.
All this to say, it will not be an easy road ahead and the losses will be significant, but we are in a much better place than most and we will make it through this. The smart decisions made by the last several city councils when times were good have helped us prepare for this time period when things are bad. I am deeply appreciative of the current and former City Councils for having the foresight to prepare for a fiscal emergency and protect Indian Wells from the unexpected. Thanks to their planning, when we can all get out and enjoy this beautiful desert landscape, visit our favorite restaurants and shops, and gather together in the shade of the mountains, the City you know and love will be here to welcome you with open arms. I look forward to that day.
Yours in service,
Ty Peabody, Mayor of Indian Wells
