Bits and Pieces

Barrett and Bohen "get it."  Oro Valley’s stewardship requires balancing the financial impact of buildout and the sustainability of maintaining a maturing infrastructure

In January, LOVE reported on an independent study of the town's financial future. This study focussed on the impact of a "buildout" on Oro Valley's future. That study concluded that the town's budgets will remain sustainable through the expected residential buildout in 2034. However, the projected financial margin is very tight, leaving limited resources for long-term maintenance and unforeseen costs. Then, a few weeks ago, we reported regarding the town's five year financial projection. This was prepared by staff. That report projected that the town will face financial challenges starting in 2026, necessitating at least $11 million in bond funds to cover shortfalls for major highway projects and rising pavement preservation costs. 

The study and the five year projection address different time frames regarding the town's financial future; but both do emphasize the need for careful planning and spending as the town continues to mature. Given what we observed in the two day TMRB study session last week, two council members, Bohen and Barrett, "get it." And Nicolson is not far behind.

Town Grant Update: $18.1 Million in Progress, $213K Awarded

Town Manager Wilkins added a section in his May report to the council. That section discusses the status of grants sought by the town over the past six months. The report lists eight grants in progress, totaling $18.1 million. $213K has been awarded to date. Most of the pending dollars requested are for three public works bridge projects. $4.5 million is sought for public safety, including a $3 million request for the design of a police station. The town will file a $2 million grant request for the Vistoso Nature Preserve revegetation project in the next fiscal year. (Source: Town Manager May Report to Council, page 32)

Town Financial Update through February: Revenues rise, expenditures driven by capital Projects

"The Town continues to perform as expected from a Townwide financial perspective. Total Townwide revenues are up $7,399,890 through February 2024 in comparison to February 2023. Meanwhile, total Townwide expenditures are greater than February 2023 by $6,388,977. Capital is the primary driver of the increase in spending from the prior year, as it accounts for $4,875,207 of the $6,388,977, or 76%. Personnel and O&M also continue to outpace last year’s outflows through February. Total estimated Townwide Fund Balances through February 2024 are $84,981,826, which is about $4.2 million less than the Town carried into the fiscal year. This reduction in fund balance is primarily a function of the large capital projects being executed and the continued spend down of ARPA and Parks and Recreation bond monies." (Source: Town Manager May Report To Council, page 31) 

Let’s hear it for CDO’s… An Arizona sports leader

The Canyon Del Oro High School sports teams have had an impressive year, showcasing their talent and dedication. While both the baseball and softball teams narrowly missed winning the 3A Arizona State Championships this past week, their effort and skill were commendable. Last fall, the football team triumphed, securing the 3A State Championship. Congratulations to all the athletes for their hard work and for being outstanding representatives of Oro Valley. Your community is proud of your achievements and spirit.

Get ready to rock at OV Battle of the Bands, May 17

"This free concert, which runs from 6:30 to 9 p.m., on Friday, May 17, at the Riverfront Park Amphitheater (551 W. Lambert Lane), features three bands comprised of students from local high schools. The bands will bring their musical talents to a live audience with a three-song setlist...Admission to the concert is free and food trucks will be on site with items available for purchase. It is recommended that attendees bring a lawn chair or blanket." (Source: Town of Oro Valley Media Release).   

2025 TMRB: Differences in Personnel Costs Highlight The Variety of Skills Needed To Keep Oro Valley Successful

No added staffing in 2025 TMRB

The Town of Oro Valley has 425 full-time equivalent employees. The 2025 TMRB calls for keeping that number essentially the same in 2025. The total 2025 TMRB cost is $43.3 million, which is 31% of the $137.4 million in identified spending in the TMRB. 

"Big Four" Departments" dominate personnel spending...

Yesterday, we reported that 80% of all TMRB identified spending is attributed to four departments. These same four departments employ 77% of the town staff, comprising 76% of the total TMRB personnel cost.

...and have the most visible roles in the community

One would expect to see the bulk of Oro Valley’s workforce supporting these four departments (Public Safety, Public Works, Water, and Parks) because each department’s responsibilities require people “doing stuff you see.” Indeed, we see these people every day. The police patrol our streets and neighborhoods; public works crews rejuvenate our roads; water crews fix pumping facilities; and parks personnel mow lawns and water the new trees planted.

Disparity in personnel cost among departments...

There is a significant range difference in the average personnel cost per person across different departments (see panel right). The town's TMRB average cost per employee is $102,000. The average cost per public safety full-time equivalent (FTE) personnel is $129,500, while the average Parks and Recreation FTE receives less than half of that. Water and public works personnel costs per FTE are also much lower. The Legal and Finance departments have an average personnel cost per person greater than that of the police department. Other departments, such as information technology and the town manager's office, also have relatively high personnel costs. 

... likely reflects the nature of the work and labor market conditions

These differences likely reflect the varying skill levels required for specific jobs in these departments and prevailing labor market conditions. Understanding these differences is crucial for informed budget planning and resource allocation in the town.  

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2025 TMRB: 80% Of Spending By “The Big Four” Departments

“The Big Four”-Water, Public Works, Public Safety, Parks
$115 million will be allocated in 2025 by four departments according to the 2024 Town Manager Recommended Budget ("TMRB"). The departments are Water, Public Works, Police, and Parks and Recreation. This is based on LOVE’s combined spending analysis of the TMRB (an explanation of our methodology is provided at the conclusion of this article).

Here’s is what is “driving” the spending

Water: $41.2 million
More than half of the total water spending of $41.2 million is allocated for capital items. The most significant is the town’s investment of $17.2 million in bringing Central Arizona Project (CAP) water more directly to Oro Valley. Some CAP water will be routed directly to Oro Valley from Avra Valley, through Marana, as opposed to being delivered through the Tucson Water System. Water Director Abraham believes that the new delivery system, once completed, will enable Oro Valley to reduce its groundwater pumping to below 5,000 acre-feet per year. Next year’s spending on this project is estimated to be $14.5 million, which will complete it. The TMRB budget calls for the Water Utility to issue $20 million in debt this year to finance this project..

Public Works: $28.3 million
Public Works is the town's workhorse, keeping everything running smoothly. It provides a wide range of services, including engineering; maintaining over 450 miles of roads, with preservation of 70 miles each year; ensuring traffic lights function properly; dispensing 20,000 gallons of gas per month; maintaining the town’s bridges and a fleet of over 300 vehicles; overseeing facilities maintenance for all town properties; managing stormwater control; and operating the town's transit system.

Public Works faces two significant challenges. First, town facilities are aging and require replacement. Bridges need resurfacing, and roads need milling. Second, inflation has significantly increased the cost of operations. For example, the cost of the pavement preservation program is projected to double from previous years due to the reliance on oil-based solutions.

Public Service: $22.9 million
Personnel costs constitute 85% of the operating expenses for the police department, with fleet replacement planned at 5% this year. Speaking at last week’s council budget session, Chief Riley highlighted that the key issue faced by the department is "It's very important that we prepare for the future regarding succession planning and training, and tonight is no different."

Being a police officer is a challenging job. As Chief Riley observed, "Our staff sees and hears things that they can't unsee." A major focus is providing a career path for officers. John Teachout, Oro Valley Police Field Services Commander, noted, "We aim to develop from within, so the budget requested for field services is targeted at the development and succession planning of line-level staff, enabling them to advance through the ranks with the same good fortune as those of us in this room, while also maintaining focus on health and wellness."

Parks: $22.3 million
Parks continues its robust spending. This year, the capital budget stands at nearly $8 million,with $4million allocated to the revegetation of the Vistoso Trails Nature Preserve.  This latter amount assumes that the town can get a grant of $2million for  the Preserve.  Additional projects include further expenditures on the Community Center building, an incomplete elevator, roof repairs, and a bridge on the Pusch View Golf Course. Furthermore, there are $1.9 million in debt service payments for the bond this council approved in 2021 to fund improvements at Naranja Park and replace golf course irrigation systems. In addition, there is a $12 million cost for the ongoing operation and maintenance of the parks and recreation system-wide.

Everything else: $22.6 million 

The biggest chunk of all of department cost is the $3 million renovation of the Court Facility.

Tomorrow: Personnel
Tomorrow, we take a look at staffing and spending.
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Our Methodology adds all the spending together
We consolidated all spending for each department, encompassing operations and maintenance, capital improvement projects, and debt service—a breakdown not provided by the TMRB. Unlike the TMRB, which organizes spending by fund without detailing some capital improvement projects and debt service costs by department, we either directly identified these costs or developed estimates for them. Additionally, the TMRB earmarks $19.7 million in contingency funds, which may not be utilized; thus, we have excluded these from our analysis. The TMRB reports total spending at $137.4 million, and we were able to attribute all but $2.2 million of that spending to specific departments.

Bits and Pieces

Council doesn’t like town staff five year financial projection message that “the future ain’t what it use to be”
Town Finance Director David Gephart’s message to council at last week's town council meeting was clear: There are going to be financial headwinds in Oro Valley’s future. 

“The [five year financial] forecast does not include really enough to keep the town functioning the way it ought to and keep service levels and … especially maintaining our capital assets.” As reported by LOVE, that is after issuing bonds to pay for needed public works projects.  Even worse, the projection does not include at lease one major future capital need: The funding of a new police facility.

The council's reaction? Two council members felt that the forecasts were overly pessimistic. Two focused on the challenge presented in the forecast of maintaining a maturing infrastructure, especially bridges, during times of higher inflation than historic norms. There was discussion of the many capital projects that were not included in the forecast simply because the town has no idea of some of these costs and how they will be financed.

Wilkins strikes again: Police Chief “informed” that financial projections include needed new police facility this year
The five-year projection does not include funds for a new police station. However, we did find it listed as a future "contingent project" in a future year in the town manager's 2024 recommended budget. It's contingent because, according to the town, it has yet to be defined and they don't know how they are going to fund it.

This is a surprise.

A new station has been included in the ten-year capital improvements plan for many years. The estimate ranges from $25 to $40 million. Town Finance Director Gebhart said that the town has no idea what facilities are needed.  

The police were not involved in the decision to not include a new facility in the projection. Instead of being part of the process, they were "informed" that it would not be included.

The Police Department reports directly to the council. The town manager has no role in their operation and no authority to exclude the police facility from the forecast.

Naranja Park Opens May 18
It’s finally here! The town will host a reopening event for Naranja Park on May 18. The event starts at 9am. “The event will include activity demos, giveaways for kids and adults and remarks from the contractor, town staff and elected officials. The ceremony will take place at the north end of the park near the skate park and pump track.” (Oro Valley Parks and Recreation Email) This marks the “mostly completion” of a park that started with a groundbreaking event on January 27,  2014. It been a long time,  with an investment of well over $30 plus million over the years, converting a gravel pit into a beautiful regional park.

“Behind the Scenes” with Oro Valley’s Public Works Department
The town’s Public Works Department plays a key role in building and maintaining the town's infrastructure.  Click this link to meet the people who make this happen.

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Town Seeks to Recertify Its "100 Year Assured Water Supply" Designation

Town seeks its forth 100 Year Assured Water Supply designation 

"Oro Valley's Assured Water Supply (AWS) designation, granted by the state, is critical because it demonstrates long-term water security, facilitating new development. The AWS designation allows developers to receive water service without the need to individually prove a 100-year water supply for their projects, streamlining the development process in the town.”

Certification designed to promote the Arizona economic health According to Oro Valley Water Director Peter Abraham speaking at last week’s council meeting, the certification program “…was created to address the problem of limited groundwater supplies in Arizona, and this came out of the 1980 Groundwater Management Act. It was to evaluate the availability of a 100 year water supply, considering current and committed demands, as well as growth projections. It was to sustain the state's economic health.”

The town must apply for this designation every ten years

The town’s first certification was on January 28, 1997, and it has received two decertifications since then. The latest certification is under state review. Renewing the AWS designation for Oro Valley should be a “slam dunk” according to Abraham, “Oro Valley really is kind of the gold standard by which they hold other communities to, because we don't grow unreasonably fast. They like that we think about water resources and community sustainability and perpetuity.”

Towns goal is to use far less groundwater than is approved

 “Our overreaching goal is to pump 5,000 acre feet a year of groundwater and less. When we commission the Northwest Recharge Recovery Delivery System,” a system that will deliver CAP water more directly to Oro Valley, that “…will be dropping down to 4,500 acre feet a year, 4,000 acre feet a year, 3,500 acre feet a year, further reducing our reliance on groundwater and preserving this designation for the future.”

Abraham: “We, in our application, demonstrate that we meet all criteria” for approval

The water provider must meet the following criteria: The groundwater supply is physically available. The groundwater is legally available for 100 years. The groundwater supply is continuously available. The groundwater of sufficient quality. The groundwater supply is consistent with the management goals of the area. The groundwater supply use is consistent with the management goals of the area. The provider has the financial capability to deliver these water resources.

Abraham is confident about the town’s water future

So ten years from now, I'll be standing before this council saying, our designation will be about 12,400 acre feet a year for the next 100 years. What am I saying? We're in really good shape.”

Wilkins Unveils $156.4 Million 2025 Budget

Proposes 5% spending increase

Town Manager Jeff Wilkins has issued his recommended budget (“TMRB”) for fiscal 2025, which starts July 1. “This budget totals $156.4 million, representing an increase of $7.9 million, or 5.1 percent more than the adopted FY 23/24 budget of $148.5 million.

Five major assumptions

“Assumptions that shaped the development of the FY 24/25 budget include: Moderate growth in local and state shared sales tax revenue; a significant decline in state shared income tax revenue as a result of [state] income tax reductions; continued slowdown in single family residential development activity; and sustained, persistently high prices in goods and services.” (Source: 2025 TMRB

Click to enlarge

A quick look

The budget is a very detailed document covering all areas of town operations. LOVE will be reporting on the areas during this month. The chart at right is a glimpse into Wilkins’ recommendation. 

There's a lot to unpack in this budget, like the inclusion of grant funds the town does not yet have

Wilkins states in the TMRB that $4.4 million from the Town's budget is earmarked for enhancing the Vistoso Trails Nature Preserve. This includes activities like revegetation and maintenance. However, only $2 million of this amount is currently available, as the rest relies on a matching grant that the town hasn't secured. 

The Land and Water Conservation Fund, the organization from which the town will seek the grant, may match funds only if the town provides proper documentation and submits a complete application. However, there's uncertainty, given the town's past experience with a similar grant application to this group for Naranja Park. They received half of what they requested.  Claiming in a budget that there will be $4million spent on the Preserve is strange accounting indeed. 

More to learn in two upcoming study sessions
Tomorrow and Thursday there are two planned town council study sessions on the TMRB. Both sessions are scheduled to start at 5pm. Council will discuss eight areas. Tomorrow they will cover Capital Improvements, Public Works, and Parks & Recreation. Thursday they will discuss the Magistrate Court, Administration, Police, Community and Economic Development and Water.

Our budget coverage continues next week.

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Bits and Pieces

Oro Valley's 50th: Join Historian Jim Williams for Two May Celebrations

In celebration of Oro Valley’s 50th birthday (April, 1974), the Oro Valley Historical Society is presenting two talks by Jim Williams, our former President, current historian, and author of the book Oro Valley The First Fifty Years.

On Wednesday, May 8 at 2 p.m. Jim Williams will talk about Oro Valley’s first fifty years at the Western National Parks store on North Vistoso Village Drive in Oro Valley. The making of a town isn’t easy, and it took a long time with many twists and turns. Jim covers that journey and the people who made it happen. 

On Monday, May 13 and Monday 20, Jim Williams will be giving two talks about our history from early settlers to today. The talks will be from 2 – 4 p.m. at the Oro Valley Public Library, and you can attend one or both. You’ll be amazed at what those who came before us endured, why they came here, and how they were important to making Oro Valley the town it is today. Join the Oro Valley Historical Society as we keep Oro Valley history alive!

Amphi School District Reimbursed Oro Valley $90,000 for SRO Support this year

The Oro Valley Police Department "...engages with the Amphitheater School District to seek reimbursement for SRO services on a yearly basis. This request is intended to encompass all Amphitheater schools within the town’s jurisdiction. These schools include: CDO High School, IRHS High School, Innovation Academy, Wilson Elementary School, Copper Creek Elementary School, and Painted Sky Elementary School. 

The requests for reimbursement occur at the conclusion of each school year and is accomplished through direct communication with Superintendent Yeager. It is an open-ended request wherein the district is if asked if they have available funding to augment or replenish the costs of OVPD officers serving in the schools. For fiscal year 23/24, Amphitheater School District reimbursed the Town of Oro Valley in the amount of $90,000. This is the largest such contribution in the last five years." (Source: Jessica Hynd, Town of Oro Valley Constituent Services Coordinator/ Management Assistant)

Reflecting on two of Oro Valley's 50th Anniversary Celebrations

"On back-to-back Saturdays this month, the Town of Oro Valley celebrated its 50th anniversary with a parade along Naranja Drive on April 6 and a community celebration event at James D. Kriegh Park on April 13. View photos from each event on the Town of Oro Valley’s Facebook page. (Source: Town of Oro Valley Media Release)