Contrasting Growth Strategies: Oro Valley vs. Marana - A Tale of State Shared Revenue Trends

Marana’s State Sale Tax revenues growing faster than Ovo Valley’s

A reader has provided us with a chart that illustrates the contrasting trends in state shared revenues between Oro Valley and Marana. These revenues encompass funds obtained by the State from various sources like sales taxes, income taxes, highway fees, and more, with a portion of these collections being distributed to cities and towns. The data is intriguing as it offers valuable insights into how different growth strategies affect the financial stability of these two municipalities.

Marana has a high growth strategy… Oro Valley does not

Thus, as one would expect, the data reveals an impressive 84% increase in state revenue to Marana from 2018 to 2022. Marana’s population grew 19% population during the same time period. In contrast, Oro Valley experienced a 6% population growth during the same period. Still, its state revenue grew a substantial 64%.   

Here’s the chart:

Indeed, there is a discernible difference in the growth of state shared tax revenues each town received but… 
Oro Valley and Marana stand as distinct entities with unique approaches. While Marana actively pursues robust growth, leveraging its strategic location along I-10 to attract commercial businesses, Oro Valley, due to its considerable distance from the interstate and the preferences of its residents, takes a different approach. Oro Valley aims for controlled growth without compromising its reputation as an excellent place to live. Additionally, these two towns are notably different in terms of aesthetics. Marana lacks physical allure and is primarily characterized by cluster zoning and flat desert. On the other hand, Oro Valley boasts visual charm, nestled beside the Catalina Mountains. In this regard, there is no comparison between the two communities.

Oro Valley Orders Independent Audit of Municipal Golf Financial Results

Bohen has been focused on the accuracy of reported municipal golf operating and financial results

In our view, there are two council members who genuinely dedicate time to scrutinizing the Town’s financial results. One of them is Tim Bohen, a council member who, candidly, can be a source of challenge for other council members and Town staff due to his pointed questioning. Occasionally, the manner in which he poses these questions may make some people uneasy. However, his questions are consistently relevant.  Bohen is serving the public, not the staff nor the Town Council.

Bohen has been actively challenging the accuracy of the operating and financial data provided by municipal golf operator, Indigo Golf. Last spring, Bohen requested that the staff produce point-of-sale data to validate the revenue and golf rounds figures reported by Indigo Golf in their financial statements. Despite raising concerns about these reported results during at least two council meetings, Bohen received no response from the staff and no support from fellow council members. It’s important to note that Bohen wasn’t necessarily claiming that the numbers were incorrect; rather, he believed they appeared unusually high and not in line with what would typically be expected.

Frankly we thought the topic was dead 

That is, until Bohen asked Town Finance Director Gephart  at last week’s council meeting about a topic Bohen had heard during his attendance as the Finance and Budget Commission meeting earlier in the week. 

Town has engaged outside auditors to look at the reporting golf financial results

Gephart told the Council that the town has engaged an external auditor to conduct a specialized examination of the financial records provided by Indigo Golf. The auditor's scope of work includes a review of the contractor's internal control measures. Furthermore, they will assess the integrity of the accounting system by testing sample transactions within the revenue process, scrutinizing point of sale data, and cross-referencing it with the monthly income report. Additionally, the auditor will verify deposits made into the bank account, ensuring the presence of supporting documentation. The examination will also encompass an evaluation of expenditure records.

According the vendor…Municipal Golf earned a profit!

Indigo Golf has submitted an accounting golf operations for fiscal 2023 (See panel). According to their annual report, El Conquistador Golf achieved an operating profit of $73,600, a significant improvement from the originally anticipated loss of $701,139 for operations alone. It's important to note that these figures pertain exclusively to operations and do not encompass the substantial expenses associated with irrigation replacement, which amounts to millions, or other municipal golf capital investment. It remains unclear whether these reported results also encompass the performance of the Pusch Ridge course.

The audit matters for three key reasons

Incentive Fee and Financial Reporting

Indigo Golf receives an incentive fee based on the financial results, while also supplying these results to the Town. Therefore, an independent audit is crucial to ensure the accuracy and reliability of these reported numbers.

Town Council Decision

The Town Council is set to decide the fate of the Push Ridge nine-hole golf course next spring. To make an informed decision, they must rely on accurate financial data, making the need for an audit paramount.

Homeowners Association Payments

Homeowners Associations are paying the Town of Oro Valley for golf course operation. If the golf courses are profitable, there's no justification for these payments to continue. An audit can determine the profitability and guide fair financial arrangements.

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Gomez Paints Rosy Picture of Town of Oro Valley Financial Condition

Staff: Town finished year in strong financial condition

Town Finance Budget Director Gomez painted a rosy picture of Oro Valley financial results through June at last Wednesday's town council meeting. “We ended the fiscal year in strong financial condition.”  According to Town Manager Wilkins: "...financial performance across all funds has exceeded expectations."

Financial condition means fund balances

The town has sixteen separate funds.  These funds totaled $99.7 million at the beginning of the year. The end of year total was $90.3 million. All Funds were budgeted at a year end total of $68.6 million (per the town's published 2023 approved budget)

“Strong” means fund balances in relation to budget

Gomez based her assessment by contrasting the actual cash holdings in the Town's funds with the predetermined figures. These fund balances are determined by the income received (revenues) and the money expended (expenditures). While the Town has limited sway over its incoming revenue, it exercises full authority over its expenditure decisions. Importantly, the expenditures do not encompass outstanding debts.

Local sales tax revenues “flat” overall

The sole "negative" observation made by Gomez pertained to local sales tax revenues. The primary fund responsible for covering town operations is the General Fund, which derives nearly half of its revenue from local sales taxes. Although local sales tax revenue appeared to remain relatively stable when compared to the previous year, it actually decreased by 10% when adjusted for inflation. 

Gomez noted that all segments of local sales tax revenues exhibited growth, with the exception of construction-related sales taxes, which experienced a substantial 20% decline compared to the prior year. In 2023, construction sales taxes accounted for 20% of total local sales tax revenues, down from 24% in 2022.

The decrease in construction revenue aligns with a nationwide trend of declining housing starts. Economists have attributed this phenomenon to the rise in interest rates and the unprecedented levels of inflation. In simpler terms, potential buyers are finding it increasingly challenging to afford housing. On a more positive note, the higher interest rates have significantly boosted the interest income earned by the town in 2023.

Two major projects not completed..deferred to this fiscal year

One contributing factor to the "strong performance" is the allocation of budgeted funds that were not used. Two specific instances of this allocation can be found in this year's budget: 

Westward Look Roadway Improvement

First, there were funds designated for the revitalization of the Westward Look roadway, in accordance with the town's annexation agreement. The Town agreed to make these improvements when it annexed Westwood look. Once again, it has taken forever to get these done. Maybe this will be the year!

Elevator at the Community Center
Second, there are funds earmarked for the installation of an elevator and necessary structural modifications to render the Community Center compliant with ADA (Americans with Disabilities Act) standards. According to Oro Valley's Public Works Director, Paul Keesler, the ADA improvement project is expected to commence by November. This improvement is long overdue.

 
For years, the Town asserted that the service entrance on the right side of the community center, accessible from the parking lot, was ADA-compliant because it provided direct access to the second floor. However, this path involved struggling up a hill. Town activist Jim Horn raised this issue with the Town Council, prompting them to take action. They would never have done so otherwise. It has taken some time for Mr. Keesler to reach this point, but it appears that significant progress will be made by the end of this year. One day, there will be an elevator.

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Bits and Pieces

Short Term Rental registrations only 31% of estimated number

Only one-third of an estimated 600 Oro Valley short-term rentals have completed registration with the town, a requirement that has been in effect since .May 5.  Total fees paid to the town are $11,200, or $60 per rental. The town has a way of identifying those rentals not registered. The 2023-24 budget includes acquiring software that produces a list of short term rental offerings from web-based rental rental sites. The site focusses on the listings in the primary “bnb” listing sites like Airbnb. 

Short Term Rental owners finding ways to circumvent registration and regulation nationally

However, in areas where short-term rentals registration and regulation, some property owners have chosen to list their properties on platforms like Facebook and local shopping site Craigslist to evade detection by regulators. Additionally, another strategy employed by owners to circumvent short-term rental regulations is to lease their properties for periods exceeding 30 days, effectively transforming them into long-term rentals. Our conclusion is that it will take quite a bit of effort for Oro Valley to identify and the follow-up on the actual total number of short term rentals… probably not worth it at the rate of $60 per rental.

SAACA and Roche sponsor a unique exhibition

Yesterday marked the debut of a distinctive exhibition, generously sponsored by Roche in collaboration with the Southern Arizona Arts & Cultural Alliance. This exhibition is dedicated to exploring the significance of routine disease screenings and their accompanying diagnostic procedures. It prominently features the stories of twenty-one Roche employees whose lives were profoundly influenced by a disease diagnosis.  You can view until January at the Ventana Gallery at Roche Tissue Diagnostics, 1910 E Innovation Park Dr, Oro Valley AZ 85755. Admission is free.  Learn more about the exhibit here.

Pusch Ridge Course getting ready for opening

Improvement projects are in progress for the 9-hole Pusch Ridge Golf course opening in late Octber. Over-seeding starts and there are plans for a Celebration kick-off event on October 26 with an afternoon shotgun and party Leagues will begin the week of October 30th. 

Should Rancho Vistoso Blvd go dark?

The streetlights along Rancho Vistoso Blvd are showing signs of aging. Originally installed as an amenity by the original developer, these lights are now under the ownership of the Rancho Vistoso Community Homeowners Association. Remarkably, this is the only area in Oro Valley with street lighting. “Unfortunately, the current 226 induction fluorescent street lights are deteriorating and becoming obsolete, with replacement parts no longer accessible. Furthermore, the underground electric cables and feeder breakers that power these lights are also deteriorating due to age and rodent infestation, resulting in numerous light failures. Additionally, the protective light shields meant to shield adjacent properties are missing, and replacements are unavailable.” (Source: Homeowners Association September News Letter) The Association is currently exploring more energy-efficient lighting options before making a decision. We have a suggestion: Consider turning off the streetlights, aligning with the rest of the town.

Oro Valley: The First Fifty Years

James Williams new book takes a unique look at the history of the Town of Oro Valley 

James Williams resides in Oro Valley and is an author. Several years ago, he authored “Claiming the Desert: Settlers, Homesteaders, and Ranchers in Oro Valley, Arizona, from 1965 to 1965.” Then, well over a year ago, he undertook the challenge of documenting Oro Valley’s first 50 years. 

Creating a fifty year history was a daunting task

This task proved to be quite challenging, mainly because there is no single, comprehensive source for the town’s history. Instead, Williams had to do thorough research into town records, conduct numerous interviews, collect photographs, and engage with key individuals who played pivotal roles in shaping the community.

The book focuses on the factors that shaped the community

The 200-page book explores Oro Valley through 14 chapters. Yes. The book does start with the town’s formation in 1974; but i offers more than a mere day-by-day historical account. Instead, it takes a comprehensive view of the factors that have shaped Oro Valley into what it is today. For instance, it delves into the significant roles that golf and growth have played in our town’s development.

There’s “lots to learn”

It is an enjoyable read because there is lots to be learned:

• Early Oro Valley government used volunteer workers to save money (p39,1)
• Most of the streets were dirt or gravel and much of the land was open space when the town incorporated in 1974
• The Sheraton El Conquistador was the financial salvation of the town in 1980
• In 1990, seven water companies served Oro Valley (p68)
• Residents voted to approve the original Oro Valley Marketplace. It was supposed to be an “upscale shopping experience
• Naranja Park was a sand and gravel pit (p108)

A read for all… Available on Amazon

Jim has crafted a true masterpiece of Oro Valley’s history. It is a worthwhile read for everyone, offering a glimpse into how the town evolved into what it is today.  Purchase the book from Amazon.

Guest View: Oro Valley Church of the Nazarene (OVCN) has Morphed from a Benign Growth to an Invasive Cancer on the Neighborhood

The below speech was given by Oro Valley resident David Dievert during the September 6, 2023 Oro Valley Town Council meeting during the Call to Audience segment. Dievert and his wife have been residents of Oro Valley for 30 years and are opposed to the Oro Valley Church of the Nazarene’s plan to build a huge sports complex with a lighted outdoor athletic field in their rural and historic neighborhood. LOVE added the subheadings.
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Oro Valley Church of the Nazarene demolished numerous structures without a permit
Oro Valley Church of the Nazarene (OVCN) purchased the Tellez property in June 2020 and almost immediately demolished the existing structures on the property. The structures included a 2,693 square foot block house built in 1980. Also demolished were a large masonry barn, stable, swimming pool, workshop, and other structures.

I called the town official responsible for permits after seeing truckload after truckload of material being hauled from the site to see if the required permit was issued. The town official said that a permit had not been issued and that they would go to the site and check on it. I don’t know if OVCN ever received the required permit.

In addition, the church removed copious amounts of vegetation from the property almost immediately after purchase. Removal of the vegetation created increased noise, increased heat island effect, more lighting pollution for the neighbors, more dust, less wildlife, and other adverse conditions for the neighborhood.

These actions demonstrate arrogance on the part of the church
The immediate changes to the former Tellez property demonstrates arrogance on the part of the church indicating that they believed that the town would approve their [rezoning] plans without hesitation.

Their arrogance also includes trying to coerce the town into approving their plan based on the argument that a sports complex is a religious activity. It is not. By definition, sports is a form of recreation and physical activity engaged in for pleasure. It is not for indoctrination to teach the beliefs or doctrines of a particular group.

OVCN is a cancer on the neighborhood
It started as a benign growth on the neighborhood, but over the years OVCN has grown into a fast-growing cancer that is destroying the neighborhood. The effect of rezoning and development of a sports complex proposed by the church will let the cancer continue to grow. The only way to stop the cancer is to cut the cancer out or attempt to stop its growth.

The Mayor and Town Council Members have the power to fight the cancer or at the very least to stop it from growing. It is time for the town to fight injustice to this neighborhood and say “No” to rezone and stop further destruction and death of the historic neighborhood.

OVCN’s invasion will cause neighbors to become prisoners in their own homes
The neighborhood was here long before the church invaded. The neighbors should not have to be walled in and stay indoors like prisoners on their own properties to protect them from the negative effects of the church.
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Search For Parks and Recreation Director is Ongoing

Town started search in July

The Town of Oro Valley has actively been in search of candidates to fill two crucial roles: One as the Director of Parks and Recreation and the other as the Director of Information Technology. Both of these positions have remained unoccupied since the middle of the summer.

Director of Parks and Recreation position is attractive 
The role of Director of Parks and Recreation was previously held by Kristy Diaz-Trajan. As of our last report, we were informed that she departed at the end of June, with the specific reasons for her departure remaining undisclosed to us. But “getting paid” was certainly not an issue because…

34 applications to date
As of this past Thursday, the town has received 34 applications. We understand why.  This is a financially attractive opportunity [See panel right-below]. And the Director gets to work in Oro Valley, a town that pays competitive wages, a town that has substantially increased its Parks and Recreation facilities and program, with a commute to work of maybe 10 minutes. 

Seeking someone who is a good manager
According to the town's position description, the town seeks a candidate who possesses strong leadership capabilities. Position responsibilities encompass the strategic and daily oversight of the Town's Parks and Recreation Department, which includes managing facilities, programs, services, policies, processes, and staff. The Director is also responsible for recruiting, training, and guiding departmental personnel while serving as an effective communicator and fostering collaboration with other Town departments, management, and the general public. (Source: Town of Oro Valley position description)

… with at least a bachelors degree in the field
The minimum qualifications for this position are a Bachelor's degree in government-related fields, a minimum of seven years' experience in the field of parks, and at least three years of managerial experience. The job requirements also specify that "...An equivalent combination of education and experience may be considered."

Our thoughts
This position should have many candidates. From the town’s perspective, the primary priorities should lie in selecting an experienced manager who possesses political acumen and can effectively oversee operations in a rapidly changing environment.

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